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Admit It ! Your Company Just Might Have A Working Capital Challenge & We've Got A Solution
Information on working capital solutions including asset based credit lines, true working capital facilities and a/r factoring
How does it work ?
What does it cost ?
Naturally, even more important, is it right for your firm? Factoring in Canada is what we would call somewhat ‘fragmented’ as a business or industry. As a result many clients we meet either have entered into the wrong kind of factoring facilities, or simply don’t know where to go when they want more information. Because of that we encourage business people to enlist the aid of a trusted and experienced financing advisor in this area.
Unbeknownst to many people there are even banks in Canada, including some in the big 6 that offer this type of financing. We would position that offering as probably the best one in the industry, however our overall financing volumes must be very large and typically a facility would be at least in the one to two million dollar range, so that does not work for everyone .
When we refer to factoring we can make the statement it is in the general category of asset based financing – but it’s very specific in that in deals only with your account receivable. The basics of the factoring finance offering are that your receivables are purchased, as soon as you issue them, (if you wish). Legal ownership of the receivables is not longer your firms, but you have the immediate cash flow and working capital by virtue of having sold those receivables.
In our opinion 95% of the factoring in Canada involves the factor firms role in the billing and collection of your accounts – we don’t necessarily feel that is the best facility for the Canadian marketplace and encourage customers to initiate a facility whereby they get all the benefits of factoring from a financial perspective, but at the same time are able to bill and collect their own receivables. Most Canadian business owners are not looking for what we could call an ‘intrusive ‘financing facility that has their customers interacting with the factoring firm.
Canadian business probably does not realize that factoring, also otherwise known as invoice discounting, is used by thousands and thousands of firms in Canada. It has become more popular for a variety of reasons, one of them simply being that as it gets more difficult to obtain business credit in a challenging financial environment factoring itself offers total solutions to working capital and cash flow challenges. Another key point is that this type of financing has a broader appeal to companies that are either in start up phase, or growing very quickly and unable to access more traditional working capital.
A true feature of factoring is that it in effect provides you with unlimited working capital. By that we mean that if you have a traditional banking or term lending type facility it has caps and limits on it, including things such as covenants and other collateral. Since the underlying asset in factoring is just the account receivable, we can make the statement that if your receivables are continuing to grow you will always have the commensurate access to cash for all those receivables.
Most of the factoring in Canada is done on a recourse basis , so your firm ,or your factor partner, has to do some level of due diligence on your customers, although naturally every Canadian business should be doing that anyway . So if a receivable becomes uncollectible then you need to repay that amount that was advanced on that receivable.
In summary, if your Canadian firm is looking for a traditional factoring model and you don’t have concerns about your customers being notified of your factoring facility, this type of financing will suit you.
However, if you wish to maintain a total control of your billings, collections, and your interaction with our clients then consider a true working capital factoring facility – You will have all the funds you need, and your financing will not be transparent to your client based. That’s a great financing solution.
7 Park Avenue Financial :
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
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 .
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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