Commercial Financing – Know How it Works

Commercial financing for small to mid-sized businesses requires innovation. Business owners need to be pragmatic when it comes to growing their businesses. But, they also need money when opportunity comes knocking. One way they are taking control of their business growth is by using a commercial financing process that allows them to auction off their accounts receivable.

Here’s how it works:

1. Apply online – The receivables auction marketplace offers an application for membership online. The small to mid-sized company owner can fill this out in about 15 minutes. Once the application and necessary financial documents are received, approval for membership takes about two weeks on average.

2. Download auction application – Once approved for receivables trading, the new seller can download the application to their computer. This desktop application provides access to the live, online receivables auction platform where buyers and sellers have 24/7 access to auctions and transactions.

3. Choose invoices – Now, the seller is ready to choose the accounts receivable they want to post for auction. As long as long as the total auction amount exceeds $10,000, the seller can post any commercial invoices they want.

Tip: The best way to get cash quickly and efficiently is to post invoices of well-known, investment-grade account debtors with great credit histories. These tend to get snapped up quickly and receive the best rates of capital.

4. Set parameters and post – The seller maintains control by setting the parameters of the auction. The seller decides the minimum advance amount they will accept from bidders, the maximum discount fee they will pay and how long the auction will last. The seller can decide to run it from 3-10 days.

5. Sale transaction occurs – There are two ways this can occur. When the auction closes, the Buyer with the highest bid that meets the parameters set by the seller wins the auction. The other option is that the seller can set a “Buyout Price”. This is similar to the “buy it now” option on eBay. When a Buyer agrees to the “Buyout Price” the auction is immediately closed and awarded to that Buyer.

6. Get commercial financing fast – When the sale goes through, the funds are electronically deposited into an account for the seller. This happens within 24 hours of the auction close.

With cash in hand, possibly in as little as one day, small to mid-sized business owners give themselves an advantage over the competition. They have the means to grow their business now instead of waiting for invoice payments to come in. Commercial financing using their accounts receivable allows them to tap into funds that normally take 30-90 days to come in.

Typically, about 60% of a small business’ working capital is sitting dormant in the form of invoices. Put these assets to work by getting this money now instead of later. Through invoice financing, small to mid-sized business owners can control the fate of their ventures with little risk, few restrictions and total control. Opportunities won’t wait.

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