Is Selling Receivables Via AR Finance Factoring A Viable Cash Flow Solution?

Assessing Viability of Canadian Receivable Finance Strategies


OVERVIEW – Information on selling receivables as a cash flow financing strategy in Canada . Why AR finance, aka ‘ factoring ‘ offers a viable business capital solution for Canadian business owners and managers.


It's not only a great legitimate question... it's a great question. Is selling receivables via AR Finance factoring a solid way to generate cash flow and growth for Canadian business? We're all for painting a balanced view of this common question so let's examine some key facts.

Factoring in Canada is not borrowing - it's selling. So just that simple concept is critical to understanding how A/R financing differs from traditional bank commercial credit lines. It's fundamental to understand the paperwork and legal concepts behind this process - and quite frankly it’s not that difficult. Let's use a $ 10,000 invoice as an example. If your terms are 30 days and you client actually pays you in that time frame (some don’t by the way!) then here's how the process works.

No loan is in place here. You sell that 10k invoice at a discount, which is typically, using our example at a discount of 150-200$. You are in a position to receive those funds, if you choose, immediately upon issuance of your invoice to the client. In effect you have transferred the ownership and the rights of that ownership in your sale to your factor firm.

Here is where some additional clarification is required. Two key points come to mind. One is that the majority of factor firms in Canada (let’s say 99 %!) typically take over the collection process. After all they have purchased your accounts and given you funds, right?

Not so fast mister!

An even better solution at this point is to utilize a confidential receivable financing facility. Under this program you still are 100% in charge of collecting your accounts, and maintaining the client relationship. And you still have received the benefits of that instant cash flow. Talk about the proverbial double whammy!

Are there any guarantees in life and business? We can think of one, which is that the debate on the cost of selling receivables under an AR Finance program will probably never end! We can though strive to provide some clarity around the issue, which is simply that you need to have a handle on three aspects of invoice factoring.

What are those three key underpinnings then? They are as follows:

The holdback that is imposed by the factor firm

The actual discount percentage (clients mistakenly refer to this as ' the rate ')

The advance amount under your borrowing facility

You will also recall that when we used our 10k example we made the assumption that your clients will pay in 30 days. As we joked, no really we were joking... many firms don't pay in your stated terms. How then does the A/R financing industry handle this? Well, if you're dealing with the right firm your costs will be then calculated on a per diem basis, so that if you clients pay in 47 days you will only be charged a fee that reflects those additional 17 days.

Why then to experts maintain that the cost of factoring is in fact not as expensive as perceived. It comes down to some basic reasons:

Your cash flow accelerates immediately

By turning over more sales and assets with those new funds you generate more profits - You are no longer ' the bank' for your own clients, as you never intended to be! What we are really talking about is a trade off between more financing costs than the bank but the ability to earn profits on more sales and asset turnover. Oh and by the way, some firms seem never to be able to be in a position to get approved for bank financing - but there will always be an A/R solution to their working capital problems.

One quicker example. Let's say your company determines it needs 250k of extra working capital. You could, if your firm is bankable, approach your bank for a 250k working capital cash flow term loan. Typical term might be 3-5 years. You might well find that these costs are much higher than a factoring facility which is all about asset turnover.

Today’s key point? Simply that keeping an open mind to selling receivables as a cash flow strategy might just be the most viable finance structure you have looked into! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your A/R financing needs.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW FINANCING 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 10 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/selling-receivables-ar-finance-factoring.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com








Stan Prokop

3 Things You Need To Know About AR Finance. Fun Facts On Receivable Financing And Factoring In Canada

Why A/R Financing Isn’t a Bad Bet ! Demystifying Factoring


OVERVIEW – Information on AR Finance and factoring in Canada . If you know the true cost you can make receivable financing work for a business cash flow solution



When the Canadian business owner or financial manager wants to be more effective with their AR Finance strategy experts will tell you that it comes down to understanding 3 basic concepts .

What are they? They are not as complicated as you might think. Let's recap them and show you how this method of business financing, aka ' receivable financing / factoring allows you to leapfrog financial challenges that seemed like huge barriers in the past.

So back to those three critical concepts - they are as follows:

1. All borrowing under this facility is based on the value of your receivables, and typical borrowing limits are 90% of all A/R under 90 days old

2. Factoring finance is not debt and it’s not managed in the way that a Canadian chartered bank would monetize its receivables

3. The way to win when you have a finance facility such as this is to understand that relationship between all 3 parties to the transaction - your firm, your client and your finance factor partner. Putting the right type of facility in place is what allows you to increase cash flow.

It's also critical to understand what amount of your sales is eligible when you consider this method of financing. We've previously referenced that you typically can borrow up to 90% of your total A/R - and we remind clients that typically a Canadian chartered bank would margin your facility at only 75% - so you are already ahead of the game!

If you are working with the right partner firm you should be in a position to finance all North American receivables. The challenge of non North American A/R, i.e. foreign sales typically can be solved by putting a credit insurance policy in place. There are a solid handful of credit insurance firms in Canada that will assist you in insuring your sales, thereby making them easier to finance.

On occasion it may be more difficult to finance government sales due to the governments position around recognizing this type of financing.

When you enter into a factoring facility its critical that your finance firm understands your day to day operations, specifically s they related to your historical bad debt experience, customer returns, etc .This entire area is viewed as ' dilution ' by your finance firm, and they want to simply understand the true value and quality of your a/r .. so they can finance the maximum for your company.

Cost is always critical when it comes to entering into any business financing facility - whether that be term debt, loans, or, in our case today, monetization of assets. While factoring has a reputation for being expensive financing this is not necessarily true. At the end of the day costs involved in A/R finance must be viewed as your trade off to more liquidity, generating more sales more often, and rationalizing that you might not be able to get the same amount of capital elsewhere.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring you’ve got our 3 concepts nailed down properly!

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING / 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_finance_factoring_receivable_finance.html

Reduce Business Financing Turbulence With AR Finance ! Why You Just Might Need Receivables Financing

Why You Just Might Need Factoring

Information on AR Finance as a business receivables financing solution in Canada



Fasten your seatbelts. if you are encountering some business finance turbulence these days. Our good friends at Webster’s define turbulence as a ‘disorder... or commotion” That’s why one new tool in your finance toolkit just might be an AR Finance facility! Let's look at receivables financing and what you need to know.

More often than not, but not always, it’s simply an alternative to a bank line of credit. And the reality in our current environment economics is that this financing often becomes either the first or only choice when any business, from start up to mature, cannot acquire the financing they need, or better said, the amount of financing they require to grow.

To put it in the proper context what this is simply, is a sub set of what we term asset based lending. We hate to get lost in the terminology sometimes, but when you combine a 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.

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 just that collateral alone, as their rules and regulations force them to focus on cash flows, balance sheets, historical profits, and all the ratios and covenants that come along with that.
Just leverage alone sometimes, i.e. too much of it, ensure you won't qualify for a traditional bank facility.

By the way, that brings up an important point, which is the actual financiers of AR Finance receivables financing are in fact non bank commercial finance firms. They vary in size from huge corporations, or subsidiaries thereof, to small boutique firms specializing in a certain size of deal of industry. That’s of course why talking to an expert in the field allows your firm to quickly focus in on working with the right partner in your firm’s particular situation.

Receivables financing works because it maximizes the amount of cash flow and working capital you can draw on, and, 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 absolutely never too late to consider a new finance tool for your firm!

We are often asked by clients if they are required to provide personal guarantees for such a facility. If you're a private company in the small to medium enterprise sector the answer is, yes, probably. But, and it’s a key point here, the emphasis on any A/R financing facility is never the personal guarantee, it’s the underlying receivables or inventory that is being financed.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining if its time for your company to consider this growing from of business finance.

7 PARK AVENUE FINANCIAL
CANADIAN A/R FINANCING 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_finance_receivables_financing.html

























Stan Prokop

Can AR Finance Increase Profitability ? Looking For Some Clear Thinking On An Effective Receivable Invoice Financing Strategy / Partner?

Canadian Receivable Finance


Information on AR Finance in Canada . Can an effective receivable invoice financing strategy increase sales and profits . Here’s how !



A strange question? Can an AR Finance strategy actually help to increase your profitability? Top experts in the field indicate a strong case can be made for that statement, so all of a sudden receivable invoice financing has seemed to catch our client’s interest. No surprise there!

Whether we like it or not business history, just like regular history, tends to repeat itself. So unless the Canadian business owner and financial manager make a decision to change how they run and finance their business they are somewhat doomed to soldier on under the same current circumstances.

When we sit down and benchmark traditional bank finance against receivable financing the differences become quite clear. For the banks and business oriented credit union’s full repayment ability as well as secondary collateral (often that’s your personal guarantee) becomes the total focus. The banks focus on you as the owner, business equity, collateral and historical cash flow is... well... supreme.

Naturally we're the first to admit that if you can secure bank financing it does have significant advantages - they include the lowest possible cost of funds, your ability to deal very locally with your banker, etc. Our point is simply that there are alternatives that can still assist you to generate sales and profits.

Every business owner knows you can increase profits by lowering costs and increasing sales. But what they don't often address is their ability to turnover assets, in our case today accounts receivable. That continual turnover allows you to generate more sales and address the opportunity cost of doing something with your assets!

Naturally invoice financing is just one method or choice you the business owner has when considering how to accelerate sales and profit via proper financing. Our point is simply that invoice financing simply accelerates cash flow, which is a key driver to your profits and ability to sustain daily operations. At the end of the day its ' quick financing ' that allows the business owner and entrepreneur to address cash and revenue goals.

And don’t forget that you can take advantage of this method of financing in more ways than one - they include taking supplier discounts, taking on larger orders and contracts, and purchasing more efficiently based on your ability to pay suppliers and vendors better.

So, our bottom line today? Asset turnover can affect profitability. And Receivable financing enhances asset turnover. Alternatively said - working capital management works! when it comes to profits . (And don't forget to manage those long term assets also!) This makes you more effective as a company!

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in growing profits and sales via a solid Receivable Financing program.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING 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_finance_receivable_financing_invoice.html

AR Finance … 6 Things Mom Never Told You About Factoring & Receivables Financing In Canada

You Asked For It ! A Clear Explanation of The Invoice Financing Industry In Canada

Information on receivables financing in Canada . You Need To Know 6 Key take aways for factoring and AR Finance .



AR finance, aka ' factoring ' in Canada. You have to admit, of all the great advice you got from Mom on life and perhaps business she never really covered off critical aspects of receivables financing in Canada! So we suppose that’s our job...

Some of both the terminology, as well as the methodology of invoice finance in Canada is potentially very confusing to the Canadian business owner. Let's cut through some of that confusion and explain 6 things you need to know.

First of all, all receivable finance in Canada is done on either a ' recourse ' or ' non recourse ' basis. Two very legal sounding terms that simply mean one thing - if your client goes under you're either ' on the hook ‘, or ' off the hook ' respectively. There are in fact facilities that you can obtain that are non recourse - just imagine, a perfect world, you sell your A/R as you generate sales, and your finance partner takes all the risk. Naturally this type of financing is a bit more expensive... a better solution might be in fact to take on some credit insurance , which you probably want to do anyway if you have high risk , concentrated, or foreign receivables . 7 Insurance companies in Canada offer credit risk insurance.

Point 2 - This is probably our greatest area of discussion with clients. The majority of AR finance, aka ' factoring ' in Canada requires that your clients be notified about your sale of receivables to them. We don't like this practice; it can easily be avoided if you’re working with the right party. That way you can CONFIDENTIALLY finance your firm and be successful without others, aka suppliers and clients, knowing your business. Point importantly taken! Hopefully!
POINT 3- Advance amounts. When you finance receivables via a factoring process you get immediately, same day, cash for sales you choose to finance. Typically you should receive 90% of the invoice amount; the balance is a hold back, which is remitted to you as soon as your client pays... less financing costs. That’s the ABC of receivables financing!

POINT 4 - Remember Mom talking about marriage and picking the right partner. She probably wasn’t referring to a corporate marriage of sorts, but you need to pick a partner finance firm that meets your goals, provides you with a rate and structure that is clear and understandable, and that fits your day to day method of doing business. Nothing could be more important... after we talk to clients that have been misinformed, overcharged, etc its clear that they missed the boat on Point 4!

Point 5 - Rates .This is not important when it comes to AR finance in Canada. HELLO???? Yes it is, as this seems to be the only issue clients want to discuss when it comes to financing their firm. In Canada rates in general are in the 2% range for a 30 day receivable .That means you receive a total of 49,000.00 for your 50,000.00 invoice - as an example. Don't forget to take that reserve into account, that we mentioned in Point # 3. Oh and by the way, take that 49,000.00 and pay some supplier invoices utilizing the 2% prompt pay discount your vendors offer.

Congratulations, as you have just cut your financing costs by 50% or more!!

Final Point: Spend some time on the basics of receivables financing as it would pertain to your firm - focus on the process flow. It's as follows: You sell your products or services, you invoice your client who accepts the invoice - you get your cash immediately from your AR finance partner firm; your client then pays you and you receive the balance of the holdback - less financing costs. See point 3 above.

Business owners searching for valuable financing methods can keep it complicated, or simple. Use our 6 points Mom never told us to understand how this financing works and then fit it into your business model, with a suitable party that meets your needs. Speak to a trusted, credible and experienced Canadian business financing advisor for assistance on proper structuring of AR finance for your Canadian company.

7 PARK AVENUE FINANCIAL
CANADIAN A/R FINANCE EXPERTISE

Critical Aspects of AR Finance In Canada . Factoring Of Accounts Receivables - The Right Way!

Factoring In Canada - ‘ Doin’ It Right ‘!


Information on AR finance in Canada . 6 Critical things to consider in the factoring of accounts receivables .


AR Finance is a very valuable method of financing a company in Canada. The process goes under various names, and there are some subtle and not so subtle differences in the terminology - aka the ' factoring of accounts receivables '. Other terms are receivable finance, invoice discounting, etc.

The arrangement is pretty basic, and in fact has been around hundreds of years. In Canada we appear to be ' catching up '! The arrangement is as follows - the finance firm enters into an agreement to purchase accounts receivable from your firm. That right there is an immediate well publicized benefit - even if your firm can’t access bank financing, or is a start up, etc you immediately have found the ability to finance your firm, based solely on your sales.

Although the actual ' cost ' of AR Finance seems to be subject # 1 when it comes to discussing factoring but this cost is balanced against some pretty major benefits - your firm now has pretty well all the cash it needs, supplier discounts can be taken to reduce up to half of your financing costs, and your competitors who seemed to be taking business away from you ( perhaps they are factoring also ?!) are now in your firms rear view mirror .

Oh and by the way, all the lending covenants and restrictions that come with Canadian chartered banks simply don't exist in AR finance. Time is also critical to clients we talk to, and solid ar financing transaction can be completed in one or two weeks - if you're dealing with the right parties or advisor.

There are three drivers that pretty well secure the fact that your firm could significantly benefit from ar finance - they are your ability to demonstrate good gross margins, reasonable overheads, and the ability to potentially increase your prices a bit or take supplier discounts at the other end of the spectrum.

Perhaps your firm is having some serious financial challenges; and at the same time you just might be experiencing a solid growth period in revenues. Even more so you might be coming out of a turnaround phase in your firm and you're not quite ready for the bank yet. In those cases the cost of factoring of accounts receivables can easily be justified around the speed, flexibility, access to capital, etc.

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can benefit from this accepted business financing strategy.

7 PARK AVENUE FINANCIAL
CANADIAN AR 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_finance_factoring_of_accounts_receivables.html

What Does Receivable Financing Have To Do With Fine Wine? AR Finance And Invoice Funding and Discounting in Canada

Canadian Receivable Financing


Information on receivable financing in Canada . Proper monetization via an AR finance and invoice funding strategy allows you to … grow!




Receivable financing in Canada. Is there a comparison here between AR finance funding and fine wine? We think there is, and it's pretty simple... Aging is good for fine wine ... its not really that great for your receivables!

Let's examine why invoice financing is a solid solution for working capital for Canadian business. And like our wine analogy, here's another shocker..... You don’t have to take on debt all the time when you want to grow your business!


Invoice financing in Canada, when properly structured and with the right party allows you o grow your business when that growth results in revenues and the resulting A/R that accelerates your need for working capital.

In a perfect world you want to strive to be able to address these sorts of issues proactively prior to having cash flow financing challenges.

So how does that solution work and how does the Canadian business owner and financial manager go about securing Receivable Financing? It's really about a simple process, on an ongoing basis, of the sale of your receivables as you generate sales. The factors that affect your ability to successfully complete an A/R invoice finance program are the size and nature of your customer base, their general quality or creditworthiness, and any particular conditions revolving around your industry or your own firm’s current situation.

What most Canadian business owners don’t realize that there are a number of... let’s call them ' flavors ' when it comes to this method of finance. Unlike bank lines of credit A/R facilities operate in a different manner. In a bank scenario your receivables are in effect collateralize and form the backbone of your borrowing base... in Canada it becomes a question of picking the type of facility that works best for you.

While 99% of invoice financing companies in Canada either prefer, or in fact mandate your company to have your client made directly to them after they have financed the receivable you do in fact have the ability to bill and collect your own receivables. We term this a confidential invoice finance facility and it's generally available to firm that have facilities in excess of 250k on an ongoing basis.

Invoice finance quite often is the first type of finance that many firms enter into when they are in start up or early stage mode. Over time many graduate to a Chartered banking relationship and it's important to note that when banks are not able to service a firm for growth or other reasons AR finance solutions make a lot of sense.

The benefits of invoice finance are quite clear - it provides you with immediate working capital and cash flow when you can't meet the requirements of a bank facility. Oh and by the way, your limit on this method of financing.....? It's pretty well unlimited, as the size of your facility is typically based on your receivables and growth. That is NOT the case with a bank.

One misunderstanding around invoice finance is that you are required to finance all your receivables, all the time. Absolutely not the case, it's your choice when and how much you wish to draw based on your business needs.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in structuring a proper solution for cash flow needs.

7 PARK AVENUE FINANCIAL

CANADIAN A/R FINANCING 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/receivable_financing_ar_finance_invoice_funding.html

Why Is AR Finance So Inexpensive In Canada . Factor Receivable Funding For Your Business - Not What You Thought!

The Devil Is In The Details Apparently When It Comes To Financing Your A/R In Canada


Information on AR Finance in Canada . How To Truly Understand Cost Of Factor Receivable Funding For Your Business.


Are you nuts? AR Finance... inexpensive? That was the reaction of one client when it came to discussing factor receivable funding in Canada for business.

The reality is that receivable financing in Canada is probably one of the most misunderstood areas of business financing when it comes to benefits, mechanics, and, as we said, cost.

We'll come to the issue of ' cost ' in a bit - let’s make sure we have got the benefits and mechanics under our belts first! AR Finance is Canada is, simply speaking, flexibility for short term working capital financing. It's mechanics, though relatively simple, provides Canadian business owners and financial managers with a large measure of cash flow and working capital when it comes to new orders and contracts, increased need for working capital as inventories and receivables grow, and , simply speaking, keeping your daily operations running smoothly.


It's of course your A/R that provides the backbone behind the capital that you need, allowing you the leisure of actually, as they say, working on your business, not in your business... and boy is that a difference as we all know.

One key benefit either overlooked or misunderstood is simply the fact that your factor receivable funding facility has the ability to grow as your business revenues grow.

And don’t forget , the key concept of AR finance in Canada is that your company isn’t taking on debt when you finance your receivables ; you're simply monetizing one the most key assets of any business, your receivables. A good analogy is that you are basically turning a Business To Business model into a cash business. As you sell, and invoice you receive cash the same day. Your facility of course fluctuates exactly similar to a business credit line, so factor receivable funding for your business goes up and down every day, just like a bank line of credit. You are of course paying for only what you use.

Many miscellaneous benefits accrue to your firm when you consider this method of receivable financing. They include:

- Ability to only draw down the amount of financing you need - It's a pay per use method for working capital

- Same day financing of your sales revenue

- Typical advances for A/R funding are 90% of your receivables

- A good facility will have per diem pricing

- Little or no emphasis on personal guarantees

- All North American receivables can be financed, and foreign A/R is financed via credit insurance which can be easily arranged


So, back to our client who said' ARE YOU NUTS ‘? As it pertains to AR costs of course!

Your business should be focused on profit and turnover. By having a constant supply of working capital and access to cash flow you have the ability to increase sales and profits. Many firms also have the ability to achieve overhead reduction as a competent AR partner firm performs these services for you.

Many clients we have spoken to have had to turn away sales volumes and large contracts because of financing inability .We see that all the time. With AR Finance you are now in a position to basically accept unlimited orders and contracts.

Do you believe you could enhance relationships with key suppliers by paying those cash or taking their offered discount? We sure think you could, and that’s a key benefit of factor receivable funding. That type of business activity also enhances your overall firm’s commercial credit rating, which should be important to you in the long run.

Got a lot of time on your hands as you run your business? We sure don’t, and you'll find that you'll be focusing a lot less on seeking external financing if you've got a solid A/R funding business solution in place.

So expensive? We let clients decide. But if you want to see how the true cost of AR finance fits into your business speak to a trusted, credible and experienced Canadian business financing advisor today.

7 PARK AVENUE FINANCIAL
CANADIAN A/R FINANCING 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.webpage66.com/ar_finance_factor_receivable_funding_business.html

Warning! Are Traditional Factoring Program Companies In Canada Right For Your AR Finance Challenge?

What Type Of A/R Financing Best Suits Your Firm ?


Information on factoring companies in Canada . What type of AR Finance program best suits your firm when it comes to receivable finance?


There's nothing like a ' Danger Ahead' sign up the road to catch a Canadian business owners attention. That's why we're pointing out a number of things today with respect to factoring companies in Canada, how they work, and why ar (accounts receivable) finance may be the best thing that ever happened to you... or the worst. Talk about a balanced perspective.

More often than not when Canadian firms look to AR Finance as an alternative it’s out of an immediate need, often almost survival. They might be finding themselves in a number of positions, including having to restructure their firm or the debt, downsizing, or addressing the worst and best problem of all - Hyper growth with strong revenue increases.

From our vantage point factoring companies in Canada are often addressing ' the short term fix' stage. The 3 most common situations that caused these challenges often are poor management (that might be you unfortunately) being undercapitalized, and finally, over leveraged.

So how does a traditional factoring program work - and what’s the good and bad in all that?

Simply speaking it’s an immediate solution that makes cash available for your firm - at a time when pretty well no one else will give you the amount you need, if they'll give you any at all

When you implement the solution you're in a positional albeit at a cost, to grow your business again, pay and hire people, and take supplier discounts and price advantages. And all of this is done without debt, and diluting the ownership in your firm.

So, lets recap how things work with an emphasis on pointing out the good and somewhat ' unfavorably viewed ' aspects of this method of Canadian business financing.

Here's how it works: You typically receive approx 90% of all invoices you submit, and you can submit pretty well as often as you like, even daily. Bottom line, as you sell you get cash. Same day.

So what could possibly be the downside of this ' traditional' factoring? The daily mechanics are not always viewed positively by the business owner; in some cases credit limits are set on your accounts, and in the majority of cases collection services are provided by the factoring firm. Generally the cost of the financing is in the 2% range, meaning that if you finance a $ 10,000.00 invoice for 30 days you have a financing charge of $ 200.00. Is that a lot? We’ll let you decide once you benchmark it against the advantages of your AR Program.

Is there a better way to enter into the right program with factoring companies in Canada? One method is the confidential invoice financing facility. Here you get all the benefits of AR Finance, but at the same time you are billing and collecting your own receivables.

How do you know when you're ready to consider such a program? A few basic ongoing calculations of your sales to receivables, collections and inventory turnover analysis should allow you to determine whether you have a financing need that might not be served by the traditional chartered bank solution.

And remember this type of financing can often be bundled together in an asset based line of credit that margins both receivables and inventory.

Speak to a trusted, credible and experienced Canadian business financing advisor - get the straight goods on those warning signs.







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/factoring_companies_in_canada_program_ar_finance.html

Warning ! Not Using AR Finance Could Be Hazardous To Business Health . Receivable Financing Via Factor Funding in Canada

A Canadian A/R Finance Strategy



Information on ar (A/R) finance in Canada. How does receivable finance via factor funding work, what does it cost, and why it doesn’t cost what you think.


AR (A/R) Finance is one method that Canadian business owners use to ensure they have the optimum level of accounts receivable and cash flow.

It doesn't take long for Canadian business to realize that their receivables are in effect their funds that are sitting in someone else’s bank. And trust us that the large corporations figured that out a long time ago - they invest thousands and millions of dollars in credit and collection departments. We know, we've sat there!

So how in fact does a firm extend credit in Canada, while at the same time minimizing the effect on working capital on a daily basis?

One of the things you have to do in advance is to calculate your firms ' collection period. If you monitor this over time you will find that you have a strong sense

Once you truly understand this calculation you will be in a position to understand the effects of increasing sales, taking on larger clients or projects, and knowing at the same time what it will cost you in financing costs and yes, even bad debt, as not all clients pay as we have found!

Most busines owners, particularly those in the SME sector don't often feel they have the tools or knowledge or expertise to calculate these types of ' what if ' scenarios. If that’s the case a business advisor, accountant, etc can help you for minimal or no cost. It's all about putting the variables on the table and looking at them - they include things such as your projected increase in sales, your costs to deliver that product or service, the cost of financing expenses from your bank or financing company, and the cash flow that will come out of those increased sales .


How then cans Canadian business utilize receivable financing, also called ' factor funding' to ensure they are masters in their kingdom - you know the kingdom we're referring to, it's the one where cash is king!

AR Finance simply accelerates the flow of money in and out of Canadian business. In a perfect world you are accelerating ' cash in ' and slowing down ' cash out ‘, i.e. payables, etc.

The cost of factor funding, aka receivable finance is a very misunderstood topic in Canada. A good start might be for you to calculate how much it costs you now to carry receivables. Its actually only three data points in your business - you annual sales, your a/r , and the amount you are paying your bank or financing company to carry that bank line or commercial receivables line of credit.

Let’s use a larger firm as an example - say it has 20 Million in sales, and they collect their money in 65 days. Let's say they are borrowing at the bank at 5%. Their total financing costs are 20M X 5% divided by 365 days in the year Times 65 days which is their collection period. Their cost to carry A/R is then 178,000.00.

The cost to finance this a/r via factoring would be about 10k more a month , but the firm now has unlimited access to cash flow and working capital, is growing sales, and have maintained their ' cash is king ' status with strong cash on hand .

Is that good or bad, and how does it compare with factor costs. The key point here is that your DSO in effect becomes zero when it comes to receivable finance, as you generate cash immediately as you invoice. You then utilize that cash to generate more sales, turnover working capital faster, etc.

In Canada, as a general rule receivables are financed at a discount of 2% on a monthly basis. So you as a business owner have to take the time to re-do our calcs and determine your new cost of financing. You may be well surprised!

Speak to a trusted, credible and experienced Canadian business financing advisor on how factor funding and receivable financing works, what type of facility works best (its confidential A/R finance) and how your firm can qualify immediately.






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_finance_receivable_financing_factor_funding.html

Canadian AR (A/R) Finance Exposed – How Receivables Factoring Companies Invoice Finance

Laid open to view. That's a solid definition for ' exposed '. It almost sounds like a steamy spy novel..! Well... perhaps not as exciting as that... but lets take the covers off A/R finance in Canada. How does receivables factoring and invoice finance work and another thing... didn't we hear it was expensive..?????

It's our observations that usually after Canadian business owners and financial managers understand how ar ( a/r ) finance works that they immediately focus in on trying to understand how they can achieve the benefits of receivables factoring , while at the same time reducing the cost . In years gone by the perception of factoring was that it was akin to the same negative perception we give to unscrupulous car dealers.

Bottom line? Things have changed, and invoice financing is powering, yes we say powering! thousands of companies all across Canada.

So, back to pricing - we're going to expose some of the key fundamentals around this type of business financing. In the case of how you are charged its actually more simply than you think, the pricing of your transactions revolves around the total time it takes to collect your invoices, the actual size of your approved facility, and thirdly, an d in our opinion as important, who you choose as an invoice finance partner !

So what actually is the best pricing you can achieve in Canada from an ar finance strategy point of view? Well, let’s just say the spectrum is broad, with costs ranging from 5-6% per annum to 1-3% per month. Wow! Let's repeat that wow! That is clearly a huge range. So clients tend to ask where they fit into the pricing of their receivables factoring equation.

In Canada there are 2-3 tiers of firms which dominate invoice finance. They are a select group of U.S. and Canadian banks, some major independently owned Canadian and U.S. firms, and finally, hundreds of what ca be only termed as small ' mom and pop ' shops, providing facilities that might range in the 15-25k/month range .

Where does your firm fit. The truth around pricing is that once your firm has a volume of approx 250k per month you can start to achieve some significant invoice finance savings. Want to know another secret of the industry. It's simply that if lock into a facility for a year then you can actually achieve a price reduction, while open facilities tend to charge a bit more.

Our favorite and recommended type of facility is called C I D - It stands for confidential invoice discounting. What is it? It's simply a receivables factoring facility that allows you to bill and collect your own receivables. Your competitors might be using invoice finance but they are under the stringent control of their factor partner, who is intensely involved in the invoicing and notification to your customers of the financing you have arranged.

And, guess what, C I D financing, contrary to popular Rumour, is the same or less expensive that traditional U.S. and U.K. type factoring which have dominated the Canadian landscape for years,

AR Finance is at the end of the day a business financing facility that involves yourself and your partner firm. We recommend you deal with Canadian firms who understand the business landscape here and who ensure you have a facility that makes sense from a cost point of view. The right partner will also not ' nickel and dime ' you with respect to hidden fees, surcharges, etc. There isn’t a day when we don’t meet a client who ' thinks' he knows what they are paying for invoice financing, until, unfortunately, we expose the true pricing around his or her facility.

Want the real straight talk and goods on receivables factoring in Canada. Perhaps, just perhaps you might want to talk to an unbiased expert. Seek a trusted, credible and experienced Canadian business financing advisor, and get on the inside of the true benefits of receivables finance!





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 .Info re: Canadian business financing & contact details :

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

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.

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

The Truth About Business Factoring And The Real Factor Cost Of AR Finance In Canada

You can't handle the truth! Or can you ? We think you will be able to once we review the basics around business factoring in Canada, what is the true factor cost of AR finance (ar = accounts receivable).

Your firms ability get financing around the most liquid and accessible business asset you have, your receivables, is what can make or break many small and medium sized businesses . The big corporations seems to have this down quite well already , as they have large sophisticated infrastructures for credit and collections, as well as access to corporate borrowing and securitization facilities that smaller companies just don’t have .

But you still have access to business factoring - all we can warn you about is that it’s important to understand your true cost - (it’s not what you think it is!) and, even as critical - picking your partner in this method of Canadian business financing.

Is your firm eligible for a business factor facility? If you can answer yes to one single question - ' Do you have accounts receivable?' then, you guessed it, you’re eligible! In many cases if you are working with the right firm you can blend in receivable and purchase order financing into the same facility - the names tend to change then, as we refer to that as asset based lines of credit and working capital facilities.

So, it’s always about cost, right? We don’t think so, but our client’s sure do, so let’s invest some time to discuss the real factor cost of ar financing in Canada. Part of the problem in addressing the cost issue is the perception by clients, totally understood of course, that factoring costs are viewed as interest rates by the borrowers.

That’s not how the industry views it; they are buying something you are selling, at a discount. That discount rate is often (99% of the time!) interpreted as an annual interest rate. So while the factor firm buys your receivables at a rate of between 1-3% (on a monthly basis) our clients gasp and view that as 12 - 36% annual percentage rates.

So, how do you assess the factor cost then? Here are the elements you should consider in assessing business factoring in Canada. First of all, if you don’t have some decent gross margins on your products or services then even bank financing or carrying your own receivables is expensive. So a solid gross margin is important.

To calculate your margins of course simply take your gross income and divide that number by your sales revenue and express it as a percentage. The number of course shows you how much you are making considering the costs you incur in actually producing that product. Naturally service companies have usually great margins, because there is no direct cost of sales.

Other issues to consider in understanding the true cost of factoring is how long it takes to collect your receivables, as well as the actual cost it is taking you to carry that investment . And don't forget the concept of lost opportunity - you can take you factoring cash and turn that into additional sales and profits, as opposed to waiting for a cheque to come in 60- 90 days later.

Our final point is that the cost of factoring can be significantly offset by your ability to take discounts and purchase in a smarter fashion, in quantity, etc.

In summary, the true factor cost of AR finance is probably not what you think it is. Thousands of firms that use and offer this service can’t be wrong. Speak to a trusted, credible and experienced Canadian business financing advisor for assistance in understand the real cost of business factoring in Canada. You might just be surprised, and find you can handle the truth!


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