Our goal here at The Commercial Finance Group in Atlanta is to make sure that no business ever has to postpone growth or close its doors because it didn’t have access to the working capital it needed to move forward.
We provide a level of support for small to medium-sized businesses that’s not available in the traditional finance industry. Why? Because many young or struggling businesses are considered to be “unbankable” by most lenders. We refuse to let a lack of collateral or credit history stand in the way of a young company’s bright future, so we offer customized lending solutions like receivables financing that can build a “bridge to bankability.”
Business owners and managers from all industries can benefit from a strong working knowledge of receivables financing, how it works, and the types of businesses that can benefit from it as a short-term financial solution. Keep reading to learn all of this and more! Then contact The Commercial Finance Group to start your application process today.
How Receivables Financing Works
Before we get too far into our discussion of the types of businesses who should look to receivables financing as a cash flow solution, let’s quickly recap how it works:
Receivables financing provides a way for companies to collect immediate reimbursement on invoices that might otherwise take weeks or months to be paid. When work is complete but the invoice for said work is waiting to be paid, revenue the company depends upon is tied up and can’t be used for operations. Receivables financing solves this by allowing companies to sell these unpaid invoices at a discount to a factoring company such as The Commercial Finance Group.
Main Characteristics Of Businesses That Can Benefit From Receivables Financing
There are two main qualifications a company must meet in order to make them eligible for account receivables financing. They must:
- Have Outstanding Invoices – This is the “asset” that’s sold during receivables financing. Without invoices that total a significant sum, this type of financing might not be the best option.
- Have Creditworthy Customers – In order to be considered an attractive candidate for factoring companies, there must be a strong statistical probability that your customers will actually pay what they owe.
Industries That Often Take Advantage Of Receivables Financing
While it’s very rare for a factoring company to exclude a client simply because of their industry, there are certain types of businesses that lend themselves very well to receivables factoring. These include:
- Government Contractors – They don’t call them the slow moving wheels of bureaucracy for nothing. While government contracts can be quite lucrative, local, state, and federal-level government entities are also notoriously slow at paying their bills. It’s not a matter of if you’ll get paid, because the government generally has a good credit rating, it’s a matter of when. For this reason, government contractors often take advantage of receivables financing.
- Healthcare Providers – Doctors, nurses, and urgent care operators provide a vital service for their patients, but in most cases, they don’t get paid at the time that service is rendered. These healthcare providers often bill insurance companies for reimbursement from insurance companies, meaning they must wait days and sometimes weeks to actually get paid for their work. For this reason, CFG specializes in healthcare receivables financing.
- Textile/Clothing Manufacturers – In the textile and clothing manufacturing industry, a great deal of money must be paid out for raw goods long before those costs can be recouped by selling the final product. For this reason, companies in these industries often choose to finance their receivables as a way to keep cash flow positive.
- Temp/Staffing/Recruitment Agencies – While these types of companies are instrumental in helping people find employment, they’re in a strange position: they must often pay their contracted workers before they receive payment from the clients who commissioned them to fill staffing gaps. Employees of temp agencies are often enticed with the promise of weekly or even daily pay, while it might be a month or longer before their clients are obligated to pay.
- Trucking Companies – The trucking industry must spend money on fuel, payroll, and truck maintenance on a daily basis while waiting 30, 60, or even 90 days to be paid by clients for deliveries made. This can make it difficult for trucking companies to maintain a positive cash flow, causing many to seek receivables financing to balance things out.
- Construction Companies – Large construction projects, like erecting a new building or re-surfacing a stretch of interstate, can take many months to complete. Unfortunately, construction companies must pay their suppliers and workers on a much more frequent basis. Receivables financing provides a way for construction companies to keep their books in the black while waiting for projects to be paid in full.
Want to know more about how receivables financing can help you to maintain positive cash flow in a slow-moving industry? Contact The Commercial Finance Group in Atlanta today!
