Factoring Is The Secret Weapon In Canadian Receivables Financing - Here's Why!

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There's A Better Way To Finance Sales & This Just Might Be It!
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Information on factoring and canadian receivables financing solutions . The ability to monetize your sales into cash flow / working capital is a key success measurement in any business

Factoring in Canada provides Canadian business owners and financial managers with an alternative method of financing working capital and cash flow needs. A classic situations in which your firm would utilize this method of financing is when you are experiencing strong growth, or unable to finance daily working capital needs when you have significantly larger orders or contracts with either a new or existing customer . Factoring in Canada is the financing of good accounts receivable. The business model is simple to understand, but requires extra diligence on your behalf in choosing which technical method of factoring would work best for your firm.


We recommend non notification factoring to our clients, although that is only one of several methods available to your firm. Under the non notification method of factoring you are in total control of your receivables and working capital. You bill and collect your receivables in the normal manner that you always have, but at the same time, due to the way in which factoring benefits business, you receive instant cash flow and working capital as soon as you are able to generate a valid invoice to your customer.


The higher cost of this type of financing can in many cases easily be offset by smarter buying on your firms part, or taking advantage of discounts not previously available to yourself when you carried large receivable and inventory positions based on traditional customer payment habits of 30, 60, and yes even 90 days sometimes . If you have a customer that is paying in 60-90 days you can generate all the cash due from those sales 2-3 times via factoring, as opposed to getting paid once in the customers 60-90 day payment time to yourself .


Factoring is simply all about working capital turnover. Is factoring the panacea of total goodness for your firm. We tell clients that no one type of financing is always going to be the best long term solution for your firm , but quite frankly factoring is an excellent ‘ bridge ‘ to your next level of growth . That bridge is there because your firm is new, has financial challenges, or, as we noted, is growing too quickly to allow you to negotiate traditional bank financing.

So how do we ‘cross the bridge ‘our clients ask? The answer is to simply understand the following facts:


Factoring is a solid immediate cash flow and working capital solution for Canadian business
Factoring has a higher cost than traditional financing
More often than not it should be viewed as an interim financing facility
There are different types of factoring in Canada offered by different firms – Don’t choose the wrong facility!


Factoring and receivable financing, (also known as invoice discounting) differs from traditional bank lines of credit. Depending on which type of factoring facility you use you in effect can have unlimited access to working capita. That is simply because this type of financing focuses on your assets themselves, not your balance sheet and income statement. In negotiating a bank line of credit the total focus is on yourself as owner, your balance sheet, your income statement, your industry, and your years in business.


Factoring places a much smaller reliance (in some cases none!) on those guidelines, and focuses solely on the following:


You have assets (receivables)

They are financeable today for immediate cash flow!


It’s as simple as that.


So, in summary is it that easy? Yes. And no. We say no because the challenging in setting up a proper factoring facility in Canada is simply understanding the differences in the types of facilities that are set up on your behalf, how they work, how they are priced, determining if you wish to lock in to a contract or leave it open ended, and your overall comfort level with the day to day business model of factoring receivables as you generate sales. Speak to a credible, trusted and experienced business advisor in this area and ensure you understand how the benefits of this type of financing can be crafted into a facility that works for your Canadian firm.


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

http://www.7parkavenuefinancial.com


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 100 Million $ of financing for Canadian corporations .

' 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