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Why A/R Financing Is The Above Average Cash Flow Solution Your Company Might Need
OVERVIEW – Information on factoring financing in Canada. What is the best a/r finance program, how does it work, and why should your firm consider this alternative financing solution
You probably are happy to know that a factoring type of facility works for every size of business and almost every industry in the Canadian business landscape. Start ups benefit from factoring, as do some of the larger corporations in Canada. (Larger corporations benefit from a more sophisticated type of factoring and better pricing, but at the end of the day it is the same facility and the same method of cash flow and working capital financing.
Clients, (unfortunately) often only focus on price when they are looking at a factoring facility. Anything we buy as consumers or business of course has to be competitively priced, but in factoring it is a lot more important to know who you are dealing with and how your facility works.
Let's also cover off one of our basic questions as posed by clients - that is namely what is factoring?! Simply speaking it's the selling of your receivables to a specialized finance firm.
What is so special about that - simply that you receive the cash, less a financing discount, the same day you issue your invoice. You have just become cash flow positive! And are generating positive working capital on a regular basis. All at the expense of only some of your gross margin, as the finance fee should generally be viewed by yourself as a cost of doing business, as opposed to an 'interest rate 'financing charge.
One of the many reasons you should speak first to a credible trusted financing advisor is that there are a number of small nuances you need to understand about factoring. Each firm handles these 'nuances 'a bit differently. Each invoice you factor also has a holdback attached to it, in the industry the holdback is generally 10-15%. You receive that holdback immediately after your customer pays the invoice. It's just a buffer for the finance factor firm that covers off late payment by your customer, or a possible credit note you might issue on the invoice, etc.
We recommend CONFIDENTIAL RECEIVABLE FINANCING as the ' ABOVE AVERAGE ' A/R Factoring solution.
We recommend to all clients that they fully understand the benefits of a 'non notification 'factoring facility. With that type of facility you are able to bill and collect your own invoices, with no additional intrusion or notification by the factoring company with respect to your clients. We feel that piece of advice alone is immeasurable in benefit to Canadian firms.
In summary, factoring is a form of working capital and cash flow generation. It does not entail borrowing money, you are in fact just doing the opposite, liquidating assets (your receivables!) to generate positive cash flow.
Seek out and speak to a credible business financing advisor that will work with you to maximize the benefits of this type of business financing in Canada.
7 Park Avenue Financial :
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
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