Accounts Receivable Finance Solutions: Investigating Cash Flow Factoring Solutions

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Beyond Reasonable Doubt This Cash Flow Financing Solution Works – Here’s Why & How

OVERVIEW – Information on cash flow financing solutions in Canada. Factoring is the fastest growing accounts receivable finance solution in Canada - Here's why

Cash flow needs for Canadian business owners usually have them in one of two camps - either they have unlimited cash resources (doubtful!) or they are constantly hampered by day to day challenges in growing and managing their business - (probable!). Accounts receivable finance solutions such as factoring could well be the solution to all your problems. Let's dig in.


Canadian business owners and financial managers face, on a daily basis real world cash flow challenges. Let’s look at an example at why accounts receivable finance can be your holy grail of working capital financing. Cash flow financing goes by a number of different names in Canada that is part of the confusion we are always trying to wade through on our client’s behalf.

Various terms apply to this type of business financing. They include: factoring, invoice discounting, A/R financing, and our favorite and most recommended solution - Confidential receivable financing. Depending on how your transaction is structured and who you are dealing with is really the key issue - It's not about what the financing is called!

Clients always want to know if they are a candidate for this type of business financing. There are some perfect candidates, so let’s look at a profile or two in order that you can determine if you fit. Generally you will have accounts receivable that pay fairly regularly but are on occasion slow.

Your overall bad debt experience has probably been in the satisfactory/respectable column. Your invoice and stated terms for your customers is 30 days, but guess what? Some or many clients in 60 and 90 days. Bottom line - you're in the category of needed an A/R finance solution.

Does size count? Depends what you're talking about of course! In cash flow financing it really doesn’t. Speaking in general terms if you have at least $ 50,000 of invoices a month you are a candidate for accounts receivable finance. The reality is that corporations with millions of dollars in receivables actually utilize this form of financing also.

Where size might count a bit is that it has a potential effect on your overall financing cost. In our experience you can potentially reduce the cost of your accounts receivable finance facility by close to 1% per month if you have a large facility. However, we spend many hours and many meetings educating Canadian business on factoring pricing, which is grossly misunderstood by most clients who look into this type of business financing.

So the bottom line is that you should not let your company size, or any other challenges you might be facing (temporary financial losses, restructuring, etc) affect you ability to successfully achieve an accounts receivable finance strategy.

Many times the decision to consider factoring of your receivables comes from directly related issues to collections. In some cases the slow pay nature of your client may be affecting your ability to purchase inventory or meet payroll - It that type of classic situation that drives clients to seek outside financing assistance.

When you finance (in effect you are selling) your receivables under this type of facility you immediately receive a 90% advance on your invoicing - that allows you to meet obligations and expand your business.

Traditional sources of business financing in Canada, i.e. chartered banks have made it challenging for firms to finance receivables in a manner that makes sense for the business owner. In some cases, as we noted, your business has or had challenges that prohibit you from temporarily sourcing cash flow financing from banks.

Speak to a trusted, credible and experienced business advisor, and focus on getting into a facility that meets your needs re day to day workings and cost.


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 13 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 :
http://www.7parkavenuefinancial.com

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

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