Financing your invoices can be the key to accessing the working capital you need. Whether it’s a one-time move to take advantage of an opportunity or a regular way of organizing your company’s income and cash flow, it’s a great tool for businesses that have an unpredictable income stream due to invoice payment windows and customer unpredictability.

Organize Your Invoices

Before applying for accounts receivable financing, it’s important you review your invoices. Organize them by age, and take note of how many are already past due. If you have a lot of older invoices, you might want to consider a simpler method of getting cash out, like factoring. If not, then it’s time to decide how you want to finance them.

Should You Finance Every Invoice?

Some programs require you to finance every open invoice when you apply. Others will let you pick and choose what to refinance, and some even accept single-invoice submissions, especially if it was a big order. If you have a lot of older invoices that might drive up the cost of financing, it might be worthwhile to leave them to the side and pursue a selective financing deal. It’s also good to use selective financing if you have a set amount of capital you want to raise because you only pay to finance the invoices you need to reach that goal. Otherwise, it’s generally a good idea to refinance the whole batch because it gets you a bigger advance.

Communication Is Key

Your first-round application for accounts receivable financing is likely to be basic company information and financial details. Beyond that, there is not a lot to consider. Once the lender has decided whether your customers represent a good risk and tentatively approved a deal, you’re going to be asked for more information. Often, this is in the form of a request to verify the original information with insurance policy confirmations, copies of a business license, or other details.

This phase goes fastest when you communicate promptly. It’s also your chance to negotiate any details about fees or payments if you have specific needs outside the boilerplate deal.

Finalizing the Deal

Once you and the lender have agreed on everything and there’s a signed contract for services, you need to notify your customers to direct payment to the lender. Make sure you reassure them that this is a measure taken for your administrative efficiency, not a collection effort for past-due accounts. That should smooth over any misunderstandings. Once you get the deposit, it’s a simple matter of waiting for the lender to notify you that repayment is complete and send you any remaining cash after the fees.