Before the market imploded, every other commercial on television was for competitive lending procedures with the premise of banks contending to offer the best rate and conditions for loans to small plus mid-sized companies or individuals. Nicely, that no longer exists as balance page losses pile up and banks keep a tight leash on credit. In answer, many small and mid-sized businesses have turned to alternatives strategies to source capital needed to grow their company.
The Receivables Exchange, allows little and mid-sized businesses to sell their own accounts receivable to investment entities that compete in real-time to purchase those receivables, giving the business the control rather than the financing institution. By using receivables finance, these companies can quickly increase their cash flow and take control of their working capital.
To get started, selling receivables on the Exchange, a business must complete an online application and provide company information which includes financials which is then sent regarding validation and approval. Once approved the Seller pays an one-time charge to join and can list as many bills as he wants to sell as long as the entire value of the invoices in the public sale meets the $10, 000 minimum.
The Seller then creates the auction, determining how long the auction will last (3-10 days), the minimum advance amount he will accept, and the maximum discount fee he will pay.
The bank loan comes with myriad terms and conditions that can stifle the creativity and ingenuity of a small to mid-sized business and limit their spend flexibility including what the loan can be used intended for.
By using an online receivables auction marketplace to sell your outstanding invoices, the business enterprise can free up valuable cash plus take the calculated risks that are often times a matter of success or failure. The majority of business don’t fail because of lack of a good idea, they go under because they lack sufficient cash flow.
For example , a business proprietor has an idea for a new product to boost his inventory but it requires a significant amount of cash up-front. The bank thinks it is a poorly designed or impractical item making it too much of a risk.
They will not lend money if they think for the minute that they won’t recoup their own funds. Being able to gain access to that funds fast and at a price points in your control, allows the business the flexibility to take advantage of these opportunities. If it breaks down, the business isn’t stuck with monthly mortgage payments.
Pumping cash into a company gives it the fuel required for growth and the receivables auction procedure allows the business to better manage its cash flow enabling it to control its very own destiny. This process is fairly simple and pain-free. There are fees, but when compared to the potential customer of having to host a “going out of business” sale, these fees seem nominal plus, the Seller includes a say in what he pays the Buyer.
Being aggressive about small business income translates into growth and opportunity. In order to compete and thrive, capital is necessary to add new equipment, build stock, add employees and expand the company. The Seller has goods or providers (invoices) and the Buyer has funds (cash). The online receivables exchange is really a meeting ground for the two to come together and make a deal. And because there is a global network of Customers bidding, the Seller can get an aggressive cost of capital
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