Does your business have outstanding invoices on a regular basis? If so, you could turn your invoices into working capital through a process known as accounts receivable financing (or A/R financing for short).

Here’s the process of business invoice funding in a nutshell:

Invoices are the primary form of accounts receivable for most businesses. These invoice represent future capital, but they are obviously not liquid in the present. You cannot give your invoices to a supplier to pay for supplies. Nor can you pay your employees or contractors with invoices.

But you can convert your business invoices into usable funds through the process of A/R financing. By transferring your invoices to a factoring company such as Far West Capital, you can receive a percentage of those invoices up front in the form of much-needed cash flow … money you can use to purchase supplies, pay employees, or otherwise expand your business.

Because of its usefulness, business invoice funding is a common type of A/R financing among small businesses that operate some form of invoicing model. Without the services of an invoice factoring company, outstanding invoices only represent future capital — not capital in the present.

But with the services of a factoring company, your business invoices can become working capital in the present.

Questions About A/R Financing

If invoices are a big part of your business model, and you’d like to learn more about A/R financing tools to convert those invoices into capital, please contact a representative of Far West Capital today!

Related articles:

• Factoring Receivables for Cash
• Factoring Companies Explained

A somewhat recent business finance article on the New York Times online discussed what we all know from watching the news — it’s getting harder for business owners to obtain credit / financing needed for growth.

The article’s first paragraph sums it all up:

“Credit flowing to American companies is drying up at a pace not seen in decades, threatening the creation of jobs and the expansion of businesses, while intensifying worries that the economy may be headed for recession.”

You might call this a ripple effect. Much of this began in the housing industry, and it goes back several years in true “time bomb” fashion. You know the story by now:

Lenders gave easy-credit subprime mortgage loans to poorly qualified home buyers … the rates were adjustable … the rates reset and caught the homeowners by surprise … record-breaking foreclosures … mortgage meltdown, etc.

Well, this initial pebble that fell into the financial waters of the mortgage industry has rippled elsewhere in our economy. Lenders of all types are under increased scrutiny from on high, which causes them to revisit (and often retighten) their lending standards.

What does it all mean? It means that it’s a lot tougher for growing businesses to obtain business financing / credit these days.

What will it mean in the future? Well, for the time being, business owners have to grin and bear it. Many business owners in certain industries are also turning to working capital finance solutions, like the services that we provide.

As for the federal government’s potential actions, it seems that the writing is on the wall. Said the New York Times piece:

“Just yesterday, the Fed’s vice chairman, Donald L. Kohn, said that the latest market turbulence appeared to be reducing credit to businesses and consumers, hinting that the central bank, in response, was prepared to cut interest rates further.”