Receivables: Beyond Simply Generating Revenue

July 13, 2017 by CNH Finance, LP in category “Financing”

To many business owners, receivables are the most important part of any operation. After all, receivables represent all of the work and effort put into customer’s request. They are are hard evidence of growth and profitability. Yet many business owners overlook how receivables can be leveraged to provide more than just revenue.

Receivables Are Assets

When we break down business accounting into its simplest terms, there are liabilities and assets. Liabilities are any money which is owed to another entity. Bills, overhead costs, debt from loans, and more are liabilities, and every business has them in one form or another. Assets are those things of value which are owned by the business. Equipment, vehicles, real estate and receivables are marked as assets. Beyond the function they serve for a business, all assets have value which can be leveraged to create a source of working capital.

Using Receivables To Create A Business Line Of Credit

With asset based financing, the value of receivables is used to create a revolving business line of credit. This revolving line of credit can be used as needed, and is completely debt-free. In other words, business owners get an extra source of working capital without having to rely on bank loans. As the line of credit is used, it can be replenished, and then used again, for the lifetime of the business. Asset based financing is great for businesses that can use extra purchasing power, or those who simple want to sidestep the liabilities and restrictions of debt financing structures.

The Rewards Of Increased Receivables

As sales increase and the volume of receivables grows, asset based financing is reconfigured to reflect the company’s success. The limit on the revolving line of credit is increased as sales grow. Asset based financing is designed to help businesses grow quickly, without having to rely on loans and similar funding programs.

What Businesses Use Asset Based Financing?

Any business with fixed assets can take advantage of the revolving line of credit offered through asset based financing. Ambitious start ups, medical practices, construction companies, manufacturers, trucking fleets, hotels, and more leverage receivables and other assets to create an extra source of working capital which can be used for everything minor purchases to mergers, buyouts, and even paying down existing debt.

Get The Capital Your Need

CNH Finance provides working capital solutions to all types of businesses. Contact our offices today to learn more about leveraging your invoices for a revolving business line of credit.

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