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How Accounts Receivable Can Help Small Business Working Capital

Business borrowers should not ignore the increasing need to replace traditional banks as an ongoing source of small business loans regardless of whether they have a sufficient volume of funds owed to them by customers to qualify for accounts receivable financing. The use of this specialized form of commercial financing is likely to be on the short list of strategies to improve cash flow and obtain working capital quickly for any business that has substantial accounts receivable. But most of the momentum for small business owners to analyze receivables factoring as a practical business financing option is currently derived from the growing need to replace conventional bank financing.

Acquiring a sufficient understanding to be comfortable with how a new process works in practical terms will always be one of the primary challenges in considering any specialized approach to small business financing. Among the previous attractions for traditional bank business loans was a firm belief that this form of commercial financing was simple and straightforward. In fact, many business owners were probably convinced by their commercial banker that receivables factoring should not be used because it would be too complicated and costly. It will come as no surprise to most when they learn that this was often an attempt to portray potential competition in an unfavorable light by banks. In an ironic twist, it has recently become more clear that the typical bank approach was not so simple after all. Many commercial loans made by banks are now being revoked because of obscure recall clauses that allow many banks to cancel commercial loans with little or no advance notice. With very little warning, business lines of credit are also being eliminated or decreased by a large number of banks.

The need to find an effective source of working capital loans and other small business finance options to replace bank financing that either can reasonably be expected to vanish within a few months or has already disappeared is a harsh reality for most small businesses. Whenever possible businesses should first attempt to accomplish this by reducing their overall commercial debt. When it is not practical to reduce business debt, commercial borrowers should focus on the most realistic alternatives for raising additional capital to maintain cash flow at an acceptable level. Exploring the viability of securing more equity financing is one strategy for accomplishing this goal. This path essentially requires taking on additional partners who will own a piece of the business in exchange for providing capital. These options for reducing debt and increasing equity financing will not be practical for many specific business situations even though they can be very effective solutions in general.

For any small business owner trying to keep their operation afloat, it is at this point that receivables financing must be thoroughly evaluated. One of the biggest hurdles in this process is a temptation for borrowers to eliminate options prematurely because they appear to be too complicated or costly. In all likelihood there might not be a cheap or simple solution to the existing commercial finance situation for a business, so it will usually be prudent to keep all workable options on the table. For many businesses, accounts receivable factoring might be the only business financing option that can be successfully arranged. While it is true that factoring might be viewed as “Plan B” for a business, it deserves serious consideration when “Plan A” is bank financing that is often not available in the current commercial lending environment.

Bank Loan Online and Small Business Finance in the US

A bank loan online generally refers to funding provided by a bank that can be accessed through an online application. Online applications usually only take a few minutes to complete and are analyzed by the bank within a couple of days. Bank loans typically do not require as many documents as a small business loan, but banks may require applicants to provide personal financial statements and credit histories along with the purpose of the loaned funds.

Banks that offer online loan applications usually specify the requirements, interest rates, terms of payment, and any benefits of the loan to help individuals decide if a particular loan is available and beneficial to them. This information saves the time of potential applicants and banks. A bank loan online application may also offer the option to print the application to be completed and mailed or faxed to the bank. This method ensures that the applicant’s personal information is not transmitted over the Internet and cannot be stolen by another individual.

Banks with online loan applications usually offer additional benefits to approved applicants. Individuals can view their loan details, such as interest rates, balance, and amount owed, from an online account that is set up when the applicant accepts the bank’s loan. The bank may also allow borrowers to pay their loans through a secured online system, receive monthly statements via email, and view tax statements online.

Individuals looking for small business finance US are usually referring to financing options available to small businesses in the United States. There are many government agencies on the federal, state and local levels that aim to assist small businesses with financial issues.

The largest source of small business finance in the United States is the Small Business Administration (SBA). This agency provides loans to small businesses that have been denied by traditional lenders for financing. The most common loan provided by the SBA is the 7(a) loan. In order to qualify for this loan, a business must employ fewer than one hundred employees and submit all necessary documentation. The requirements for start-up and existing business differ slightly, but both require certain business and personal financial documents as well as a business plan. The SBA does not provide loans directly. Instead, it has a guaranty program, which means that the SBA will guarantee a certain percentage of a loan provided by a lender in order to minimize the lender’s risk of loss. To apply for an SBA loan, business owners must compile all necessary documents and ask for a loan from a lender who participates in the guaranty program.

Most states and a growing number of cities also have financial agencies that work much in the same way the SBA does. Many of these agencies, including the SBA, run websites that allow business owners to access information on funding options, current news, management advice, and common business laws and terms.

What Are the Benefits of Small Business Finance Software

Are you a small business owner and trying to decide if you should invest in small business finance software? Are you an entrepreneur who’s finding that it’s taking way too much time to manage your finances with pen and paper? Have you considered investing in a business finance software to help make performing those financial tasks a little less daunting? Today, I’m going to share some of the benefits to purchasing business finance software for your organization.

1.) Time – finance software such as small business accounting software helps to free up your time. It removes the reliance on having to key everything into an Excel spreadsheet. This removes any need for complicated formulas and mitigates the risk of errors. Once you put your transaction information into an accounting system it immediately does the record keeping and calculations for you. Thus saving you time and frustration.

2.) Keeps the numbers of your business organized – you will always have information at your finger tips in a way that’s easy to locate. For example, you have a vendor who said they weren’t paid for a product or service provided for you. You ask for the invoice number, look it up in your accounting system, and it will show you when it was paid, the method of payment, and the check number. Very cool!

3.) Once set up properly small business accounting software ensures that your information is accurate.

4.) In addition, it keeps you abreast of what’s happening in your business which helps you to make informed decisions about your business.

5.) Saves you money – without finance software keeping track of the financials, you run the risk of money slipping through the cracks. Accounting software minimizes that risk by keeping track of the money going out of your business as well as the money coming in. This is very important for cash flow management and ensuring that you have money when you need it and for staying in business.

6.) Affordable – generally speaking a small business owner can purchase small business finance software at a relatively low cost. Depending on the needs of your business, you can buy off the shelf at local office supply store or you can opt for online accounting software.

So if you’ve ever been on the fence about investing in financial software for your business, think about these benefits, and go out a make that purchase feeling confident that you’re making the right decision! Many entrepreneurs fail because they don’t have a handle on the financial management aspect of the business! Software can help you keep the books organized and keep tabs on money!