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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
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 .
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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