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Improving Credit Score with Accounts Receivable Financing

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Get a line of credit and clean up this Spring!

Let’s face it – unsteadiness of cash flow cycle is the worst nightmare for a small business and there is sometimes seem to be no escape, but the right kind of financing such as accounts receivable financing may be your solution. Uneven cash flows restrict growth of businesses, leading them out of business due to heavy competition.

In the process of building relations with your customers, businesses often extend trade credit or terms to their customers and in turn have to wait long periods for their payments. Situation worsens when suppliers start knocking the doors for their payments. Again, many other irregular expenses crop up that need immediate attention and meeting all these can be back-breaking. Business owners run errands for loans or request help from other sources to bail them out of such situations.

How Credit Score Matters?

When banks give out loans, they do it thorough credit checking the borrower through 3rd party credit bureaus to safeguard their potential loan and collateral. Due to irregularity in cash cycles small businesses have poor performance history in paying suppliers, which in turn affects their credit ratings. Many small businesses with low credit scores find it difficult to qualify for bank loans. It is imperative for businesses to have good standing credit score.  Accounts receivable financing is the process of converting invoices to immediate cash. 

How to build your credibility with Accounts Receivable Funding?

Dwindling cash flows are the reason businesses perform poor and have low credit scores. Getting receivables factored can be the best remedy to manage funds while improving credit points. Most businesses in Michigan as well as other business in many other states use accounts receivable financing for instant access to cash. With minimum credit requirement, businesses can combat their cash flow issues and focus on their performance and credit scores. Factoring invoice financing can also assist in rebuilding a company’s business credit because the business will now have the working capital to pay their suppliers on time, or even early.  The payment to your supplier will most likely be recorded by one of the 3rd party business credit bureaus and improve your company’s credit score.  Among the many benefits, this is another real positive from financing invoices via factoring.

For businesses in Michigan as well many other across the country, finding a reliable invoice factoring company can solve most of their cash flow problems.Factoring companies in Los Angeles have extensive experience not only providing factoring but other commercial lending products so going calling on a firm like PMF Bancorp that has been providing commercial lending for decades is a very safe call when looking for cash flow solutions. 

Effects on Business Credit Score

  • Businesses see immediate cash-flows and can clear-up all their outstanding expenses and debts. Leads to a better credit score.
  • Timely payments to suppliers increases their trust on businesses and builds good relationship. A good relationship with suppliers can result in better discounts and offers. Leads to a better credit score.
  • Businesses get access to funds without adding to their debts. Lowers overall debt. Leads to a better credit score.
  • With more working capital in hand businesses can stretch their limits to accept new assignments, thus increases sales. Leads to a better credit score. 

For small business owners and entrepreneurs with low credit scores, getting access funding is challenging. Building a trustworthy reputation takes time and invoice factoring is one best alternative to improving cash flow and growing your business.  This all leads to a better credit score.