OVERVIEW – Information on receivable financing in Canada. Factoring and full asset based lending solutions provide you with the cash flow and working capital your business needs when traditional capital isn't available
In talking to clients they are concerned about two key issues around this innovative financing method. Those two key issues are:
How does it work?
What are the Costs?
We firmly believe that if you understand those two critical points then your firm is in a position to benefit from receivable financing and Canadian factoring solutions. And those benefits are significant and quite clear.
They include your peace of mind as it relates to business financing, since factoring facilities grow with your business and are unlike pre-set bank credit lines, etc .
Also, many business owners confuse a factoring (also known as receivable discounting) with a loan. Let us be clear - Factoring is not a loan! There is no additional debt on your balance sheet, and there are no monthly repayments. In fact the overall optics of your balance sheet actually improves.
Time is money as the Canadian business owner well knows. Factoring or receivable financing in Canada works quickly and efficiently (When you have chosen the right partner and the right type of facility). Once the initial set up process is completed, usually in a week or two the facility runs itself at your discretion. You in effect have taken complete control of your cash flow. Slow paying clients can now be monetized immediately, i.e. the same day, into valuable cash flow and working capital.
So, A/R Finance and, to our point #1 - How does it work?!
Factoring or receivable financing is simply best described as the short term sale, or 'discounting 'of your accounts receivable. You generate cash, at your option, on the same day that you generate an invoice for a sale and delivery of product and services to your client base. In Canada most customers and industry players use a 'notification model 'when they implement a receivable financing solution. That simply involves the factor firm confirming your invoices with your client basis after you have provided invoice back up to the finance firm.
That system works, but quite frankly we firmly believe the best factoring or a/r financing solution is one in which you run your company, not the factor firm . So we strongly recommend to clients that when they have an A/R base over, say 200k per month that you consider a facility where you are billing and collecting your own receivables, but still enjoying all the benefits of factoring.
Critical Point # 2- What does factoring, A/R finance, cost? Actually it's zero per cent financing. Don't believe us? We are being a bit facetious, but the reality is that the receivable financing industry in Canada does not express of calculate factoring costs via an annual per cent age rate.
The problem lies in the fact that customers do in fact look at it that way .We have actually demonstrated too many customers that the true cost of factoring is actually zero or less than bank financing in many cases.
Why is that? If you factor your receivables, get cash the same day, buy more inventory with that cash, negotiate a better price with suppliers with that cash, and then repeat the process over and over we can almost guarantee you, depending on your industry and A/R turnover that receivable financing can become a profit mechanism for your firm.
That's certainly clears up a lot of the 'negative 'things you have heard about factoring, its costs, etc.
Speak to a trusted, credible and experienced business financing advisor on the benefits of factoring, how it works, and how financing costs can be controlled and reduced. That's true cash flow and working capital financing for Canadian business.
7 Park Avenue Financial :
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 .
7 Park Avenue Financial
2910 South Sheridan Way
Direct Line = 416 319 5769
Office = 905 829 2653
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.