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Information on cash flow financing solutions for Canadian business . Factoring financing is a solid solution for accounts receivable cash flow
When Canadian business owners and financial managers think of financing their receivables historically they have thought of a bank ‘overdraft ‘or an ‘operating line of credit ‘. With today’s low rates those facilities (when you can get them) are among the best financing facilities in Canada from a viewpoint of cost of capital. However, many new, smaller, and even medium sized established firms cannot meet the criteria that our chartered banks require to get such facilities in place. This is very simply because these type of facilities require excess collateral, strong personal guarantees, and the ability to meet various ratio and covenant formulas that the banks wish to have as back up collateral to their lending decisions .
Factoring financing or the immediate discounting of your receivables provides your firm with a greater level of borrowing against what is often your largest current and most liquid asset, you’re A/R.
When clients come to us looking for a factoring facility we are very clear that the largest challenge is not getting them that facility, but moreso, getting the right facility. The Canadian factoring landscape is littered with many firms who have facilities that don’t meet their needs from a cost perspective, but more importantly, getting a facility that meets the ways in which they do business in their own industry and geography.
In Canada there are hundreds of small and large factoring companies – (think of it, there are only 6 or so charted banks!). What most business owners don’t know that these firms are either very small privately funded independents, or, alternatively, subsidiaries of large branch operations in the U.S. and the U.K.? The later, the U.S. and U.K. firms have brought their way of doing business into Canada, which is not always, in our opinion, what works for your firm.
Also, many Canadian business owners don’t also realize that they can compliment, with the right partner firm, their receivables with an inventory and equipment facility – in some cases that can immediately double your available liquidity from a viewpoint of cash flow and working capital.
The main challenge we see for business owners, is their inability to navigate the difficult terminology and jargon of this relatively new type of financing in Canada. Business owners can therefore be forgiven that they don’t know what the following terms mean, and what impact they have on your business.
Discount rate
Advance Rate
Borrowing Base
Notification
Holdback reserve
Guess what? These terms have a huge impact on why you’re factoring financing and invoice discounting facility will be a success or failure.
Business owners prefer, when they have the choice, to be well informed. They also want to take advantage of products and services, (in our case financing) that maximizes the benefits they are looking for.
Speak to a trusted, credible and experienced advisor in the area of factoring financing. Understand why this type of financing is working in Canada, and more importantly, how it can help your firm grow revenues and profits.
South Sheridan Executive Centre
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
