Your Company Signed Up For A/R Financing & Didn’t Get What You Thought?
OVERVIEW – Information on AR Financing in Canada . When It comes to account receivable factoring are you aware of the best solution?
AR (account receivable) financing is a critical aspect of any, large or small, commercial business that sells on credit. That time gap from when you are finally able to issue an invoice, to when you get paid is one of the most critical time periods in any business. More often than not that time gap needs to be financed - in the right manner. Let's dig in.
Many clients we speak to have in fact already ' signed up' for some form of receivables finance - in certain cases they are ' factoring' their A/R. The challenge then? It's just a case of what they got isn’t necessarily what they signed up for. And a small handful of key tips can help you avoid any mistakes in this area.
Why do firms finance A/R? As we have hinted it’s simply that in corporate finance the ' working capital cycle' needs to be addressed. And typically the way to ' shorten ' than waiting to get paid scenario is addressing the financing of your firm’s receivables.
When firms use a third party finance company , as opposed to bank financing , to finance working capital its really the type of facility and terms that ' make or break' a good deal in this area . It is probably apparent to all, but we will say it never the less, that Canadian chartered bank financing is simply not available to all commercial borrowers in Canada. And sometimes, even when it is, it's not enough.
One of the true ironies of Canadian business financing is that our banks, in general, are not generally in favor of meteoric sales growth - the type that requires huge bulges in financing needs. As someone once put it, the challenge is to keep your company both ' going' and ' growing'!
So why do firms turn to a commercial finance company for factoring of their receivables? It's really the reasons, and how the financing addresses those reasons properly that’s at the crux of our discussion today.
And those reasons? They more often than not are as follows:
Inability to secure bank financing (company too new or no established track record
A/R Exposure to government receivables or out of country sales
Financing required is often greater than available through a bank even if the company were approved by its bank
Fast timing is required to address large orders/contracts
The need to address a slow down in payments from key clients
So is there a ' perfect’ factoring facility that addresses and cures all of the above issues. One that we feel does that is Confidential A/R Financing. It allows you to bill and collect your own receivables, is competitive in price, requires no notices to your clients, and allows you to margin up to 90% of your AR on an ongoing basis as your firm ' goes; and ' grows'!
Where do things go wrong then? It's simply when the business owner or financial manager doesn't understand the paperwork, pricing, and ongoing management of this type of facility. One way to correct that? Seek out and speak to a
Stan Prokop - 7 Park Avenue Financial :
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 90 Million $ of financing for Canadian corporations . Info & Contact details :
7 Park Avenue Financial = Canadian A/R Financing Expertise
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