Consumer finance allows a business to gain additional sources of income while awaiting payment from the client. Often, the gap between being paid for a product or service and having to pay accounts payable can limit the cash flow of a business. Third party consumer financing programs are available to bridge that gap including consumer finance asset based lending, consumer finance receivable lending and purchase order financing. Businesses may wish to explore their options and understand terms involved in consumer finance prior to using these services.
Consumer finance asset based lending
Companies provide businesses with consumer finance asset based lending. These lenders aid businesses in mergers and help them to achieve business goals. Some lenders provide several types of consumer financed lending.
Consumer finance receivable lending
Consumer finance receivable lending is an area many businesses are entering. Here, businesses buy credit card accounts from lenders to collect on the interest from them. The process is similar to buying bank mortgages for an investment purpose.
Private label credit card programs
Private label credit card programs allow businesses to access loans easier for their consumers. This type of consumer finance tool for businesses is available for prime and sub-prime loans. These programs can help a small business get clients pre-approved for necessary loans. Consider the differences in costs and features of prime and sub-prime loans.
Purchase order financing
Purchase order financing is a method of financing the production of a product that has been pre-purchased by the consumer. It is a short-term financial solution for businesses that have a strong credit history.
Invoice factoring is the process of borrowing funds to continue the operation of a business while waiting for consumers to pay their debts. A factoring advance is the amount of money provided to the business, usually at 80% of the invoice's value.
Consumer note purchasing
Consumer note purchasing is the process of turning accounts receivable, including new accounts and older portfolios, into immediate cash for the business.