Auto Glass Installers Offers New Alternative Form of Financing

As the installer's business grows or fluctuates with uneven sales patterns, the business becomes undercapitalized or financially unstable and is not able to make payroll, pay suppliers or cover fixed expenses. The main reason this happens is because all the cash flow that is normally used for daily operations is tied up in accounts receivable.

(PRWeb) February 9, 2007 -- Auto Glass Installers have a new alternative form of financing.

The auto glass industry currently experiences credit term sales that remain outstanding on an average of 21 to 35 days depending on the region and type of account debtors (customers that are sold on credit terms). As the installer's business grows or fluctuates with uneven sales patterns, the business becomes undercapitalized or financially unstable and is not able to make payroll, pay suppliers or cover fixed expenses. The main reason this happens is because all the cash flow that is normally used for daily operations is tied up in accounts receivable.

Why do auto glass installers have a tough time getting a traditional bank loan? Installers are considered to be professional service providers that require industry related certifications, utilize specialized pneumatic tools, cutting blades and urethane adhesives. An auto glass installer cannot offer the tangible assets most traditional lenders would like to lend on. The most accessible and valuable collateral an auto glass shop can offer is an intangible asset called accounts receivable. However, it is one of the most unwanted collateral traditional lenders want to lend against.

1st Commercial Credit offers an alternative form of financing for auto glass shops by offering receivable financial services and advances up to 90% based on the invoice face value. Accounts receivable financing (also known as factoring) is not a loan, so there is no need to make payments or create debt. We simply utilize the receivables that are owed by commercial accounts (including insurance companies) and advance funds against them, it is that easy.

A prospective client can set up an account in 3 to 5 working days, no financial statements are required and the applicant can be a newly formed business. The discount fee is based on the sales volume and collection cycle and averages 2% to 4% of the invoice value.

The majority of auto glass shops seeking financing fall under the following criteria:

• A surge of increased sales has caused a shortage of cash flow to make payables.
• Existing bank loan is not sufficient for daily operations.
• Principals cannot obtain traditional financing due to personal credit.
• Newly formed business with no sales history cannot justify traditional loans.

• Sell credit worthy businesses.
• Have not pledged accounts receivable as collateral.
• Sell to commercial accounts or insurance companies

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