Everyone knows the economy hit rock bottom in 2008. The effects of which have been like a trail of dominoes-one falls and 10 more follow. Think about the auto industry alone. Plants close which means people are laid off.
But, it also causes a decrease in demand for parts and other materials that are contracted out to other businesses. Buying cars becomes a luxury no one can afford, dealerships close and so on. As a result, innovative and alternative ways for small to mid-sized company financing have become imperative to survival.
Accounts receivable-credit terms extended to a customer-are filed away, waiting for payment which usually comes in 30 to 90 days. In a financial environment where consumers are hanging on to their money and businesses experience a sharp cut in profits due to poor sales, extensions on these due dates are commonplace.
The problem for small to mid-sized businesses is that nearly 60% of their working capital is tied up in outstanding invoices and if there is any hope of growing the trade, they need to convert these accounts receivable into cash. This is where innovative business financing comes into play.
That working capital can be quickly accessed by selling the invoice on an online auction platform. Small and mid-sized businesses set their own auction terms-the minimum advance they want and the maximum fee they are willing to pay-allowing them to control the entire financial transaction. Sellers gain access to funds in as little as 24 hours. It is simply a flexible way to get the money faster while the owner remains in the driver's seat.
A global network of registered and approved accredited institutional investors can search and bid to purchase your auction. This best bid that meets the seller's parameters wins the auction. The bidding process ensures that the seller gets a competitive cost of capital.
What makes this different from other financing methods is that the business owner maintains complete control of the transaction. He sets the parameters for the auction-the maximum discount fee, minimum advance amount and length of the auction. If a bid does not meet the Seller's parameters, the seller is not required to sell.
The entire transaction is vastly different from bank-controlled loan processes and buyer-controlled factoring processes. The auctions are open 24/7 so it is possible to post, close and receive funds all within 24 hours. Quick access to working capital gives small to mid-sized businesses a huge advantage in today's economy.
Getting a small loan is a trial in a good economy, but in today's cash-strapped environment, it is even harder. And, if approval does come through, the loan is filled with terms and conditions protecting the lender.
After getting burned in the housing market, banks have made their lending practices even more stringent and time consuming which means it will be even more difficult for small and midsize business to increase their cash flow through these traditional financing sources.
Having the ability to access cash in as little as 24 hours makes this business financing solution essential to any small and mid-sized business searching for a reliable funding source in order to withstand poor sales and economic uncertainty. More importantly, they gain timely and efficient access to the cash necessary to sustain long-term growth.
Small to mid-sized businesses are the backbone of the U.S. economy, making it imperative that they thrive and grow if things are ever going to turn around. The only way to do this is for businesses to have working capital available to take advantage of growth opportunities when they arise. Business financing through the online receivables marketplace is a quick low-risk solution for accessing the funds you need, when you need it.
Author Resource:
Facilitating business financing via monetizing the accounts receivables, New Orleans based company helps companies to raise funds for their working capital needs. Know more about the same at http://www.receivablesxchange.com
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