Factoring Financing For Working Capital Needs Factoring Finance In Canada - A Lot Easier To Understand Than Bitcoin!

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YOUR COMPANY IS LOOKING FOR FINANCING VIA  WORKING CAPITAL  FACTORING!

YOUR GUIDE TO CAPITAL  AS A WORKING CAPITAL SOLUTION IN CANADA

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

THE BENEFITS OF FACTORING FOR IMPROVING WORKING CAPITAL

 

Factoring for working capital needs in Canada is quickly becoming a recognized and traditional strategy for cash flow financing. We say traditional because for many years factoring via Canadian factoring companies in Canada was viewed as a non-traditional and alternative financing strategy.

 

 

 

A bank is a place where they lend you an umbrella in fair weather and ask for it back when it starts to rain." - Robert Frost 

 

Poet Robert Frost probably wasn't talking about factoring accounts receivables to obtain cash, but he highlights the risk around being too heavily reliant on traditional financing options such as bank credit!

 

INTRODUCTION - ACCOUNTS RECEIVABLE  FACTORING AS A FINANCING SOLUTION IN CANADA

 

Small businesses in Canada constantly struggle with cash flow management issues - that challenge of covering operating expenses, the purchasing of materials, and asses for the business is a challenge - Factoring services helps those cash flow issues business experiences, allowing the company to finance accounts receivable at a slight discount to third party business factors.

 

 

The simple explanation around this financing tool is that it allows Canadian firms to access financing and cash flow immediately to smooth out the ups and downs of any company's business cycle.

 

WHAT DOES A FACTORING COMPANY FINANCE

 

Firms in Canada utilize the strategy for short term working capital needs. Invoice factoring is not a term loan. Most business owners don’t realize that factoring as a financing strategy brings no debt on the balance sheet. We could comfortably argue that your balance sheet looks better when using this financing tool. It, in effect, allows you to satisfy short terms needs for payroll, purchase of inventory, etc.

 

WHAT IS THE IMPORTANCE OF FACTORING IN WORKING CAPITAL MANAGEMENT?

 

Factoring is a valuable tool to manage working capital in your business because businesses can instantly convert sales, i.e. accounts receivable, into cash.  By financing ( selling ) invoices to the factoring company, the enterprise receives immediate same-day cash to fund day-to-day business needs around suppliers and current liabilities on the balance sheet - The bottom line?  Cash flow is improved, and the business can operate more efficiently and effectively.

 

By reducing the need for traditional financing via term loans or lines of credit, the company can maintain liquidity at times when conventional channels for funding are limited for a business - A factoring company focuses on the creditworthiness/credit quality of your accounts receivable base versus the financial health of your business - Many companies cannot access some of all of the traditional bank financing they need to run and grow a business which is why accounts receivable financing is a valuable solution.

 

Using traditional factoring solutions, businesses also can transfer both credits and collect risk to the factoring company if they so choose - At 7 Park Avenue Financial, our focus is often on recommending a Confidential Receivable Financing factoring agreement, allowing a business to bill and collect its customer payments while reaping the immediate benefit of factoring -  CASH FLOW!

Most factoring solutions will also allow the business owner and financial manager to finance the receivables invoices they choose to finance, so this finance solution is the ultimate in short-term cash flow gap solutions. Any business requiring ongoing cash flow needs to operate successfully and manage asset turnover, and credit risk should consider receivable financing as a Canadian Business Financing solution.

 

 

BENEFITS OF FACTORING -  IMPROVED CASH FLOW / QUICK ACCESS TO FUNDS / IMPROVED RISK MANAGEMENT AND ASSET TURNOVER  

 

A factor financing strategy has significant benefits if utilized properly (more about that later). Some of these benefits include:

 

• The ability to purchase more inventory on a short-term basis at preferred pricing and quantities

 

• Access a working capital credit facility that many times are significantly higher than what your firm could achieve with bank financing.

 

• Increase sales with the right customers by offering better payment terms than your competitors (cash flow is king for your customers also!)

 

• Take advantage of payment discounts offered by suppliers – many firms offer discounts such as 2% ten days – by taking advantage of these discounts, you can remove a huge portion of your factor financing discounts

 

EVALUATING FACTORING AS A WORKING CAPITAL SOLUTIONS

 

We can’t overemphasize the need to ensure you understand the Canadian factoring market. It differs significantly from the U.S., and some enhancements to a factor financing strategy can supercharge your cash flow. For instance, by combining an A/R facility and an inventory financing scenario, you can often at least double all your firm's previous liquidity. That’s a powerful cash flow statement.

 

Also, for firms that are factoring now, we are quite convinced, after talking to clients, that they either don’t understand factoring pricing or in some cases have been misled about what they are really paying for this type of financing. Even improving your factor facility by ½ % can drive profits straight to the bottom line.  Clients are encouraged to seek a trusted, credible, and experienced advisor such as the team at 7 Park Avenue Financial  in this area , who can help them achieve the right factoring facility for their firm.

 

We also encourage clients to seek out factor facilities that don’t lock you into long term contracts, as our experience indicates your firm might be a candidate for other forms of financing at some point down the road.

 

WHEN SHOULD A  COMPANY  CONSIDER FACTORING?

 

 

5 REASONS TO CONSIDER FACTORING FINANCE 

 

1. The ability to cash flow slow-paying customers will allow a business to fund daily operations and invest in growth

 

 2. Companies with a limited credit history or who do not have the financial strength to access financing via traditional financial institutions such as banks can access business funding for ongoing capital needs

 

3. Businesses that have cyclicality or seasonality to some aspects of their business can benefit from  overcoming cash flow fluctuations that help smooth out the cash flow cycle of a business

 

4. Growth opportunities such as expansion into new markets or international markets can be funded by sales financing and receivable factoring

 

5. Service-oriented businesses  that do not have assets or collateral required by banks can still access working capital

 

 

We spoke previously of properly utilizing a factoring financing strategy. By that, we mean that you should ensure you understand what you are paying, as some firms have methods of presenting factoring in a method to confuse the customer about overall ‘all in' cost.  Things to look for are clear per diem pricing – you want to ensure you only pay for what you use in your facility. Open contracts make more sense for your firm; why would you let a finance firm lock you into a contract? Other things to look for are the advance rates on your transaction.

 

Most business owners understand the basic mechanics of factoring – they are of course:

 

• Your firm ships or delivers your goods and services
• You invoice and receive same-day cash for your invoices – usually in the range of 80-90%
• Your customer pays the invoice and at that time you receive the original amount that was held back, minus the factoring discount fee

 

U.S. Based firms that offer factoring in Canada are heavily involved in the entire process that we just walked through. They often insist on verifying your invoices, talking to your customer about payment, etc. Our recommended solution to eliminate this intrusiveness is a factoring or working capital facility that allows you to bill and collect your own receivables.

 

 

KEY TAKEAWAY - WORKING CAPITAL FACTORING 

 

Factoring improves cash flow by providing immediate cash for  outstanding invoices generated by business-to-business sales

 

Cash flow access is immediate - often the same day or the next day at the latest

 

Obstacles to traditional financing are eliminated as  receivable finance is a viable alternative to traditional bank loans that have significant requirements around  personal guarantees,  collateral,  and the  bank requirement for strong financial statements.

 

Companies can better manage  credit risk by utilizing non-recourse financing solutions, credit insurance,  or  utilizing the collection expertise of business factoring companies

 

Factor financing is often tailored to a business or industry's particular needs around the cash flow gaps in the business.

 

Any business selling on trade finance/credit terms to business customers domestically or internationally can access factor financing working capital solutions.

 

Increased buying power - cash flow from receivable financing can be used to maximize inventory purchases.

 

Factoring will often be an intermediate solution for a company to improve the business credit history and make the journey back to traditional financial solutions.

 

  

CONCLUSION  

 

Factoring for working capital is a proven strategy. The challenge becomes being an educated business owner. Find out what benefits apply to your firm when utilizing this type of financing, and investigate the best facility for overall ease of doing business and pricing. That’s cash flow 101! For working capital factoring.

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor to discuss your business financing needs.

 

  

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION  

 

What is factoring, and how does it work as a working capital solution?

Factoring is a business financial transaction in the area of asset based lending which allows a business to finance its sales by selling unpaid invoices to a third-party commercial factoring company at a discount to obtain immediate cash instead of waiting for payment from the client. This form of financing allows a business to finance daily operations and cover business needs around current liabilities and short-term obligations.

 

  

How can factoring benefit businesses in terms of working capital?  

 

Factoring benefits businesses by providing access to cash needed to cover the investment a business makes in working capital accounts such as accounts receivables and inventory - Cash flow is improved when the company cannot access traditional financial options from banks for short-term working capital loans or business credit lines to fund business operations. Companies cash choose between non recourse invoice or traditional recourse factoring based on credit and collection policy and bad debt experience.

 

 What potential drawbacks or risks are associated with factoring as a working capital solution? 

 

Factoring financing is more costly than bank financing based on the factoring fee that the invoice factoring company charges. Firms using traditional notification factoring have a potential loss of control in the collection process, and customer relationships can become a concern.  Not all businesses are suitable for factoring.

 

 What types of businesses can benefit from factoring as a working capital solution? 

 

Any business that sells on trade credit in any industry has the potential to benefit from factoring. Longer payment terms can be offered to clients that can be financed via a factoring solution.

 

 

  

How can businesses determine if factoring is the right working capital solution?  

 

Businesses should consider factoring receivables for working capital by assessing factors determining their working capital needs with a business advisor to determine if they can benefit from factoring as a working capital solution for immediate cash flow as a line of credit alternative.

Click here for the business finance track record of 7 Park Avenue Financial

Secure Working Capital Financing For Your Business Today ! Cross The Threshold and Check Out Confidential Accounts Receivable Financing Today

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YOUR COMPANY IS LOOKING FOR CANADIAN BUSINESS FINANCING!

ALTERNATIVE WORKING CAPITAL FINANCING OPTIONS FOR BUSINESSES

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today 

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

                                                                      

GUIDE TO WORKING CAPITAL FINANCE SOLUTIONS - WHAT YOU NEED TO KNOW

 

 

"Working capital management is a discipline that requires daily attention and continuous improvement." - Unknown 

 

 

Accounts receivable financing is becoming more and more popular as an alternative financing and working capital financing solution for Canadian business owners and financial managers.

 

 

WHAT IS WORKING CAPITAL FINANCING? 

 

Working capital finance is the funding of your business's day-to-day operations that provides cash flow to cover short terms expenses of the business. Typical expenses include salaries and payroll, short-term liabilities such as rent, and the purchase of inventory. To run a business successfully cash flow is needed to operate and grow the business and a number of solutions / business loans are available.

 

There are a number of sources of working capital loan financing - working capital loans, revolving credit facilities via a business line of credit, supplier financing, and a/r financing- aka ' factoring ' receivables for business customers.

 

 

WHAT IS FACTORING? 

 

Factoring A/R is a true form of an asset financing arrangement. Your company uses its receivables - ' AR ' as collateral in a financing arrangement. The financing can be on one receivable, all your receivables, and, more commonly, some or all of your receivables on an ongoing basis.

 

The industry tends to refer to the term 'factoring' as the day to day description of accounts receivable financing.

 

"Poor cash flow is the biggest killer of small businesses." - Robert Kiyosaki

 

 

THE ROLE OF A/R FINANCING FOR BUSINESS GROWTH AND EXPANSION

 

Factoring or receivable financing allows Canadian business owners to receive immediately, on billing, cash for the receivable. A portion of the invoice is always held back, representing a traditional 'holdback' plus some of the lender's financing fee. We would point out that the holdback is always paid back to your firm as soon as your customer pays the invoice.

 

The company receives an amount that is equal to a reduced value of the receivables pledged. The age of the receivables has a large effect on the amount a company will receive. The older the receivables, the less the company can expect - Generally speaking, invoices over 90 days cannot be sold - therefore no cash flow will result in those items.

 

 

 

 

 

  

^{WHAT'S THE BEST RECEIVABLE FINANCING FACILITY AND HOW DOES IT WORK?}

 

  

  

 

 

At 7 Park Avenue Financial, we recommend Confidential Receivable Financing as our recommended solution for clients with monthly receivable portfolios in excess of 250k. There is virtually no upper dollar limit on this type of facility. Under this type of non-notification financing your firm bills and collects its own receivables, with no notice to any clients, or suppliers,. etc. Your company receives all the benefits of a/r financing and factoring with none of the pain!

 

Another related alternative to your a/r financing needs is Purchase Order Financing, which facilitates the funding of your large orders or contracts if financing can't be arranged for that type of order. The solution pays your suppliers and allows you to take on large orders and contracts to propel business growth and profits.

 

  

NON-RECOURSE VERSUS RECOURSE FINANCING - HOW IT WORKS  

 

Factoring, or accounts receivable financing helps companies unlock capital that is invested in accounts receivables. Accounts receivable financing on some occasions transfer the default risk associated with the accounts receivables to the financing company; this type of facility is set up as a non-recourse facility, meaning the lender or finance firm that is doing your factoring in fact accepts the credit risk associated with the ultimate collection of your accounts receivable.

 

How does the lender do that - quite frankly the receivable portfolio originated on your customers in effect is 'insured' by the lender. We will let you guess who pays for that and if it is included in your cost of financing. Yes, you are right, you pay. Typically the cost of such insurance adds at least a percentage or two to your cost of financing.

 

The Canadian marketplace is dominated by a variety of firms that will factor accounts receivable. These firms are either divisions or subsidiaries of large U.S. or other foreign countries, or they are smaller Canadian-owned, operated and funded firms. Typically the latter type of firm, the Canadian single entity, has difficulty in accessing all the funding it typically might need for a large number of transactions. The factoring business requires a significant amount of capital.

 

When a Canadian business originates an account receivable financing it is prudent for the company to ensure they understand the overall profile, reputation, and capabilities of the firm that will be financing your accounts receivable.

 

Unless the business owner negotiates a very special type of facility the accounts receivable financing firm generally has a good amount of customer contact with your customer base; they will want to validate your invoices, confirm customer acceptance of your invoice and products and services, and in most cases follow up directly with your customer for payment.

 

In summary, Canadian firms can increase cash flow by the use of the alternative financing method known as 'accounts receivable financing', commonly called factoring. Cash is secured for your receivables soon that your customer actually paying for it - As we have pointed out that comes at a cost in both financing cost as well as some level of customer intrusion.

 

  

THE BENEFITS OF EFFECTIVE WORKING CAPITAL FINANCING  

 

  

Effective working capital solutions such as factoring and other types of  a/r financing provide numerous benefits for a business via surplus capital - Those benefits include :

 

The ability of the company to  cover temporary gaps in  cash flow to fund payment obligations - along with effective accounts payable management  a business can maintain liquidity

 

Working capital solutions typically bring no debt to the balance sheet and do not require additional collateral as well as a limited emphasis on personal guarantees

 

Short-term working capital and accounts receivable financing solutions are faster to obtain and are often tailored with a strong level of flexibility for the borrower - Traditional lending financial institutions such as banks are known for longer credit approval timelines as well as often demanding additional collateral

 

Effective working capital financing and management improve asset turnover in key areas of the business such as accounts receivable and accounts payable and leads to greater profitability and return on assets. Additionally, these types of financing are 'non-dilutive' and do not require any equity transaction or ownership change.

Typically these financings increase as sales and business assets grow!

 

  

 KEY TAKEAWAYS - WORKING CAPITAL MANAGEMENT 

 

" Don't ignore working capital " Thats from a great Harvard Business Review article

 

 

Businesses use working capital finance solutions to fund everyday operations

Short-term financing solutions around working capital needs should not be used for the purchase of long-term assets or investments in long-term operations

Businesses that experience seasonality or cyclicality in their business model or industry are prime candidates for short-term financing

Depending on the size and creditworthiness of the company good business and personal credit scores are required

 

CONCLUSION - UNDERSTANDING BUSINESS WORKING CAPITAL NEEDS AND CASH FLOW

 

Canadian business owners should dutifully look into who they are dealing with, their capabilities and their procedures.

 

Speak to 7 Park Avenue Financial, a trusted and credible expert with a track record of business finance success to determine their best receivable finance/working capital and business loan solution.

 

 FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

What is working capital financing?

 

Working capital financing is a borrowing arrangement to fund the daily operations of a business when a firm does not have consistent cash flow.  Proper business financing solutions allow a business to achieve optimal business growth via business financing solutions such as short-term loans, lines of credit and overdrafts, and accounts receivable financing. Steady cash flow allows a company to sustain its growth objectives.

 

Businesses of all sizes and in every industry will typically require working capital finance to expand sales and operations. The majority of small businesses in Canada utilize these solutions to bridge cash flow gaps and ' lumpiness' in cash inflows

 

  

Why is working capital financing important?  

Working capital financing is important   as it allows a business to maintain funds to continue the daily operations of a business - without access to a sufficient amount of working capital a company may not be able to meet short-term obligations or maximize growth opportunities in sales revenues,

 

  
What are the different types of working capital financing?   

 

Different types of working capital finance include short-term working capital loans, lines of credit /  a revolving credit facility, business credit cards,  invoice factoring via trade credit receivable financing, and sr&ed financing solutions for refundable tax credits - Other ' venture debt ' type solutions include purchase order financing, MMR lines of credit, and merchant cash advances. Different needs and circumstances make every possible financing solution unique to a business based on sales and the company's balance sheet and businesses will only pay interest on amounts borrowed and used in any facility.

  
How does a business determine how much working capital financing the business needs?  

 

Determining working capital financing needs are determined by examining the working capital ratio and operating cycle and asset turnover of a business in key current assets and current liability accounts such as accounts receivable, inventory, and accounts payable.

 

What factors should I consider when choosing a working capital financing provider?

In choosing a working capital financing provider for small business financing a company should consider factors such as interest rates on the facility, miscellaneous fees, as well as repayment term flexibility offered in the financing solution. Businesses should align themselves with reputable lending institutions and established financing providers who can meet the specific funding needs of the business.

 

SOURCES/CITATION

"What You Can Do About Excess Working Capital" by Michael C. Mankins and Lori Sherer, published in the July-August 2016 issue.

1. "A Smarter Way to Improve Cash Flow" by Richard V. Hays and Frank V. Cespedes, published in the May 2014 issue.

2. "The Most Neglected Fact About Cash Flow" by Philip Campbell, published in the May 2017 issue.

3. "The Case for Behavioral Strategy" by Dan Lovallo and Olivier Sibony, published in the March 2010 issue (which includes a section on working capital management).

 

 

Click here for the business finance track record of 7 Park Avenue Financial

Lender Finance ? Get Successful With You Canadian Lender Financing Needs

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Lender financing is about the ability to grow and support your financing capabilities to maximize the profitability and growth potential of your finance company. The opportunity to obtain a customized lender finance solution to your industry enhances your reputation via credit facilities and business capital that deliver true lending potential to your client best, whether that be consumer or business, aka ' b2b' and b2c'. That's when ' experience ' counts!

No lender/finance company wants to decline borrowers that meet their credit criteria for lack of internal funding program capability or competitive interest rates.


At 7 Park Avenue Financial our clients that are lenders know that they require specialized insights into their business. The industry is vast and diverse with firms offered both secured and unsecured loans and other ' niche ' financing products. The 2008 financial crisis brought about significant changes in the way in which specialty financing solutions are funded. Whether it's a collapse in financial markets or the traditional banking system . a pandemic crisis, or technological breakthroughs in delivering consumer or corporate finance solutions the only constant is: Change! As challenging as specialty finance industry issues are seasoned lenders know that opportunities emerge at every turn in times of upheaval.

The Lender Finance Search - Understanding  The Lender Financing Provider

Most industry specialists in finance feel that they have been somewhat abandoned by the major insurance companies and Chartered banks that traditionally filled the void in specialty lending. Whether that can be termed a failure on their part of only a hard reality of the capitalization and constraints of those two lending bodies is subject to vigorous discussion.

Finance firms have certainly seemed stifled when it comes to the potential to grow, and your firm might be anxious to capitalize on access to the internet by business borrowers. That type of access to clients can only help you to spur growth without having to recognize boundaries (like the old days !). As an example, well-respected statistics firms such as Dun and Bradstreet estimate that the specialty finance industry in North America has volumes in excess of 585 Billion dollars.

Growth capital is what it is all about as your core business requires capital alternatives to deliver financing services. Owners, managers and shareholders of your business know that new capital sources should come with expertise that will lead to further financial success and the ability to operate effectively on an ongoing basis. At the end of the day, it is all about the portfolio and your management's ability to deliver value to owners and the client base.

Credit risk, more specifically the management of that risk is at the heart of your firms borrowing capabilities. Your ability to borrow well is dependent on your ability to demonstrate assessment of credit risk as well as documentation, collection, and fee issues dependent on your success


You want a partner or advisor who had an understanding and insights into your business. At 7 Park Avenue Financial, we have 16+ years of business dealing directly with specialty lenders in every aspect of consumer and corporate borrowing. You're looking for someone who understands your ' credit box ' when others don't or don't want to!

It's no secret that every aspect of every specialty lenders business is somewhat unique. Whether that be consumer lending, asset based lending, equipment leasing, law firm lending, factoring /receivable finance, auto loans, MCA ( merchant cash advance ) working capital loans, sr & ed loans, as well as other / niche lending markets every finance business is different. Online lending models have exploded into the Canadian and North American marketplace.


Your team knows that specialty lenders succeed best when they fill the void left by the exit of other or traditional market players. You, therefore, want to capitalize on expansion and growth. Therefore financing with a partner or advisor with industry expertise and the ability to finance creatively is foremost in your mind. That's where the relationship begins at 7 Park Avenue Financial - with a focus on understanding your current portfolio and the credit criteria that drive that growth.

Specialty Lender Financing Makes Your Firm More Competitive

Demand for your financing comes from client confidence in your finance services and of course interest rates, your ' cost of capital '. Someone lending to finance companies will look at your ability to write new business, but, as importantly service and collect on those loans. If your firm is a smaller finance company those rates/cost of capital areas are more important than ever if you are competing with the ' gorillas' in your industry who have the scale and potentially multiple sources of business capital. In some cases your firm may also be challenged to align new funding with redesigned business processes.

Niche players such as your firm always can succeed of course by highly specializing in your chosen field of finance. The specialty finance industry is not unique in that similar to many industries experts tell us that the higher quartile of lenders have the majority of the business


Your firm's ability to demonstrate adherence to any level of regulation in your industry, as well as the ability to divulge credit practices is key to the start of a good relationship with a specialty lender or funding advisor.

These days it's all about ' fintech ' which can mean a lot of different things, but the essence of that is the technology that delivers your firm's funding and growth and reporting. It should be no secret that a well-performing portfolio and your firm's ability to demonstrate that performance is key to attracting new funding.

At 7 Park Avenue Financial our focus is on delivering on a financing solution that will maximize your portfolio growth potential, so our focus of discussion is around areas of the size of your portfolio and the ' credit box ' that goes into those client approval decisions.

In some cases your firm might have some level of industry self-regulated or government compliance which should be demonstrable. These days it's all about ' FINTECH ' and any technology issues your firm has invested in or intends to invest in.

Similarly to any corporate borrower your finance companies must demonstrate the ability to report appropriately on portfolio statistics such as ageing, bad debt reserves, etc.


Lender to lender funding is also about your firm's ability to capitalize on new markets when new niches or geographical opportunities emerge. New economic cycles have a way of identifying unique new opportunities. The growth of alternative financing products has uncovered millions of dollars of lending possibilities for successful firms with existing portfolios.

Benefits Of Flexible Specialty Lending To Your Industry :

Ability to maximize the borrowing power/leverage of your existing portfolio

Secure specialized facilities based on the nature of your business

If your firm can't issue debt or stock or access commercial paper markets you need the best interest combined with flexibility and good repayment terms as low as possible compared to your interest earned

Almost all firms, probably including yours have external pressures around regulation, credit risk, and competition.


Lenders control credit risk by assessing the borrower's creditworthiness before extending credit. If a borrower fails to meet the conditions of a loan, fees can be charged, or the loan will become a loss. Lenders can minimize loan losses by employing or outsourcing a collections team that contacts and attempts to collect from borrowers who fall behind on payments.


At 7 Park Avenue Financial we have delivered on the financing of credit services for unique finance programs delivered by industry leaders in a niche industry. Whether your firm is experiencing hyper-growth or if you have very special requirements the 7 Park Avenue Financial team wants to become a long term financing advisor/partner and contribute to your company's success in your industry.

Seek out and speak to a trusted, credible and experienced Candian business lending advisor who can ensure your lending needs are met.





7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

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 areas 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.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

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 financing 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
7 Park Avenue Financial/Copyright/2020

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How Do Factoring Companies Work In Canada

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The Best Factoring Company Will Offer Confidential Receivable Financing - Here's Why

An effective accounts receivable finance solution has the ability to ' supersize' your overall working capital and cash flow. This can be even more enhanced with a business accounts receivable finance strategy known as C I D - Confidential Invoice Discounting; that is a type of ' factoring ' that has worked very well for our clients at 7 Park Avenue Financial.

How can this business finance solution be ' supersized' then? Simply that it is highly possible that on the utilization of this type of financing you will often double, and in some cases triple your access to immediate cash flow and working capital. Business owners and their financial mgrs will be surprised to know that in most cases even traditional bank financing won't provide the same cash flow access as this little known solution.


And safe to say that in some cases where you would have been self financing or had non-financing in place whatsoever, well, your firm has it now!

How Much Does A Factoring Company Charge ?

So what in fact is the cost of this unique and innovative AR Finance solution, how does it work, and what can your company compare it to when assessing your specific cash flow needs.

C I D is our terminology for Confidential Invoice Discounting. ' Factoring ' solutions are used by firms of all sizes (even major corporations, by the way) but in reality seems to be more common in the S M E (small and medium enterprise sector). It even accommodates start ups if you can believe it, as any type of financing for a start up is often a major challenge for the business owner. By the way, the big boys have a more fancier name for their AR financing solutions - Securitization .

Companies that sell on credit in Canada will always have an investment in their accounts receivable, often representing, along with inventories, a huge part of their overall business assets.

So how is that asset financed ? That becomes an even more challenging question when traditional bank financing is not available. In a large majority of client we talk to they don't qualify for some, or all, of the business capital they need via a bank.


That's exactly where business accounts receivable invoicing and discounting comes in. Your ability to ' sell ' those invoices as you generate them, using the A/R as collateral allows your company to turn into an instant cash flow machine. It's all done by a fairly seamless process when you are working with the right type of facility and the best firm/financing partner.


So that’s the essence of factoring, or invoice discounting, but where does our key benefit of confidentiality come in? Right about here!

The key difference of Confidential Receivable Finance facilities and business factoring is that you are in control of your sales ledger and customer base, not the factor finance firm. That gives you superiority over other firms who use this type of financing but are forced by their factoring agreement to make their customers aware of how they are financing their firm. In talking to clients here at 7 Park Avenue Financial that benefit is huge in their minds when it comes to how their competitors and suppliers might view them.

How Does AR Finance Work?

On a daily basis a/r financing works in the same manner as what we will call ' traditional ‘ accounts receivable finance and invoice discounting. It’s a simple process. You generate invoices for the products and services that your firm provides and you receive immediate same-day funds for 90% of the invoice value. ( That remaining 10% is held back until you client pays, you then receive the 10% less a finance fee of anywhere from 1-2% per month.

The way our clients look at it is that the 1-2% per month reduction in gross margin is more than offset by all the cash flow their sales generate - allowing them to run and grow the company on an ongoing basis.

Advantages Of Confidential Invoice Discounting

Clearly the advantages of this type of business financing couldn’t be more pronounced

- Financing is approved quickly

- Easy to administer

- Your company bills and collects it's own a/r !

- Cash flow generated is used to run and grow the business


So, does a solid AR Finance strategy seem like the proper cash flow solution for your firm? Ultimately you will decide that - we're simply letting you in on the secret and letting you be the decision maker around supersizing that cash flow.

Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success . Get your company ahead of the pack and competitors.






7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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

How Does Non Bank Receivable Financing Work ?

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Confidential A/R Finance Is The Best Kept Secret In Business Credit Finance

Accounts Receivable financing isn't always in the headlines - we're the first to admit that . But it should surprise business owners and their financial managers that thousands of Canadian firms are moving toward a working capital financing facility known as receivable factoring.

There are numerous reasons why businesses choose, or must choose to finance their sales outside traditional bank norms . One reason might be they aren't able to access all the business credit they need ; in other instances they might not qualify for any traditional bank credit solution while at the same time their business is growing !

Confidential Invoice Financing

Here is a question . What if you could get invoice finance that would allow you to bill and collect your own receivables under this facility? Possible? Absolutely.

Canadian business financing solutions such as Confidential A/R Finance provide your business with unlimited cash flow, and, unlike your competitors, you , not a third party, are in control of your facility.

HOW RECEIVABLE FINANCING WORKS

Most Canadian business owners and financial managers know a bit about how factoring, aka receivable financing works.

The Confidential AR Financing Difference :

Factoring , we call it ' old school ' factoring, is a process whereby you sell your receivables and receive immediate, same day cash for those invoices. 99.9% of all the financing done in Canada under this business model has the third party lender firm collecting your invoices and notifying the customer. They also follow up for collection and interact with your customer, because, as we said, you have sold them your receivable, or receivables in whole.

Why Trade Receivable Financing :

Clients of 7 Park Avenue Financial like the end result:

Instant Cash Flow

Constant Working Capital replenishing

What they don't necessarily like is the 3rd party firm taking over the client relationship as it relates to accounts receivable.

Enter Confidential Receivable Financing - Under this scenario your receivables are billed and collected by your firm , and there is no third party interference with the relationship you have with clients when it comes to billing and collecting.

Business owners like this latter model - The bottom line is that your financing relationship is not disclosed to your customers, and that’s a good thing. Your firm achieves all of the benefits of accounts receivable financing, but under the confidential invoice finance model your receivable factoring is in your control.

Under traditional U.S. And U.K. type receivable factoring your customers receives a letter from either yourself or the factor firm, notifying your clients about the issue of your firm having sold its receivables. If you don’t care about that, no problem...! But if you do care about what the perception of that letter might be then you should consider confidential invoice finance.

Using a solid non bank a/r finance model gives you a competitive advantage - It differs from bank financing, and is the alternative to the traditional factoring of invoices that we have talked about here. The bottom line is there is a world of difference in the facilities offered.

Cost Of Factoring / Confidential A/R Finance

The cost of confidential invoice discounting is the same as traditional factor financing - so that’s a good thing! This method of financing is costlier than bank interest rates, but does not require the significant emphasis that banks place on personal guarantees, outside collateral, ratios, covenants, credit limits , etc. In fact business owners may be surprised to know that credit limits are virtually unlimited if you business has the sales levels to justify increases in the facility, and that the facility is operating properly .

Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success , one who will assist you in closing this valuable type of working capital financing solution.







7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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 .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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

Did You Know You Can Make The Cost Of Receivable Financing Work To Your Advantage ? Here's How

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Making The A/R Factoring Cost Work For Your Company

How much is it? No we aren’t in line at a department store, we're sitting with our clients who are always asking what the true cost of factoring receivables is and if a receivables financing facility is their real solution for working capital problems. They ask other questions also, such as how the facility works and what is the best type of facility for the Canadian business marketplace, so we we'll cover those off also .

We don’t think there is more of a misunderstood business financing in Canada, notwithstanding the fact that receivables financing is growing in popularity traction everyday. The biggest stigma around the topic is really the true cost, and we use the word true cost because many Canadian business owners and financials managers simply don’t understand the components of that true cost, and more so, how these costs can be significantly offset and reduced.

We'll point out that coming up the rear fast and furious behind true cost are the issues of how the facility works and what type of facility is the best one in Canada - as there are several types.

To properly address our issue lets quickly define our subject - factoring, ( also called receivable discounting and invoice financing ) is simply the sale of your receivables to a third party firm, that firm providing you with immediate ( and we mean same day!) cash to finance your business

One of the misconceptions clients have around pricing is related to the fact that you receive (depending on who you are dealing with) 80-90% of your invoice amount in a receivables financing scenario. This must be taken into account when you are looking at total factoring cost.

One thing that constantly disturbs us is that the terminology mumbo jumbo that many factor firms use when they are offering you pricing on your facility. That’s why it makes total sense to talk to a trusted, credible, and experienced Canadian business financing advisor that will work with you through the (industry created) maze of factoring, factoring cost, and day to day paper flow.

You can quickly and easily focus in on the true cost of factoring by simply keeping in mind three things that you need to know - they are:

1. The percentage that you are advanced on your invoice (refer to our previous comments)

2. The discount rate charged on the advance

3. The length of time that you typically collect your receivables in

Most business owners are not readily facility with their DSO, their ' day’s sales outstanding '. You have to be, because it’s an ongoing measure of the time it takes to collect your receivables in days. It’s calculated simply by taking your receivable on an annual basis, multiplying them by 365 (days) and then dividing that number by your sales for that time period.

Therefore, if you know your collection period, and get an honest, clear answer on our three points you can easily determine the cost of factoring.

Let’s give you a clear example: Your factor firm advances you 80% of your invoice. Their discount rate is 3%. So if you are in the lenders shoes your annual return on the client (that’s you!) is simply: Discount rate % times 365 days Divided by number of days invoice is outstanding.

In Canada that rate is typically going to work out to be in the 1 - 2 % per month range depending on the lenders perception of the size and quality of your accounts receivable portfolio.

Is that expensive financing? You tell us, because if you take into account the receivables financing facility provides you with unlimited cash flow to generate sales and profits, and that you can use the cash to offset financing costs, well... we don't think so .Costs can be offset by using the funds to take supplier payment discounts, and purchase in larger volumes and better prices re your inventory needs, etc.


Take Advantage Of The Knowledge and Expertise @ 7 Park Avenue Financial :

Speak to that trusted, credible business financing advisor with a track record of success that we spoke of, he or she will guide you through the receivable discounting maze and set you on course with the right facility at a price that makes sense to you.





7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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 .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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