It’s difficult to imagine how the economy would be effected if commerce were a cash only proposition.
Credit based purchasing is certainly a benefit to the consumer who has the need, albeit not the cash. On the merchant side of the equation, the benefits are equally important:
- Increase sales
- Convenience
- Source of cash
Wait! Source of cash? That’s right, credit card receivables are a powerful source for accessing working capital.
Although scores of merchants accept credit cards, very few are aware of the untapped potential of this staple of commerce.
Credit card receivable funding is an exciting opportunity for business owners seeking financing. As with other opportunities in the Cash Flow industry, there are many different versions and terms available, however they do share these common characteristics:
- Visa/MasterCard Merchants - This option applies to merchants who accept Visa and/or MasterCard, regardless of whether it's a brick and mortar or online store front.
- Future Sales - Funding is based on the merchant's expected future credit card sales.
- Qualifying - Credit worthiness focuses more on past sales than on the bureau score of the business/owner.
- Payback Using Daily Sales - Payback is based on a small percentage of future sales, and occurs automatically as those come in. This means that unlike the stringent terms of traditional financing where “x” amount is due by “date”, re-payment is driven by the performance of sales.If the month is slow, less is paid, if business is booming the faster the advance is paid.
- Speed - This type of funding really shines when the need is urgent (ie: meeting payroll, fulfilling orders, etc.). Cash in hand occurs in a matter of days as opposed to weeks.
It’s always best to have the right tool for the job. For business financing, credit card receivable funding is certainly a versatile and effective tool.
[This posting is from a feature article of CapSource Funding's Working Capital Journal. For additional articles or to subscrible, visit www.capsourcefunding.com.]
