AR Financing For Cleaning Franchises
Cleaning franchises are some of the most profitable small businesses. Between offering services to individual customers, as well as long-term contracts for hotels, offices, and multifamily residences, cleaning franchise owners can attain financial independence in a very short period of time. However, having a large customer base and a number of lucrative contracts does not necessarily guaranty expedient payments, which can quickly put a strain on cash flow. To remedy this strain, or to prevent the situation from happening in the first place, cleaning franchises are taking advantage of AR financing services.
What Are AR Financing Services?
AR financing (short for “accounts receivable financing”) is an arrangement between a cleaning franchise and a commercial finance team to exchange open customer invoices for working capital. The initial agreement can be finalized in 24 to 48 hours, and open invoices submitted to the financing company can be converted to working capital within 24hours. This means that cleaning franchises with open customer invoices do not have to wait the full aging period before seeing payments. Instead, the franchises can receive cash for open invoices in less than a day’s time.
Freeing Up Accounting Resources
Getting paid for open invoices can consume the majority of in-house accounting resources. Tracking multiple customer accounts, sending out friendly reminders for payments due, eventually resorting to collection services – this is par for the course with cleaning franchises. AR financing does away with all of the aforementioned steps, by quickly turning unpaid invoices into revenue. Cleaning franchises do not have to track payments from multiple accounts, because money will be coming from a centralized source – the AR financing company. When invoices are converted within 24 hours, there is no longer a need for sending out notices of payment due or collection agencies. The accounting process becomes streamlined, and resources can be focused on budgeting for business growth.
No Debt On The Balance Sheets
AR Financing is not a loan, and does not place debt on the balance sheets. Instead, this type of financing is considered a sale on receivables, and invoices can be submitted in large batches, or as they are generated by new customers. This allows cleaning franchises to preserve their credit ratings and accumulate revenue quickly.
If you own a cleaning franchise, and would like more information about AR financing services, call Vantage Commercial Capital at 913-543-4242. We work with franchises of all sizes to ensure they get the revenue they are owed from open customer invoices.