If you are in business and have a physical retail location, you might want to open a second store. It is a significant decision because a new store has its own set of challenges. One issue is the expense. Paying for a new location can be problematic if you don’t know where to get money. If you are in good financial standing, accounts receivable financing could help you with your new location. Here’s how this financing can help grow your business.
What Is Accounts Receivable Financing?
If you have outstanding invoices from customers, a factoring company can take over these invoices and give you an advance. Typically, this advance is 70-90% of the amount of money due from the invoices. If there is an issue with customers having debt or not inability to pay, the factoring company will do what they can to get money for you. There is typically a fee charged, so any money you get will be the invoices minus the factoring fee.
Why Use This Financing?
If you need cash quickly, then this is an excellent option. There is no long waiting period, unlike a bank loan. This fact means you can start using your money almost immediately. It can help with opening up a second location because you have the capital needed, and you don’t need to have approval for a loan that typically has a long list of requirements. With accounts receivable financing, you don’t need to worry about money, and instead, you can focus on making your business thrive.
How Do You Use It for a Second Location?
When dealing with a second location, you need to ensure that you are financially ready first. You should have consistent cash flow coming in and a customer base. Factoring companies want to see growth and consistency, so if you can show that your business has both of these features, you can get more receivables. You should also consider the second location and what similarities and differences it will have, compared to your first location. It is beneficial to think about how the store will operate and how you can fund it.
This type of funding can help businesses expand if they are ready. To show that your business is prosperous and stable, show factoring companies how you run your current location. Show how you intend to run the new store, and this can reduce any issues with risk. Contact BluWav Capital today, we are here to help!
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