In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.
Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.
Monday, March 21, 2011
Canadian Business To Business Factoring Stripped Down – Receivables Cash Flow For Your Accounts
What's our goal here ? It's to explain the art, and science of business to business factoring so your firm can understand the benefits, costs, and ' how to ' of receivables financing for your commercial accounts . (Commercial, because in general consumer receivables can’t be financed in this manner - see .. you have learned something already!).
So where are you in the pack? We think we know already, you are either growing quickly, or running into all sorts of obstacles when it comes to cash flow and working capital financing. Is it possible to actually finally manage that situation successfully? One of a number of possible answers is the cash flowing of your receivables - which can be facilitated by the way on a one of, periodic, or on going full time basis. Bottom line, your firm has options.
So what does business use receivables factoring for ? - its pretty obvious - the general day to day business obligations you have with suppliers re your payables, any loan or lease payments you need to make, admin and salaries, etc.
The reality, (hopefully) is that your ongoing working capital needs fluctuate, and that you are not in constant crisis mode. We are the first to admin that with the recent recession every small and medium sized business in Canada probably felt, to some degree, a tightening of business credit. Suffice to say they looked for alternate or new innovative solutions for business financing.
One of these solutions is business to business factoring, which is the sale of your receivables for cash. It sounds so simply, that’s why we are hoping to convey the ' stripped down' explanation of this type of financing, while at the same time warning clients where some of the complexity and risk lies.
Receivables, your commercial accounts tended historically to be paid in commercial environments in 30 days - these days 60 and 90 days are common occurrences. Your ability to smooth out the cash flow ultimately will reflect in your overall business financing success.
Let's focus in on our core asset, your A/R. Go to any balance sheet and receivables will make up a very large portion of your ' most near liquid ' asset. Your ability to monetize that asset on an ongoing basis creates working capital.
Business owners need to consider that their ability to monetize cash through receivables factoring in essence can become a competitive tool, allowing you to penetrate markets, and generate more sales and profits at the expense of your creditors.
Business to business factoring has been around for 100 years, if not more. Why is it more popular today? The simple ' stripped down ‘reason it is easier to obtain than bank credit, and can often be fully functional in your company within a couple weeks.
Why do business owners like and utilize A/R financing? - simply because it has limited focus on personal covenants of the owners, other asset collateral is not required, and under the right circumstances your customers and suppliers aren’t even aware of how your firm has suddenly become flush with cash .
So that’s all the upside, is there any downside? Only if you don't know what you are doing !You need to focus on what types of business to business factoring is out there, what are the costs ( they vary from 1-3%/month) and if your receivables partner has the flexibility and straight forward processes to accommodate your day to day activity . Speak to a trusted, credible and experienced Canadian business financing advisor to ensure our ' stripped down ‘version of business factoring meets your business and cash flow goals.
Stan Prokop - founder of 7 Park Avenue Financial -
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :