Receivables Discounting Solutions In Canada . Getting A Handle On Debtor Factoring Solutions That Make Sense

There’s A Big Problem When You Don’t Understand Factoring and A/R Finance




OVERVIEW – Information on receivables discounting solutions in Canada . How does debtor factoring differ from standard bank credit lines , how does the process work, and why is it a viable option for owners and managers seeking a cash flow solution to business finance challenges





Receivables discounting solutions in Canada. Not understanding something in business can often be simply confusing - sometimes it's downright dangerous. So let's take a basic look at debtor factoring solutions; how do they work, what do they cost, and why in the heck you would consider such a Canadian business financing solution. Let's dig in.

First of all, it’s nothing new, that’s for sure. It's a method of financing that’s been around for only hundreds of years. We’ve heard it originated when the Dead Sea was simply ill!

Often confusing with bank lines of credit that are receivable based, it's simply a process where you arrange, on a one time, but usually on an on going basis to sell your A/R for immediate cash as you generate sales. If we were keeping things really simple we would tell you that you generate an invoice for $ 100,000.00 dollars and you receive that cash, right away, as we have said.

Well almost, the actual process has you receiving 90%, 90,000.00 - the balance is a hold back to cover off any short payments or extended pay issues. That 10k balance, ' the hold back ' is remitted back to you, again, immediately, as soon as your client pays. Deducted from the 10k are the receivables discounting fee, which customers tend to refer to as the finance charge for the transaction.

So what don't Canadian business owners and financial managers often understand? The reality is they tend to view of confuse the whole process with bank loans. While the bank registers pretty well the same security against the A/R as the finance firm helping you with factoring, the issue is simply that the bank lends on an ongoing basis against the receivable, and other security they hold as collateral. The challenge in accessing bank credit lines is that your firm must have clean balance sheets, profits, cash flows, personal guarantees, and other qualifiers that ' sometimes' make it challenging to access A/R finance.

Oh and buy the way, if you're a start up or experiencing intense hyper growth that challenge of accessing bank financing is even more daunting. So as we have said, you'll understand receivables discounting a lot better when you separate it from what Canadian chartered banks do with A/R, and how the daily process actually works. Hopefully we've already brought some clarity to the problem of understanding your different working capital and cash flow solutions - they all achieve the same goal, it's just that sometimes they work and cost a little differently.

The issue of cost is always a matter of ' mass confusion' when it comes to debtor factoring. Bank lines of credit are the cheapest and most flexible form of financing in Canada. That’s a safe statement we can make. But when that type of business credit can't be accessed then its alternative financing solutions that make sense. Yes the cost is more, but that cost is offset against all the cash flow your firm now has access to. Quite frankly we can comfortably make the statement that you have unlimited cash flow, with no upper limit, if your firm has the sales and receivables to backstop your facility.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your receivables discounting solutions to enhance cash flow and access to capital.


P.S. Don't forget to ask that advisor about CONFIDENTIAL A/R FINANCE allowing you to bill and collect your own receivables in a manner that suits your firm and your client relationships.



CANADIAN RECEIVABLES DISCOUNTING 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 :

RECEIVABLES DISCOUNTING SOLUTIONS AND DEBTOR FACTORING







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