What is receivables anticipation? Get your questions answered on the subject!

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Lack of cash is a common challenge for small and medium-sized businesses. Sales terms tend to be longer than those negotiated with suppliers, especially when the economy is down. To avoid problems, more and more business owners have resorted to anticipating receivables.

Seeking capital injection may be the only option for several reasons: high default rates , business seasonality, poor financial management, among others. Given the costly loans available on the market, finding a cheaper and more practical way to obtain money makes all the difference.

This post presents an efficient solution to working capital problems. If your business has faced adversities in this regard, follow us!

How does receivables anticipation work?
Anticipation of receivables is the exchange of sales ios database on credit for cash in cash. For example, your company has a sale made on credit with monthly installments. In order for the business to continue, it is necessary to buy more goods at this time. You look for a company that makes advance payments and they buy the right to receive payment for an amount lower than the sum of the installments. It is similar to a cash sale with a discount.

The company that carries out this type of operation can be a securitization company, fintech, factoring company or FIDC. The lower amount paid by it is like an interest charge for a loan. Intuitively, the longer the term of the rights negotiated, the lower the amount paid upfront.

When should I use it?
Working capital problems can be easily solved by anticipating receivables. It acts as a bridge between mismatched receipt and payment terms.

Although it fits so well in this case, this solution can also be useful in other situations. In general, any company that has payments to receive and needs a capital injection can use receivables anticipation.

It is possible to take advantage of an opportunity that requires immediate investment by carrying out this operation, for example.

What are the benefits?
The advantages over traditional loans are quite clear. Anticipating receivables can be obtained more conveniently and with much less bureaucracy. In addition, the rates paid are usually lower than those for loans.

These advantages arise because the credit obtained is already paid during the transaction. Remember that it is a sale of receipt rights. Therefore, it is possible to carry it out even if you are in debt.

A merchant who knows this tool can also increase their sales. This is because they can offer better payment terms, helping to close deals. A portion of the installment sales are then paid in advance to keep cash flow up to date.

However, it is important to be careful with this solution. Its constant use may be a sign of a poorly organized financial sector . In this case, using it is not sustainable and the problem must be fixed.

After learning about receivables anticipation, its superiority over loans becomes clear. Business owners who are short of cash should look for a trustworthy company and take advantage of this solution.

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