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
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.