Achieving
Cash Flow Management Through Accounts Receivable Factoring and Credit Insurance
Accounts
receivable factoring is another mode of receivables management and working
capital funding to eventually increase the cash flow. Accounts receivable
factoring involves buying and selling of accounts receivables in order to
obtain immediate cash or working capital.
Accounts
receivable factoring helps in acquiring cash for the product or the services
rendered. It results in immediate cash inflow without creating any debt or
transferring the business ownership. Accounts receivables are the most values
assets for any company. It is one of the modes for increasing sales and
expanding business. The cost varies, for example the payment can be 80% of the invoice value. The 20% of the value
is kept as reserved and is paid after deducting the fee once the amount on the
invoice is due.
Jamaican
Exporters can access EXIM’s Trade Credit Insurance (TCI) which protects their receivables
against non-payment by local and overseas buyers. The policy is tailored to suit your specific
needs, with insurance premiums at rates you can afford. With TCI you can recover up to 85% of your
receivables under commercial cover, and up to 90% under political cover. All policy holders are eligible for
post-shipment financing up to 80% of invoice value. (See http://www.eximbankja.com/products)
Not only
does ECI protect you against the non-payment of receivables by your foreign
buyers, but the policy can also be used as collateral when applying for
post-shipment working capital financing – IPDF.
BRIDGE FINANCING FOR INSURED RECEIVABLES- All
policyholders can apply for post-shipment financing of 80% of invoice value of
all eligible transactions, where the policy is used as collateral. Loans will be available for 120 days at a
rate of interest ranging between 10% and 11.5% per annum. See http://www.eximbankja.com/products
This
practice if accounts receivable factoring is most suitable for small and medium
business owners. Due to accounts receivable factoring small and medium business
owners are able to generate cash and avoid the debt trap. It also helps in
representing strong financial status and avoids interest on any loans if
otherwise taken.
In
addition to the Exim facility, NCB
offers Receivables Financing. This is a line of unsecured credit that gives SMEs, who
provide services goods and services to any of over 30* preapproved organizations,
access to funds to fill cash flow gaps between delivery of goods and services
and collection of receivables. The terms are as follows:
Ø
Unsecured
line of credit, no collateral required
Ø
Get
up to 75% of the value of your receivables
Ø
Maximum
of 1 year to repay
www.easybooks.ca |
Accounts
receivable factoring also provides relief from non-paying clients or slow
paying clients. It generates more sales due to increased orders. It also offers
flexible funding program to help heighten the sales graph and take vendor
discounts due to availability of cash.
This
practice of accounts receivable factoring generates cash to fund the payrolls
and taxes due. The funds thus generated also help to increase the inventory or
buy new equipments, tools, etc to flourish the business.
The
availability of cash helps small business owners to negotiate for discounts
from their vendors and suppliers. It also helps to reduce book keeping,
depositing checks, monitoring collection process, and preparing reports for
collections. Brokers or agencies also provide their services for accounts
receivable factoring. They help the business owners to manage their
collections, payments, generating more cash and managing their cash inflow
process.
www.uhy-ja.com |
When you talk about accounts receivable financing,
ReplyDeleteyou should realize that it is alone in which the invoices are actually used as collateral, and he would be able to receive the necessary amount of funding for your company.
In order for you to actually get the necessary amount of loan, you should be ready to give the collateral,
which is in the form of invoices to the necessary financial inclusion
in which you would actually be able to get the required amount of money, so as to use it in some other method.
and one of the recommended accounts receivable financing and factoring company is Spectra
ReplyDeleteIt seemed very important to be knowledgeable about accounts receivable factoring and credit insurance. I think that those information would really make a great difference to your business. I know that many business put this into consideration for their business.
ReplyDelete