Are you in search of a financing solution that will help to solve your company’s cash flow problems? You may assume, as many people do, that the only place where you might be able to find relief is within the walls of a traditional bank or credit union, but this simply isn’t the case. The Commercial Finance Group in Atlanta has been providing alternative lending solutions to small and mid-sized businesses for many years.
The Problem With Traditional Loans
While many entrepreneurs will seek to finance their business or supplement cash flow in difficult times via a loan from traditional lending institutions, these aren’t the best solutions for acute situations. When you need cash quickly to pay bills or to facilitate expansion, you don’t have time to wait for a traditional loan to be approved and funded. That’s where receivables financing, factoring, and the other financing solutions offered here at CFG, come in.
Unfortunately, there are many misconceptions about receivables financing swirling around out there in the business world, leaving some entrepreneurs wary about seeking help from us or commercial factoring companies. We’d like to address some of those harmful myths in today’s article.
Common Myths About Receivables Financing
Myth 1: Receivables Financing Is Only For Failing Companies
Fact: Receivables financing is used by rapidly growing companies.
Saying that only failing companies use receivables financing is like saying that only people who are bad with money use credit cards. It’s just not true. Like all lending solutions, receivables financing is a tool that primarily facilitates growth for new and rapidly growing companies. In some cases, it is also a short-term business financing solution for companies who find themselves with temporary cash flow issues, but this isn’t the norm. In order to benefit from receivables financing, you must be making sales which result in invoices. This generally isn’t the case with failing companies.
Myth 2: Receivables Financing Ruins Your Reputation
Fact: Receivables financing is widely-used cash flow management tool.
There’s another common misconception that utilizing receivables financing will signal imminent failure to your customers (or simply annoy them) and that as a result your clientele will start to shrink. The idea is that even if you didn’t start using receivables financing because you’re failing, that will be the result if you dare to try it. One simple reason that customers will not be left to draw their own, incorrect, conclusions about factoring is the Notice Of Assignment. This is a letter sent out from a commercial factoring company on your behalf. This letter explains that you’ve been awarded a line of credit in the form of receivables financing and that you’ve retained the factoring company’s receivables management services to help during your time of growth. It will be a mere blip on your customer’s radar, and after they’re used to mailing their payments to a new address, they’ll think nothing more about it.
Myth 3: Receivables Financing Is Too Expensive
Fact: Receivables financing is competitively priced.
Finally, we’d like to address the myth that receivables financing is too expensive for the average small to mid-sized business. The fact of the matter is that The Commercial Finance Group in Atlanta strives to maintain costs that are competitive with other forms of lending. Why else would anyone choose to use us for receivables financing? It’s also worth pointing out that we specialize in providing a “bridge to bankability” for companies that don’t yet qualify for traditional bank loans. And if you can’t qualify for bank financing, the cost of factoring vs. bank financing doesn’t really matter: you need capital and you need it now.
