Accounts Receivable Financing for Seasonal Businesses
Seasonal businesses often face cash flow issues due to fluctuations in demand throughout the year. This variability in cash flow can put your business in a vulnerable position, especially during business lull periods, when you most likely will have insufficient working capital.
This is where accounts receivable financing comes in.
What is Accounts Receivable Financing?
Accounts receivable financing is a type of asset-based lending (ABL) in which an alternative lender will advance you money based on the face value of your outstanding invoices. Accounts receivable financing can be structured as a loan or a line of credit, both of which are collateralized with your accounts receivable.
Even though you are pledging your accounts receivable as collateral, lenders will still factor in your creditworthiness, which can affect interest rates charged by lenders.
One of the benefits of accounts receivable financing is that as your sales increase, the amount you can borrow increases as well. Furthermore, the underwriting process for accounts receivable financing is simple and quick.
How Accounts Receivable Financing Helps
Accounts receivable financing helps seasonal businesses manage their cash flow during the peaks and lulls in demand.
Some uses of the funding you receive through accounts receivable financing include:
Buy and maintain equipment
Advantages of Accounts Receivable Financing
Because accounts receivable financing has a quick underwriting process, lenders will be able to advance you cash within a few days. This is fantastic for any season business looking to gain immediate access to additional capital, instead of waiting 30 to 90 days for your invoice payment.
You can choose which invoice will be financed. Because the accounts receivable is pledged as collateral, it is also much easier to qualify compared to traditional loans.
Accel Business Funding has many different funding options for all businesses and funded many businesses for more than $380 million. When banks say NO, we say YES to funding in 24 hours!