Receivable Finance Canada: Finally Your Clear Explanation Of Factoring & AR Financing

Eliminating The Hail Mary Pass on Canadian Receivable Financing Techniques

OVERVIEW – Information on factoring and receivable financing in Canada. Only when certain elements of AR Financing and cost are understood does this funding strategy make sense for your company

Receivable Finance generates somewhat of a ' fear of the unknown' when we talk to clients who are business owners / financial mgrs looking at AR Financing, commonly known as ' factoring'.

The problem though is that with so much diversity out in the market the solutions they are offered are ' reheated' / misunderstood. Not knowing the different nuances often have your company feeling like it needs a ' HAIL MARY PASS' for their Canadian Receivable Financing needs. The solution? Understanding the offering and how it works and benefits your firm. Let's dig in.

A ' Hail Mary Pass’? That's the legendary term coined by NFL great Roger Staubach. He actually borrowed it from two 1930's players at Notre Dame who coined the term when they needed a last chance ' low probability' pass that needed divine intervention!

No divine intervention needed here, just common sense. Owners/finance mgrs just need to think of A/R financing as a business line of credit against receivables. Simple enough. But not so fast. Because the paperwork of ' factoring' shows that you don't have ' ownership ' of the A/R certain terms must clearly be understood. Let's cover off key basics.

Your borrowing ability on your factoring line of credit will always be based on specific collateral, i.e. the amount of your outstanding invoices, typically less than 90 days old. (Older invoices are deemed uncollectible).

How much can we get? is a typical client question. The answer -more often than not your advances will be 90% of your outstanding A/R.

Cost? Financing costs are higher in factoring. However you can lower your costs by up to 50% or more if you focus on strong collections to clients. Simply speaking - the length of time your clients take to pay determines your financing costs.

Miscellaneous fees abound for many offerings which can increase your cost. These include closing fees, ' facility fees’, aka standby fees, termination costs, monitoring costs, and up front deposits. Our answer to all of the above - with the right lender pretty well none of the above

should apply to your finance offering.









Receivable finance works best when your sales are constant or growing... We caution our clients who might be in high distress of have flagging sales that entering into the wrong financing arrangement at this time causes negative cash flow due the fact that borrowings will mostly go to reducing the credit line.

Have we forgotten anything? Just that our recommended facility for almost all our clients is CONFIDENTIAL RECEIVABLE FINANCING, allowing you to bill and collect your own invoices without the required notification to your clients that 99% of the industry requires. It’s much better than the ‘reheated’ versions of old school factoring offered by most Cdn firms.

Our bottom line? Work with a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in determining the total cost, as well as benefits of ' factoring' , including comparing the facility to a bank line of credit. Common sense Canadian business financing - no Hail Mary Pass needed!


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com/ar-financing-factoring-receivables-finance.html

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

Direct Line = 416 319 5769

Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' 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

Receivable Finance In Canada : Get Back On Top With Financial Factoring

Looking To Overcome Your Fear Of Receivable Financing & Factoring?

OVERVIEW – Information on receivable finance in Canada . Financial factoring allows business owners/managers to get back on top of cash flow and working capital challenges

A lot of receivable finance in Canada happens via financial factoring. For those business owners and financial managers that aren't fully familiar with this method of Canadian business financing there is that potential element of fear of the unknown. We think some basics, as well as some recommendations are in order, allowing you to get back on top of business financing challenges. Let's dig in.

A world wide revolution is in fact in place on alternative financing methods such as A/R finance - a subset of asset based lending. The real surprise is that companies of all size, from start up to major corporation in fact utilize this method of cash flow/working capital financing.

Factoring is a very ' formulaic ' and is a financial solution linked to the total value of your accounts receivable. Factors such as income statement, debt to equity, and personal collateral have very little to do with approval for this method of finance, which is of course one of the reasons for its popularity. In effect your A/R always covers your ' loan ' amount, although loan is a misnomer as it’s actually a ' cash flow monetization' of your 2nd most liquid asset - Receivables. (Cash is still king at # 1!).

The broad appeal of financial factoring solutions revolves around the fact that cash is immediate on making a sale, if you choose that to be the case. Typical advances are 90%range, and that adds another layer of attractiveness given banks (if you qualify) tend to margin receivables at 75%. Bottom line - more liquidity.

Firms that might be deemed ' higher risk ' by Canadian chartered banks can still almost always secure separate non bank receivable finance solutions.

From the Canadian banks point of view the overall credit worthiness of a customer is what drives lending solutions. These are lower cost almost always, as financial factoring is a more expensive form of financing, but accessible! The bank in fact views receivables and others as ' secondary ' sources of collateral - A/R finance views it as the only source of collateral, therein the difference.

Many Canadian firms are uncomfortable with the traditional form of factoring, which almost always involves notifying your clients of the process and payment. Therefore our recommended solution is CONFIDENTIAL RECEIVABLE FINANCING - here the business bills and collects its own receivables - it’s only your firm that knows how you are financing yourself. A classic MIND YOUR OWN BUSINESS.

Businesses that want to source more capital can consider a non bank asset based lending solution, allowing them to combine inventory and equipment, plus A/R into one total business line of credit.

If you want to overcome the fear of assessing new cash flow financing solutions for your company seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your financing needs.




Stan Prokop - 7 Park Avenue Financial :

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 90 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN RECEIVABLE FINANCE EXPERTISE



Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Cash Flow Is ‘ Tight ‘Is One Saying We’re Committed To Eliminating Via Receivable Finance And Confidential Factor Funding

Some Good Reasons Combating

True Weakness In Cash Flow Is Easier Than You Thought


OVERVIEW – Information on factor funding and receivable financing in Canada . Cash flow challenges can be solved via creative alternative financing that meets all the business needs for owners/managers






Receivable Finance...aka ' Factor Funding' In Canada . Quite frankly we couldn't count the number of times that a client has opened up to us with the line ' cash flow is tight '. That challenge, that appears sometimes, or in the case of some clients... all the time. Is there a way to combat that problem? Let's dig in.

Numerous types of financing can combat cash flow and working capital issues your company faces. We're focusing on some solid external solutions, but we'd be remiss to remind business owners and managers that a lot of cash flow challenges can be addressed internally through faster asset turnover, and simply hard focus on quality , reporting, of current assets and liabilities such as inventories, payables, and of course our focus today, A/R.

How does a business owner know when external financing solutions such as A/R Financing are needed? We suppose we are talking about those ' symptoms' of cash flow being tight.

When most business owners/managers think of external financing in Canada they think of ' the bank’. They go to ' the bank'. Traditional lending is great because it's low cost and plentiful if your firm qualifies. But more often than you think issues of financials, collateral, history of owners, etc prohibits many firms from accessing that plentiful ' low cost' bank financing.

We also meet many clients who in fact have low cost flexible Canadian chartered bank financing, but it’s a case of ' not enough '. Not enough is due to some of the issues we will now address.

At night business owners dream.

Those dreams often include the concept of high growth. While the future financials might look bright when it comes to profits and sales revenues quite often the investment that you need to make in people, materials, and inventory and receivables is improperly overlooked. So Receivable Financing is simply one way to get the profit and growth into your financials.

Many clients we meet are embarking on -

The big project
The new product line
Entry into U.S. and foreign markets
Major R&D projects
Major fixed asset upgrades

While equipment financing and SR&ED tax credits can help finance some or almost all of that expansion it still takes funding out of business credit lines. Factor funding is in fact a business credit line - it's a subset we can say of asset based lending in Canada. Cash flow derived from this method of financing helps fund your expansion, simple as that.

Cash flow may not be tight today, it often will be ' tomorrow ‘.

In financing that is known as ' the bulge '. So while a traditional bank business line is a fixed credit limit Receivable financing via confidential factor funding allows you to address ' the bulge '. That bulge is a lot easier than the one we're trying to eliminate at the gym! The bulge is when you get the big order, have a temporary buildup in receivables, or require products and services that necessitate major cash outflows.

Payroll financing is one other aspect of A/R financing. For some reason we have never quite figured out employees and contractors want pay cherubs and they want them on time. Factor funding allows you to pay employees before clients pay you.

If you want to understand how confidential factor funding works ( you bill and collect your own receivables , while getting funded daily ) seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.



Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


7 PARK AVENUE FINANCIAL = FACTOR FUNDING AND CONFIDENTIAL A /R FINANCING SOLUTIONS



CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653 ( OFFICE )
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com























Stan Prokop

Working Capital Financing . Introducing A Way To Manage And Finance Your Inventory And Receivable Investments

Working capital quality, not quantity!



OVERVIEW – Information on successful working capital and cash flow solutions around inventory financing and receivable finance





Working capital financing in Canada. As a business owner or financial manager are you 100% comfortable in knowing the signals of when you really have to better manage your business current assets? More so, do you know the tools and solutions that come with that challenge? We think we do, so let’s dig in!

When we talk to certain clients in hindsight around their inventory finance and the receivable investments challenges they make on a day to day basis they are often surprised about how little of some key basics they in fact did not know.

That's because it’s difficult for some to cut through all the finance and financial statement jargon and concepts to figure out the real root of some of those challenges.

What aspect of business couldn’t be more complicated today, whether it’s financing, growing your company, staying on top of the competition, etc?
We're NOT suggesting industrial espionage, but if you knew your competitor had very slow moving inventory or uncollectible or very slow receivables you would be in a great position of profit and exploit market opportunities.

That goes for your firm to, which brings us to the key subject today, the quality of your current assets - i.e. A/R, inventory, and the need and ability to finance them properly.

One of the best ways you can interpret critical upcoming problems in our working capital and cash flow situation revolves around a few ' slick tricks' solutions, as we call them, around your A/R and inventories.

The way most people and even stock analysts look at a company receivable or industry status is to calculate day’s sales outstanding, i.e. DSO, or inventory turns.

But wait; there is even a better way to look at all this! And that is to monitor those two asset categories as they pertain to sales going up or down. If you set up a simple tracking system that captures your sales and a/r and inventory amounts over specific periods of times, i.e. monthly, quarterly, etc ( By the time you get to annually we can guarantee you it will be too late !) you will be able to spot poor collections and growing inventories.

You just might find that sales growth, which hides a lot of problems, is in fact fast becoming your biggest problem. And that's even when your income statement show you're making a profit. (Yes, profitable companies can go under!)

So the bottom line is that growth in A/R and inventory with stable or declining sales will signal huge upcoming cash flow problems. At the same time, the Canadian business owner or manager will get a lot of comfort knowing that if their sales are growing and a/r and inventories are staying the same, declining, or growing commensurately will mean you're a winner in the cash flow and working capital game .

Let's try and illustrate a quick example, which is tougher to do when you don't have a chart in front of you. But let's assume you are tracking A/R, inventory, and sales on a simple chart or spreadsheet. Let's assume for our sample that sales are growing by 20% ( congratulations by the way ) but a/r seems to have ballooned to 100% in that same period?!

What has happened? Simply that yours sales success has shifted problems into your A/R account. And that affects cash flow and cash in the bank.

The solution? Monitor those current assets as we have suggested. And speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with working capital, receivable financing, and inventory finance solutions such as:

A/R Discounting
Supply chain/PO finance
Non bank asset based lines of credit
Commercial bank loans,



Etc!

You've got the power now!







7 PARK AVENUE FINANCIAL
CANADIAN WORKING CAPITAL FINANCING


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/inventory-receivable-financing-working-capital.html




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com















Stan Prokop

Receivable Finance And Factor Funding In Canada . Looking For Some Growth Tips On Financing AR And Growing Your Company?

What’s The Big Deal With ‘ Growth ‘ ? !


OVERVIEW – Information on factor funding in Canada . Implications of growth, profits and financing AR cost when Canadian business utilizes receivable finance



Whether he or she likes it or not Canadian business is somewhat obsessed with growth.

It might come from the perception that to be successful you in fact have to grow. We're not 100% sure we agree, but if your firm is in fact placing a high priority on growing financing is probably a challenge you're consistently facing.

We do admit there might be some risks to not growing a lot - they might include the ability of competitors to run all over you, even going as far as stealing some of your people and clients.

One of the ways to feel a lot better about ' growth ' is the utilization of Receivable finance as a method to enhance your overall return on capital. Your growth in fact can come from only 4 areas... they include acquiring business your competitors previously had, raising your prices, seeing your industry grow as a whole, and finally .. your potential acquisition of a competitor.

So, we suppose you could say we're getting a bit more converted to the concept of ' growth ‘... when it’s done properly. Sales growth, properly achieved, does in fact bring more value to your company, but how do you get the financing to get there. One of those solutions is factor funding.

Receivable financing, considered ' expensive ' by some in fact is a very critical and valuable form of business financing in Canada... and becoming more so everyday. It's simply an agreement between your firm and your chosen finance partner (choose one carefully!) to provide you with cash as soon as you generate sales. All of a sudden your balance sheet and perhaps some temporary operating losses aren't holding you back to... you guessed it... growing!

The Canadian business owner and financial manager can probably immediately see the advantages here of this method of finance. You are now in a position to improve relations with suppliers, take prompt pay discounts with cash now that you never had before, and all along the way you don't have to deal with restrictive bank covenants. Oh and finally, all of a sudden you’re on equal footing with those competitors who have been taking that business away from your firm. Finally... a level playing field.

A common questions from clients who suddenly are seeing the benefits of factor funding and growth is as follows - ' so what is the limit of the financing here?’ The answer? There is no limit - your sales in effect determine the limits you can finance against.

So when does financing your A/R work best? The following conditions create a perfect storm for this method of finance:

Good gross margins
Pricing ability on your products and service

And quite frankly, whether you consider the pricing of factor funding ' high' the ability to quickly and flexibly get all the funding you need in place is probably very much worth considering .

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your Receivable finance needs.





Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/factor-funding-receivable-finance-financing-ar.html






7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Disaster Recovery Via Receivable Finance In Canada . Does Canada’s Newest Main Street Business Cash Flow Financing Really Work?

A Real World Working Capital Solution? Here’s Proof


OVERVIEW – Information on business financing in Canada . One solid cash flow solutions is Receivable Finance which can fix a lot of challenges .. quickly.



Can some forms of business financing in Canada really work when a company finds itself, unfortunately, in the ' disaster zone '. And do those solutions have to be either alternative, or can they be ‘main street '?

Top experts in the field of business financing will often point to the solution of A/R finance, also known as ' factoring ' to solve cash flow problems. While this finance method has been in place hundreds of years it was actually pretty late in getting to Canada, and years ago, when it did, it was considered ' alternative '.

My how things change though, and thousands of Canadian firms now use this financing as a method of fixing business challenges. They might be mild challenges, aka ' cash flow is tight ' or severe challenges, as in ' the bank has called our loan ... we need help!

So, given those statements, what is this method of working capital finance, and how does it differ in Canada? Because almost have of respondents in Canadian business, certainly in the SME sector advise that ‘ inadequate capital or financing ‘ is a main source of their daily struggles .

At the end of the day it’s really quite simple, it’s a contractual arrangement that allows you to ' sell ' or ' fund' your receivables as soon as you generate a sale. Naturally it’s at your option; certainly you can do this on an ongoing basis a little, or a lot!

The majority of this financing is Canada is done under a much regimented process, parts of which are sometimes not really preferred by the business owner or financing manager. We're talking about the notification of the process to your client.

While the majority of offerings in Canada revolve around this method of working on a day to day basis we quickly point out to clients that if you're knowledgeable and working with the right party the best type of facility available is one that allows you to bill and collect your own receivables... i.e you're minding your own business.

So why is this fix for challenged firms, and even more so, growing firms. Simply because it’s a way to accelerate cash flow. And when you have that cash all you are doing is accelerating your business cycle, allowing you to ship or bill more, all over again. We remind our clients that even service companies can use receivable finance; you don't need to be selling a product.

So is A/R finance for your firm? You might find that it gives you a much higher level of confidence in growing sales knowing you have the ability to fund that growth. In general we have observe that because of the higher financing cost associated with factoring most business owners run a tighter ship from a cash flow management/borrowing perspective . And that’s a good thing.

So, whether you are in disaster recovery need when it comes to working capital solutions, or if you've been accused ( you're growing too fast !) speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a solid utilization of Canada's ' newest ' main street cash flow solution .

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLE 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/receivable_finance_business_financing_cash_flow.html

Receivable Finance Is Actually The Premium You Pay To Have The Business Cash Flow You Need To Grow Your Company

Why You Should.. Or Shouldn’t Finance Receivables Independent Of Other Business Financing


OVERVIEW – Information on receivable finance in Canada . Why do Canadian business consider using , or not using a/r financing for business cash flow .



Liquidity in Canada for many Canadian businesses is often ' fixed ' by Receivable Finance... commonly known as factoring... for business cash flow.

It's not financing per se, in the way that a bank finances receivables, its a form of finance that allows you to sell, individually, or in bulk, on a regular basis your a/r... for immediate , and by that we mean ' same day ' cash flow. That’s the key perceived benefit by many business owners and financial managers.

In explaining the process to clients it has become clear over time that a good way to describe this method of working capital finance is simply to view the cost of the financing as a ' premium ' you pay in order to achieve constant cash flow .

That ' premium' is viewed as expensive by many, however we maintain that its important to understand the terms , mechanics and benefits before we rush to judgment on what we have called the ' ouch factor ' ... a/r receivable finance pricing.

There are just so many little in's and outs of this method of financing that its important to separate what is important vs. what is not.

So what are some of the misperceptions around this method of cash flow finance? One is that it is an all or nothing scenario and that can't be farther from the truth. If you are working with the right firm ( key word ' right'!) you should be in a position to finance what you want and when . You should not be dealing with a firm that insists that you finance all your receivables all the time, as some players are want to request.

One of the biggest challenges we see in A/R Finance is the fact that many Canadian businesses don't view A/R financing as an interim solution. So they feel locked in and unable to address other financing at some future point in time.

The reality that we see day in and day out is that firms often progress to the point that they are now eligible for what they consider more traditional types of financing. If you are dealing with the ' right ' firm, (there is that key word ' right ' again!) you should not have any sort of penalties to exit a facility.

If your firm is not interested in a confidential financing facility, allowing you to bill and collect your own receivables you might find one very significant advantage to that ' PREMIUM ' we have talked about . That is simply that many firms can choose to have the factor finance firm administer their entire credit and collection policy. This alone can save many thousands of dollars and offset a lot of the ' premium ' paid to factor invoices in Canada.

Remember also that if you have one, or many larger ' blue chip ' type firms as clients you have just hit cash flow nirvana, as receivable financing is unlimited when it comes to credit worthy customers. If you clients aren't credit worthy it’s a case of really assessing whether you should be doing business with them anyway.

So, we can debate with clients all day the actual true cost of the premium they pay to finance receivables, but it should be clear that a strong business case can be made for the benefits of this method of cash flow financing in Canada.

Speak to a trusted, credible and experienced Canadian business financing advisor on whether you should, or should not finance your company in this manner.

P.S. You just might be surprised!

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLE 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/receivable_finance_business_cash_flow.html

3 Questions ( And Answers ) On Factoring In Canada. Your AR Receivable Finance Questions Answered .. Finally !

Fundamentals of Factoring in Canada


Information on factoring in Canada . What every business owner needs to know about receivable finance and ar finance costs and strategies .




We get a lot of questions on factoring as a business finance solution in Canada. The concept, background, and mechanics of financing just your AR is somewhat misunderstood we think. Let's share some basics for the sake and benefit of those firms considering this method of business financing.

1. Where is factoring at in Canada? First of all there seems to be a general consensus that this type of finance vehicle for your business is one of the faster growing and certainly feels like it is getting more popular everyday. The reality is that it's been around for many, many years, and in the case of being around period it’s been around for hundreds of years in North America, Europe, etc... Kind of reminds us of that saying in the fashion industry, ' what's old is new again ...'!

As a potential user of A/R finance it kind of makes sense to know who you are working with. In Canada the market is somewhat smaller and fragmented, with firms offering AR finance being either small or mom in pop in nature, or to the other extreme subsidiaries of some very large U.S. and Global corporations. Talk about a choice!

It's also important for you to distinguish between firms who offer this financing as a part of their overall solution, or if you're dealing with a specialty firm, for all the right reasons! We've always preferred to work with an expert ourselves!

From our perspective it kind of feels that Factoring got a lot more popular after the 2008 recession. That's not hard to disagree with because of the way the business credit totally dried up at that time, with thousands of small and medium size firms finding they have a lot less access to business credit. Canada’s chartered banks clearly no longer dominated all of Canadian business financing, that’s for sure.


2. What size and type of Companies utilize factoring? Here’s where it get's interesting, and not doubt speaks to the fact of this new found popularity. Why? Small firms use factoring, start up firms use it, SME firms utilize it, and guess what.... some of the largest corporations in the world utilize AR receivable financing, although it takes a new name higher up the food chain, often referred to as a ' Securitization '. At the end of the day it’s all about taking A/R off the balance sheet immediately, replacing it with cash, and taking on a finance charge for that privilege of enhancing your balance sheet with cash.

3. When does Factoring work best? Several business situations arise that drive the popularity and success of this finance solution. Primary is the inability of the borrower, small or large, to get traditional bank type financing.

But we remind clients also that even start ups qualify for receivable financing, and many firms that are actually doing quite well ( too well in fact because they are growing too fast ) also embrace this finance , cash flow and working capital solution. It's also a great way to assist in the restructuring of a company that is having any one of a number of business challenges that preclude it from accessing working capital elsewhere.

Is that everything you need to know about AR Receivable financing in Canada? Probably not, but it’s not a bad start and business owners and financials managers should speak to a trusted, credible and experienced Canadian business financing advisor for more info and assistance on this widely misunderstood finance solution .

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING EXPERTISE






Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

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

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
















Stan Prokop

Exactly When Does Your Company Need A Receivable Finance Solution? Financing Working Capital Is About Timing!

Let A/R Finance Get Your Receivables In Overtime Mode!


Information on receivable financing and the proper methods to look at when financing working capital in Canada




Have we got a story for you! There's an interesting old story /legend about a guy named Bernard E. Smith who at the time of the 1929 crash of Wall Street crash simply went around and saw what companies were building up receivables and inventory and maybe not selling enough either . We're not really focusing on ‘sales ' today though. The bottom line on this legend is that by simple observation of build up in receivables (and inventories) he became somewhat of a predictor for companies that would fail.

Receivable finance in Canada. Exactly when does your firm know it needs something new when it comes to financing working capital and understanding what solutions are available and when ?

If you have a strong handle on receivables in your company you're in a position to know a lot about your cash flow and working capital. When we look at what our buddy Bernard Smith was doing he probably would have profited even more (he was ' shorting 'those companies ) if he had simply had solid access to an analysis of any company’s' A/R position.

When you truly understand the relationship between sales and properly managed accounts receivable you're a more effective business manager or owner. That’s because you can only run so long on the concept of sales, and what one analyst called ' borrowing from the future '.

Financing working capital is need when your receivables rise substantially over your sales growth. Poor collections and liberal credit terms are some other causes, and those require separate measures and actions. But today we're focusing on simple ' growth ‘.

So, two things. How can you track such a phenomenon, and secondly what is one solid solution for receivable financing in Canada?

When it comes to tracking set up a very simple chart or spreadsheet around sales / receivables, and inventory. Simply track the actual growth rates over a specific period, say quarterly, even monthly if you want. (We’d say annually was a bit too late!)

If you find that sales are growing at 15% for example, and A/R and inventories are growing at 35% you will quickly start to feel a working capital and cash flow shortage. It's as simple as that!

So if you can’t get support from a bank in Canada on your A/R and growth then perhaps its time to look at another option. That option is known as receivable finance, or invoice discounting is another term. You might not be able to get additional financing because you're growing to fast, or in some cases you simply can’t meet bank criteria.

That's when it comes time to rethink your Canadian business financing strategy. The cost of factoring is often a consideration or concern , and business owners can address this by effectively understand how they can use the capital generated from invoice financing .If you have good gross margins you're even in better shape when it comes to assessing the cost of receivable finance.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in both monitoring working capital needs and assessing quality solutions for business cash flow and growth.

7 PARK AVENUE FINANCIAL

CANADIAN RECEIVABLE 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/receivable_finance_financing_working_capital.html

Don’t Utilize Receivable Finance .. Until You’re Read This . Mastering Tricks Of The Trade In Business AR Financing

How Much Do You Really Know About A/R Financing In Canada?

Information on understanding how business ar financing works and how receivable finance is priced .





Receivable finance in Canada. The business battlefield is littered with firms who either don't understand business AR financing from a pricing or a mechanics perspective, or, heaven forbid, have hooked themselves up with the wrong partner firm.

It's that proverbial fork in the road, and let's assumes the Canadian business owner or financial manager has taken it - he or she has opted to solve cash flow problems that have hampered growth and entered into an invoice financing facility.

But were the costs of the facility properly addressed, and are you working with the right lender ?Those two issues alone , when properly solved, or addressed, give you working capital and cash flow piece of mind.

You can make a huge mistake in receivable finance in Canada by not taking a bit of time to, as we say ' peel back the onion ' and ensure you understand that cash costs and mechanics of business AR financing.

So what issues should you consider when picking the right finance firm for your AR financing? Just like any other business or consumer contract you might look at you'll find that you need to address ' the fine print ', which typically isn’t the favorite thing we like to do, right?

Some of those miscellaneous charges can add up- for example some finance firms might want you to guarantee a minimum amount of financing business during any period - that might be a month, quarter, etc. A fee might be assessed if you have lower turnover.

The actual ' interest ' or financing charge is a subject of great discussion when we talk to clients about A/R finance. In general terms the amount of financing you do, the quality of your customer base, and to a certain degree the overall financial strength of your firm play a key role in pricing.

But business owners will find that the industry does in fact place a huge amount of importance on your A/R portfolio itself, not your own firms general credit worthiness. And that’s a good thing.

Also watch for the miscellaneous items that can add up, they include wire transfer charges, service fees, admin fees, - OMG it's almost as if we're banking in Canada !

If you're dealing with the right firm you'll find that you can finance all your Canadian and U.S. receivables without any issue. We do point out to clients though that if your receivables have a foreign component you may require some sort of credit insurance - which by the way isn’t a bad thing anyway.

In a perfect world you want to be able to move either to another A/R finance firm, or to a bank or other lender without penalty. Customers have a bit more negotiating power than they know when addressing this issue, and it should clearly be discussed up front at the time of entering into the facility.

Finally, make sure you understand the differences between a bank facility, a working capital term loan, and invoice financing, aka ' Receivable Finance '. The characteristics of a business AR financing facility are different - it's not a loan, it’s not a collateralized facility such as with a bank, it’s simply the ongoing sale of your invoice sales as you generate them, with the option of financing which sales you wish when you wish. It's simple as that.

Oh and by the way, we’re all for minding our own business, so be sure to consider a facility that allows you to bill and collect your own a/r without notification to suppliers, clients , etc . It’s our absolute recommended facility .

So is this method of Canadian business financing the answer to your current and future cash flow problems? As we said, it can be, if you take some time to master some of those tricks of the trade.

Speak to a trusted, credible and experienced Canadian business financing advisor today on how you can best understand and utilized business AR financing.





7 PARK AVENUE FINANCIAL
Canadian A/R Business 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_finance_business_ar_financing.html

Village Elder Advice On Receivable Finance . How Is Business Invoice Financing Positioned In Canada ?

Canadian A/R Financing

Information on receivable finance in Canada . Business Invoice Financing Works if you know how it’s priced and why it works.



Receivable Finance in Canada. Wouldn't it be refreshing to get some of that ' VILLAGE ELDER ' advice on the subject of business invoice financing in Canada. We're told that type of advice has a connotation of authority and wisdom from someone qualified to provide such counsel.


There are a number of significant benefits when it domes to receivables financing in Canada. It certainly is becoming more of a main stream alternative everyday in Canada, with thousands of firms considering and using this type of business finance.

A/R financing is the ultimate in what we could call ' short term financing’. And what do we mean by ' short term '. Well it pretty well means ' daily ' as funds are typically advance the day that you generate an invoice. As we have stated in the past a properly constructed facility gives you the option of submitting invoice sales, or not submitting them. Its classic ' pay for what you use ' financing. The bottom line, you're satisfying any immediate needs of your business, which includes of course payroll, supplier obligations, term loan payments, etc.

Most factoring or invoice financing firms tout the fact that you also don't have to make a significant investment in accounts receivable credit and collection given that the financing firm takes over the collection of the account. That allows you to focus on running and growing your company of course.

In our opinion that probably is a good thing, but truth be told our recommended facility is one in which you retain control over your invoices, and your clients. We think, if they had the choice, that the majority of clients in Canada would say that want to be front and center in front of their customers, without a third party . That’s why time and time again we find ourselves recommending confidential receivable finance, allowing you the business owner and managers to bill and collect your own A/R.

If there is one obstacle to customers embracing business invoice financing it's definitely a lack of understanding around cost and mechanics. What the business owner has to understand is how to be able to properly assess the cost of borrowing.

Let’s use a quick example; let’s say you're a mfr. and that typically A/R in your industry is collected din 50 days. Let's further assume that your firms days sales outstanding is closer to 65 days .That of course means that you're typically carrying 15 days of excess receivable investment. Let's use approximately 100k as the firm’s daily sales. That means that you have over 1 and 1/2 Million dollars in what we could call excess A/R - even at bank rates of say 5% that means you have a total annual extra financing costs of over $ 80,000. That, on top of the 1.5 Million $ you are already over invested in makes almost 1.5Million in lost opportunity cost!

Our example dramatizes the healthy impact your A/R has on your cash flow if you're not focusing and financing it properly. A/R, next to any cash you have in the bank for your business is your closest liquid asset. Consider receivable finance as an effective way to monetize that asset. Speak to a trusted, credible and experienced Canadian business financing advisor on how to properly monetize business invoice financing.




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.

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