Food Distribution Companies Use Accounts Receivable Financing

Every area of the world has been affected by the latest recession. All companies have reduced Working Capital and are forced to do more with less. While this will make the surviving companies stronger, it will also make them wiser. There have been many companies move away from a traditional bank loan for their operations Cash Flow needs because taking on more debt is not the best idea in to many business owners.Recently a Pennsylvania USA Distribution Company was blessed by winning a major contract with a National Food store chain. Problem was, the terms to the account meant that they would have to pay their suppliers before they received payment from their new customer. Accounts Receivable Financing was an excellent alternative for this company.This is becoming more and more common in every industry in that the great news of winning a new customer is soured by the fact that you do not have the Working Capital to process the orders.Accounts Receivable Financing is the ideal Commercial Financing vehicle for this issue. When your Commercial Finance Broker sets up an Accounts Receivable Financing facility for your company you will be able to take advances on your new invoices within 24 to 48 hours of you creating a new invoice. These advances can be used to pay what ever your business needs to pay – rent, suppliers, payroll, and taxeswhatever you choose.Over the years, many people considered that Accounts Receivable Financing was only for companies that were in financial trouble. Although this may be the case sometimes, it is more often used for businesses that have outgrown their bank line or just simply have a need for more Cashflow due to increased sales and timing issues between suppliers and customers. As in the example above, when you have to pay for supplies before you can collect from your customers, you need to increase your cashflow. Accounts Receivable Financing can do this.If you take a good look at companies that do not need Working Capital funding, they are generally businesses that are not growing, and even worse, declining sales. Accounts Receivable Financing are not needed by these companies because they are entrenched in a grove that they are meeting all their Cash Flow requirements because they are either a cash only business or they have their inflow of Accounts Receivables before their suppliers expect payment.Being fortunate enough to have your payments come in before your payables are due is a very rare situation. Does your company operate that way? Most do not. For everyone that does not fit into that situation should speak to your Commercial Finance Broker to see what Working Capital options are available for you and perhaps Accounts Receivable Financing is the answer for you.

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