How Accounts Receivable (AR) Benefits Your Company
The four seasons of freight shipping refer to the cyclical nature of the shipping industry throughout the year. For example, the holiday season in November and December is typically a busy time for shipping companies due to increased demand for consumer goods. Similarly, the summer can be active for industries like construction and agriculture, requiring seasonal supplies.
In the logistics world, these ups and downs can make it difficult for businesses to maintain a steady cash flow. However, with an accounts receivable line of credit, companies can improve their cash flow and ensure they have the resources to cover their bills and expenses throughout the year.
When you have an accounts receivable (AR) line of credit, you can access funds owed to your business from outstanding invoices. This allows you to collect payment on your invoices faster and avoid the delays that can come with waiting for customers to pay. With improved cash flow, you can stay on top of your bills and expenses, avoid costly loans or credit card debt, and maintain a healthy financial position for your business.
What is an AR Account?
The success of a business depends on its ability to maintain a positive cash flow and generate profitability. However, these two aspects are not always in sync, and a company may face difficulties when cash flow is poor, even if profitability is high. Poor cash flow can lead to problems such as difficulty paying bills, falling behind on loan payments, and losing suppliers and vendors.
Maintaining healthy cash flow is crucial for any small business manager or operator. Without cash flow, a company can find itself in a precarious financial position, unable to finance its daily operations or invest in growth opportunities. One effective way to do this is by opening an AR line of credit, which allows a company to access funds that are owed to them but not yet collected.
Accounts receivable financing is a flexible way to access cash that can be used for various business needs, including paying bills, financing growth opportunities, and handling unexpected expenses. By opening an AR line of credit, a company can improve its cash flow and maintain financial flexibility without taking on the burden of a traditional loan.
AR accounts benefit companies shipping freight in two ways: they allow for greater flexibility in paying for your freight shipments, and they help in an emergency situation. Let’s examine both of these benefits closely.
Increased Flexibility with Accounts Receivable
One of the critical benefits of the accounts receivable (AR) line of credit is its flexibility in terms of repayment. Unlike traditional loans, which have specific requirements for repayment at set intervals, an AR line of credit allows business owners to borrow and repay the money on an as-needed basis. This can be especially helpful for small businesses with seasonal revenue or unexpected expense fluctuations.
With an AR line of credit, you can allocate financial resources to the areas of the business that need it most. For example, if you have a large order to fulfill and need more inventory, you can draw from your AR line of credit to finance the purchase. Alternatively, if the business is slow and you need to conserve cash, you can slow down your payments on the AR line of credit to match the performance of your revenue numbers. This can help you avoid the burden of fixed loan payments that can become difficult to manage during lean times.
Another advantage of AR lines of credit is that they are typically easier to obtain than traditional loans. This is because the credit line is secured by your business’s accounts receivable, making it less risky for lenders. Additionally, since the line of credit is revolving, you can draw from it multiple times as long as you make timely payments.
Pay for Important/Emergency Expenses
Expanding further upon the improved cash flow and increased flexibility benefits of an AR line of credit, these two things significantly benefit your company. You can pay any emergency expenses without worrying about how to repay them, like a traditional loan.
If you need money for something quick or urgent, you can go right into your line of credit without digging a larger financial hole. You can then focus on other parts of your business that you need to tend to with your full attention. And that is the crucial function of an AR line of credit; you have a backup safety net you can modestly indulge in with peace of mind to care for costly upfront needs.
AR Accounts Are Smart and Affordable
An accounts receivable (AR) line of credit from FreightCenter can be a smart financial move for your business, providing a cost-effective way to improve scalability and maintain a healthy cash flow. One of the most significant advantages of AR lines of credit is their low-interest rates compared to traditional loans and credit cards. By building a solid credit history through on-time payments, you can keep those rates low, saving you money in the long run.
Moreover, AR lines of credit provide a flexible payment option to help your business weather challenging times. When you have bills and expenses, you don’t want to fall behind on them or take out loans or credit cards that can add to your financial burden. With an AR line of credit, you can put financial resources into the areas of your business that need them the most, paying vendors or other expenses according to the revenue numbers. This flexibility allows you to keep up with payments during slow times and pay more back when business is booming. Opening an AR account can provide a cost-effective way to improve your cash flow and maintain financial solvency in the long run.
Why Choose To Open AN AR Account with FreightCenter?
Opening an accounts receivable (AR) account with FreightCenter is a smart choice for small business owners. We’re a reliable company with years of experience in shipping and logistics, providing access to a vast network of carriers for competitive rates.
An AR account offers flexibility in managing cash flow, allowing you to cover expenses without the stress of loans or credit cards. Our user-friendly online platform simplifies tracking shipments and managing invoices, while our excellent customer service ensures you receive the support you need.
It’s easy to make an AR account with us! If you are an existing FreightCenter customer, log in to your MyFreightCenter account. If you are new to FreightCenter, create an account here. On your dashboard/account page, complete the online application form. Once you submit your application, you will receive an email in 24-48 hours with the status of your application. No personal credit checks, personal guarantees, annual fees, or interest when paid in full by the due date.
If you have any questions about your FreightCenter account, call (800)716-7068 to speak to one of our AR experts. They’ll go in-depth on how our AR accounts work and guide you through the application process.
