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Article: Turning short-term assets into money.(Business Banking)
- Article from:
- San Diego Business Journal
- Article date:
- March 5, 2007
- Author:
CopyrightCOPYRIGHT 2007 CBJ, L.P. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Businesses that generate short-term assets like accounts receivable or inventory often are faced with a situation in which, for all practical purposes, they are financing their customers. As accounts receivable and inventory grow, so does the additional working capital necessary to carry them.
An answer to this common dilemma for many businesses is an asset-based formula line of credit. This type of financing is offered on a revolving basis and can be used to generate working capital or to meet specific short-term cash needs. Under an asset-based line of credit, a bank will advance funds against a business' eligible accounts receivable and/or inventory--eligible ...