Accessing Cash Flow During the Covid-19 Crisis: A Factoring Approach
The survival of a business is highly dependent on sufficient cash flow for operations, capital expenditures and other financing needs. A crisis outbreak may lead to disruption in economic activities, business operations and opportunities, as seen during the current Covid-19 crisis. As uncertainties rise in the business environment and a lot of businesses struggle to tackle the bottleneck of a cash crunch during the coronavirus pandemic, it is paramount to consider alternative sources of cash and financing to keep operations afloat.
Need quick cash flow? Consider Factoring
Small to medium scale businesses, as well as large scale organizations, need to explore effective options to generate and free up cash flow in tough times. One such option is factoring invoices, also known as accounts receivable factoring.
Factoring involves selling your business’ accounts receivable (sales made to customers on credit) to a third party (a factor) at a discount. The factor usually provides 70%–90% of factored invoice value to a business in the form of cash. The balance—less factoring fees—is then provided to the business after the customer has paid in full within the invoice terms.
An accounts receivable factoring process could be with recourse or without recourse. With a recourse factoring, the credit risk—when a customer does not pay due invoices—stays with the business. On the other hand, a non-recourse factoring transfers the credit risk to the factoring company.
How Factoring helps your business
Exploring the factoring process helps your business promote positive cashflow which in turn, supports your business needs for survival and profitability. Factoring services free up cash for your business to take advantage of growth and expansion opportunities, fund inventory, and settle other current financial liabilities.
Even the best planned cash flow scenarios fall short in extreme economic disruptions, factoring is one of the ways to quickly access cash flow in uncertain times such as the current coronavirus crisis.
Factoring also helps your business:
- retain customers on favorable credit terms,
- focus on more business growth oriented and profitability driven tasks,
- outsource customer and credit management,
- access alternative financing and loan without expensive and heavy capital collateral.
Factoring services come with a fee; however, the underlying value add to your business cannot be ignored.
Why your business needs Accord
The accounts receivable factoring process with Accord Financial is seamless, straightforward and effective for your business needs. We provide up to 90% of the face value of your credit invoices in immediate cash. The balance is provided to you when the customer pays, less a fee for our services.
Accord Financial offers your business the accessibility to readily available cash through invoice factoring. This affords your business the flexibility and effectiveness in managing working capital. The Accounts Receivable Financing and Management teams at Accord Financial offer professional and expertise services to help manage your credit risk and free up cash flow.
Your business does not have to suffer bankruptcy or risk being out of business, it can survive and thrive through any downturn, pandemic or crises with the help of professionals at Accord.