Financing Receivables. Here’s What You Didn’t Know About An Accounts Receivable Financing Company!

This Just In! A/R Finance just might work!



Information on financing receivables in Canada. What does the Canadian business owner and manager need to know when dealing with an accounts receivable financing and factoring company.




When Canadian business owners and managers utilize an accounts receivable financing company the focus is all on the dollar value and quality of your A/R. That's what is going to generate cash flow under this process - which simply is a transaction in which you immediately monetize your sales for cash, at a discount... the obvious benefit being the ability to generate cash flow and working capital for your company.

We will add a small technical point here, in that when we typically describe the process we always advise clients that invoice discounting monetizes your revenues as you generate them. That infers that you have to finance those sales all the time and immediately, and actually that’s not 100% correct. The reason? Simply that if you are working with the right firm you certainly can finance any amount of sales you need - it doesnt have to be all or nothing.

And about that ' timing ' issue. The reality is that you can finance those sales ' ANYTIME' after you make them. Quick example: You generate a 100k sale to one of your clients, and the client typically pays you in 60 days. (Notwithstanding your terms are 30 days!) . If you don’t need the cash right away but need it, for example around day 45 in this process, you can finance the invoice then. The benefit - Again its immediate cash when you need it and you are only paying for 15 days of financing! Talk about a win / win!

Invoice discounting, A/R Financing, Factoring, etc are all synonymous terms for the process we are describing today. Pricing always causes mass confusion

with clients. Can this confusion be avoided? We thing it can when you simply focus on and understand the three elements of A/R finance pricing - they are:

The advance rate/ hold back

The discount rate

Time to collect your accounts

When you have a solid grasp on those you've become somewhat of an immediate Receivables Financing expert.

Let's use a quick example, and let us use a 100k invoice as an example. There is no real dollar limit on these facilities, and for that matter invoice size, whether large or small, is not a concern either.

Anyway, you have just invoiced your sale and have 100k outstanding on an invoice. The Accounts receivable financing company will typically advance, at your request 90% of this amount. The 10% is a reserve or hold back that allows for anything going wrong, primarily uncollectibility. If your customer pays you in 60 days, as they typically did in our example you receive the 10% hold back, less financing costs which are typically 1.5-2% for a 30 day period.

If you are using traditional A/R financing companies the finance firm you are dealing with handles collections. That's not our recommended solution - as we prefer the confidential invoice financing strategy, allowing you to bill and collect your own accounts, with no notice to any client, supplier, other lender, etc. We do of course point out that when financing receivables your accounts receivable financing company partner must in fact have clear collateral of your receivables. Many clients we talk to think they can have a bank line and finance receivables via a commercial finance firm. They are wrong! It's one or the other.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in setting up the facility that works for your business when it comes to monetizing your sales revenues and cash flowing that balance sheet!

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLES FINANCING EXPERTISE


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/financing-receivables-accounts-receivable-company.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com
























Stan Prokop

Buying A Company? Who Can Help You With Financing To Buy A Business Or Make An Acquisition?

Canadian business acquisitions and merger financing


OVERVIEW – Information on buying and financing a company in Canada . When you buy a business or make an acquisition you need specialized assistance and expertise



If you are buying a company or a business in Canada your goal is of course to make an informed acquisition, pay a reasonable ' market' price and get the financing to need to make your deal work.

That might be an outright acquisition, or perhaps even a merger with a strategic partner or competitor.
The large corporations in Canada, public and otherwise have access to tons of talent and assistance in this area. But what about businesses in the SME sector, from a small business to a mid market type company?
If you’re looking to execute on a deal it might be very wise to consider the assistance of a Canadian business financing advisor to assist you in closing the deal, and in some cases even finding the deal.
Going it alone works, but boy can that be both time consuming, painful and expensive.

In what ways can a qualified intermediary or financing advisor help you? There are several key areas - they include:

Developing criteria for your final decision

Reviewing and assessing financial information that's available

Helping with pricing and valuation

Structuring a financing that makes sense based on assets, cash flow

Timing is always critical when it comes to arranging financing and making that acquisition. You need to ensure that who ever you are working with is proactive when it comes to timelines. The quality of a final financing package is critical and can significantly influence the parties who will finance your deal - which might be Canadian banks, independent commercial finance companies, or even perhaps a private equity group.

What can the business owner or manager expect to pay when it comes to a Success fee or work fees? In the SME sector we suggest a nominal but reasonable work fee and a Success fee in the 1-5% range depending on the complexity of the deal. In many cases the work fee or ' retainer' as many seem to prefer to call it can easily be negotiated to be deducted from the final Success fee.

Reasonable fees for an advisor or intermediary ensure he or she is incented to keep things moving when things get tough on a deal , and the quality of the person or firm you are dealing with will quickly demonstrate to you the amount of useful information and advice they can bring to a deal .

Also, it sure helps if you are working with someone who has a sense of the industry you are in. They tend to be on a first name basis with people and firms that can help you both acquire and finance your deal. That's important and has value.

Buying a company and arranging the appropriate financing to make your acquisition successful requires patience, proper documentation and disclosure, and some hand holding along the way. You may have found the right deal, but if proper and successful financing is not in place there is of course... NO DEAL! That’s when the right amount of debt, equity and financing expertise becomes critical.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you buy and finance that company or acquisition.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING ACQUISITION EXPERTISE


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/buying-company-financing-buy-business-acquisition.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com













Stan Prokop

Loan For A Franchise? Here’s How Franchising Finance Can Work For You

Buying A Franchise ? How To Finance That Smart Purchase!


OVERVIEW – Information on how Canadian franchisees can access a loan for a franchise . Franchising finance is a specialized form of finance .


Yes, you're looking for a loan for a franchise, but who in fact is lending for franchising finance in Canada and what are the criteria. Is there a way to ensure you have access to all aspects of franchisee loans? Some good questions - let's explore some even (hopefully!) better answers.

A few years ago as the Canadian franchise industry (and all businesses in general) recovered from the global financial crisis it probably was the worst time even to seek franchising loans. But the dust has settle, the Canadian economy seems to be firing on all cylinders, and the only question you as a franchisee want to know is ' where's my loan approval'?

While Canadian banks promote actively that they support franchises in Canada the reality is that quite often, in fact almost always! ... they don’t do this directly. That probably simply comes from the fact that in many aspects franchises are viewed as start up in nature - notwithstanding the proven business model and brand you as the franchisee have bought into. So that means from a fundamental finance point of view that there are no strong opening balance sheets, historical cash flows, and proof of profitability. In essence you're a start up... and start up financing is hard to find.

So how in fact do the banks finance franchises? The reality? They do it under the auspices of the BIL/CSBF loan program, which is a government guarantee to the bank for the majority of the loan.

There are of course other sources of franchise loans. They include specialized franchise finance organizations, private commercial finance firms, and to a certain extent equipment finance firms that will finance certain hard assets associated with your business.

The key aspect of getting approved for financing under the Govt loan program is your ability to find an experienced banker who is both familiar with the program and can help you identify the key requirements of the loan . Another method in which you can address this ' search issue ' is to seek out a trusted, credible and experienced Canadian business financing advisor who has the established relationships and knowledge to fast track approval success.

In the U.S., which has a similar program almost 25% of all loans made under their program are for franchises, and we think that's probably a similar, if not larger number in Canada. So if your competitors are getting franchising finance, why shouldn’t you... right?

If you are buying a master franchise or have multiple locations in mind various other options might in fact be available - for example assistance from a private equity group, etc. But the reality is that one individual franchise will never qualify for this type of financing participation.

The equity, or down payment component of a franchise loan is critical - It can be anywhere from 10-50% and it’s a fine line that has to be managed relative to the amount of personal funds you commit and where there will come from - i.e. collapsed savings, collateral mortgages on your home, etc, Remember the saying ' once you spend it, its gone! ‘which we caught recently.


The reasons you want to get a loan for a franchise are quite clear – owning a business, financial independence, etc. Accessing the right type of available finance for that entry into entrepreneurship is critical. Seek out and talk to an expert in franchising finance options.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE LOAN EXPERTISE






Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/loan-for-a-franchise-franchising-finance.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com
















Stan Prokop

Are You A Franchisee Looking For a Franchise Finance Loan . Here’s Franchising Capital 101!

How To Finance A Franchise


OVERVIEW – Information to franchising finance in Canada . Here’s what a franchisee needs to know to be successful in getting a franchise finance loan for his or her new business opportunity




Isn't the scary

part of getting a proper franchise finance loan in place the fact that you've already spent a ton of time, and probably some money in addressing your project? That of course means you have probably covered off already key issues such as researching franchise trends, choosing the franchisor with which you wish to become aligned with, checking out industry trends and competition... and on it goes.

So with all that good staff work behind you it must seem daunting to know that getting franchising financing might still be your biggest obstacle. Not necessarily though, so let's discuss.

If you are focused and can address 4 or 5 issues surrounding your potential purchase and financing you are going to have a lot less of a challenge than you think.

The first key issues is that of ownership equity, aka the proverbial ' down payment '. Every client we talk to seems to want to know the minimum amount of capital they can put into the transaction. Surprisingly though we even see the other extreme where some business entrepreneurs are prepared to risk it all and pay cash for their franchise - often collapsing savings or taking mortgages on their homes.

So our key point on that issue - if we had to summarize we would say that somewhere between a low down payment and a 100% cash purchase is probably what you want to be focusing on. You're never going to be successful with 100% debt, and the reality is that no financing is in fact available on the ' OPM ' concept - i.e. 100% other peoples money! Over the years we met franchisees who have told a sad tale of losing it all, personally, after their business failed and they had pledged all personal assets.

We would add that the Canadian govt business loan, aka the BIL/CSBF program requires that you provide only a limited guarantee of 25% of your entire borrowings. That as well as good rates and flexible terms make it a prime candidate to research when you are looking for a financing facility for your transaction.

Another key issue that we always focus on is the concept of doing a bit more planning around how financing will work after you have closed your transaction. So a proper business plan and cash flow that you'll need should also stay focused on how the business will address wages, how much salary you will draw, covering the franchise royalty fees in your agreement with your franchisor. Typical royalty fees we see seem to be in the 6-8% range, sometimes more, and can take a significant chunk of your profits and cash flow.

One of the ways that you can address on going working capital, other than wrestling with your spreadsheets.. is to discuss carefully with the franchisor and other current franchisees as to the ongoing capital and expansion requirements of your business.

Many business owners start with modest drawing of salaries when they start a business. A franchise scenario, at the end of the day is still a start up. Yes, its a proven business model with a good chance of guaranteed revenues, but at the end of the day its as close to a start up as you can get, so budget accordingly for your personal needs relatives to a salary, living expenses, etc.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in addressing the key issues of franchise finance success in Canada.

Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/franchise-finance-loan-franchising-franchisee.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

















Stan Prokop

3 Ways To Manage And Accelerate Business Cash Flow Via Solutions And Management Techniques

Getting Your Funds Flowing?

Information on business cash flow solutions and management . Accelerate working capital and timing with these tips and business finance methods .




Business cash flow wouldn’t be required if we could all sell on cash to our clients. However, unless your business is 100% retail that of course can't be the case. So let's examine 3 ways to address management of working capital solutions in Canada.

Sales growth is good... right? Well kind of, because those sales require financing, and management of your current debt. So at issue today for our purposes is the discussion around managing that liquidity issue, and solving problems via financing solutions...

The longer your receivables go unpaid creates two issues - first of all there is a chance the sales might be at some point uncollectible, and secondly you are going to have higher financing costs. And that’s whether you are financing through a bank or non bank solutions. (Yes, there are non bank solutions when it comes to financing A/R)

It's therefore important to continually assess your asset turnover - one basic tool being a days sales outstanding calculation. Also, at the heart of the matter is your firms overall philosophy to granting credit and setting limits with clients. Oh... by the way... the largest corporations in the world do that also, its one way in which they get large and successful! So why shouldn't your firm?

Naturally there is a potential cost in addressing a new credit policy as not all clients will want to pay within your stated terms and may consider other vendors. One way to address that issue to offer a prompt payment discount - which typically is called ' 2 % 10 '. That simply means that you are giving up 2% of your gross margins for the ability to collect A/R faster and generate business cash flow. So that is clearly on management solution you can consider.


That brings us to the actual financing of your receivables. This is an overall critical part of every company’s finance strategy and success. The hear of the matter is simply financing your sales with a cost that your firm can bear, while at the same time generating the maximum amount of cash that you require .

One of the fastest growing and popular methods of financing A/R is called ' factoring’... aka ' invoice discounting'. To clarify how this works let's use a simple example - If you have 100k in receivables you receive 90k as soon as you generate your sales. That's instant cash. You receive the balance, i.e. the 10k, less financing costs, when your client pays.

And those financing costs? They are very similar to your strategy of offering a prompt pay discount as we noted above. While this cost seems high to many the reality is that you are already incurring it by carrying receivables, or offering discounts, and not being able to take discounts with suppliers. Our recommended solution to clients is a ‘ confidential invoice financing facility ‘ that allows your to bill and collect your own receivables without intrusion from any third party .

So one key point today is to evaluate the criteria under which you can finance your sales via a receivable factoring arrangement. The costs may not be what you think!

Finally, the alternative to factoring A/R is simply bank financing via commercial lines of credit. Canadian chartered banks offer A/R credit lines that are generally based on the quality of your A/R as well as the overall quality of your financials -- so caveat emptor here - you need to demonstrate profits and a balance sheet that meets bank criteria. Under bank credit lines 75% of receivables are generally margined.

So, here we are - it's decision time. Use our information to address business cash flow solutions via internal management, credit policy, and financing solutions such as factoring and commercial bank facilities. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the right solution.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS FINANCING SOLUTIONS


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/business-cash-flow-solutions-management.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com







Stan Prokop

Cash Flows . Timing Is Everything When It Comes To Financing Business Cash Flow And Capital Management

How’s Your Timing .. when it comes to business cash flow ?


OVERVIEW – Information on cash flows and working capital for Canadian business . Financing business cash flow requires and understanding of timing and accessing solutions that work for your company or industry .



Working Capital is an area of business that requires solutions that revolve around timing.

Timing is everything when it comes to the fundamental problem of managing and solving the cash flow conundrum!

Let's examine some of those solutions using the example of a company trying to grow... which is what it's all about is it not?!

This is when what we could call your ' cash flow cycle ' needs to be both understood... and addressed. That's because the concept of timing has just kicked in ... your have produced your goods or provided your services and a specific amount of time has lapsed as you now generate revenues via invoicing... and wait for payment.

It's no secret that that whole cycle varies between each company and industry. But whether your cycle is 30 days or 120 days the effects of that timing require certain activities to be financed. The timing around this cycle, as well as the solutions that your bring to bear makes or breaks your overall liquidity and solvency - aka ' Survival'!


Example of the need to finance that cycle are should be quite clear - your firm must buy supplies or inventory, at the same time taking on payables. Wages and salaries must be covered and then you're in the waiting game when it comes to delivery and acceptance of your goods and services, as well as final payment from your clients based on your credit terms. It's therefore no secret to the business owner to see that using our example it can easily take those 30-120 days for a dollar to in effect flow through your company. Again... it’s ' timing'!

When you look at your balance sheet you see that the ratios of current assets and liabilities have also changed dramatically. You’re unfortunately less liquid and this can only be solved by financing the shortages you have carried. Of course your customer could pre pay you in advance for orders, or pay you ' cash on delivery ' but that's not the perfect world we dream about.

Financing business cash flow is all about monetizing and managing your assets. Solutions in Canada include:

Receivable financing
Commercial bank lines of credit
Asset based lines of credit
Sale lease backs
Tax credit monetization
Purchase Order and Supply Chain financing


Utilize one or a combination of solutions to manage the ' patterns' of financing that your business needs. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist your with putting together a solution that addresses the timing of cash flows and capital in your business.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS CASH FLOW FINANCING SOLUTIONS


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/cash_flows_financing_business_cash_flow_capital.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com












Stan Prokop

Your Road Map To Success With Leasing Companies . Equipment Finance Rates And Lease Finance Solutions

Looking For A Path To Canadian Equipment Financing Success?


OVERVIEW – Information on working successfully with leasing companies in Canada . Equipment finance rates and asset lease solutions are more readily available for the Canadian business owner.



When it comes to using leasing companies for equipment finance in Canada is there a road map that Canadian business owners and financial managers can use to ensure they are getting the best solutions, rates and structures for acquiring business assets. We think there is a basic road map that can be followed to ensure asset financing success.

So what would the elements of that road map be? We think it comes to the following categories :

Solid structures , rates and terms

Understanding the benefits, and yes the risks of lease finance

Ensuring you have chosen the right lease with a monthly payment and term that supports your financial needs

Understanding the accounting and tax implications of your transaction


Trouble shooting to ensure you're dealing with the right lease company

Utilizing Proper third part assistance when needed

When you have those points covered off we're pretty sure you are very close to having a solid road map in front of you for the lease finance journey.

There really isn't another more popular method of financing your business asset acquisitions in Canada and the U.S. In fact billions of dollars of assets are financed every year, and the ability of your business to acquire assets with financing that comes with other benefits make this business tool extremely popular.

The actual asset that your firm acquires has both a useful life and some economic and hopefully operational value to your business. In many cases these assets will have a residual value. That's where it’s important for you to ensure you're still following some of our road map issues - namely understanding who to deal with and what type of lease you choose. Those two choices boil down to lease to own (capital lease) and lease to use (operating lease).

How you shape and negotiate your payments around that asset is what makes you a winning in dealing with leasing companies. Equipment finance rates themselves are important, but at the essence of this financing tool is the fact that you have access to a lot of structuring tools that come with both risks and opportunities for you and your chosen lease company.

Typical benefits associated with lease finance include the ability to match monthly payments to cash flow streams that make sense for your firm. Despite all the flexibility that is offered with lease structuring more often than not the business owner and manager simply wants to know that a regular fixed monthly payment is a known factor they can readily deal with.

When equipment finance rates and monthly payment values are critical you have access to a number of solid tools -. They include lengthening the lease term, including a residual value in your structure, or negotiating lower down payments.

If you want to maximize the leverage your firm has in acquiring assets through leasing companies spend some time on our key ROAD MAP points and protect your interests and assets.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your lease finance needs.

7 PARK AVENUE FINANCIAL
CANADIAN EQUIPMENT FINANCING EXPERTISE

Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/leasing-companies-equipment-finance-rates-lease.html




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com














Stan Prokop