How Receivables Financing , aka ‘ Factoring ‘ Manages And Solves Working Capital Problems

Is Factoring The Solution You’re Looking For In Financial Management ?


OVERVIEW – Information on factoring and receivables financing in Canada . Is this widely used financial management tool a solution for Canadian working capital and cash flow challenges ?



Could a receivables financing program actually help you manage and success when it comes to solving those working capital problems? Top experts in the field show that the trend towards many companies adopting a factoring / receivables finance strategy is in fact one solid solution to cash flow management... and survival in Canada. Let's explain!


At the core of our subject is the concept of ' working capital ' which is sometimes difficult to grasp for the Canadian business owner and manager in the SME sector. Those large corporations seem to have it down pat, don't they ?

When they do those conference calls on their quarterly results cash flow and growth seems to be all they are talking about .. right!

So does a receivables finance strategy solve the problem? It's kind of good to understand the problem also, don't you think - and in our case it's all about managing your current assets - receivables, inventory, etc.

In the case of receivables if you don't have a stated goal (by the way those large corporations do - they call it days sales outstanding) you definitely have an intuitive goal, which is to turn over those assets into cash.

That's where factoring/invoice finance comes in. It accelerates that turnover of receivables into cash at Warp Speed. And just what is that warp speed?

Well you should know by now, and if you don't you do now... that factoring generates cash as soon as you make a sale. So the current assets, in our case A/R that you permanently have on your balance sheet are turned into cash. That cash allows you to run the company and satisfy all other creditors.

Your payables, which comprise usually the majority of your short term liabilities are a great way to manage debt, and the cash flow you receive from factoring helps keep the risk of insolvency at bay. Simple as that.

So while the Bay Street gang focuses and talks on the concept of working capital your firm, with an adopted factoring strategy helps you cut through the jargon without limitations to timing. What we mean by that is that if you calculate your Current ratio, and let’s say for example it is 4:1 that really is somewhat meaningless if receivables are not collected and inventory isn’t turning. Factoring solves that receivables turning issue very quickly!

It's important to remember that receivables finance, as a solution to working capital challenges is a short term financing strategy. Long term it's up to you the business owner and manager to manage long term debt and grow your company.

Factoring is one key solution that helps you solve the cash flow cycle conundrum, which is the ability of 1$ to make it through your entire company, from product purchase for inventory to cash collected for your sales.

The bottom line today - Cash shortages reach a peak when your firm is carrying a high level of accounts receivable. Factoring solves that problem by converting your one major source of cash - receivables into immediate working capital.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you set up a proactive Factoring program to meet your business challenges.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING AND RECEIVABLE 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/factoring-receivables-financing-working-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