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

Canadian Receivable Finance


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



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

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

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

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

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

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

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

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

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

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING FINANCE EXPERTISE


Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

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

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

Canadian Receivable Financing


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




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

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


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

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

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

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

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

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

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

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

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

7 PARK AVENUE FINANCIAL

CANADIAN A/R FINANCING EXPERTISE









Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

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

A Receivable Finance Working Capital Loan Facility Financing . Explained . Finally! 6 Things You Need To Know About Invoice Finance

What You Must Know About Factoring In Canada


Information on a receivable financing facility in Canada . Why does this type of invoice working capital loan work best for cash flow challenged firms .



Receivable finance in Canada can be a valuable strategy for Canadian firms in search of alternate finance methods... that work.

There are 6 things you need to know about this type of working capital loan (it’s not a loan per se), so let’s examine what you need to know about invoice finance in Canada.

For our first point we can simply that that we are sure there are thousands of Canadian firms who probably haven’t even heard of this method of financing their business. When that is the case you can clearly say that lack of awareness leads to a general misunderstanding on the benefits of A/R finance, how it works, and how it stands up against other forms of business line of credit financing.

Secondly, and we're the first to admit it, that lack of awareness sometimes seems to tarnish the image of invoice financing. 'How we could have not heard of this before, my bank never told me about it '... that’s a constant comment we get all the time. Coupled with that fact is a general image problem around receivable finance, in that there is a perception, sometimes, that your firm has to be in difficulty to use this finance strategy. There is nothing more incorrect than that, and the proof we offer up is that some of the largest companies in the world utilize this strategy as part of a sophisticated method to finance their corporations. Enough said.

Cost also factors into one of our key things you need to know. Because A/R financing isn’t a loan or term debt of any nature it’s priced a bit differently than the Canadian business owner and financial manager might think, as they associate an ' interest rate ' with anything to do with financing. In fact the way A/R finance is structured it is in fact an ongoing sale, at your option, of your sales invoices as you generate them. That sale is structured as a discount purchase by your financing firm partner and in Canada typically is in the 2% per month range, sometimes less, sometimes more. So on a 10,000 $ invoice as an example you pay 200$ if your terms are thirty days and the account is collected within terms.

The bottom line is that A/R finance pricing is in fact a huge stumbling block to many clients, but only when they don't understand it.

Our fourth point is that if your sales are in a downward spiral this method of financing doesnt necessarily works, because in an invoice working capital financing strategy such as this your only liquidity is in fact your sales. If they’re growing, great, if not your flexibility to generate cash flow is diminished.

Point 5. Not every business sector in Canada can utilize our strategy. If you're in a Business to Consumer model retail/consumer receivables can't really be financed. And similar to business banking credit underwriters do attach a certain amount of risk to different industries which fall in an out of favor, or are constantly out of favor!

Finally, complexity! That's our 6th point today and we think its easiest one to fix. Yes, if you haven’t heard of the strategy around receivable finance then it might seem complex. Picking a partner is even worse perhaps , What firm is best for you as the lay of the land is littered with U.S. and U.K. firms, small Canadian firms, larger corporations domiciled in Canada. Some or limited by size of financing you require, or their geographical location.

Also, who is going to give you the straight goods on which method of invoice receivable finance works best (We favor confidential A/R finance), how pricing is determined, and how the facility works on a day to day basis.

The solution? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in crafting the facility that meets your working capital financing needs.

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/receivable_finance_working_capital_loan_invoice.html

Pick The Best Canadian Receivables Factoring and Financing ! Cost and Rates Of Invoice Finance

We encountered a great term the other day when it comes to business financing - the term was ' expansionary finance ‘. Is it just us or does this term seem to perfectly cover off factoring and receivables financing.

Often though three key issues come up when Canadian business owners and financial managers consider this type of financing. What are those 3 issues ?They are the total cost of this type of financing, the rates associated with this facility, and probably most importantly what type of firm offers the best facility to match your company's own specific needs .

Let's learn and cover off those issues, which will allow you to get more comfortable we think with this type of Canadian business financing.

So, why should you even be considering receivables factoring? Simply because it has become a common way for Canadian business to cash flow their accounts receivable and generate working capital based on your own policy of extending credit terms to your customers.

And, as most business owners know, sales does not equal cash flow and when business financing of your A/R is not available from your bank a logical place to turn to is to an independent finance firm that offers invoice financing.

But, what does this type of financing cost, and who offers it, and an even better question... ‘How do you pick the best factoring partner?

In Canada the financing and factoring of A/R varies widely. As a general rule we can say the cost is between 1-3% per month based on the size of the facility, your overall financial condition, and most importantly, whether you have sought out and picked the finance firm that best suits your needs.

Let’s clarify our comment on your overall financial condition. Receivable financing places much less emphasis on your firms overall financial health - in fact a huge amount of Canadian firms that utilize this type of financing are in stages of turn around, high growth, experiencing temporary financial losses, etc . So don’t despair that your firm isn’t eligible. But, as we said, your client base, the size of your A/R portfolio on a monthly basis and some other factors will dictate your overall pricing.

Frankly the best costs in factoring finance in Canada start to be achieved when your monthly financing capability for A/R is greater than 250k. Is there a ceiling on the amount of facility? Absolutely not, and facilities that go into the several millions of dollars on a monthly basis happen everyday in Canada.

Clients often ask our favorite most recommended type of facility. That’s a simple one - its called C I D - which stands for confidential invoice discounting, allowing you to be in total control of billing and collecting your own a/r without any notification to clients that comes with the U.S. and U.K.versions of a/r finance .

Remember also that when you are addressing the always top of the list issue with firms such as yourself, ' Cost ' that you need to factor in things you might never have thought about. They include your ability to grow your business and generate more profits simply because you now have the capital to do so, albeit at a higher cost. And couldn’t you offset some of the cost of factoring by taking discounts with your own suppliers (and improving relations with them along the way!), as well as purchasing more effectively with your new found working capital?


So , in summary , if you need a financing partner when you are considering a receivable management and financing solution seek out and speak to a trusted, credible and experienced Canadian business financing advisor who will ensure your cost and partnership with your factoring firm is focused on a mutually beneficial relationship for financing success .




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_invoice_rates_cost_financing.html

Supersize Your Canadian Business Accounts Receivable Finance Success via Confidential Invoice Discounting Factoring

Surprised? Clients often are, when we tell them that they have the ability to ' super size ' their level of working capital and cash flow via a little known business accounts receivable finance strategy known as C I D - confidential invoice discounting or factoring .

What do we mean exactly by the reference to supersizing? Simply that it is highly possible that on utilization of this type of financing you will often double, in some cases triple your access to immediate cash flow and working capital. And in some cases where you would have been self financing or had non financing in place whatsoever, well, your firm has it now.

So what’s C I D - how does it work, what can we compare it to, what does it cost, and why is it so innovative. That’s a lot of questions, so let’s get to some basic answers.

C I D, as we stated is our terminology for confidential invoice discounting, more commonly also called factoring. This type of financing is 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.

As a Canadian business owner in the business to business market you typically have a large investment in accounts receivable. But how do you finance that investment when traditional capital is not available, or the reality is that you dont qualify?

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.

So that’s the essence of factoring, or invoice discounting, but where does our key benefit of confidentiality come in. Right about here! Because the key difference of C I D and business factoring is that you are in control of your sales ledger and customer base, not the factor firm. That’s where you immediately gain 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.

On a daily basis C I D work 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. The remaining 10% is held back until you client pays, you then receive the 10% less a finance fee of anywhere from 1-2.5% per month.

Clearly the advantages of this type of business financing couldn’t be more pronounced - its quick financing, its easy to administer ( you bill and collect your own a/r) and you use that valuable working capital and cash flow you have just achieved to run your business on an operating basis .

So, does Confidential Invoice Discounting seem like the proper accounts receivable finance strategy 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 super sizing that cash flow. Speak to a trusted, credible and experienced Canadian business financing advisor on how this type of business financing can put you ahead of the pack!



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/accounts_receivable_finance_business_invoice.html