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Accounts receivable financing is used by businesses to convert sales on credit terms for immediate cash flow. 1st Commercial Credit adopts a quick and simple approval process and expedites initial funding in 3 to 5 working days.
learn moreAlso known as invoice factoring, this financial solution provides your Alaska business with an opportunity to avoid banks and their loans and incurring debt. This financial solution will allow you to retain your company and control the finances. The way it works is simple; your company has unpaid invoices, which will be paid in either 30 to 90 days, and your business is experiencing a shortage of cash flow because of these sales on credit terms. The factoring company will "buy" these unpaid invoices from you at a discount and facilitate the cash within a few days. Once your Alaska business establishes an account with the factoring company already, future funding can happen on the same day or within 24 hours.
With this kind of accounts receivable financing, the factoring company will purchase the ownership of your outstanding invoices, which grants the right to a collection directly from your customers. When the invoices are sold to the lending company, a large percentage of the invoices is given to you immediately to be used for whatever financial responsibilities need to be covered.
Unlike a traditional bank loan that will make you go through an irritating and time-consuming process, factoring will provide you with immediate cash while making it a smooth and simple process. When your clients pay those invoices in full to the factoring company, the remaining balance of the factoring loan will be sent to you after deducting a small factoring fee for the services.
Receivable financing is structured like an ongoing seller/purchase agreement, and it is not a traditional loan. Understanding the invoice factoring process will help you make a more informed decision when comparing options for financial solutions for your Alaska company.
The receivable credit line is always determined by the customer's financial strength (Buyer), not the client (The seller of the receivables). Growing and successful businesses can also benefit from accounts receivable factoring. Often, an immediate injection of cash is needed to expand the business and take on more and bigger clients while still being able to offer better credit terms.
1st Commercial Credit is an accounts receivable finance company specializing in many industries in Alaska, and the financial tools we offer help businesses grow. Financing accounts receivable is now the preferred financial tool in obtaining flexible working capital for businesses of all sizes in Alaska.
Other benefits your Alaska business will experience when choosing a factoring company like 1st Commercial Credit include:
There are many benefits of borrowing money on accounts receivables include avoiding penalties for late payments and bankruptcy, access to a short-term credit line, reducing annual overhead costs, retaining your company's equity, and many more. 1st Commercial Credit can lend your company up to 97% of the value of your invoices, depending on the number of accounts you currently sell to. We lend on accounts receivable by advancing funds that your business can use today. Given our expertise and knowledge in the industries we fund, we can provide competitive accounts receivable loan rates and higher advances.
Alaska runs on oil, which means oil and gas comprise the state's primary industry. The oil production in Alaska has been responsible for the economic growth in the state. The discovery of new fields offers yet more potential to increase production, meaning many businesses working with the oil and gas industry directly or indirectly will face success and growth.
The oil and gas industry continues experiencing incredible growth all across the nation. This growth fuels excellent opportunities for businesses in this industry, and services relating to the oilfield sector have also been increasing in demand. However, with rapid growth, financial hardship can follow if things are not handled correctly. Many small and medium-sized businesses have a challenging time obtaining financing, which can result in business failure.
1st Commercial Credit makes invoice factoring for the oilfield industry easy and attainable. We offer the most reliable and cost-effective accounts receivable lines of credit. Most oil and gas clients pay their invoices in 30 to 90 days. Most customers require these payment terms, and businesses need to offer them. The problem arises when many smaller oilfield service companies do not plan for this situation and are not prepared, but thankfully, 1st Commercial Credit is here to help.
One-quarter of the jobs in Alaska comes from the oil industry, and about a half of the state's economy also comes from the oil and gas industry. Without the oil and gas industry, Alaska's economy would be half-sized. Alaska residents make up 84% of the total employment and $4.8 billion in wages. The state's average wage earnings in this industry are about 2.5 times higher than the rest of the state wages for all other sectors.
For each job in Alaska's oil and gas industry, there are 15 additional jobs in the Alaska economy connected to the industry. No other industry in Alaska comes close to the multiplier effect of the oil and gas industry. Cleary, when the industry prospers, so does Alaska's economy.
At 1st Commercial Credit, we can provide your business with the financial tools needed to continue succeeding in the oil and gas industry. We make working capital available to your business when using our accounts receivable financing program. This type of financial service is available to oil and gas exploration service providers and field equipment suppliers.
1st Commercial Credit offers accounts receivable factoring to small and medium-sized businesses in Alaska. Oil and gas companies can offer credit terms to customers utilizing our funding program. Oilfield companies will now be able to tap into their receivables assets for immediate cash flow quickly. You can offer credit terms to larger customers, take advantage of early-pay discounts offered by your suppliers, and countless other opportunities.
A factoring company converts invoices sold on credit terms for immediate working capital at a discount. It has become a simple, fast and easy way to access business cash flow. In comparison with a traditional bank loan, a company that factors receivables has a quicker approval process.
1st Commercial Credit is an accounts receivable factoring company that specializes in evaluating accounts receivable and can make a prompt approval decision. The documentation requirements are not as lengthy, and the main requirement is that an applicant has invoices for work or orders that have already been satisfied. It also helps to have creditworthy customers. As long as a business has been in operation, meets revenue requirements and is free of liens or legal issues, approval is likelier.
Financing accounts receivables is our business, and 1st Commercial Credit has more than 18 years providing financing solutions to businesses. Our goal is to make our financing programs easy and achievable for all companies. An experienced factoring company like 1st Commercial Credit is far more valuable because we are familiar with working with accounts receivable assets for any industry in Alaska including the oil and gas sector.
The value of your accounts receivables will always be more significant to us than to the banks. Banks focus more on the cash flow side of the business and fixed assets to approve a business loan. A factoring company concentrates on the company's invoices and reviews the credit quality of the buyers to make a more accurate assessment of the value.
A bank can also end up costing more in other areas of the business by restricting eligibility on accounts receivables when your company has a limited number of customers. Even if your business has a bank line of credit for free, your business will face limited growth because turning away business due to limited eligibility can be very costly.
In many cases, companies wait until their cash flow becomes an intractable problem that they are forced to turn to bank loans with higher interest rates that will end up costing much more than any other cash flow solution.
On the other hand, even if you don't have frequent cash flow problems or are currently experiencing difficulties, most businesses in Alaska will eventually experience circumstances that will put pressure on their cash flow. Many unexpected situations can wrench your business and make it challenging to pay bills and employees on time. Sometimes many of these difficult situations are beyond your control, and you need to be prepared for unexpected and sudden changes in your cash flow.
Regardless of your situation, when your business is in a similar financial struggle, a bank loan or an alternative like a loan against receivables are the options available to you. With this being said, there are many significant differences between a bank line of credit and a factoring line of credit and understanding which one is a better option for you and your business. On the positive side, qualifying for a factoring line of credit is a much simpler process for many small, medium-sized, or new companies than qualifying for a line of credit with a bank.
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