Canadian Business Financing - 7 Park Avenue Financial: a/r financing

WELCOME !

Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.

Showing posts with label a/r financing. Show all posts

Tuesday, March 10, 2020

How Does Non Bank Receivable Financing Work ?

Confidential A/R Finance Is The Best Kept Secret In Business Credit Finance

Accounts Receivable financing isn't always in the headlines - we're the first to admit that . But it should surprise business owners and their financial managers that thousands of Canadian firms are moving toward a working capital financing facility known as receivable factoring.

There are numerous reasons why businesses choose, or must choose to finance their sales outside traditional bank norms . One reason might be they aren't able to access all the business credit they need ; in other instances they might not qualify for any traditional bank credit solution while at the same time their business is growing !

Confidential Invoice Financing

Here is a question . What if you could get invoice finance that would allow you to bill and collect your own receivables under this facility? Possible? Absolutely.

Canadian business financing solutions such as Confidential A/R Finance provide your business with unlimited cash flow, and, unlike your competitors, you , not a third party, are in control of your facility.

HOW RECEIVABLE FINANCING WORKS

Most Canadian business owners and financial managers know a bit about how factoring, aka receivable financing works.

The Confidential AR Financing Difference :

Factoring , we call it ' old school ' factoring, is a process whereby you sell your receivables and receive immediate, same day cash for those invoices. 99.9% of all the financing done in Canada under this business model has the third party lender firm collecting your invoices and notifying the customer. They also follow up for collection and interact with your customer, because, as we said, you have sold them your receivable, or receivables in whole.

Why Trade Receivable Financing :

Clients of 7 Park Avenue Financial like the end result:

Instant Cash Flow

Constant Working Capital replenishing

What they don't necessarily like is the 3rd party firm taking over the client relationship as it relates to accounts receivable.

Enter Confidential Receivable Financing - Under this scenario your receivables are billed and collected by your firm , and there is no third party interference with the relationship you have with clients when it comes to billing and collecting.

Business owners like this latter model - The bottom line is that your financing relationship is not disclosed to your customers, and that’s a good thing. Your firm achieves all of the benefits of accounts receivable financing, but under the confidential invoice finance model your receivable factoring is in your control.

Under traditional U.S. And U.K. type receivable factoring your customers receives a letter from either yourself or the factor firm, notifying your clients about the issue of your firm having sold its receivables. If you don’t care about that, no problem...! But if you do care about what the perception of that letter might be then you should consider confidential invoice finance.

Using a solid non bank a/r finance model gives you a competitive advantage - It differs from bank financing, and is the alternative to the traditional factoring of invoices that we have talked about here. The bottom line is there is a world of difference in the facilities offered.

Cost Of Factoring / Confidential A/R Finance

The cost of confidential invoice discounting is the same as traditional factor financing - so that’s a good thing! This method of financing is costlier than bank interest rates, but does not require the significant emphasis that banks place on personal guarantees, outside collateral, ratios, covenants, credit limits , etc. In fact business owners may be surprised to know that credit limits are virtually unlimited if you business has the sales levels to justify increases in the facility, and that the facility is operating properly .

Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success , one who will assist you in closing this valuable type of working capital financing solution.

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 '

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

Sunday, May 19, 2019

5 Advantages Of AR Accounts Receivable Finance In Canada. Using A Business Factor Funding Program Works.

INFORMATION ON ACCOUNTS RECEIVABLE FINANCING SOLUTIONS IN CANADA

Thousands of Canadian business owners and financial managers perceive
AR Accounts Receivable Finance as a solid strategy for financing their firms. Let's examine 5 key advantages of this method of working capital finance. But first let’s take a quick step back and ensure we understand the product and the mechanics of this type of finance service.

The heart of the AR finance strategy is of course your receivables. This financing differs significantly from a bank loan or more commonly the Canadian chartered bank line of credit. What is that main difference? Simply that under a bank facility the financing is based on your firm’s credit worthiness, with the receivables being assigned to the bank as collateral.

The difference then? It's simple and basic. AR financing is not a loan to your company per se, instead its the purchase of your receivables, generally on an ongoing basis , This sale of ar, via our business factor funding arrangement enhances your cash flow and working capital .. Immediately!

One of the main points of confusion that we find continually exists around this method of financing is the pricing. While the bank facility charges your firm an annual interest rate (plus some miscellaneous fees here and there!) invoice finance is the sale of your A/R, at a discount, allowing you to receive funds and replace A/R on your balance sheet with cash, immediately as you make sales.

In general, certainly more often than not, invoice receivable finance in on a recourse basis, just as if you had a bank facility in place. Simply speaking, you're responsible for any credit losses. Purchase of business credit insurance can eliminate bad debt risk, especially if you have foreign or concentrated receivables.

Finally let’s get on to those advantages we spoke of. Here are just five of them, and if you are having challenges in accessing bank financing these advantages should have significant appeal to your firm.

First of all, it’s a classic short term funding strategy without additional collateral requirements or major emphasis on guarantees of the owners of the company.

The second advantage is timing, and we're firm believers that timing is everything in business. The hard reality is that invoice financing provides you with cash flow on the same day as you generate sales. That shortens your overall credit extension cycle by... you guess it, 100%.

Our third advantage of AR Accounts receivable finance is simply flexibility. No debt goes on your balance sheet, you’re just monetizing assets and funds can be used for any general corporate purpose.

Our 4th advantage is somewhat of a double edged sword. Traditional AR finance in Canada has the busines factor funding your receivables as an extension of your credit department. We would point out that under the right circumstances your firm can acquire a confidential AR Finance facility which allows you to do all the billing and collecting yourself. Bottom line, it’s your call.

Finally, if your firm as a lot of U.S. or foreign receivables invoice finance is a solid way to address this business challenge. Even the exchange rate is taken care of in this situation.

You owe it to your yourself of check out and understand AR Accounts receivable finance in Canada. Do any of our listed advantages make sense for your firm? If so, speak to a trusted, credible and experienced
Canadian business financing advisor who can assist you in the solution for a proper 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 '

Tuesday, March 5, 2019

Confidential Cash Flow Factoring - Turn Accounts Receivable Into Your Best AR Finance Strategy

We are going to demonstrate how a little known, and in our opinion almost a secret strategy can called confidential cash flow factoring can turn your accounts receivable into a virtual cash flow machine, turning past AR finance obstacles into cash flow solutions!

Search engine analysis will show you that thousands of Canadian businesses search everyday for what they hopefully believe will be valuable information around the most popular method of business financing today. Those businesses, of all types and sizes by the way (even the largest corporations in Canada) want to know why cash flow factoring offers unlimited unlocking of cash flow based on your sales and receivables.

Initial explanations and overviews to clients sometimes become bogged down in key issues such as the cost of this method of AR finance, and, equally important, is the unwillingness of some clients to accept how invoice discounting (that's another name for this type of financing) works.

Canadian business owners and financial managers want to like a good thing, at the same time they want to know how it works and how they avoid any pitfalls. Lets discuss the ' how it works ' portion first and then share with you the method we believe eliminates the major pitfall perceptions viewed by many firms considering this type of financing.

We'll focus on small and mediums sized business - the larger corporations have access to all sorts of financing and external finance strategies - while the small and medium sized businesses in Canada tend to rely on their own cash flow to fund their ongoing growth and working capital. In fact many firms realize they have potential to grow sales and profits, but cant because of that lack of working capital.

Back to the 'how it works'! Cash flow factoring of accounts receivable is the ongoing sale, in whole or in part of your sales invoices as you generate them and deliver products and services to your customer. The invoices are purchased at 1- 3% discount from yourself, and you receive cash, 99% of the time the same day, for those sales. So, in effect all your sales now fuel that cash flow machine you have turned your company into.

So far, so good, right? Where complications arise, especially in Canada, is the fact that this type of financing requires your client to be notified of the process, directly, or indirectly, and payments are required to be forwarded to your factoring finance firm. Canadian business, in our eyes, has a reluctance to involve their customers in their internal financing policies, and challenges. As a result, many firms are skeptical of entering into AR finance of this manner.

Is there a solution? We told you there was - it's a breakthrough called confidential invoice discounting. This type of financing comes at the same cost, allows you to bill and collect your own receivables, and gains all the benefits of that cash flow factoring machine we turned your company into.

Speak to a trusted, credible, and experienced Canadian business financing advisor who can put you into a proper AR finance facility, allowing you to reap the benefits of cash flow invoice financing, while at the same time allowing competitors, customers, and vendors to remain exactly where you want them to be, outside your financing strategies and challenges! Let's let your competitors try and figure our how you're doing so well in both growth and profits.

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, January 13, 2019

The Only Disadvantage Of Factoring Receivables And Why Confidential Accounts Receivable Finance Works!

Use Confidential Invoice Financing as your Best Cash Flow Tool

Information on financing receivables . Receivable finance solutions such as Confidential Invoice Discounting are a solid way to enhance cash flow when unlimited amounts of traditional financing aren't available

Looking for a creative, ‘outside the box’ Canadian business financing solution? You may have investigated factoring receivables already but either didn’t understand how accounts receivable financing works, or, probably more to the point weren’t comfortable with how it works for your firm on a daily basis.

We've got the perfect solution for those worries, and its called confidential receivable financing, in Europe its more commonly known as C I D, confidential invoice discounting .

Let's examine why this type of business financing works in general, and then let's focus in on why our solution makes a solid solution even better.

In general terms when you 'factor ' your receivables you essentially sell them to the factoring firm. That can be done on a one of basis, on a periodic basis, or all the time. That’s one of the key advantages of this type of financing, you only use what you need, and... More importantly, you only pay for what you use!

Paying for what you use in accounts receivable financing is key because factoring, in general terms can be a more expensive type of financing. We say ' can be ' because quite frankly if you use it properly it actually could be a cheaper method of financing than your bank. That's a point our clients are always amazed at when we discuss this type of Canadian business financing.

The cost of factoring receivables can be significantly offset, or in some cases removed completely by your firm using these funds to take supplier discounts and purchase more efficiently and at better prices .

And... Think about this carefully, if you can finance your receivable the days you issue the invoice (that’s what factoring does) then you are in a position to generate funds to sell more products and services to your customers, generating additional margins and profits.

Or, of course, you could take the non factoring approach and wait for your customers to pay you in 30, 60, or... dare we say it, 90 days. And that hasn’t worked for you in the past, which is why you are looking for a better solution.
So lets examine how factoring works, and lets get you over the hump, so to speak, on why our preferred type of accounts receivable financing is confidential invoice discounting .

When you generate an invoice under a factoring receivables agreement you receive 90% of the invoice in the form of immediate funds the same day. The other 10% is a holdback, and is remitted back to you promptly when you customer pays, less the financing charges, which are typically 1.5 - 2% for a 30 day period.

In 99% of traditional factoring arrangements the factor company verifies your invoice with your customer and actually collects it. Under confidential invoice discounting you bill and collect your own receivables, and are in a position to finance your firm without your customers and suppliers having anything to do with how you finance your business.

Speak to a trusted, credible and experienced Canadian business financing advisor on why confidential accounts receivable financing will work for your firm, allowing you to supercharge that cash flow and those profits!

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, January 8, 2019

A Receivables Financing Counterpunch – Making A/R Finance Work For Your Cash Flow Needs

Why Canadian Business Has Problems with the Cost of Financing Receivables

Information on receivables financing in Canada. The ability to ' factor ' your receivables creates instant cash flow and alleviates the needs for the constant pressure of growing your business via a working capital solution

How much is it? No we aren’t in line at a department store, we're sitting with our clients who are always asking what the true cost of factoring receivables is and if a receivables financing facility is their real solution for working capital problems. They ask other questions also, such as how the facility works and what is the best type of facility for the Canadian business marketplace, so we we'll cover those off also .

We don’t think there is more of a mis understood business financing in Canada, notwithstanding the fact that receivables financing is growing in popularity traction everyday. The biggest stigma around the topic is really the true cost, and we use the word true cost because many Canadian business owners and financials managers simply don’t understand the components of that true cost, and moreso, how these costs can be significantly offset and reduced.

We'll point out that coming up the rear fast and furious behind true cost are the issues of how the facility works and what type of facility is the best one in Canada - as there are several types.

To properly address our issue lets quickly define our subject - factoring, ( also called receivable discounting and invoice financing ) is simply the sale of your receivables to a third party firm, that firm providing you with immediate ( and we mean same day!) cash to finance your business

One of the misconceptions clients have around pricing is related to the fact that you receive (depending on who you are dealing with) 80-90% of your invoice amount in a receivables financing scenario. This must be taken into account when you are looking at total factoring cost.

One thing that constantly disturbs us is that the terminology mumbo jumbo that many factor firms use when they are offering you pricing on your facility. That’s why it makes total sense to talk to a trusted, credible, and experienced Canadian business financing advisor that will work with you through the (industry created) maze of factoring, factoring cost, and day to day paper flow.

You can quickly and easily focus in on the true cost of factoring by simply keeping in mind three things that you need to know - they are:

1. The percentage that you are advanced on your invoice (refer to our previous comments)

2. The discount rate charged on the advance

3. The length of time that you typically collect your receivables in

Most business owners are not readily facility with their DSO, their ' day’s sales outstanding '. You have to be, because it’s an ongoing measure of the time it takes to collect your receivables in days. It’s calculated simply by taking your receivalble on an annual basis, multiplying them by 365 (days) and then dividing that number by your sales for that time period.

Therefore, if you know your collection period, and get an honest, clear answer on our three points you can easily determine the cost of factoring.

Let’s give you a clear example: Your factor firm advances you 80% of your invoice. Their discount rate is 3%. So if you are in the lenders shoes your annual return on the client (that’s you!) is simply: Discount rate % times 365 days Divided by number of days invoice is outstanding.

In Canada that rate is typically going to work out to be in the 1-2% per month range depending on the lenders perception of the size and quality of your accounts receivable portfolio.

Is that expensive financing? You tell us, because if you take into account the receivables financing facility provides you with unlimited cash flow to generate sales and profits, and that you can use the cash to offset financing costs, well... we dont think so .Costs can be offset by using the funds to take supplier payment discounts, and purchase in larger volumes and better prices re your inventory needs, etc.

Speak to that trusted, credible business financing advisor we spoke of, he or she will guide you through the receivable discounting maze and set you on course with the right facility at a price that makes sense to 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 '

Tuesday, December 4, 2018

What is the Factor Cost Of Factoring Accounts Receivable?

How To Rationalize the Cost of Factoring : Weighing The Benefits of A/R Financing !

Information on the cost of factoring and receivable finance solutions. Pros and cons of a/r finance - P.S. They're mostly pros!

Canadian business owners and financials managers who are considering financing accounts receivable often ask us how they can calculate , or moreso, understand the factor cost of factoring accounts receivable .

There are a whole bunch of factors ( excuse the pun ) that seem to be coming together to make the financing of accounts receivable a high growth , popular, and accepted method of business financing in Canada . The reality is that even just a few years ago most business owners did not even realize that they could sell their accounts receivable to a private non bank firm, gaining valuable working capital, i.e. cash flow! in the process .

Business is being driven to this method of Canadian business financing out of a very basic need - meet payrolls, make fixed term obligations, and purchase products and services. And when your customers make you wait, 30, 60, and unfortunately 90 days for your funds all of a sudden factoring, also known as invoice discounting and receivable financing becomes very popular. Not hard to understand.

Business owners want to know more about factoring and receivable financing simply because they recognize that cash flow challenges hinder them from growing, and yes, even surviving. And, we are sorry to say, many clients simply can’t get the bank financing they need to fund and grow their business - that isn't necessarily a condemnation of Canadian chartered banks, it’s a case of individual financing challenges within the current credit crunch and global economic challenges.

So, let’s cover off what you need and want to know about factor cost and the true way in which you should be looking at the pricing around factoring accounts receivable in Canada.

There are three; lets call them ' drivers ' in the pricing process of financing your receivables. Those three drivers are the time in which it takes for your invoice to be paid, and we mean right down to the day. Secondly the factor firm calls their pricing a ' discount ' - so the actual discount rate they quote you becomes critical in your knowledge of understanding your true cost of financing A/R. And finally, to keep things simple we often explain to clients in initial discussion that they receive immediate cash for their receivables once they finance them, i.e. same day cash.

However the reality is that the industry advances a (significant) portion of your receivable le, the rest is a hold back. Typically this portion is 90%, but many firms calculate total financing not just on the holdback but the invoice amount.

When do I get the holdback? Ask clients. The answer is that they receive the holdback as soon as the actual invoice is paid.

We thing its clear that the discount rate, of the three key drivers we have mentioned is the most focused on by clients. Because the commercial receivable financing industry is not regulated firms charge what markets will bear.

In summary, understanding the returns of your commercial factor firm will better assist you in determining if this overall receivable financing strategy is for you. Speak to a trusted, credible and experience Canadian business financing advisor to better understand the benefits of this growing method of financing your company.

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 '

WELCOME !

Tuesday, March 10, 2020

How Does Non Bank Receivable Financing Work ?