Factoring Receivables ? It’s Up To You - Pick The Right Business Finance Company As Your AR Factor Partner

‘Whats best type of business financing company for my firm' often ask our clients when they consider AR (A/R) financing and factoring of receivables. We believe strongly its all about the partner, as much as the facility arrangements and we think we can show you why.

A/R (AR) financing companies in Canada tend to be specialized focused niche lenders in the Canadian business landscape. Unlike our friends in the U.S. these firms tend to be non bank independent finance firms, Canadian, U.S, or U.K. based with respect to ownership.

This type of business finance company has one focus, advancing you cash and working capital on your AR (A/R) similar to a line of credit. The funds you can obtain are unlimited based on all your eligible receivables. ( In general receivable financing works for all receivables under 90 days old, as many clients think they are able to finance a receivable only immediately after it is generated , which is not the case by the way.

So could the right business finance company for the factoring of receivables actually be a bank. There are 1 or 2 players in the Canadian banking landscape that do in fact offer receivable finance, similar to a factoring model, however on a broadly speaking basis we can categorically state that banks don't finance receivables under the invoice discounting model that you are probably looking for .

We guess that anything is possible and one day we might see the banks gravitating to this type of finance... It certainly might be good from a rate and competition basis.

So we have determined that your search for the right firm re factoring receivables should focus on a specialist firm offering the type of facility you are looking for. But do you as a Canadian business owner or financial manager actually know the best facility when you meet it?!

Let's walk you through what we consider the key issues in finding the ' perfect ‘AR financing facility in Canada. First of all you want to ensure your partner firm can satisfy your facility size - some firms are very small and have limited capital themselves! which we think is something clients don’t often consider. Other key issues are as follow: facility limit, your ability to finance all your receivables, as certain companies impose restrictions on either the total amount for any one of your customers, and believe it or not some firms actually don't like government receivables for some legal and technical issues around their security.

Two other factors to consider is how clearly you understand the advance formula under which you will draw on the facility... and oh yes, did we forget to mention pricing ? That's a tongue in cheek comment of course as the majority of clients we speak to seem totally focused only on pricing, and not the ten or so other issues they should be considering.

Pricing varies significantly in Canada... anywhere from 1-3% of each invoice for a 30 day period. Rates are determined by overall facility size, the quality of your A/R and the number of days it takes your clients to pay.

Whats the optimal facility in Canada for factoring receivables? For us its 'C I D’, confidential invoice discounting or financing. This allows you to bill and collect your funds without any notice to your customer. This type of facility is perfect for your day to day operations.

In summary, of course you're the one that will make the final call on the type of facility that makes sense for your firm when it comes to cash flowing your A/R.

Consider also speaking to a trusted, credible and experienced Canadian business financing advisor who can navigate the waters of receivable financing for you on issues such as borrowing formulas, rates, terms and conditions, and your ability to improve on these factors.






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/factoring_receivables_business_finance_company_ar.html

Why Canadian Companies Use Factoring Receivables Solutions for Business Financing

Knowing you are making the right choice in factoring receivables for your Canadian business is half the battle. You then have to pick the best firm to facilitate your transaction, and like most business owners you want to know you have made the right decision.

Let's recap why A/R financing works, and more importantly, how to select the best companies to work with based on your own needs.

There are numerous reasons why you might want to use a factoring receivables strategy to finance your business. The best reason you can have is that you are growing! And growing quickly - Because in that situation you are unable to achieve the sort of traditional financing you need to run and finance your business on a daily basis. Simply speaking working capital and cash flow become your overwhelming priority on a day to day basis, and that shouldn’t be the case!

So, yes... you have identified invoice factoring and financing as your solution - but more importantly you also want to know how it works and how it will both affect and benefit your business on a day to day basis. The reality is that if are a small and medium sized business owner in Canada you are probably relying heavily on what the finance folks call a ' self financing' strategy. That simply means that you are only using your existing cash flow to finance your growth and profits - you are not in a position to, or don’t want to... take on more debt for your company.

Enter at stage left receivables financing companies! They purchase your a/r a daily, weekly, monthly ( its your choice!) basis and provide you with same day cash flow as soon as you have generated a valid sale and invoice .

And why does this strategy appeal to Canadian business owners? Simply because you are not creating debt on your balance sheet, and the personal guarantee situation is all but eliminated and you have the ability, ( if you choose the right partner firm ) to exit this financing at any time .

So, it all seems like a perfect world right? in effect the perfect business financing situation . Well in business it doesn’t work that way, there are pitfalls and mistakes you need to avoid when utilizing a factoring receivables strategy.

So what are those mistakes you should not make? Partnering... you need a firm that meets your needs, both geographcially, with competitive rates, and the ability to transact with you on a daily basis. We strong recommend what we call a C I D solution, which is the acronym for Confidential Invoice Discounting. This allows you to bill and collect your own receivables, finance them when you want, and receive the same rates as your competitors who aren’t using this C I D strategy. In their case their customers are contacted for payment by the factor firm, and this is unappealing to many Canadian businesses.

Whether we like it or not our clients always focus on rate when talking about a move to companies that will finance their receivables. Factoring rates are perceived as more expensive but in many cases when you factor in use of funds, ability to grow your business, etc the decision is not as difficult as you might think.

Speak to a trusted , credible, and experienced Canadian business financing advisor who is an expert in factoring pricing, picking the best solution for your firm, and negotiating pricing and fees and advances that work best for your future 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/factoring_receivables_financing_companies_canadian.html

How To Obtain The Best Receivable Financing In Canada and Why Factoring Receivables Works Best When Its CID!

Your mission, should you choose to accept it? It's finding a financing receivable strategy that works, is cost efficient, and allows you to mind your own business when it comes to this popular method of Canadian business financing!

Factoring receivables gains daily momentum in Canada - If you feel either confused, mis informed, or just generally out of sync with how this type of financing works and what it costs lets get you up to speed.

It's actually not as complicated as you thing - on a daily, week, or monthly basis, (it’s your call) you provide your invoices and proof of delivery and shipment . And then here's the good news, you receive cash, the same day, for those funds. Actually, to clarify, the amount of the advance on your invoices is actually 90% - you receive the rest of the funds, i.e. the ten per cent, when your customer pays - less the financing charge.

And we know from experience that clients want to always know and talk about that financing charge, so let’s clarify that point right away. First of all did you know that some of the largest corporations in Canada utilize this method of financing receivable portfolios? Their cost is often either the same as traditional bank financing, and in some cases less.

However the majority of business in Canada that seek out factoring receivables actually pay anywhere from 1 - 2.5% per month for the cost of factoring. But let’s be clear here, receiving those funds when you invoice allows you to maintain a totally positive cash flow, and at the same time continue to grow sales and profits. We also point out to clients that they are now in the enviable position of taking 2% discounts on all their qualified purchases with their suppliers, and, if they are really smart, can negotiate better terms and pricing from their suppliers on product.

We referenced the term C I D when it came to our favorite, and recommended financing receivable solution. So what exactly is C I D? It's a unique form of factoring, that by the way, costs the same as other types of factoring receivables financing. However, unlike traditional A/R financing it allows you to bill and collect your own receivables on a confidential basis. Your suppliers, clients, etc are simply not aware of how you are financing your company, and we think that’s important. C I D is the acronym we provide for Confidential Invoice Discounting. So again, to clarify, you are financing your business on a confidential basis - your competitors who use this type of financing are not. That’s your key advantage, and we think it’s significant.

Selecting a receivables financing partner can be a challenge - simply because there’s hundreds of small and larger firms out there with difference criteria. You have to be able to distinguish between recourse and non recourse factoring, and if the firm even offers (or has heard about!) C I D financing. Other factors (pardon the pun) to consider are the size of your portfolio, misc fees that add up quite frankly, and must be understood or negotiated. And pricing is reflected to a certain degree by the size of your monthly receivable financing. A/R portfolios of 250k per month generally receive better pricing and structures.

Interested? Confused? Hopefully not the latter, but if you are seek out a trusted, credible and experienced Canadian business financing advisor who will steer you through the financing receivable maze - we're sure you'll come out the other side well informed and with a factor facility that works best.
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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/factoring_receivables_financing_receivable.html

The Only Disadvantage Of Factoring Receivables And Why Confidential Accounts Receivable Finance Works!

Looking for a creative, ‘outside the box’ Canadian business financing solution? You may have investigated factoring receivables already but either didn’t understand how accounts receivable financing works, or, probably more to the point weren’t comfortable with how it works for your firm on a daily basis.

We've got the perfect solution for those worries, and its called confidential receivable financing, in Europe its more commonly known as C I D, confidential invoice discounting .

Let's examine why this type of business financing works in general, and then let's focus in on why our solution makes a solid solution even better.

In general terms when you 'factor ' your receivables you essentially sell them to the factoring firm. That can be done on a one of basis, on a periodic basis, or all the time. That’s one of the key advantages of this type of financing, you only use what you need, and... More importantly, you only pay for what you use!

Paying for what you use in accounts receivable financing is key because factoring, in general terms can be a more expensive type of financing. We say ' can be ' because quite frankly if you use it properly it actually could be a cheaper method of financing than your bank. That's a point our clients are always amazed at when we discuss this type of Canadian business financing.

The cost of factoring receivables can be significantly offset, or in some cases removed completely by your firm using these funds to take supplier discounts and purchase more efficiently and at better prices .

And... Think about this carefully, if you can finance your receivable the days you issue the invoice (that’s what factoring does) then you are in a position to generate funds to sell more products and services to your customers, generating additional margins and profits. Or, of course, you could take the non factoring approach and wait for your customers to pay you in 30, 60, or... dare we say it, 90 days. And that hasn’t worked for you in the past, which is why you are looking for a better solution.

So lets examine how factoring works, and lets get you over the hump, so to speak, on why our preferred type of accounts receivable financing is confidential invoice discounting .

When you generate an invoice under a factoring receivables agreement you receive 90% of the invoice in the form of immediate funds the same day. The other 10% is a holdback, and is remitted back to you promptly when you customer pays, less the financing charges, which are typically 1.5 - 2% for a 30 day period.

In 99% of traditional factoring arrangements the factor company verifies your invoice with your customer and actually collects it. Under confidential invoice discounting you bill and collect your own receivables, and are in a position to finance your firm without your customers and suppliers having anything to do with how you finance your business.

Speak to a trusted, credible and experienced Canadian business financing advisor on why confidential accounts receivable financing will work for your firm, allowing you to supercharge that cash flow and those 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 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :


http://www.parkavenuefinancial.com/factoring_receivables_accounts_receivable_finance.html