AR Factoring or Accounts Receivable Factoring is a type of financing companies use to improve their cash flow. A company can borrow money against outstanding accounts receivable. By definition of Accounts Receivable Factoring you are selling your accounts receivable to a factoring company.
Businesses can partner with AR Factoring Services to finance all or a portion of their accounts receivable. If you are selling on open terms to credit worthy customers, chances are this type of funding will work for you. In some cases, the factor will even insure your receivables to make sure you get paid in the event of a default from your customer. This is considered Non-Recourse Factoring.
AR Factoring lets a company feel comfortable that they will have the cash flow they need to be successful. An entrepreneur who is using Accounts Receivable Factoring can now deliver on larger orders and not worry about waiting 30-90 days to get paid by their customers. Sometimes offering better payment terms to customers will help you land larger deals and bigger purchase orders.
Working with STAR Funding, you can go after the bigger business opportunities and not worry about stressing your cash flow. We are one of the few companies in the factoring industry to provide Non-Recourse Factoring and Purchase Order Funding under the same roof.
Here are some benefits of AR Factoring
- Improve your cash flow – No more waiting for payments from your customers.
- Secure your customer’s credit – With Non-Recourse AR Factoring you are protected against the credit risk of customers.
- Outsource collections – A good Accounts Receivable Factoring Company will also help you collect on your outstanding AR.
There are two main types of AR Factoring.
Non-Recourse Factoring provides you with credit protection against your customers. Regular AR Factoring simply advances you cash against your open invoices from your customers. Simple invoice discounting. A Non-Recourse Factoring arrangement also provides credit guidance. The assurance it provides helps you build stronger relationships with your customers, knowing that you will be paid.