Fast Accounts Receivable Financing for High-Risk Businesses
Unlock Capital from Unpaid Invoices Today
By utilizing invoice financing, businesses can overcome cash flow gaps and maintain a healthy working capital position. This immediate injection of funds can be used to cover operational expenses, invest in new equipment, hire additional staff, or pursue growth opportunities. Unlike traditional loans, invoice-based financing does not create debt on the company’s balance sheet, making it an attractive option for businesses looking to access quick capital without incurring additional liabilities.
Accounts Receivable Financing for High-Risk Industries: PO Financing vs. Factoring
Green Financial Service offers specialized Accounts Receivable (AR) Financing tailored for high-risk industries such as CBD, cannabis, kratom, and vape shops. Our AR financing solutions are designed to free up capital tied in unpaid invoices, allowing businesses to maintain cash flow and meet operational demands. AR Financing can be broken down into two key types: Factoring and Purchase Order (PO) Financing, each serving unique business needs.
Factoring
Factoring begins once the product has been shipped, and the Bill of Lading has been released. The terms of factoring—including the factor rate charged monthly and the upfront percentage of the invoice amount provided—are determined largely by the creditworthiness and reputation of your customers, rather than your business. Typically, factoring rates range from 1% to over 2% per month, with funding amounts between 70% and 85% of the invoice value.
- Cost: 1% to 2%+ per month.
- Funding Amount: Typically 70% to 85% of the invoice value.
- Timeline: Most factoring occurs within 30-45 days, although terms up to 90 days can be extended depending on customer agreements.
- Key Consideration: Factoring is dependent on your customers’ ability to pay, as the factor directly collects payment from them.
Purchase Order (PO) Financing
PO Financing provides funding when a Purchase Order is submitted, offering businesses the ability to cover production and supply chain costs upfront. Unlike factoring, PO Financing generally involves more scrutiny of both your business and your customers, given the longer-term nature and responsibility for fulfilling the purchase order. While it can help cover production costs earlier in the process, it is usually more expensive, with rates starting at 2-3% every 30 days, and funding typically covering 50-60% of the purchase order amount.
- Cost: 2-3%+ every 30 days.
- Funding Amount: Typically 50-60% of the purchase order value.
- Timeline: Generally operates on a 60-120 day cycle.
- Key Consideration: Involves risk assessment of both your business and your customer’s reliability, given the extended funding period.
Which Option is Right for Your Business?
Choosing between PO Financing and Factoring depends on your immediate needs and the nature of your customers. Factoring is ideal if you need quick cash once products are shipped, while PO Financing is more suitable if you need upfront capital to cover production costs early in the order process. Regardless of your choice, Green Financial Service provides flexible, industry-specific AR Financing solutions to help high-risk businesses thrive.
Benefits of AR Financing
- Immediate Access to Cash: Convert your unpaid invoices into immediate working capital, allowing you to cover expenses, manage cash flow, and invest in opportunities without waiting for customers to pay
- No New Debt: Invoice financing isn't a loan, so you’re not taking on additional debt. Instead, you’re leveraging your existing invoices, which means you can access funds without affecting your credit score or taking on repayment obligations
- Improved Cash Flow Management: By turning your receivables into cash, you can better manage day-to-day expenses, payroll, and inventory purchases, reducing financial stress and ensuring smooth business operations
- Flexibility in Funding: Access funding as needed based on your invoices, giving you the flexibility to finance only the amount required, when it’s required, without committing to long-term financing
- Quick and Easy Process: Green Financial Service streamlines the invoice financing process, providing fast approvals and quick access to funds, so you can keep your business running smoothly without delays
- Support for Business Growth: With improved cash flow, you can take on new projects, expand your business, or invest in growth opportunities without the cash constraints that come from waiting for invoice payments
- No Collateral Required: Unlike traditional loans, invoice financing doesn't require additional collateral beyond your invoices, making it easier to access funds without putting your assets at risk
- Customized Solutions for High-Risk Industries: Green Financial Service specializes in working with high-risk industries, such as cannabis, CBD, and kratom, providing invoice financing tailored to the unique needs and challenges of these businesses
Frequently Asked Questions
Accounts Receivable (AR) Financing allows businesses to access immediate capital by using their unpaid invoices or purchase orders as collateral. For high-risk industries like CBD, kratom, and cannabis, AR Financing can help manage cash flow, cover operational expenses, and invest in growth without waiting for customer payments.
Factoring provides funding based on invoices for goods that have already been shipped, with funding amounts typically between 70% and 85% of the invoice value. PO Financing, on the other hand, kicks in when a Purchase Order is submitted, covering production costs earlier in the process. PO Financing is generally more expensive and involves more scrutiny on your business as it covers a longer cycle.
With Factoring, you can receive between 70% and 85% of your invoice value upfront. The exact amount depends on your customers’ creditworthiness, as they are ultimately responsible for paying the invoices.
PO Financing provides funding for purchase orders before production begins, covering between 50% and 60% of the purchase order value. This type of financing is generally used to pay suppliers and cover production costs, and it is repaid once the customer pays for the completed order.
Factoring costs generally range from 1% to over 2% monthly, depending on your customers’ credit profile. PO Financing is typically more expensive, with rates starting at 2-3% every 30 days due to the higher risk and longer terms.
Funds are usually available within 24 to 48 hours after the invoices are verified and approved. Most factoring transactions are completed within a 30-45 day period, but terms can extend to 90 days based on your customer agreements.
Yes, your business’s credit score plays a lesser role in AR Financing compared to your customers’ creditworthiness. Factoring and PO Financing rely primarily on the reputation and reliability of your customers, as they are ultimately responsible for the payment.
The rates for both Factoring and PO Financing are determined by evaluating your customers’ business credit, payment history, and overall financial stability. In the case of PO Financing, we also assess your business’s ability to fulfill the purchase order obligations.
We specialize in providing AR Financing for high-risk industries, including CBD stores, vape shops, kratom/kava bars, licensed cannabis businesses, and retailers selling SARMs, peptides, and legal mushrooms.
Simply contact us for a consultation. We’ll assess your invoices and business needs, then guide you through the process to quickly secure the working capital you need.
