Managing a business in today’s environment isn’t easy and growing a business can be even more challenging. Having cash flow is important for all businesses! If you appreciate the value of receiving your cash at the time of service, rather than waiting on your customers to pay you, then Accounts Receivable Financing at First Mid may be the answer.
How can Accounts Receivable (AR) Financing help?
It takes income to grow or maintain a business. But how do you meet your expenses or invest in more business when customers request 30 to 60 days or more to pay you?
By receiving an advance on the invoices owed by your customers, you receive immediate cash to operate your business. This also allows you to maintain your image without bothering your customers for their payment before it is due. Your customers want time to pay, and with AR Financing, you can allow them the time they need — because cash flow is also important to them!
Rodney Morris, Vice President, Business Services at First Mid, has been helping businesses with Accounts Receivable Financing for nearly 20 years. He says, “This is something very few banks offer. We specialize in helping our customers succeed and this service has helped many people over the years.”
“Utilizing AR Financing at First Mid has allowed us to take advantage of discounts on material and have consistent cash from our work. We banked with First Mid several years ago and came back because of their ability to meet the needs of our mechanical insulation business. They are great to work with.” – Chris Lyles, Central Services
How does AR Financing work?
When you create an invoice, you send a copy to the bank for an advance the same day. When the customer pays you, the payment is sent to a lockbox at the bank and applied against the advance. It’s simple and easy — with convenient online access to specialized software that allows you to submit information, retrieve reports, and stay current on all payment activity.
“First Mid looked at my company and recognized how their Accounts Receivable service could assist my business. First Mid has been instrumental in helping Micro Tek succeed. I’m fortunate to have them on my team.” – Robin Shively, Micro Tek Pattern Inc.
What is the cost of this service?
The cost is based on the average time it takes for your customers to pay, and it is generally less than the cost of receiving payment by credit card. Morris said, “We analyze each business and their activity independently. Rather than paying interest, a fee is deducted from each invoice. Most businesses will pay between one and three percent of the invoice to have the money in 24 hours, similar to traditional discounts that businesses may offer to their customers if they pay in 10 – 14 days.”
How does AR Financing differ from other types of financing?
AR Financing incorporates local banking with factoring. Like traditional financing, your relationship with the bank is hidden from your customers. The only difference is the customers send their payments to you in a lock box at the bank for processing. Like traditional factoring, the fee is a percentage of the gross invoice rather than an interest calculation on an outstanding balance. AR Financing generally offers higher advance amounts than traditional lending but at lower costs than traditional factoring. You are responsible for follow-up and customer payment on the accounts receivable. The bank does not process billing or regularly contact customers for payment like a traditional factoring company would.
“There is nothing better than AR Financing with First Mid. We get an advance on our invoices and there is no waiting on money for cash flow. We have the money in our account right away so we can keep rockin’ and rollin’ with our business.” – William Rexing, W.M. Rexing Trucking Inc.
What are some other benefits of AR Financing?
AR Financing is not a loan; it is contingent on your customers paying for your work. If your customers pay as agreed, you have no debt or financial obligation. Receiving an advance on each invoice gives you immediate cash, which can allow you to take advantage of vendor discounts and pay your bills sooner. With AR Financing, you can continue to quote new projects and take on more work — even tackling projects that may take longer to pay you. You will also gain advice and assistance from a bank with timely information to help you evaluate your business activity. Morris adds, “We view our relationship with each of our AR Financing clients as a partnership and serve as an extension of the business by providing information to help them make decisions. It is rewarding to help our clients’ businesses grow and to see the value they gain from the bank’s help.”
“We have grown our business tremendously since working with Rodney and First Mid. AR Financing has allowed us to take on larger and more jobs because we have immediate cash. We wish we would have started using this service sooner.” – Jessica and Daniel Mull, D & D Tire Service
Interested in learning more? Talk to Rodney Morris, at First Mid, or click here for more information about Accounts Receivable Financing.
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