What Happens When You Use The Right Accounts Receivable Financing Solution?
OVERVIEW – Information on account receivable financing in Canada. Factoring receivables is often misunderstood and benefits are significant . Here’s why.. and how to!
Accounts receivable financing solutions often have Canadian business owners/financial mgrs not fully understanding the impact and benefits. Also known as ' factoring receivables' one top expert probably describes it best - Expensive... and Valuable! Let's dig in.
Numerous source of A/R financing are available to your company when you're looking to finance sales. That, whether you like it or not, is part of the confusion around the multitude of ' offerings' that come from asset based lenders and commercial finance companies.
The best way to describe the fundamental receivables finance offering is to think of it as an alternative to a bank line of credit - although numerous key differences have to be fully understood to make the ' Valuable' part of our expensive/valuable equation work!
One positive aspect of factoring is the fact that it provides a significant borrowing leverage - typical advances are in the 90% range. Most business owners are aware that banks only finance AR at 75% as a most common practice.
A proper financing will allow you to draw against the previous month end A/R. With that information the owner/mgr can then calculate ' borrowing power' for the month, allowing for proper cash flow planning.
When you are factoring receivables who your client pays and how they pay is key to getting the best possible facility in place. In the majority of cases payments by your clients are made to a bank ' lockbox/post office box' controlled by the finance company. This works best... for the finance company. The optimal solution sought by most owners is of course to have their clients pay them. They want to maintain the client relationship as well as be perceived as in charge of their own business finances.
The solution to the client payment problem? We call it CONFIDENTIAL A/R / INVOICE FINANCING. The process? Your client pays you!
Pricing on A/R financing in Canada varies, again emphasizing the need to ensure you are working with the right firm or advisor. While small facilities are in fact available and popular the truth of the matter is that facilities typically are in the 250k range and up - with virtually no upper limit - including 'factoring' in your growth prospects.
In future updates we'll discuss the more on the mechanics and cost of factoring receivables and why the perfect solution to financing your sales might just be around the corner. If you're looking to understand ' VALUABLE ' versus ' EXPENSIVE ' in non bank sales finance solutions seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in your funding needs.
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 10 years - Completed in excess of 100 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 & Contact Details :
7 PARK AVENUE FINANCIAL = CANADIAN ACCOUNT RECEIVABLE FINANCING AND FACTORING EXPERTISE
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
' Canadian Business Financing with the intelligent use of experience '
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
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