Accounts Receivable Financing Blog

The Power of Invoice Factoring: Turn Work Completed Invoices into Working Capital

September 26, 2024

In the competitive construction industry, maintaining steady cash flow is crucial for growth and operations. A Maryland-based construction company faced a significant cash flow challenge with $97,734 in open accounts receivable and another $400,000 in work-in-progress. To sustain operations and capitalize on new opportunities, they needed immediate funding. That’s where SouthStar Capital stepped in with a solution. The Challenge The construction company needed to accelerate their cash flow to keep up with ongoing projects and operational expenses. With nearly $100,000 in open accounts receivable and a substantial amount of work-in-progress, they faced a cash flow crunch that threatened their ability

Breaking Free From MCA Loans: How a $750,000 Accounts Receivable Facility Transformed a Marketing Agency

September 9, 2024

Has your business been tied down by costly MCA loans? One local marketing agency recently found itself at a crucial point after a sluggish year. When their bank severed ties, the agency was left grappling with high-interest merchant cash advance (MCA) loans. While MCA loans may offer quick cash, they often come with sky-high interest rates and daily or weekly repayment terms that can suffocate a business's cash flow. Instead of fueling growth, these loans can slow your business down, making it difficult to manage daily operations, invest in new opportunities, or even keep up with routine expenses. Despite being

Government Contract Financing Propels Small Business to Success

August 21, 2024

For small businesses, entering the world of government contracting can be a transformative experience, but it often requires navigating new challenges—especially when it comes to financing. A mattress manufacturer's representative with over five years of experience found herself in this exact situation when she secured a $209,000 contract to supply mattresses to the U.S. Air Force across 15 locations. This contract marked her first venture into government contracts, and while the opportunity was significant, the financial requirements posed a challenge. With a cost of goods totaling $130,000 and additional responsibilities, including recycling the old mattresses, she needed financial backing to

The Role of Alternative Financing in Economic Recovery

July 15, 2024

In today’s economic environment, businesses are increasingly encountering challenges as traditional sources of financing become more restrictive. The shift is particularly daunting for small and mid-size businesses, which often rely heavily on accessible credit to manage operations and foster growth. As conventional lending tightens, it becomes essential for businesses to explore alternative financing options to secure the necessary capital for stability and expansion. Alternative financing has emerged as a critical resource for businesses facing limited access to traditional credit. Among these solutions, accounts receivable financing stands out for its ability to provide immediate working capital. This financing method allows businesses

How SouthStar Enabled a Denver Painting Company to Secure and Execute a Major Government Contract

July 9, 2024

In the competitive world of commercial painting, securing large contracts can be a double-edged sword. While they promise substantial revenue, they also demand significant upfront expenses that can strain a company's cash flow. This was the challenge faced by a Denver-based painting company when they landed a large and lucrative contract. Immediate financial requirements for subcontractor compensation and supplies created a cash flow restraints. However, with the support of SouthStar Capital, this company overcame their financial hurdles and completed the project successfully. The Challenge The Denver painting company had a golden opportunity: a substantial Government Contract. This project had the

What’s the Difference Between A/R Financing and a Bank Loan?

June 11, 2024

In the world of business financing, there are various options available to address cash flow needs and fund growth opportunities. Two common solutions are Accounts Recievable (A/R) Financing and traditional bank lines of credit. While both serve the purpose of providing capital, they operate differently and cater to distinct needs. Let's explore the key differences between A/R financing and bank lines of credit to help you make informed financial decisions for your business. 1: Cash Flow, Collateral, and Creditworthiness: • Bank: Traditional bank lines of credit are based on things like past business performance, typically require collateral and a strong credit

AR Finance Case Study

January 28, 2020

American Staffing, Inc. Case Study This case study shows how Accounts Receivable Financing can be used to solve the cash flow issues of a staffing company, highlighting the receivable financing problems and solutions process. To protect client privacy, we have changed some details (including their name) in this business case. Also, the numbers have been simplified to make the case study easy to understand, but the key facts and lessons remain. The Challenge American Staffing, Inc. (ASI) is a staffing company that matches large corporate clients with qualified candidates to fill open positions within the corporation. Although ASI is a

10 Questions: Is Accounts Receivable Financing right for your business?

September 10, 2019

When considering if Accounts Receivable Financing is the right solution for obtaining working capital for your business, ask yourself these 10 questions: Could you increase sales with more working capital? Do you have to scramble at the end of the week or month to cover your payroll expenses? Is your business in growth mode? Have you been turned down by a bank for financing? Do you have projects that you could be bidding if you were assured the cash flow required would be available to you? Do you have challenged financial history or personal credit issues? Do the majority of

The Cost of Invoice Financing

February 4, 2019

Have you ever considered invoice financing, but thought the cost would be prohibitive? Well, maybe the question should be what is the cost of not financing your invoices? If you're turning down a large job or contract because you don't have enough working capital, think about the associated revenue your business is missing out on. Consider not just the lost opportunity cost, but also the growth opportunities your business is missing due to a lack of cash flow. With invoice financing, we advance up to 90% of your outstanding invoices, so you get the capital you need right when you

5 Reasons to use Invoice Financing to Grow your Business

June 28, 2018

The 5 reasons to grow your business with Invoice Financing. ① Easier Qualification Qualifying for a bank loan can be strenuous and time consuming, especially if you have a challenged credit history. Invoice Financing is different, in that the qualification process is based on your customers’ credit, not your own. ② Get Paid Faster Why should you have to wait 30, 60, or even 90 days to get paid by your customers? Invoice Financing allows you to unlock the cash within your business immediately, making it easier to grow your business. ③ Add Flexibility Invoice Financing is a means of