How Receivables Financing , aka ‘ Factoring ‘ Manages And Solves Working Capital Problems

Is Factoring The Solution You’re Looking For In Financial Management ?


OVERVIEW – Information on factoring and receivables financing in Canada . Is this widely used financial management tool a solution for Canadian working capital and cash flow challenges ?



Could a receivables financing program actually help you manage and success when it comes to solving those working capital problems? Top experts in the field show that the trend towards many companies adopting a factoring / receivables finance strategy is in fact one solid solution to cash flow management... and survival in Canada. Let's explain!


At the core of our subject is the concept of ' working capital ' which is sometimes difficult to grasp for the Canadian business owner and manager in the SME sector. Those large corporations seem to have it down pat, don't they ?

When they do those conference calls on their quarterly results cash flow and growth seems to be all they are talking about .. right!

So does a receivables finance strategy solve the problem? It's kind of good to understand the problem also, don't you think - and in our case it's all about managing your current assets - receivables, inventory, etc.

In the case of receivables if you don't have a stated goal (by the way those large corporations do - they call it days sales outstanding) you definitely have an intuitive goal, which is to turn over those assets into cash.

That's where factoring/invoice finance comes in. It accelerates that turnover of receivables into cash at Warp Speed. And just what is that warp speed?

Well you should know by now, and if you don't you do now... that factoring generates cash as soon as you make a sale. So the current assets, in our case A/R that you permanently have on your balance sheet are turned into cash. That cash allows you to run the company and satisfy all other creditors.

Your payables, which comprise usually the majority of your short term liabilities are a great way to manage debt, and the cash flow you receive from factoring helps keep the risk of insolvency at bay. Simple as that.

So while the Bay Street gang focuses and talks on the concept of working capital your firm, with an adopted factoring strategy helps you cut through the jargon without limitations to timing. What we mean by that is that if you calculate your Current ratio, and let’s say for example it is 4:1 that really is somewhat meaningless if receivables are not collected and inventory isn’t turning. Factoring solves that receivables turning issue very quickly!

It's important to remember that receivables finance, as a solution to working capital challenges is a short term financing strategy. Long term it's up to you the business owner and manager to manage long term debt and grow your company.

Factoring is one key solution that helps you solve the cash flow cycle conundrum, which is the ability of 1$ to make it through your entire company, from product purchase for inventory to cash collected for your sales.

The bottom line today - Cash shortages reach a peak when your firm is carrying a high level of accounts receivable. Factoring solves that problem by converting your one major source of cash - receivables into immediate working capital.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you set up a proactive Factoring program to meet your business challenges.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING AND RECEIVABLE 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 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/factoring-receivables-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

Canadian Receivables Financing ‘ Grow Cash Flow And Lose Money ! Receivable Factoring Equals Business Cash Flow

Why Canadian A/R Finance Just Might Be The Cash Flow Solution You Are Looking For!


Information on receivables financing for Canadian business . Receivable factoring is a cash flow generator and here’s why



Canadian business owners and financial managers should not be ' tricked' around our statement of 'grow cash flow' and ' lose money’ as a recommended strategy. But when they understand the essence of receivables financing they do see the truth in that statement, which revolves around how receivable factoring is priced and how it benefits their benefits their business.

Receivable finance is a source of working capital. It is not debt financing, which is a common misperception of what it is and how it affects your business. In technical terms the A/R is sold to your A/R partner. That sale is done at a discount basis, meaning that over a 30 day period you would typically receive 98,000.00 on a 100,000.00 receivable. That 2k cost is in essence a loss, or a financing cost. What you do with those funds and how you run your business allow you to sell more, do more, and recover a huge portion of that financing cost.

This type of financing arrangement is used in a wide variety of industries in Canada, by thousands of companies, including, we bet, many of your competitors.

If we had to identify the two major benefits of this method of Canadian business financing we would say it’s simply the high advance rate on your sale/receivable, as well as of course the quick turnaround.

Quick turnaround? If you consider same day funding for any sale you make in our book that’s a quick turnaround.

Relatively speaking (relative, say, to a Canadian chartered bank) the financing is perceived as expensive. We say perception, because when we sit down with clients and review the fact that they are already carrying receivables anywhere from 60-90 days , plus the fact that the new found cash flow can be used for a variety of profit generating activities .. well we think you get the point. And that's that perception is not always reality.

When receivables financing arrangements are done properly you are even in a position to ensure that you are not introducing a third party to your client process. Our recommended strategy is a C I D facility, which is the term for confidential invoice discounting, allowing you to bill and collect your own A/R, reaping the benefits and eliminating the disclosure!

We're pretty sure you're getting our main point today, which is simply that information, facts, and the proper interpretation around this method of financing is what generates a winning combination.

Some of the key benefits can simply be grouped under the term ' predictable cash flow. And if you choose the right partner firm and our recommended confidential A/R facility your strong customer relationships stay intact.

We're open enough to say that the majority of firms who in fact entertain receivable factoring can't get financing elsewhere, particularly at their bank. But don't forget also that many instances involve firms such as yours who are growing too quickly or who have landed that ' big contract' or order. It's at this time that busines owners appreciate the fact that their net worth, profitability, debt coverage, or operating losses arent under the microscope anymore. And your firm is free to explore other methods of debt financing outside your A/R assets.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to work through the benefits of this type of finance.




Stan Prokop - founder of 7 Park Avenue Financial –


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/receivables_financing_receivable_factoring_cash.html