9 Ways Accounts Receivable Loans are Safer

You may well be asking yourself whether accounts receivable loans are safe. Is that true for you right now? Everyone has doubts just before making a next-level move for their business. Borrowing decisions often can affect your credit history, making it more difficult to get the capital you need at the crucial moment later on.

Well, now you can rest a little easier before taking the plunge. We’ve done all the math for you. The results? We think you’ll like them!

9 Ways Accounts Receivable Loans are Safer (& Easier!)

1. You get to actually USE your current revenue as working capital.

All too often, capital is locked away in unpaid invoices that just sit there, when they should be working for YOU.

2. A/R loans rely on your existing revenue, not projections.

This means that you are spending within your actual revenue, not running up a credit card bill.

3. They can become loans, cash or revolving business credit.

Many A/R loans become revolving lines of credit (RLOCs) which is basically a credit card that draws on your unpaid invoices.

4. They can’t easily become a liability.

Since accounts receivables loans are backed by your incoming revenue, they cannot default. Doing more than one A/R loan will not generally limit your future borrowing potential.

5. You show sound judgment to lenders when you borrow against existing revenue.

A/R loans can become part of the review process of lenders when determining character and credit history. 

6. Respect from lenders equals better track record for future bigger loans.

When smarter borrowing goes on your credit history, the bigger loans without liquid collateral become easier to get. Borrowers who make careful choices fare better for later more complex loans and ultimately still have collateral to bargain with.

7. Better future loan prospects equal higher growth potential.

Obviously, you can’t get an expansion loan to take advantage of that next level opportunity if you can’t get loans. A/R loans are one way of doing that, but so is the better credit history resulting from using them rather than a more risky loan.

8. Better growth potential = planing ahead with confidence.

The added confidence from having better credit history from the use of A/R loans increases your ability to plan ahead more confidently. It’s not easy to think clearly about your business when you have unclear or unrealistic growth expectations.

9. Avoiding risk makes you a more effective strategist.

You become a more strategic planner when you know you can plan ahead with confidence. Each new step you take competently enables you to see ahead a little further into your planning window. In this way, managing your financial decisions is a bit like the ancient Chinese game of Go: you need a cool head and sound insight into the future moves of other players to more easily achieve your goals.

If you’re mulling over which method to use, rates vary, but so do situations, so do research it a bitAccounts receivable loans are generally the safest loan method available.

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10 thoughts on “9 Ways Accounts Receivable Loans are Safer

  1. Nice post Randy. The need to spend within one’s revenue is really important, because there’s nothing as bad as running up a credit card bill.

  2. Accounts receivable loans are the preferred choice of every wise person. Just as you also said, financial experts consider it to be a smarter way to borrow. This is quite insightful. Thanks for sharing.

  3. Borrowing when there is no source of revenue is a bad decision. People really need to learn some of the important ideas that you shared in this post. Thanks Randy.

  4. Opportunities for proper planning would be available when low risk is involved in a loan. So I think it’s easier to achieve goals through accounts receivable loans. Nice article.

    1. That’s so true, Lucas! It’s always best to knock out the factoring services like accounts receivable loans / RLOCs first Then take on collateral loans last. No need to risk needlessly!

  5. Veillon Business Consulting always has something great to share. I do appreciate that. For my part, I prefer not doing more than two accounts receivable loans.

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