5 Reasons Accounts Receivable Financing Is Ideal For SME India


Need money soon? Don’t want to pester your clients for early payment of bills? Are you certain your client will slowly but eventually pay up?

Then accounts receivable financing is for you.

Every business, especially one that is part of SME India, always needs finances to keep running its operations. While your billable hours look great, the problem is a delay in payments from your client’s end, which unfortunately leaves your daily operations stranded and you, the business owner, frustrated.

This is where accounts receivable financing steps in and saves the day for SME India. This is a considerate form of financing that allows companies to receive early payment on their outstanding invoices. Accounts receivable financing is very similar to a secured loan. Here is why it is a very good option to meet day-to-day business loan requirements for small businesses.

#1 Easier and faster

Unlike extensive audits of other traditional business loan requirements fulfilling partners, it simply takes a setting-up period of just 5-10 business days to establish a factoring facility for a company. The procedure associated with the factoring accounts is relatively short, making this kind of financing a popular and sensible choice for business owners. And since the process is speedy and efficient, it puts your business back on the road of financial stability and growth within no time at all.

#2 Convenient access to capital

Since an accounts receivable financing company can fund invoices as soon as they are billed, this type of financing is one of the best ways companies can protect themselves from slow, non-paying customers and keep their business cycle flowing.

Assisted by receivables financing, a business is then left to pursue growth opportunities. An advance from a factoring company frees up a significant portion of working capital that is needed to pay employees, buy inventory and incur other costs to meet fresh demands.

#3 Surviving a downturn

A downturn in the industry can put a business through a hard patch. The virtue of factoring companies that lend accounts receivable financing  is that they are more concerned with the strength of a client’s customers, and not just on the strength of the client itself, which is unlike the outlook of traditional banks.

Banking on accounts receivable financing thus secures business loan requirements for a business as receivables financing companies do not withdraw their support during hard times and continue to be a dependable source of capital for the business.

#4 Flexibility to pursue opportunities

If you are a small business owner depending on this financing model, it helps you in taking advantage of market opportunities that you would have otherwise missed due to lack of finances. In turn, it also helps your business improve its margins.

#5 Managing accounts receivable

Just like any other company, an SME needs to focus on time and resources that would culminate into the progress and development of its business. Factoring is ideal for such small businesses as they take interest in the performance of its customers and provide them free back-office support, including managing collections from the customers. This all thus results in improving the client’s cash flow and liquidity, and builds the credibility and sustainability of the business.

In the era of accessible and convenient accounts receivable financing facilities, intelligent financial strategizing is the way to grow!

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