AR Financing . Your Every Question Counts When It Comes To Receivable Factoring

Lost Your Operating Manual For Receivable Financing In Canada?



OVERVIEW – .Information on AR financing in Canada . When it comes to receivable factoring what does the Canadian business owner/manager need to know with respect to operating and benefiting from a successful cash flow strategy .




AR Financing in Canada. When clients we speak to think about receivable factoring solutions they tend to have more questions on this solution than some other types of financings. Why is that we thought? We're not 100% sure but we know those questions need to be answered. So our solution, a mini ' Operations Manual ' on A/R finance in Canada.

It's those operations manuals that provide us with ' how to ‘, dangers, warnings, recommendations, so it seemed quite appropriate to adopt that type of information delivery! Let's dig in.

Canadian business owners and financial managers utilize Receivable factoring for a variety of reasons - one main one being it provides your firm with working capital and cash flow without dilution of your ownership equity in the company. It is often viewed as a short term or intermediate finance solution, avoiding long term commitments and long term debt.

It differs from bank financing from a number of perspectives. When you finance you A/R with a bank you provide an assignment of those receivables that you're financing. When you utilizing an A/R finance scenario you simply bulk up on ' Cash On Hand ' as you are in a position to constantly ' sell' your A/R on an ongoing or bulge type basis .

Both factoring and bank receivable finance advances you a per cent age of the value of your sales. In the case of Canadian chartered banks it's a 75% advance; Receivable factoring typically provides you with a 90% advance, so you have more liquidity.

Does our ' Operations Manual ' of advice recommend any one type of AR financing over another. Ours does! It recommends that you consider Confidential A/R finance
which allows you to bill and collect your own accounts - there are no notices to customers, you are completely independent of your finance partner, and at the same time you have the same or better pricing with respect to limits and credit lines.

In effect you're in control. That ability of Canadian firms to run their own businesses without any ' negative ' client reaction from their customer base. That's a good thing! , when it comes to the somewhat more conservative Canadian landscape of business ' perceptions '.

Receivable financing in Canada is a sub set, we can say, of asset based financing... So in many cases your cash flow financing for your receivables can be combined with inventory of fixed asset financing, allowing you to truly ' bulk up ' on capital needs .

The security for your A/R financing is pretty well the same as that of any Canadian chartered bank. Typically its most easily accomplished with the same type of General Security Agreement that collateralizes the financing.

So does the concept of an ' Op's Manual ' when it comes to receivable factoring make sense. If you're concerned about ' how things work '. ‘dangers’ , 'recommendations', etc consider a LIVE operations manual by seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow needs.




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 :


7 Park Avenue Financial = Canadian Receivable Financing Expertise





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

AR Financing And Factoring . Don’t Be Hatin’ A New Way To Finance Receivables

Out of the fog and into the clarity with A/R Finance



OVERVIEW – Information on factoring and AR financing in Canada . What’s the proper way to look at a receivables finance strategy for Canadian business owners who want to augment or increase working capital and cash flow


A/R Financing / factoring in Canada are significantly misunderstood when it comes to pricing, how it works, etc. For that reason we've met clients that actually ' hated ' it! So our message... stops hatin’ it and try and be somewhat more flexible in getting educated about how this method of business financing works.

And most importantly, understand this business financing model, how it works, and how to assess the true cost. Most people would agree that successful entrepreneurs and business people are the ones that took the time to listen to new ideas about anything that will make their business more productive from a cash flow and profits perspective.

So some might be thinking now... '' .. Sounds complicated?’

The reality, not really. AR financing is simply a 3 way mechanism between your firm, your finance partner, and your client with a focus on obtaining cash from your receivables investment.

And the reason it works when other forms of finance might not be accessible? Simply because the essence of collateral on the transactions are the value and quality of your A/R. It is not, we repeat... NOT... a loan based on your firms particular financial standing.

Pricing, while often pitched as ' complicated ' by others is the crux of today’s message to clients and others. While the common belief is that factoring is expensive this is not necessarily true. Oh by the way though, dealing with the wrong partner might be your biggest mistake when it comes to selecting a factor partner, but there enough solid financing firms out there who can make your ' partnering ' decision easy when it comes to financing your business for cash flow.

One of the misunderstood essences of factoring in Canada is the concepts of ' asset turnover ' and ' return on investment '. That’s because 99% of the clients we initially meet seem to have reviewed and investigated everything EXCEPT these two concepts, which in fact are the essence of factoring. So they can be forgiving for having focused on all the wrong issues.

So, asset turnover and return on investment. How do they play a key role in the factoring decision? They do that by the Canadian business owner and financial manager recognizing that there is a trade off in that they can now use the cash flow generated by the factoring transaction to grow and sell more. That is then benchmarked against the cost of A/R financing, so if your firm has solid gross margins, is growing, and needs to invest in working capital accounts such as inventory, etc you have probably just found the perfect method of financing your company!

We always strive to paint a balanced view , so we would be remiss in saying that AR finance sometimes is also very suited to firms that have significant financial challenges and cant obtain financing elsewhere , but the optimal scenario is when your firm is growing, generating some profits, but just unable to access the capital you need.

The actual arithmetic around how factoring is pricing is again very simply - sometimes the industry itself does a poor job of laying out that pricing. The only elements of the pricing are the amount of your invoice, the discount rate you are being quoted, the amount of the advance against your a/r, expressed as a percentage, and finally .. The time it takes you to collect your invoice. The faster you focus on collection the lower your financing costs.

Bottom line today... be open and flexible in understanding how receivables finance works. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in setting up a facility that works for your company.

P.S. Don’t forget to also check out confidential invoice financing, allowing you to bill and collect your own receivables under your total control.

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/factoring-ar-financing-finance-receivables.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

When Do You Need AR Financing And Is It Really That Simple And Effective ? Factoring In Canada

Looking To ‘ Cash Flow’ Your Largest Asset ?



Information on factoring in Canada, Why AR ( a/r ) Financing Works, and how it works!.. in Canada



No secret that Canadian business owners and financial managers in the SME (small / medium enterprise) sector in Canada are constantly seeking simple and effective business financing solutions in Canada. That's where AR financing comes in – it’s assistance for the constant need for cash flow.

We don’t think we can count the number of clients we meet that always bemoan the lack of cash to run their business. And borrowing via some sort of term debt solutions isn’t exactly what they consider a solution.

Enter ' FACTORING '. In the right circumstances (more about that later) its time efficient and not really any sort of complicated approval process. The fundamental solution it provides is very simple - your clients owe you money but you would rather have that funding... today!

Although conceptually its similar to a business bank line of credit the difference is that the documentation surrounding this Canadian business financing solutions essentially has you selling those receivables, not just ' borrowing ' against them, as you would with a chartered bank in Canada.

You get the funds immediately, basically you’re able to cash flow the receivable as soon as you generate it and are able to document that you have delivered your product or service.

So how does the actual cash flowing of the invoice work. Let’s take an example of a $ 50,000.00 invoice as an example! As soon as you have issued that invoice you receive cash for the invoice, less a discount, which is typically in the 2% range in Canada, sometimes more... sometime less.

Our style is not to complicate things, but in actuality usually an additional 10% is held back as a reserve, or holdback. That money comes directly back to you when you client pays. So at the end of the day all you have in effect ' paid for ' is the invoice discount, the previously mentioned 2% range.

That seems very simply, but typical client questions are:

Why does the discount or financing cost change or vary?

Does the quality of my A/R portfolio affect pricing?

What if my client pays doesnt exactly pay on time?

Good questions ... here are the answers:

Financing costs vary based on the type of firm you are dealing with and the size of your monthly receivables, In general your firm can attract better pricing with a higher quality customer base, but this is certainly never always the case. And finally, we haven’t really met anyone that ' pays on time ' these days when cash is valuable. So the factoring industry addresses this by charging a daily ‘per diem ‘rate based on what one additional day of the overall financing cost we have referred to.

So why is this form of financing effective? Simply speaking it’s your new cash flow and working capital solution, allow you to finance receivables and inventory and grow your business. It's no secret that cash flow runs every small business and every FINANCIAL POST 100 firm in Canada. Factoring, aka ' RECEIVABLE FINANCING “helps you smooth out the ups and downs of the business cycle ... effectively.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING AND A/R 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/factoring_ar_financing_canada.html

‘Takin’ Care Of Business ‘ AR financing . Accounts Receivable Loans Are ‘ Working Overtime ‘ !

Canadian Receivable Finance – Working Overtime!

Information on ar financing in Canada . Why accounts receivables loans play a key role in Canada’s business financing



AR Financing in Canada. It's clearly ' takin' care of business' when it's used properly with respect to accounts receivable loans for financing your business in Canada .

One of Canada's greatest rock anthems gave us some ideas about how receivable financing in Canada is appropriate for thousands of firms, and getting more traction everyday. ‘Start your slaving job to get your pay ‘... perhaps BTO meant to stress the importance of collecting receivables in order to facilitate cash flow for payrolls? So as the song says ' take good care of my business ‘... and you don’t need to ‘work overtime.'


So what then are the advantages of AR financing in Canada and do they in fact make sense for your firm. Those advantages become very clear if in fact your firm has tried to access more traditional bank financing but finds itself unable to do so.

First of all the time and level of financing in accounts receivable loans (it’s not really a loan per se - it’s a monetization ' provides you with a significant amount of working capital immediately without the additional collateral and guarantees that might be required by another lending source.

And what do we really mean by ' immediately '. Well how is ' same day service ‘, because firms get funded typically the same day they generate sales and invoices.

Organizations like the Federation of Canadian Business speak extensively on ' ease of access' to financing for companies in the SME sector. AR Financing is typically very easy to apply for and turnaround time for a proper facility should never be more than a week or two.

Also, if you're dealing with the right firm (unfortunately many firms in Canada are not) you should be also able to finance U.S. receivables at no cost. Foreign receivables might, but no always require some level of credit insurance, and we're referring of course to non North American A/R.

The overall mindset of the Canadian business owner changes once he realizes the difference between A/R financing and a bank facility. So unlike a bank overdraft which is collateralized by your assets, accounts receivable loans are in effect the sale of your A/R to a third party finance firm. Oh , and by the way, as your business grows so does your receivable loan facility, there is no real need to ' reapply ' or wait until you have another year of financial statements under your belt .

So if we're so right about invoice financing in Canada why isn’t everyone on the program? Good question. The reality is that there is still a lot of lack of awareness of how the financing works, what it costs, as well as the perception that it’s non traditional in nature. If thousands of firms in Canada use AR finance we're quite sure it’s no longer that ' alternative ' in nature.

We do acknowledge though that if your sales are in fact shrinking or not stable that there are some challenges here and this method of financing might not be for your firm. The bottom line though that if you are in fact growing you can use cash flow from A/R financing to productively finance your firm. That includes by the way using the funds to purchase more effectively as well as taking supplier discounts, potentially alleviating the cost of accounts receivable loans.

Looking for a business financing solution that helps you control business cash flow performance and growth? Then speak to a trusted, credible and experienced Canadian business financing advisor today on how A/R financing can help your firm.

P.S. Again, it’s not a loan, it’s a ' monetization’!





7 PARK AVENUE FINANCIAL is an expert in RECEIVABLE FINANCE in Canada



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_financing_accounts_receivable_loans.html

Receivables Purchase Finance In Canada . Don’t Get Caught Misunderstanding AR Financing strategies And Costs

Canadian Receivables Purchase Financing


Information on a receivables purchasing finance strategy in Canada . What does AR Financing cost and how to make it work in an optimal fashion.




Receivables purchasing financing in Canada. Thousands of businesses in Canada utilize AR financing when the economic climate and their particular situation does not allow them to ' extract ' the type of financing they need for their working capital and cash flow.

Is it really positive to stay ahead of the proverbial ' cash flow shortage ' 8 ball? We think there is and at the same time your firm may now be in a position to take advantage of growth opportunities it could barely even consider, let alone realize on previously.

So why is AR financing so misunderstood in Canada. Our own opinion is that its just simply poorly explained when it comes to the mechanics and the cost.

The reality is that if you know 3 basis numbers around your business, and they are numbers you should know you are in a position to determine the cost of financing A/R, and the opportunities you might be missing by not considering a receivables purchasing finance strategy.

Those 3 business elements we are speaking of are simply the size of your receivables, your day’s sales outstanding, and the interest or financing rate.

Let's examine quick example. Let's say your annual sales are 2 million dollars and you are collecting your money in 65 days, which certainly is a typical time period these days. And lets say you are being financed by a bank and the interest you are being charged is 5 %.

The Total cost to finance your A/R is, then, 2 Million dollars times 5% divided by 365 days= 17 thousand dollars.

So, is that a great number? Putting on our lawyer hat, we will ay ' it depends '. What you need to do then is determine what the average really should be for your company or industry based on its selling and collecting terms.

Rather then demonstrate another more complicated calculation lets just say that if you can reduce the amount of receivables you carry the impact of actual DSO can go a tremendous way to maintaining your company’s general cash flow health .

If managed properly a receivables purchase AR Financing program can fund all your short term capital needs. In fact you can consider growth opportunities that were never available before, while at the same time ensuring you can meet payroll, product purchases, and expansion.

In Canada AR financing is provided by independent commercial finance firms. For facilities in excess of 250k you can even get the true benefit of AR finance, which is immediate cash flow while at the same time maintaining full responsibility for customer relations, collections, etc.

If your company requires immediate cash and you are unable to obtain bank financing for any variety of reasons speak to a trusted, credible and experienced Canadian business financing advisor for your operating capital needs.





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/receivables_purchasing_finance_ar_financing.html

AR ( a/r) Financing Is Your Logical Plan B – How Factor Finance Becomes Your Solid Canadian Non- Bank Funding Source

Are Accounts Receivable Financing Companies A Logical Solution to Canadian business financing ?


Information on ar financing in Canada and how factor finance firms are a solid and logical solution to funding your firm in a non-bank setting .



How do firms that can't qualify for bank financing (or all the bank financing they need) solve the working capital dilemma? A solid ' Plan B' solution is (A/R) ar financing of your accounts receivables. Factor or discounting finance has become a significant contributor to funding of Canadian businesses - of all sizes.

Your ability to turn current assets such as receivables (and of course inventory) makes you quite simply a better credit risk for your lenders and suppliers. Most Canadian business owners and financial managers realize very quickly that profits do not automatically generate cash flow for your business. In the long run of course they do equal cash flow... however you will notice your suppliers and other lenders rarely want to wait for the ' long run’!

Naturally if you don’t need to borrow and can generate cash by waiting and collecting your receivables your cash flow stays ' internal ' To stay in business for the long haul you of course need 3 key underpinnings to your business - profit , cash, and solvency . As we have said profits don’t equal solvency in the short term and that’s where ar financing comes into play.

So why do thousands of Canadian firms (yes thousands) turn to factor finance. Simply speaking it’s an alternative way to funding growth, turnaround and restructuring. If utilized properly you are now in a position to take and negotiate vendor discounts with your key suppliers, enhancing your relationship over the long term.

So, the logical question we get from clients is of coruse ' why not the bank?’ Although bank financing of receivables is by far a cheaper method of financing your working capital that solid pricing comes with stringent credit requirements. The bottom line is that ar financing and funding has quite often much more flexibility when it comes to your firms particular current financial situation.

Factor financing is often viewed as ' the gap ‘... it’s the bridge between your current situation and traditional funding. There are a number of different ar financing solutions in Canada - many Canadian business owners and financial managers are confused by a lot of the terminology... recourse...notification... discount rate. Reserve holdback. Etc.

Our recommended solution to clients is what we term a ' confidential factoring ' facility. This facility allows you to bill and collect all your own invoices... unlike the majority of this type of financing in Canada no contact or notification is made to your clients. You simply must be in a position to maintain proper monthly financials and reporting around your A/R.

A key benefit of factor funding in Canada is that facilities grow pretty well automatically as your firm grows - there is not constant re-applying. Many clients miss the key fact that this type of financing is not debt - it’s a monetization of your assets. Over the long term you will increase profits and sales turnover.

Speak to a trusted, credible and experienced Canadian business financing advisor on how the funding and finance of your receivables can help you grow sales and profit.




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_financing_funding_factor_finance.html