How to generate additional income from your accounts receivables?

Extra cash generally facilitate the ability to take on more business. More business generates more profit. If 80% of the profit earned from the additional business taken on is greater than the interest earned from your accounts receivables, why not release the cash trapped in your account receivable book  and use it to take on more business and generate more profit?

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What are Accounts Receivable?

Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivables are listed on the balance sheet as a current asset. AR is any amount of money owed by customers for purchases made on credit.

 

What is Accounts Receivable Financing?

Accounts receivable financing unlocks the trapped cash flow within a business. It is a type of asset-financing arrangement in which a company uses its receivables (outstanding invoices or money owed by customers) as collateral to secure a loan. In this agreement, Thrifty Money gives the borrowing company an amount equal to a reduced value of the unpaid invoices or receivables while holding the accounts receivable book as security for the loan. This type of financing helps companies free up capital that is stuck in unpaid debts.

 

BREAKING DOWN 'Accounts Receivable Financing'

Thrifty Money typically advances companies 45 to 55% of the value of their outstanding invoices. Then, the borrowing company collects the debts. All cash collected goes to Thrifty Money until the loan has been paid in full after which the balance of the accounts receivable collected remains with the Borrower.

 

How Thrifty Money Price Accounts Receivables

Thrifty Money will take several elements into account when determining how much to offer a company in exchange for its accounts receivables. In most cases, accounts receivables owed by large companies or corporations are more valuable than invoices owed by small companies or individuals. Similarly, new invoices are more valuable than old invoices. Generally, the more confident Thrifty Money is about the chances of the debt being collected, the more valuable it is, and the harder a bill is to collect, the less it is worth.

 

Sometimes, depending on the size and nature of a businesses accounts receivables book, Thrifty Money will engage in what is commonly referred to as selective receivables finance. Selective receivables finance gives Thrifty Money an opportunity to pick those receivables it will accept to as collateral as opposed to registering a lien over the entire book. Often businesses find that their accounts receivables book has been "tied-up" under some general agreement. This structure, if structured correctly, offers the borrowing entity a further opportunity to raise additional funding. Why not let us have a look at what we can offer?