Why Finance Accounts Receivable Is Recommended For Businesses

Most business expert these days understand that partnering with a trusted bank is a must for business growth. And so, businesses take advantage of bank solutions that are formulated to help them advance and reach their goals. Finance accounts receivable is just one of them. To help you understand how this can be a help to your business, you need to know what are accounts receivable first.

Receivables are the money that a company is owed by its clients. For example, your company has provided products and/or services to your clients and you have already issued an invoice and are now waiting for the payment. The amount stated on the invoice is the amount of you receivable. This is usually how it goes in the business world. You provide products and services and issue an invoice with a later date. All those receivables are usually recorded as an asset in your company. Although the money is not yet on hand, it is already considered a sale or profit because it is what your client owes your company and it is what your client needs to pay come the date stated on the invoice.

So, why is finance accounts receivable recommended for businesses? Most of the time, clients and customers prefer to pay all at once for the services and products that they got from your business. This will strengthen your relationship with your clients and customers. This is also considered as a form of credit which will encourage trust and confidence for both parties. This will also lessen the hassle of paying every time a transaction is done.

When you provide products and services to clients or customers especially if they are already recurring ones and considered as among your loyal customers, issuing an invoice with a later date is more preferable than collecting the money right then and there. You can then use these accounts receivable when applying for any type of financing from your trusted bank. This is called finance accounts receivable.

Accounts receivable financing is when a business or company uses its accounts receivables as collateral in order to secure a cash advance. Businesses that wish to apply for any type of loan or cash advance can use the accounts receivable.  All you need to show the bank are the invoices that you sent your clients which will serve as collateral. With this, your bank can easily assess and grant your application.