Harsh Truth, Cost, and Benefits Of AR Accounts Receivable Finance In Canada . Factoring & Reality 101!

Explored Every Cash Flow Financing Mechanism?

Information on AR accounts receivable finance in Canada. Why factoring works, what it costs, and what to look out for in a good facility



The truth. We don't think we've met a business person, man or woman, that doesn't appreciate the real truth when it comes to business. So when it comes to AR Accounts Receivable Finance, aka ‘factoring’ let’s just clear up a few things if you don't mind!

We think if you lined up ten business people and asked them who they believe they could rely on when it comes to business lending most would say ' the bank ' That's been Canada's choice for decades .. that’s for sure.

But does everyone company have access to cash flow and growth financing when it comes to our beloved chartered banks. Here's the harsh reality - they don't.

So is there an option? There is. Its accounts receivable financing, which has become attractive to many firms when they look at some key advantages. Is factoring the only solution? Definitely not, firms can also utilize lease financing, sale leasebacks, and other debt mechanisms.

Debt mechanisms ... optimal? Certainly not all the time, and that’s why AR Accounts receivable Finance is a non - debt solution. It's just a monetization of your key asset, the receivables.

So why doesn't everyone utilize this form of financing. It certainly appeals to Canadian business owners who can't supply the type of security that a bank requires.

What then are some key reasons that businesses avoid factoring? We think we can summarize them quite clearly - they include a general lack of awareness of what the financing is and how it works.

In certain cases there appears to be an ' image ' problem. Why then do some of Canada's largest and most successful firms utilize this finance mechanism? We'll never figure out that one!

The cost of factor finance always comes up. In Canada a typical financing facility would be in the 1.5 -2% range based on a collection period of thirty days.

What Canadian business owners don't realize though is that cost can be offset in a solid handful of manners - they include your ability to purchase smarter, take discounts with suppliers, and take on new business and contracts you never could even consider in the past. We can honestly say that we're met some clients who have totally eliminated the entire cost of financing when they utilized factoring.

Some other harsh reality? If your sales are going down instead of going up factoring won't necessarily work, because your borrowing asset base is declining... not growing. Also, a very small handful of industries, such as construction pose more difficult challenges when it comes to AR finance utilization.

But the majority of Canadian businesses can actually do the following:

- access immediate short term funding

- improve cash flow

- utilize a pay for what you only use method of business financing

So, our bottom line? Take some time to investigate a bit more thoroughly, without some of those biases this method of business finance. Speak to a rusted, credible and experienced business financing advisor today.

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLE FINANCE EXPERTISE




Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/ar_accounts_receivable_finance_factoring.html

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

Looking For Some Solid Benefits In A/R Finance In Canada?

Information on advantages of ar accounts receivable finance funding . How does a business factor program work.



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.

Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/ar_accounts_receivable_finance_business_factor.html