Accounts Receivable Finance: The Graduation Path Back to Bank Credit

 

Receivable Financing Companies: Solutions for Cash Flow Problems

 

A/R FINANCING - CANADA

 

Introduction

 

Accounts receivable finance can turn invoices/trade receivables due in 30–90 days into working capital now—but an unsuitable facility can create unexpected costs, customer-notification issues or conflicts with your bank. Drawing on its experience arranging receivables-based facilities for Canadian companies, 7 Park Avenue Financial explains how you can obtain liquidity while protecting customer relationships and existing lender arrangements.

 

What Is Accounts Receivable Finance?

 

 

Accounts receivable finance provides funding against unpaid business-to-business invoices. The lender or factor usually advances a percentage of eligible receivables and releases the remaining reserve, less fees, after customers pay. 

 

FASTEN YOUR SEATBELTS

 

If you're experiencing business finance turbulence these days. Our good friends at Webster’s define turbulence as a ‘disorder… or commotion.”

 

That’s why an AR Finance / invoice finance  facility might be one new tool in your finance toolkit! Let’s look at receivables financing and what you need to know.

 

 

Three Uncommon Takes on Accounts Receivable Finance

 

    Growth can tighten cash flow: Longer terms, aging invoices and customer concentration may increase funding needs faster than availability.

    Advance rates can mislead: An 85% advance with broad eligibility may provide more cash than 90% with strict exclusions and reserves.

    Invoice quality can outweigh borrower strength: Clean invoices to creditworthy customers may matter more than the company’s profitability.
 

 

 

RECEIVABLE FINANCE IS A GAME CHANGER

 

Receivable financing companies are crucial to helping businesses maintain steady cash flow by converting unpaid client invoices from commercial or government accounts into immediate working capital.

 

Business owners and financial managers should consider funding options, invoice amounts, rates, advance rates, funding speed, customer service, and repayment terms when evaluating accounts receivable financing companies.

 

Let the  7 Park Avenue Financial team show you how receivable financing can be a lifeline for companies facing cash flow challenges. It lets your business keep operating smoothly without waiting for customer payments. By leveraging receivable financing, companies can meet their short-term obligations, such as accounts payable, payroll, and other financial obligations.

 

 

The Cash Flow Gap -

Cash-Flow Gap Calculator Example

 

 

A company bills $250,000 per month, equal to approximately $8,333 per day:

$250,000 ÷ 30 days = $8,333

If customers pay 15 days later than expected, the additional cash trapped in receivables is:

$8,333 × 15 days = $125,000

The company therefore needs approximately $125,000 of extra working capital to cover payroll, suppliers and operating expenses during the delay. At an 85% receivables-financing advance rate, those invoices could generate about $106,250 in immediate liquidity, leaving a $18,750 reserve until customers p

 

 

What Types of Accounts Receivable Finance Are Available?

 

 

Factoring

Factoring involves selling or assigning receivables to a factor. The factor may manage collections and notify customers to remit payment directly.

Accounts Receivable Line of Credit

An accounts receivable line is a revolving loan supported by eligible invoices. Availability changes as new invoices are issued, existing invoices are paid and older accounts become ineligible.

Invoice Discounting

Invoice discounting advances funds against selected invoices or the broader receivable ledger. Your company may retain collection responsibility.

Confidential Receivables Finance

Confidential financing allows you to continue dealing directly with customers while the finance company monitors and funds the ledger. It generally requires reliable accounting, reporting and collection procedures.

Non-Recourse Factoring

Non-recourse factoring transfers specified customer-credit risks to the factor. It does not normally protect you against disputes, returns, contractual breaches or invoice fraud.

 

A/R FINANCE IS A PART OF THE ' ACCOUNTS RECEIVABLE FINANCING ' SOLUTION IN CANADIAN BUSINESS

 

 

To put it in the proper context, receivable financing is a subset of what we term asset-based lending.

 

One option in accounts receivable financing programs is the accounts receivable loan, alongside invoice factoring and asset-based lending, each structured differently to suit the client's needs. We hate to get lost in the terminology sometimes, but when you combine an Accounts Receivable facility with inventory financing, it’s often called a working capital facility.

 

That is to say that both A/R and inventories are margined at a pre-agreed amount, and you borrow against them. Asset-based lending is about financing the balance sheet.

 

 

DOES YOUR FIRM MEET BANK LENDING CRITERIA FOR IMPROVING CASH FLOW?

 

 

The fundamental belief of your AR finance partner is that the quality of the underlying collateral alone is good enough for you to borrow against. Banks in Canada are challenged to accept collateral alone, as their rules and regulations require them to focus on cash flows, balance sheets, historical cash flow, etc.

 

 

THE PERSONAL GUARANTEE ISSUE IN BUSINESS CREDIT IN CANADA

 

 

Clients often ask us if they must provide personal guarantees for such a facility. The answer is probably yes if you're a private company in the small- to medium-enterprise sector. But, and this’s a key point, the focus of any accounts receivable financing facility is never the personal guarantee; it’s the underlying receivables or inventory being financed.

 

 

When Does Receivables Financing Make Financial Sense?

 

Accounts receivable finance makes sense when the economic benefit of earlier cash exceeds the facility’s total cost.

Consider whether funding allows you to:

• accept profitable contracts
• meet payroll during long customer terms
• buy inventory needed to complete orders
• capture supplier discounts
• avoid production interruptions
• replace more expensive short-term borrowing
• offer competitive payment terms
• prevent growth from exhausting working capital

 

The correct comparison is not simply the factor’s fee versus a bank interest rate. It is the cost of financing versus the gross profit, discounts and operational savings made possible by usable liquidity.

 

 

What Are the Main Benefits of  A/R Finance?

 

 

• Cash can be released without waiting 30–90 days.
• Availability may grow as eligible sales increase.
• Customer credit quality can carry significant weight.
• Seasonal and rapidly growing businesses gain flexible liquidity.
• Funding can support payroll, inventory and supplier deposits.
• Businesses may qualify despite limited operating history.
• Credit insurance can strengthen eligible export receivables.
• The facility can provide a bridge back to conventional banking.

 

Selling Invoices vs. Borrowing Against Invoices

 

 

Selling invoices—factoring: The business assigns eligible invoices to a factor, which advances most of their value and collects payment from customers. The transaction is generally structured as a receivables purchase, although the business may remain responsible for unpaid invoices under a recourse arrangement.

Borrowing against invoices—A/R financing: The business retains ownership of its receivables and uses them as collateral for a revolving loan or line of credit. Customers may continue paying the business directly, subject to the lender’s cash-control arrangements.

The practical distinction is ownership versus security: factoring transfers or assigns the invoices, while A/R financing creates debt secured by them. Accounting treatment, customer notification, recourse and legal documentation depend on the facility’s specific structure.

 

 

 KEY TAKEAWAYS - 

 

 

1. Invoice Factoring: This concept involves selling unpaid invoices to a financing company at a discount in exchange for immediate cash, which improves liquidity. Accounts receivable financing frees up capital and receivable financing rates are typically in the 1.5-2% range.

2. Accounts Receivable Financing: This method allows businesses to use their accounts receivable as collateral to secure a loan, providing quick access to working capital.

3. Cash Flow Management: Effective incoming and outgoing cash flow management ensures that businesses meet their financial obligations on time.

4. Working Capital Solutions: Various financial strategies and products designed to optimize a company’s working capital and ensure smooth operations, including accounts receivable loans

5. Receivable Funding: This involves obtaining funds based on the value of outstanding receivables, offering a flexible way to finance business needs.

 

 

Case Study

From The 7 Park Avenue Financial Client Files

 

 

ABC Company — Medical and dental equipment distributor, Ontario

 

Challenge: ABC Company had strong, creditworthy hospital and clinic customers but 60-75 day payment terms were straining payroll and inventory purchasing. A bank declined a credit line increase, leaving the owner needing a fast, confidential fix that wouldn't alarm long-standing institutional customers.

 

How we got there: 7 Park Avenue Financial structured a confidential, non-notification accounts receivable finance facility sized to the company's invoice volume, with an advance rate that released cash within 48 hours of invoicing. The facility was intentionally set up with clean draw reporting to build a track record toward future bank refinancing.

Results: Cash flow stabilized within one billing cycle. Customers noticed no change in how they were invoiced or where they sent payment. After 18 months of consistent facility use, the company qualified for a conventional bank operating line at a lower rate, using the AR facility as the bridge.

 

 

CONCLUSION

 

Accounts receivable financing works because it maximizes the amount of cash flow and working capital you can draw on. As we noted, if you combine it with an inventory line, you're more often than not either doubling or tripling your access to capital.

 

So when your current finance model isn’t working, it’s never too late to consider financing accounts receivable as a new finance tool for your firm!

 

Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can help you determine whether it's time for your company to consider accounts receivable financing as a growing form of business finance.

 

7 Park Avenue Financial originates Accounts Receivable Finance

 

 

 

FAQ/FREQUENTLY ASKED QUESTIONS

 

 

What is receivable financing?

Receivable financing is a financial arrangement in which businesses sell their outstanding invoices to a financing company to obtain immediate cash.

 

 

How do receivable financing companies work?

These companies buy unpaid invoices at a discount, giving businesses quick access to cash while they wait for customer payments.

 

 

What are the benefits of using receivable financing companies?

Benefits include improved cash flow, shorter invoice payment cycles, and the ability to meet financial obligations promptly.

 

 

Can any business use receivable financing?

Most businesses with outstanding invoices can use receivable financing through a factoring company, but terms and availability may vary by industry and creditworthiness.

 

 

How does receivable financing differ from a traditional loan?

Receivable financing is based on the value of invoices rather than credit history, offering quicker and often easier access to funds than traditional loans.

 

Is receivable financing suitable for startups?

Yes, startups can benefit from receivable financing if they have unpaid invoices. This type of financing provides quick access to cash without needing extensive credit history, and the business's credit score can help establish it.

 

 

What fees are associated with receivable financing?

Fees can vary but typically include a percentage of the invoice value, factoring fees, and sometimes additional service charges.

 

 

How long does it take to receive funds through receivable factoring financing?

Funds from accounts receivable financing companies are usually available within 24 to 48 hours after the financing company approves the invoices.

 

 

Are there any risks with receivable invoice financing?

The risks of receivable loans include the potential impact on customer relationships and the costs associated with the financing terms. Many companies choose Confidential receivable financing, which allows them to bill and collect their receivables. Accounts receivable financing rates are expressed as fees and should not be compared to interest rates.

 

 

Can receivable financing help with seasonal cash flow issues?

Yes, receivable financing is particularly useful for businesses with seasonal fluctuations in cash flow, providing stability during slower periods.

 

How does invoice factoring impact business cash flow?

Invoice factoring improves cash flow by providing immediate funds based on outstanding invoices, reducing the wait time for payments.

 

 

What industries benefit most from receivable financing?

Industries with longer payment cycles or high invoice volumes, such as manufacturing, staffing, and logistics, benefit significantly from receivable financing.

 

 

How can businesses choose the right receivable financing company?

Businesses should compare factors such as fees, terms, reputation, and industry experience to choose the right receivable financing company.

 

 

STATISTICS  -  RECEIVABLE FACTORING WORKING CAPITAL

 

• Advance rates on accounts receivable finance typically run 80-90% of invoice face value
• Funding turnaround is commonly 24-48 hours once a facility is active
• Facility sizes at 7 Park Avenue Financial range from $250,000 to $25 million+

 

 

CITATIONS -  FACTORING COMPANY SERVICES

 

Salek, John G. Accounts Receivable Management Best Practices. Hoboken: Wiley, 2005. https://www.wiley.com

7 Park Avenue Financial "AR Receivable Financing: The Working Capital Solution".https://www.7parkavenuefinancial.com/financing-receivables-cost-of-factoring-funding.html

"Accounts Receivable." Wikipedia, The Free Encyclopedia. https://en.wikipedia.org

Business Development Bank of Canada. "Financing Your Business." https://www.bdc.ca

Medium."Selling / Financing of Accounts Receivable: Your Cash Flow Game Changer".https://medium.com/@stanprokop/selling-financing-of-accounts-receivable-your-cash-flow-game-changer-d98734b9c719

Canadian Federation of Independent Business. "Access to Financing." https://www.cfib-fcei.ca

https://en.wikipedia.org/wiki/Accounts_receivable

 

How Do Factoring Companies Work in Canada? Understanding the Basics of Accounts Receivable Financing

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The Benefits Of  Confidential Accounts Receivable Financing

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HOW YOUR BUSINESS CAN USE ACCOUNTS RECEIVABLE FINANCING

 

An effective accounts receivable finance solution has the ability to 'supersize' your overall working capital and cash flow.

 

This can be even more enhanced with a business accounts receivable finance strategy known as C I D - Confidential Invoice Discounting; a type of 'factoring' that has worked very well for our clients at 7 Park Avenue Financial. Let's dig in

 

HOW DOES A BUSINESS USE ACCOUNTS RECEIVABLE FINANCING

 

When your business uses a  accounts receivable financing solution, it enters into an agreement with a bank or a commercial finance company / factoring company. The receivable assets on a business's balance sheet represent one of the largest and most liquid assets on your balance sheet. Those receivables represent money owing to your firm for products or services you have billed to clients but remain unpaid. 

 

Most lenders view the quality of a business's accounts receivable when providing financing around working capital and growth issues. Lenders will measure asset turnover in accounts receivable as a measure of the business being able to pay current liabilities such as accounts payable.

 

Although the investment a company makes in accounts receivable is a cost of working capital the ability to convert the accounts receivables into cash is always a challenge!   Banks, asset-based lenders, and factoring companies step in to assist the business with cash flowing those receivables.

How can this business finance solution be 'supersized' then? Simply that it is highly possible that on the utilization of this type of financing, you will often double, and in some cases triple, your access to immediate cash flow and working capital. Business owners and their financial managers will be surprised to know that, in most cases, even traditional bank financing won't provide the same cash flow access as this little-known solution.


And safe to say that in some cases where you would have been self-financing or had non-financing in place whatsoever, well, your firm has it now!

 

  

SELLING RECEIVABLES / ASSIGNING RECEIVABLES- ACCOUNTS RECEIVABLE FINANCING VS TRADITIONAL LOAN STRUCTURES   

 

The majority of non-bank financing of accounts receivable in Canada is structured as an asset sale  - The documentation and factoring agreement signed by the business specifies the sale of the receivable to the financing firm.    As an example, some banks may use to choose to sell off some of their loans in the same manner.

 

The business selling the receivables receives cash for those receivables.  A typical advance rate for a non-bank a/r financing firm is in the 90% range - which is much higher than bank advances on receivables which are funded in the 70% range - That is one of the more significant benefits of third-party a/r financing.  Factoring companies pay the company the same day as the invoice is generated, and most factoring agreements allow you to finance which receivables you wish to fund - without obligation to fund all.

 

If a company is not using Confidential a/r financing, the factoring finance company assumes collections. In Confidential non notifIcation financing company bills and collects its own a/r!

 

Companies are still required to take on normal bad debt risk associated with their clients as factoring companies don't want to take on bad debt risk without charging more for their service.

 
HOW MUCH DOES A FACTORING COMPANY CHARGE? 

So what in fact, is the cost of this unique and innovative AR Finance solution, how does it work, and what can your company compare it to when assessing your specific cash flow needs?

C I D is our terminology for Confidential Invoice Discounting. 'Factoring' solutions are used by firms of all sizes (even major corporations, by the way) but seem to be more common in the SME (small and medium enterprise sector).

 

It even accommodates start-ups if you can believe it, as any type of financing for a start-up is often a major challenge for the business owner. By the way, the big boys have a fancier name for their AR financing solutions - Securitization.

Companies that sell on credit in Canada will always have an investment in their accounts receivable, often representing, along with inventories, a huge part of their overall business assets. Accounts receivable management best practices will always include proper financing facilities.

So how is that asset financed? That becomes even more challenging when traditional bank financing is unavailable. A large majority of clients we talk to don't qualify for some or all of the business capital they need via a bank.


That's exactly where business accounts receivable invoicing and discounting come in. Your ability to 'sell' those invoices as you generate them, using the A/R as collateral, allows your company to turn into an instant cash flow machine. It's all done by a fairly seamless process when you are working with the right type of facility and the best firm/financing partner.


So that’s the essence of factoring or invoice discounting, but where does our key benefit of confidentiality come in? Right about here!

The key difference between Confidential Receivable Finance facilities and business factoring is that you control your sales ledger and customer base, not the factor finance firm. That gives you superiority over other firms who use this type of financing but are forced by their factoring agreement to make their customers aware of how they are financing their firm. In talking to clients here at 7 Park Avenue Financial, that benefit is huge in their minds regarding how their competitors and suppliers might view them.

 

HOW DOES A/R FINANCE WORK? REQUIREMENTS AND APPLICATION

 

When it comes to the underwriting process, a business lender such as a receivable finance firm focuses on several key issues in approving and setting up a facility.  Several key factors affect how the financing is priced relative to financing cost. Factoring costs are expressed as fees versus interest rates.

 

Typically firms selling to larger, well-known companies or the government can get more favourable pricing based on the overall quality of the a/r.  The time that a receivable is outstanding also plays a key factor in pricing and overall collection, and DSO turnover will affect factoring and financing fees.

On a daily basis, a/r financing works in the same manner as what we will call 'traditional' accounts receivable finance and invoice discounting. It’s a simple process.

 

You generate invoices for the products and services that your firm provides, and you receive immediate same-day funds for 90% of the invoice value. (That remaining 10% is held back until your client pays, you then receive the 10% less a finance fee of anywhere from  .75 -1.5% per month).

The way our clients look at it is that the 1-2% per month reduction in gross margin is more than offset by all the cash flow their sales generate - allowing them to run and grow the company on an ongoing basis.

ADVANTAGES OF  CONFIDENTIAL INVOICE DISCOUNTING

Clearly, the advantages of this type of business financing couldn’t be more pronounced :

- Financing is approved quickly

- Easy to administer

- Your company bills and collects its own a/r!

-  Improved cash flow  - Cash flows generated are used to run and grow the business

-  Increased working capital enhances the long-term growth potential

-   A/R Financing is flexible and tailored to business needs

-    Accounts Receivable factoring solutions can be accessed in days and do not require  external collateral

-  Financing of receivables is not a term loan structure, and no fixed payments are required

So, does a solid AR Finance strategy seem like the proper cash flow solution for your firm? Ultimately you will decide that - we're simply letting you in on the secret and letting you be the decision-maker around supersizing that cash flow.

 

KEY TAKEAWAYS - ACCOUNTS RECEIVABLE FINANCING SOLUTIONS

 

A/R Financing solutions  provide business capital for the investment a company makes in carrying accounts receivable

Financing solutions can be structured as  a loan or assignment via a bank, or an asset sale to an asset-based lender/factoring firm

 

CONCLUSION

 

 

Speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success. Get your company ahead of the pack and competitors. 

 

 

  

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION  

 

 

  

What is accounts receivable financing?   

 

Accounts receivable financing is a financing arrangement where a business receives early/immediate payment of outstanding invoices they wish to finance - In return for cash received the financing or factoring firm charges a fee. While receivables financing from a bank is an accounts receivable loan for the unpaid invoices on the company's balance sheet, financing capital is provided by a business line of credit secured by the money owed to the business.

Small businesses benefit from asset-based lending factoring solutions where they can immediately sell unpaid invoices for cash when the invoice is generated for products or services the business has sold.

 

Do banks offer accounts receivable financing?

 

Banks offer accounts receivable financing for firms selling on a business-to-business / trade finance basis. That allows a company to extend credit terms to customers and grow sales revenues - When the business provides a product or service to a client, and an invoice is generated, the bank can include the invoice in a bank receivables finance/line of credit for drawdown by the company. Banks take an assignment of accounts receivable to provide the funding, typically secured by a general security agreement on all the company assets.

What are the advantages and disadvantages of A/R Financing?

The advantage of a/r financing is the ability of a business to receive cash without going through a loan approval process or waiting for bank approval, for which many small businesses can't qualify. Factoring companies also assist in the collection of the account receivable. Accounts receivable funding solutions are an excellent choice for startups who often have financing challenges.

Historically there was a negative connotation to factoring services, but in current times thousands of businesses and even major corporations use the service. Financing costs and factoring fees are perceived by some owners as high. Still, business owners often do not consider the opportunity cost of business capital and their ability to fund ongoing operations and growth.

 

 

Click here for the business finance track record of 7 Park Avenue Financial

How Do Factoring Companies Work In Canada

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The Best Factoring Company Will Offer Confidential Receivable Financing - Here's Why

An effective accounts receivable finance solution has the ability to ' supersize' your overall working capital and cash flow. This can be even more enhanced with a business accounts receivable finance strategy known as C I D - Confidential Invoice Discounting; that is a type of ' factoring ' that has worked very well for our clients at 7 Park Avenue Financial.

How can this business finance solution be ' supersized' then? Simply that it is highly possible that on the utilization of this type of financing you will often double, and in some cases triple your access to immediate cash flow and working capital. Business owners and their financial mgrs will be surprised to know that in most cases even traditional bank financing won't provide the same cash flow access as this little known solution.


And safe to say that in some cases where you would have been self financing or had non-financing in place whatsoever, well, your firm has it now!

How Much Does A Factoring Company Charge ?

So what in fact is the cost of this unique and innovative AR Finance solution, how does it work, and what can your company compare it to when assessing your specific cash flow needs.

C I D is our terminology for Confidential Invoice Discounting. ' Factoring ' solutions are used by firms of all sizes (even major corporations, by the way) but in reality seems to be more common in the S M E (small and medium enterprise sector). It even accommodates start ups if you can believe it, as any type of financing for a start up is often a major challenge for the business owner. By the way, the big boys have a more fancier name for their AR financing solutions - Securitization .

Companies that sell on credit in Canada will always have an investment in their accounts receivable, often representing, along with inventories, a huge part of their overall business assets.

So how is that asset financed ? That becomes an even more challenging question when traditional bank financing is not available. In a large majority of client we talk to they don't qualify for some, or all, of the business capital they need via a bank.


That's exactly where business accounts receivable invoicing and discounting comes in. Your ability to ' sell ' those invoices as you generate them, using the A/R as collateral allows your company to turn into an instant cash flow machine. It's all done by a fairly seamless process when you are working with the right type of facility and the best firm/financing partner.


So that’s the essence of factoring, or invoice discounting, but where does our key benefit of confidentiality come in? Right about here!

The key difference of Confidential Receivable Finance facilities and business factoring is that you are in control of your sales ledger and customer base, not the factor finance firm. That gives you superiority over other firms who use this type of financing but are forced by their factoring agreement to make their customers aware of how they are financing their firm. In talking to clients here at 7 Park Avenue Financial that benefit is huge in their minds when it comes to how their competitors and suppliers might view them.

How Does AR Finance Work?

On a daily basis a/r financing works in the same manner as what we will call ' traditional ‘ accounts receivable finance and invoice discounting. It’s a simple process. You generate invoices for the products and services that your firm provides and you receive immediate same-day funds for 90% of the invoice value. ( That remaining 10% is held back until you client pays, you then receive the 10% less a finance fee of anywhere from 1-2% per month.

The way our clients look at it is that the 1-2% per month reduction in gross margin is more than offset by all the cash flow their sales generate - allowing them to run and grow the company on an ongoing basis.

Advantages Of Confidential Invoice Discounting

Clearly the advantages of this type of business financing couldn’t be more pronounced

- Financing is approved quickly

- Easy to administer

- Your company bills and collects it's own a/r !

- Cash flow generated is used to run and grow the business


So, does a solid AR Finance strategy seem like the proper cash flow solution for your firm? Ultimately you will decide that - we're simply letting you in on the secret and letting you be the decision maker around supersizing that cash flow.

Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success . Get your company ahead of the pack and competitors.






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

The Unknown Secret In Canadian Accounts Receivable Finance - Confidential Business Factoring And Financing in Canada

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Cash Flow .. Today..! Via Confidential Invoice Financing


Information on business accounts receivable finance in Canada and why a C I D facility can provide your firm with factoring financing , achieving all the benefits of cash flow financing with your firm in control of the process!




Want to feel initiated? Privileged? That's kind of what a secret is about, and we're sharing a great one today, a strategy known as C I D accounts receivable finance - it's our version of the best factoring financing in Canadian business today.


Let's back step a bit first though. Why are you considering receivable finance, and even more to the point, why are thousands of other firms, your competitors included! already there in that business decision to finance business receivables ?


Actually there are only two answers to that question... maybe three. First of all it’s because this type of working capital and cash flow financing is relatively easy to work with, and secondly, the more you analyze it, well it seems to make sense. Our third reason - in many cases clients we meet are almost forced to consider this type of business financing because factoring financing becomes their only method of ensuring their business has the working capital and cash flow to success.


In talking to clients we always try and dispel the perception, and trust us it’s just that, that this is the ' poor mans ‘(or woman’s!) solution to business financing. Hardly, some of the largest, most well known names in Canadian business, even public companies by the way, utilize accounts receivable finance. It’s just disguised a bit more cleverly by those finance folks as securitization, etc.

Anyway, back to our key point today, which is simply is there a way to get all the benefits and financial leverage of accounts receivable finance and cash flow generation in a manner that allows you to control your own destiny . 99% of factoring financing in Canada is done in a very... lets call it ' pure ' manner .You sell your invoices, the buyer, i.e the ' factor' notifies your clients that they have purchased the receivable, and you get your cash flow - the same day . In effect you've just turned your company into an automatic ATM machine with yourself having the key to the back of the unit!

But wait... perhaps like hundreds of other businesses that we meet you dont want to let the world know how you are financing your business, including your competitors by the way! Is there a solution for that?

There is. It’s what we've termed ' C I D’; our terminology for confidential invoice discounting or factoring financing. It allows you to bill and collect your own ar, while at the same time getting all the benefits of that same day cash flow everyone else is getting. Unless we're missing something, it’s the ultimate win/win?!

An now you have opening up a window of financing that has created for your company all the benefits of this type of Canadian business financing - without taking on business debt, because C I D accounts receivable financing is simply monetizing or cash flowing your 2nd most liquid current asset - your a/r . And turning that into your first most liquid asset - cash flow!
Intrigued? Interested? Hopefully not confused?

Speak to a trusted, credible and experienced Canadian business financing advisor on the benefits of factoring financing in Canada, including C I D!









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

What is the Factor Cost Of Factoring Accounts Receivable?

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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

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

Factoring Financing For Your Working Capital Needs

Factoring Finance In Canada - A Lot Easier To Understand Than Bitcoin!

Information on factoring and working capital finance solutions in Canada. The ability to monetize your sales solves cash flow challenges for running and operating a business

Factoring for working capital needs in Canada is quickly becoming a recognized a traditional strategy for cash flow financing. We say traditional because for many years factoring in Canada was clearly view as a non traditional and alternative financing strategy.

The simple explanation around this financing tool is that allows Canadian firms to access financing and cash flow immediately to smooth out the ups and downs of any companies business cycle.

Firms in Canada utilize the strategy for short term working capital needs. Factoring is not a term loan. Most business owners don’t realize that utilizing factoring as a financing strategy brings no debt on the balance sheet. We could very comfortably argue that in fact your balance sheet looks better when you use this financing tool. It in effect allows you to satisfy short terms needs for payroll, purchase of inventory, etc.


If utilized properly (more about that later) there are significant benefits to a factor financing strategy. Some of these benefits include:


The ability to purchase more inventory on a short term basis at preferred pricing and quantities

Access a working capital credit facility that many times is significantly higher than what your firm could achieve with bank financing

Increase sales with the right customers by offering better payment terms than your competitors (cash flow is king for your customers also!)

Take advantage of payment discounts offered by suppliers – many firms offer discounts such as 2% 10 days – by taking advantage of these discounts you can remove a huge portion of your factor financing discounts


We can’t over emphasize the need to ensure you understand the Canadian factoring market. It differs significantly from the U.S., and some enhancements to a factor financing strategy can super charge your cash flow. For instance, by putting in a combo of an A/R facility and an inventory financing scenario you can often at least double all the liquidity your firm had previously. That’s a powerful cash flow statement.

Also, for firms that are factoring now , we are quite convinced, after talking to clients , that they either don’t understand factoring pricing, or in some cases have been mis- led about what they are really paying for this type of financing . Even improving your factor facility by ½ or ½ % can drive profits straight to the bottom line. Clients are therefore encouraged to seek out a trusted, credible, and experienced advisor in this area who can help them achieve the right factoring facility for their firm.


We also encourage clients to seek out factor facilities that don’t lock you into long term contracts, as our experience indicates your firm might be a candidate for other forms of financing at some point down the road.

We spoke previously of properly utilizing a factoring financing strategy. By that we simply mean that you should ensure you understand what you are paying , as some firms have methods of presenting factoring in a method to confuse customer about overall ‘ all in ‘ cost .

Things to look for are clear per Diem pricing – you want to ensure you are only paying for what you use in your facility. Open contracts make more sense for your firm, why would you let a finance firm lock you into a contract. Other things to look for are the advance rates on your transaction.

Most business owners understand the basic mechanics of factoring – they are of course:

Your firm ships or delivers your goods and services

You invoice and receive same day cash for your invoices – usually in the range of 80-90%

Your customer pays the invoice and at that time you receive the original amount that was held back , minus the factoring discount fee


U.S. Based firms that offer factoring in Canada are heavily involved in the entire process that we just walked through. They quite often will insist on verifying your invoices, talking to your customer re payment, etc. That is why our recommended solution to eliminate this intrusiveness is a factoring or working capital facility that allows you to bill and collect your own receivables.

In summary, factoring for working capital is a proven strategy. The challenge simply becomes being an educated business owner. Find out what benefits clearly apply to your firm when utilizing this type of financing, and investigate the best facility for overall ease of doing business and pricing. That’s cash flow 101! For working capital factoring.




7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

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