Canadian Business Financing - 7 Park Avenue Financial: November 2019

Saturday, November 30, 2019

Acquiring Business Assets ? Equipment Finance Loans & Lease Finance Are The Solution !

Creative Ways To Acquire Assets Via Lease Finance Solutions

Equipment Leasing questions we always get ? How About : What's my rate? Are we approved? What are my rights and obligations under this transaction? What's the capital of North Dakota... oh sorry, forget that last one..!

And on it goes... these are just some of the many questions that clients ask us when they are looking for assistance in sourcing and negotiating equipment leasing and working with financing companies in that regard . We do acknowledge it’s a big challenge sometimes - the Canadian marketplace is a bit different than its counterpart in the U.S. The finance industry is fragmented, and business owners and financial mangers absolutely could not be expected to know the credit appetite, the asset appetite, and the structuring options available from literally hundreds of firms offering lease financing.

Let's share some ' secrets' and tips around ensuring you can be successful in your equipment financing strategy. First of all, different strokes for different folks - what do we mean by that? Simply there are number of very well published ' equipment leasing benefits ' offered by finance firms. Do they all apply to your firm? Probably note, so focus in on understanding which benefits of lease financing work for you, and then... maximize them! Through effective negotiations.

For the record those benefits usually include payment structuring to your cash flow, tax advantages, upgrade and return options, and simply being an alternative to traditional debt and loan negotiation. Oh and we forgot one other key benefit, its generally recognized that lease financing credit approval is significantly easier to obtain than bank term debt or other loan mechanisms of a more traditional nature .

Psst... Want to know another secret. Here's a good one, that almost no transaction is too large or too small for the Canadian equipment financing market. So, if it makes sense to lease a 2000.00 photocopier consider it, and if you're buying a corporate jet for 3 Million dollars, there is a lease approval for that asset also.

BENEFITS OF LEASING EQUIPMENT

If there is on obvious secret or tip that most owners miss it’s simply that when it comes to any type of ' technology ' you should consider equipment leasing with financing companies that are knowledgeable about the asset. We are mostly talking about computers, but the tech universe today covers telecom, and many other types of assets. Technology changes, tech assets depreciates very quickly, and the best kept secret in town is often a technology operating lease , allowing you full use, but not ownership, of the asset .

Many clients seem confused by the ' lingo' used by financing companies. You can be forgiven for not knowing ' off balance sheet leasing, residuals, fmv, all in rate, amort, ' etc, etc etc. So the best and final secret we can probably provide for you is simply to search out a trusted, credible, and experienced Canadian business financing advisor who will help you identify priorities and finalize equipment leasing success for your asset acquisitions.

New equipment leasing and used equipment leasing solutions are available in numerous creative solutions for your business asset needs. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance of success in helping firms acquire key business assets to run and grow their business.

Oh and by the way. Bismarck. That’s the capital of North Dakota.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !

7 Park Avenue Financial provides value added financing consultation for small and medium sized businesses in the area of cash flow , working capital , and debt financing .

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

Thursday, November 28, 2019

Here's What Really Matters With Inventory Financing Companies

Little Known Factors That Affect Inventory Finance Solutions

Inventory finance lenders in Canada provide the solution to ongoing working capital challenges encountered by Canadian business owners and their financial mgrs. Inventory is often a key component in the current asset part of many balance sheets , particularly those in industries such as manufacturing . There are some critical factors in an inventory financing loan that need to be understood . Let's dig in !

Inventory financing is of course the collateralizing of your inventory for cash flow purposes . Where it gets tricky is that it has to work for yourself and the lender , and can also get a little tricky if you have existing financing in place as a part of your overall business strategy.

Most working capital solutions revolve around inventory and receivables - if your sales are growing and you have business accounts receivable and are turning your inventory you are a candidate for more working capital - especially as these two asset categories grow!

The key to facilitating a solid inventory financing, or purchase order financing in Canada is to help your lender get the feeling they will never have to realize on that inventory to collect their loan or financing proceeds! You want to be able to demonstrate that your inventory is marketable, and that you have the ability to control and count the inventory. A perpetual inventory accounting systems helps a lot in that process , so investigate that with your accountant.

In some cases a purchase order financing solution or an a/r financing facility might be very complementary to the inventory financing loan. This is especially true for firms that take on much larger contracts or clients / orders.

When clients ask us what can go wrong in an inventory financing scenario we often simply state that you must be in a position to be able to turn inventory over and demonstrate your products are marketable in a worst case scenario .

We mentioned earlier about the challenge of managing through an inventory financing facility based on your current borrowing arrangements. In a perfect world (we know it’s not a perfect world!) you secure both inventory and A/R financing via a chartered bank. The alternative to this is an asset based lending facility, or what is known as an ABL line of credit. This facility margins inventory and receivables to the maximum value, which great increases your ability to draw down on cash flow needs.

In a working capital or asset based line of credit situation you will usually have a larger draw down on receivable, but a proper inventory financing scenario can easily secure 60-80% of your overall inventory values and that is a lot of additional cash flow if you need to draw down on it.

BENEFITS OF A PROPERLY STRUCTURED INVENTORY FINANCING LOAN

The key benefits of a properly structured inventory financing facility are that it supplements your overall working capital needs. The facility should revolve, and you should only be paying for what you use. You should also have defined borrowing limits on inventory, and the ability to repay, or draw more financing at your option.

Your best inventory financing ability will ultimately come from your ability, as we said, for you to demonstrate proper accounting and reporting of inventory, as well as information on customer prospects, contracts, etc.

Pricing on inventory and purchase order financing varies with the size of the facility, lenders interpretation of the marketability of your product, and your ability to turnover inventory at equal to or better than industry standards based on your own business model. Focus on demonstrating clearly how inventory financing will grow your sales and profits, that’s a win win situation for you and your inventory lender.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your inventory finance needs.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Tuesday, November 26, 2019

Factoring Services For Trucking Companies : Not as Difficult as You Think

Interested In Transportation Factoring Companies?

Factoring services for trucking companies is a key part of the transportation finance landscape ,. Let’s look at some of the reasons for that.

Canadian Trucking and Transport firms have historically been significantly challenged in financing their company through traditional working capital methods – i.e. bank loans, bank lines of credit, working capital term loans, etc. When these are not available (for a variety of reasons!) Your trucking and transport firm, no matter what size, should consider receivable financing, also known as freight factoring .

In the past we have spoken of the ‘working capital gap ‘. Nowhere is this ‘gap ‘more evident in the trucking industry. Will it require rocket science to understand the gap? Not really, it’s as simple as this – your drivers, fuel suppliers and other want to be paid weekly, or within 30 days, whatever their terms are with your firm. You have receivable, but these tend to be collected in 60 days, sometimes more, sometimes less, mostly more!

That’s the working capital gap.

As a trucker or truck firm owner you are looking for a better way to finance your business. Truck factoring / freight factoring in essence give you an unlimited amount of credit line based on the receivables as collateral. As your business grows, so does your factoring facility.

This type of accounts receivable or invoice discounting facility allows you to pay suppliers and employees, and further allows you to focus on growing your business. What you are doing in essence is capitalizing your business with the proper amount of working capital. That’s common business sense, and allows you not to tap into either personal financial resources or enter into long term loans, assuming you qualify for those loans – many don’t in the somewhat challenging current financial and banking environment.

So it all sounds kind of easy, do it not. There are of course issues you have to both understand and address. One if of course fees, which range in Canada from 1-3% per month. As a business owner of financial manager of a truck or transport firm there are numerous ways in which you can offset part, or in some cases all of your financing charges. One of these very obvious ways is to use the new cash and working capital that you generate from your factoring and accounts receivable discounting facility to pay suppliers on time and take their discounts.

When we talk to Canadian business firms, including truck or transport firms more and more of their time is focused on looking for cash flow solutions and not on running and growing their business. With a proper accounts receivable and factoring facility you can focus on growing your firm’s sales and profits.

In Canada factor solutions for truck and transport firms, how they work on a day to day basis, and their costs differ greatly, and we mean greatly. We recommend you talk to a trusted and experienced advisor in this area to maximize the solution that’s best for your firm in terms of rate, structure, and day to day paperwork.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of financing success to assist with your cash flow needs.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

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 '

Sunday, November 24, 2019

Why Do Companies Factor Receivables ? Cash Flow !

Do You Qualify For Factoring Receivables ?

Factoring receivables in Canada is well over 40 years old in Canada. So why though do so many business owners and their financial mgrs. not know about the types of factoring and how pledging receivables work . More about that ' pledging' later !

Ironically A/R factoring has its roots was in one particular industry, fashion and garments .We can say tongue in cheek now that factoring itself is in fashion!

While many companies would be perfectly willing to arrange pledging receivables to their bank for a business line of credit the hard truth is that many firms don't qualify for Canadian chartered bank financing based on all the criteria that banks demand for business credit lines. That is why alternative finance, via solutions such as factoring and invoice discounting provide the same cash flow solution, albeit at a higher cost.

Most Canadian business owners and financial managers know only two well that their line of credit is capped at a certain financial amount. And that borrowing facility is subject to personal guarantees, sometimes other additional collateral, and most importantly loan covenants and ratios that restrict your business in a number of ways.

Many Canadian business owners know full well that if they do have a bank operating facility it is a low rate facility, i.e. the interest rate is great. But what if that facility cannot meet your business needs. In effect you have a small, or smaller let’s say line of credit than you need, its cost effective, but, guess what? Your company finds it difficult to grow without working capital.

So what about the different types of factoring ? Yes Virginia, there are numerous types, from old school full notification invoice discounting to asset based lending which monetizes your a/r much like a bank facility, allowing you to do all your billing and collecting with no notification to your clients .

Traditional U.S. and European factor firms with branches or subsidiaries in Canada offer the traditional version of factoring, which has the factor finance firm also involved in your credit and collections and credit extension. While this works for many firms we recommend to our own clients that they utilize a non notification facility . We call this Confidential Receivable Financing ! Your firm has all the financial benefits of factoring, and you in charge of their own destiny via customer relationships, amount of credit extended, etc.

When factoring is employed you receive an immediate advance against your accounts receivable . Moreover you are only paying for what you use, and , if you have structured the right type of facility you are not locked in, you have a competitive factoring or discount rate, and your are turning over receivables and inventory much faster than before . Those faster inventory and A/R turns translate into increased profits and owner equity.

Factoring in Canada is quickly overcoming a stigma that it is for companies in distress – the exact opposite is many times more true – which is that some of the largest corporations in Canada utilize factoring through asset based lending arrangements of their receivables, and inventory .

Speak to a trusted, credible, and experienced business financing advisor with a track record of business financing success to ensure that you understand the benefits of a true non notification working capital factoring facility.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Thursday, November 21, 2019

What Type Of Receivable Financing & Working Capital Solution Works Best For Your Firm?

Why Take Chances With The Wrong Type Of Cash Flow Financing ?

Cash flow enabling is of course the top priority for every business owner and his or her financial manager. More often than not firms that search for asset based loans such as factoring or invoice financing are looking for a short or intermediate solution - the hard reality being that traditional financing from Canadian banks may not be available.

In some cases though asset based financing solutions can work in the long term also - but newer businesses with less of a track record, or high growth / fast growth companies need access to working capital..now . In some cases investments might be being made in other aspects of the business, perhaps r &d, or acquiring capital assets . ( Note - SR&ED Financing and Equipment Leasing also can alleviate spend in these two areas )

But inevitably it will come back to short term daily financing needs requiring a working capital solution . Companies with proven cash flows and historical financial success can of course access term loans in the working capital / mezzanine finance area.

When you are examining asset based financing, and a/r factoring specifically . These solutions allow business owners to raise cash quickly to capitalize on short term opportunities, for example new clients, large contracts, foreign sales , etc. It's no secret that traditional lending sources such as Canadian banks take a significant amount of time to complete .

Asset based financing such as factoring always costs more than the low bank interest rates - but the good news is rates in the asset finance area are the lowest they have ever been, and all indications point to more of the same! Also in the experience of our firm, 7 Park Avenue Financial the competition to secure your financing business is the strongest it has ever been.

Rates in the asset financing area are dependent on a couple of obvious factors, ie transaction size , quality of assets such as receivables or inventory, and other collateral in the firm such as equipment, etc. In some cases an appraisal, altho it might come with a modest cost can enhance your firms overall ability to get financed.

Having up to date an quality financials also is also key to successful and abundant asset financing . Your firms ability to bill, collect might seem simple and basic, but proof of adequate accounting and controls is key to loan approval .

Bottom line ? Your firm needs cash flow to run and grow the business. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success who can assist you with your business loan and cash flow needs.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Tuesday, November 19, 2019

Important Decision Making On Working Capital Loan And Receivable Financing Invoice Solutions

Cross The Threshold On Invoice Finance Solutions

Receivable finance solutions that are offered in Canada ( there are several types ) are a valuable strategy for companies looking for alternative finance solutions when traditional financing is not available . Typically when we are talking about traditional financing we are talking about Canadian chartered banks of course !

So what does the business owner and financial manager need to know when it comes to invoice financing and complementary cash flow strategies ? For a starter A/R financing is not a loan per se, your firm is of course simply monetizing one of the main current assets on your balance sheet.

Years ago we venture to say that many business owners were not aware of alternative finance strategies . That of course also means that many of the benefits derived from factoring or Confidential Receivable Finance finance solutions. At 7 Park Avenue Financial we always strive to ensure our clients understand the various options available to meet their unique individual needs.

Our Cdn banks of course do not tout the benefits of a/r financing / factoring if only for the reason they do not offer this type of financing . That has sometimes tended to create an image that firms utilizing factoring finance are financially challenged . That's very wrong - in fact business folks might be surprised to know that some of the largest companies in Canada utilize this for of cash flow financing - in some cases they call it by a fancier name - Securitization .

Alternative finance solutions almost always cost more . Important to understand though that actual factoring of invoices tends to not be priced at an interest rate , as opposed to a selling cost of margin reduction - typically 1-2% for companies who have good paying clients.

Example - On a $ 10,000 invoice you would have a cost of $200.00 to finance the invoice . The benefit? Cash is available immediately after you invoice and ship /provide your service.

So our take away here of course is that a/r finance pricing is in fact a huge stumbling block to many clients, but only when they don't understand it.

A/R Financing only works when you have sales, so firms that are in severe distress or have seriously declining sales rarely are encouraged to utilize this method of cash flow finance.

Receivable financing solutions typically only work for business to business firms , aka ' B2B'. Firms that sell on credit or cash to consumers are best suited to working capital cash flow loans that monetize future sales based on your historical sales levels . As an example companies in the retail sector can typically achieve a working capital loan of 10-20% of their annual sales.

What else is important in the invoice financing area ? Simply that choosing a partner firm to access your financing needs.

If you are looking for the straight goods on which method of invoice receivable finance works best (We favor confidential A/R finance), how pricing is determined, and how the facility works on a day to day basis.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in crafting the facility that meets your working capital financing needs.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Sunday, November 17, 2019

Looking For The Best Accounts Receivable Factoring Company - The Answer Is ' Confidential '

A Few Quick Tips to Help You Find the Best Factoring Receivables Company

Most people agree that Canadian business model and the Canadian psyche differ from those of our friends in the United States .

Accounts Receivable Factoring goes back to the 1400's and is an accepted way of doing business . Simply speaking it is the ability of a company to immediately obtain cash for their receivables , thereby augmenting cash flow . Factoring is generally viewed as expensive , as the company views the discount rate as the ' interest rate ' on the transaction .

In both the U.S. and Canada very typical rates on factoring range from 1 1/4 % to 2 % per month. Issues that drive the overall rate are the over all transaction size, the credit quality of the debtor , and the historical time that the debtor has taken to retire invoices .

To be clear, when we talk about the participants in a factor transaction, there are three, the company selling the receivable, their customer ( the debtor ) and the finance or factoring firm .

Customers choose factoring , or are forced into considering factoring, when they do not have bank financing, or the financing that is in place is not sufficient to fund working capital .

Companies in Canada have been slow to utilize factoring - there are numerous smaller finance firms that offer the service, and more predominantly, the landscape is covered with branch firms of U.S. and U.K. companies who are established leaders in their respective countries .

A few in Canada offer factored facilities, a fact not generally known to the Canadian business market .

More often than note smaller and medium firms who don't have access to traditional bank lines of credit utilize factoring . They use this financing facility to grow their business, maintain acceptable levels of cash flow, and ensure debt and government payments re taxes, etc . are made on time .

Typical advance rates on factored invoices are in the 80-90% range . Firms utilizing factoring are often not aware of the mechanics of how these facilities are priced on a daily or monthly basis. Two different business models exist within the industry, recourse, and non- recourse . If the debtor does not pay the invoice a recourse transaction forces the company to pay back the factored amount, or replace it with another invoice .

As stated, many firms do not properly focus on the many nuances of the factoring transaction . These include the amount held back by the factor firm, when the hold back is released, and most importantly the paper flow involved in the transaction.

Canadian firms have tended to view factoring as very intrusive . They , unlike their U.S. and U.K. counterparts , have not appreciated that their customers are contacted regularly by the factor firm to verify invoices, demand payment, etc.

Here's What Really Matters in Factoring Receivables

Ultimately the Canadian market seems to desire a non-notification factor model which is not widely available . 7 Park Avenue Financial calls this Confidential Receivable Financing

Prudent business owners and financial executives , both in the U.S. and Canada , can enhance their use of factoring by negotiating arrangements specific to their business , re receivable size, quality, customer time to pay, etc .

Many firms also quickly realize the cost of the factoring can be significantly offset by the use of additional cash to negotiate supplier discounts, take trade discounts offered by suppliers, and in general , improve supplier relations . Key benefits of factoring, also known as invoice discounting, are improved cash flow and maximized cash flow .

About 7 Park Avenue Financial :
We are located in the Toronto area, but we have financed customers all over Canada, from B.C. to Quebec in the east
Financing solutions from 7 PARK AVENUE FINANCIAL can improve cash flow, enhance key operating efficiencies, strengthen working capital and enhance revenue, improve production capabilities - Ask us how!
You are a business owner who wants options and alternatives and the right financing for your business . Commercial financing can be complex - we will make it simple for you .

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '