How Does Accounts Receivable Financing Work?
Offering clients net-30 terms is usual for lots of companies. Some companies don't have the cash books to wait that long for payment. Accounts receivable financing aids companies by enabling them to finance their slow-paying invoices. If it is a great fit for your business, this post shows you just how the receivables financing process functions so you can decide. Step 1: Due diligence and account setup The initial step of the receivables financing process is doing the due diligence so the account can be established. The due diligence enables the finance business to determine if your business can be financed. The finance company usually checks: The credit quality of your clients Your receivables aging report If any liens encumber your receivables If your corporate taxes are up to date The relevant background of the business owners If you ask for a huge funding center, the finance company also assesses your business's financial statements. When