Selling Accounts Receivable to Raise Funds
Online auction is the easiest way to sell accounts receivables but since there are criteria that you should meet, you have to determine first if you can qualify. Auctions sites are usually suitable for small to medium sized businesses but are not for newbies.
You should be in business for more than two years and so if you don’t qualify, you might want to sell the receivables to private buyers.
The Criteria for Selling Accounts Receivable to Raise Funds
Are you looking for ways to raise funds? One way to do that is by selling accounts receivable. This is an excellent alternative that involves fewer risks and little cost. You can start selling the accounts receivables through an online auction website and enhance your cash flow immediately. Auctions sites usually set different criteria when selling accounts receivable and you should meet the minimum criteria. The business should also be operating for more than two years and in most cases, the business should be operating in the US (regardless if the invoices are open to the international buyers). Another criterion is that the business should have annual sales amounting to at least $1.5 million.
What if you don’t meet these most basic requirements or criteria? If you don’t meet the minimum requirements, you will surely find it hard to sell your accounts receivables through the auction sites. However, if you qualify, you can proceed with the application process. It will only take you about fifteen minutes. You also have to provide tax returns, bank statements, and other financial statements that are necessary to complete the application. These documents are still subject to verification which can take two weeks. If you’re application is approved, you will pay a one-time fee for the membership so that you can sell your accounts receivables any time in the future.
Selling the Invoice to Raise Money
You need to list down the outstanding invoices especially the ones with excellent credit records. You will set the advance amount as well as the fee amount. The procedure is similar to that of the ‘Buy-It’ of eBay. When you list invoices, you will also need to pay for the posting fee. Once the invoices are posted, the qualified buyers will not bid on the invoices. The highest bid will get the invoice and the advance amount will be settled. All fees and payments will be managed by the auction site.
If your business lacks funds, you can resort to selling accounts receivable. However, since there are criteria that you should meet, you may think of other ways to sell the receivable other than the online auction. There are times when you can sell the receivables to other business owners that you know personally. The conditions will vary and this will depend on the arrangement that you made with the buyer. Cash flow can be enhanced considerably by simply selling accounts receivables. So what are you waiting for? Solve your cash problems by selling invoices.
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