Your Business Needs Income
If times are tough for your business, and you need to improve cash flow, your list of options can seem like they are getting shorter by the day. More often than not, your choices will come down to invoice factoring and opening up a line of credit with a bank.
We are here to go over the pros and cons of both, while also showing which might be best for you.
Accounts receivable financing is the purchase of those invoices by a financial institution which then manages the debt themselves. The small business can earn money that it is owed, and the financial institution will be able to withdraw a fee, in addition to collecting on the debts themselves.
Line of Credit
A line of credit is when you go to the bank and say a business needs 5,000 dollars. The business would open up a line of credit to you for desired capital and then tack on an Interest rate for the duration that the line of credit is either unpaid or withdrawn (depending on your contract).
While you are still receiving the same money, you are now engaged in a perpetual relationship with your debt. You will be paying off that debt for a long time; and often there are fees associated with keeping the account open, as well as starting the account.
Which is best for you?
Some of our clients prefer not to open a line of credit because it will then reflect on the businesses’ credit, as opposed to factoring.
At AmeriFactors, we are always looking out for small business owners. They are the workforce that runs America and makes this country great. If you are a small business owner and would like to receive more information on how to receive financing or financial help, give us a call today!