Accounts Receivable Financing: Is it Right for Your Business?

 

It’s fact of life. At certain times, businesses — regardless of size — will need access to credit so they can support inventory, meet payroll or cover their operating expenses. For certain business industries – such as staffing agencies – facing difficulty getting approval for traditional loans or lines of credit, accounts receivable financing may be a viable option. That’s when AGR Financial can step up to help.

AGR Financial works exclusively with staffing companies that supply consultants, contractors and other employees in such sectors as information technology, accounting, legal, medical, clerical, engineering, transcription, light industrial and day labor.

“In many cases, accounts receivable financing can be the best alternative to raising working capital without giving away equity or taking on debt,” said G. Allen Geyer, President and CEO of AGR Financial in Edison. Geyer held a series of high-level positions at large banks before founding AGR Financial in 1995.

Geyer said accounts receivable financing, also known as accounts receivable factoring or accounts receivable funding, is actually one of the oldest forms of commercial finance.

Advances are made against a company’s customer invoices to provide the cash flow required to fill the gap between when businesses provide service and when their customer pays.

Geyer said advances are arranged on a sliding scale, up to 90 percent. This helps businesses to determine cash flow needs from week to week. Lower rates are provided as a reward for high- volume growth.

“Concurrent with advances, business owners can also elect to outsource back office and administrative tasks such as payroll and related chores, billing and collection functions,” he said. “These customized plans allow businesses to focus on its core business of selling its staffing services.”

Geyer said there are a number of other reasons business owners become drawn to accounts receivable financing as a viable finance tool.

“Outsourcing the management of accounts receivable lets a company focus on other more productive activities, such as selling their services,” he said. “We’ll take care of providing the money, and best of all, we’re on your side and ready to help every step of the way. Instead of watching your capital sit idle on your balance sheet because of unpaid invoices, accounts receivable financing frees up your money so you can put it to work in growing your business.”

Some businesses in need of working capital may initially consider raising money by selling equity in their business. But many decide that they do not want to give up part of their ownership of their business each time more funding is required.

“Accounts receivable financing does not require selling equity and that’s a game changer for many staffing companies who prefer not to sell equity. By choosing accounts receivable financing, they will retain sole control of their company while still getting the working capital they need to operate,” Geyer said.

Geyer points out that accounts receivable financing is just one of many options offered by AGR Financing.

“It all depends on your situation, of course,” he said.

Geyer said every AGR Financial client has a dedicated account manager plus a backup account manager. These are experienced professionals completely familiar with the intricacies of a client’s business.

“This in-depth knowledge of your company and your customers’ payment patterns make them a valuable member of your corporate financial team,” Geyer said. “We’ll drill down and determine what works best for you — not us. For example, if you’ve just started up a business, or you’re beginning to grow and have plenty of assets, but your financial statements shows that you’re not yet profitable, you may want to explore asset-based financing with us.”

Since 1995, AGR Financial has been dedicated to tailoring innovative financing programs to the staffing and temporary personnel industries. Products include merger and acquisition consulting and brokerage, financial consulting, working capital financing (including payroll funding) and back office processing. If you wish to know more about account receivable financing and other AGR Financial services, go to www.agrfinancial.com/staff-contacts/ for more information.

— Robert Wahlers

 

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