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INFORMATION ON ACCOUNTS RECEIVABLE FINANCING CASH FLOW SOLUTIONS
Accounts receivable credit financing is one method in which thousands of firms in Canada generate ' cash on hand '. That phrase is of course the accounting/business term which business owners and financial managers in Canada refer to with respect to their positive cash balances.
Your ability to have cash on hand at any given time provides you of course with the sense of positive feeling that you're able to fund both operations, and hopefully growth. We've observed over the years that Canadian financial statements typically seem to reflect less cash on hand when it comes to monthly or annual financial statements .
Naturally in tougher economic times it is even hard to maintain positive cash balances, and we're quire sure most business owners would maintain that they are not 100% satisfied with their cash position over time. It is of course important to remember that too much idle cash is a negative item - large corporations even risk losing their ownership when suitors circle with the intent of leveraging the firms cash and assets to in effect take their company away from them via a buyout . But we digress...
The pressures that reduce cash flow are obvious to most business owners and managers. They are fluctuating sales, lower profit margins, and the inevitable slow paying clients which these takes take anywhere from 60 to 90 days, even though your terms are net 30. We wish!
Although management of businesses in the small and medium sized sector in Canada (SME) typically focus on survival and daily operations it's clear to all hopefully that cash flow success also translates into ability to grow your business.
So how does business increase the cash cushion. The simply answer is to lower your costs, get extended credit with key supplies, lower inventory levels, improve collections, and monetize current assets .
Factoring receivables focuses on the latter, monetizing your typically largest asset, your A/R. Accounts receivable credit financing, i.e. ' factoring ' allows you to get paid on invoicing, typically getting 90% of your funds as soon as you deliver your product or service. And by the way, that other 10 per cent isn’t the cost of financing! that balance is remitted to you as soon as your customer pays, less financing costs which are typically in the 2% range if your terms and collectability equate to 30 days. Bottom line, all of a sudden your cash cushion of cash on hand is there, and it’s positive!
The receivable financing industry in Canada is fragmented, consisting of a number of large and small players. They offer the benefit of instant cash flow for firms, allowing them to meet the obligations we spoke of, i.e. payroll, government remittances, and growth.
So when should a customer consider factoring receivables. Typically it’s when you yourself have become the financing company you never intended to be, carrying larger amounts of inventory and receivables than you desire. All of a sudden you're in a position to take supplier discounts and entertain larger orders and contracts.
Is accounts receivable credit financing and factoring for your firm. It is if you maintain proper financial records, have generally creditworthy clients, and are in a position to provide those receivables as collateral for the cash flow. Simple as that.
Speak to a trusted, credible and experienced Canadian business financing advisor who can assist your with your ' cash on hand' needs!!
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
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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