Accounts receivable factoring is often seen as an alternative to traditional loans. However, for businesses that may be unfamiliar with how factoring works, that first statement can be a bit nebulous. Accounts receivable Factoring offers a number of advantages to business owners, from improving cash flow to enabling growth, and more.
1. Factoring is not a loan
While accounts receivable factoring is frequently placed under the heading of “lending solutions,” it is not a loan. Accounts receivable factoring does not require collateral, does not impact business credit ratings, and does not place any debt on the balance sheet. Factoring is a simple exchange of receivables for immediate working capital.
2. Accounts receivable factoring improves cash flow
The success of every business relies on having a strong cash flow. When revenue is tied up in unpaid receiva