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The Modern Rules Of Alternative Finance Options
Debtor financing, aka ' receivable finance ' is one of the most popular methods of financing a business that is growing . Success in accounts receivable financing will relate directly to your firms ability to pay normal expenses and invest in growth while not at the expense of slow paying clients . By the way, the most common term used today around debtor financing tends to be ' factoring '.
It's simply a flexible form of a ' business line of credit ' , via alternative finance options . And by the way it's utilized in pretty well every industry, by both start up earlier stage firms as well as the largest and most successful corporations in Canada.
Business owners and financial managers should simply view this tool as ' cash flow financing '. Where confusion sets in is the terminology the industry uses and how it prices this form of finance . Knowing how debtor finance works will allow you to exploit it's various features.
When setting up such a facility it's all about being able to identify the quality and size of your sales revenues as they are invoiced to your client base. In it's simplest form your facility will typically have 90% of your sales finance as soon as you generate invoices that have been ' earned ' Earned ? By that we mean simply that you have delivered a service or product under payment terms agreed to by your client base.
As an aside we also mention that many firms feel they can grow faster if they can offer extended dating terms to new or larger or strategic clients.
Clients of 7 Park Avenue Financial will typically ask when they get the balance of the invoice amount, ie that remaining 10% balance. The answer ? Once your client pays you get the remaining 10%, less finance and carrying charges. Safe to say that clients with good paying customers can see the positive advantage of cash flow turnover.
Many clients , in fact most , would prefer to be in total control of the whole debtor finance timeline. While some firms are happy to have a lender do their collections the majority of firms want to bill, and collect their own receivables.
So rather than disclose debtor financing arrangements to your customers you are in a position to ensure that your clients aren't aware of how you finance your business. This is called Confidential Receivable Financing .
Summary of the advantages of Debtor Financing:
1. Keeps a Business Focused On Better Receivable Management
2.Allows companies to access business financing not available from traditional bank type arrangements
3. Increased cash flow
The Debtor Financing Plan to More Cash Flow -->
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success .
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Click Here For 7 PARK AVENUE FINANCIAL website !
7 Park Avenue Financial provides value added financing consultation for small and medium sized businesses in the area of cash flow , working capital , and debt financing .
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 .
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
