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In Brazil, companies seek to increase their sales through easy payment methods for their customers, which can be made in installments, with bills, checks or booklets.
With these payment options, the possibility arises for the company to anticipate receivables.
Have you ever heard about this term? Do you know how to do this financial action? And when is it worth making that choice?
To answer these questions and make it clear what prepayment of receivables is, we have prepared a complete content on the topic with everything you need to know to identify right now whether it is time to do it and what options are available for it. Check out!
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What is prepayment of receivables?
The anticipation of receivables happens when a company has a series of amounts to receive in the future, coming mainly from credit card sales in installments, post-dated checks and bills, and requests this money in advance to increase its cash liquidity and promote a good financial health for the company. Using the example of a food distributor, it is common for sales to be made in installments, with receipts arriving only months later. With the anticipation of receivables, the company can have this amount ahead of schedule to cover more urgent expenses , avoiding the accumulation of debts that would bring high interest rates. As the name implies, it is the action of anticipating amounts that would only be paid in the future to the company's cash. It is the transformation of installment sales into cash on demand. Based on the amount of receipts that businesses make monthly, the business owner can anticipate future receipts and obtain advances on receipts as a form of financing, to invest or pay other debts and expenses, all based on the forecast amount. In general, anticipating the receipt of these amounts is a possibility for companies to adjust their expenses and investments over periods of possible scarcity in cash flow. The business owner can use this funding source to inject cash back into the business for future projects or expansion.Advance receivables or loan?
As we have seen, prepayment of receivables may seem similar to a loan, with the difference that in this case the company would already have access to these amounts. In the loan, the company borrows an amount that will later be returned with interest rates. But for businesses to get the money they need, it's easier to resort to advances on receivables than bank loans. Banks, traditionally more conservative, are less likely to release a loan, with several points in the process that generate bureaucracy to access these amounts. Basically, each of these choices of value delivery solutions will have advantages and disadvantages. The most important thing at first is to understand the fee charged for each transaction . Thinking about anticipating receivables, there are 2 main types of sale that can interfere with the fee charged so that you can make that choice:- Short-term installment credit;
- Long-term installment credit.
