Revolutionize Your Business Cash Flow: The Accounts Receivable Financing Breakthrough

Accelerate Business Success: The Power of Accounts Receivable Financing Revealed

 

 

 

YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!

Say Goodbye to Cash Flow Problems: Accounts Receivable Financing Solutions

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Financing & Cash flow are the biggest issues facing business today

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

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EMAIL - sprokop@7parkavenuefinancial.com

 

 

Table of Contents

 

1. What Are Receivables Factoring Companies?

2. Why Is Choosing a Factoring Company So Difficult?

3. The 4 Types of Receivables Factoring Companies in Canada

4. Why Choose Factoring Over a Traditional Bank Loan?

5. How Does Receivable Financing Work?

6. How Much Cash Can You Advance Against Receivables?

7. What Do Receivables Factoring Companies Charge?

8. What Is Confidential A/R Financing?

9. How Do You Choose the Right Factoring Company?

10. Can Factoring Be Used as a Growth Lever?

11. Case Study: Matching the Right Factoring Company

12. Key Takeaways

13. Frequently Asked Questions

14. Statistics and Authoritative Context

15. Conclusion

Introduction: Understanding Receivable Financing / Canadian Factoring  Canada

Receivables financing in Canada—It's your mission to find the best solution available in factoring financing. And we'll give you a hint—it's called Confidential A/R Finance! Let's dig in!

 

 

What Are Receivables Factoring Companies?

 

The key question is simple: can receivables factoring companies turn your unpaid customer invoices into working capital before your customers actually pay?

 

Yes. Receivables factoring companies provide cash against eligible business-to-business invoices, helping you shorten the wait between making a sale and collecting the receivable.

 

For a business owner, the problem is often frustratingly familiar.

 

You made the sale, delivered the product or service, and earned the revenue—but the cash is still 30, 60, or 90 days away.

 

 

 

Every Invoice Factoring Company Says Yes — That's the Problem

 

 

After a bank decline, many businesses receive multiple offers from receivables factoring companies. The problem is not finding funding — it is comparing advance rates, fees, contracts, and operating requirements.

 

Bank-owned factors, independent Canadian factors, cross-border U.S. factors, and fintech platforms may finance the same invoice on very different terms.

 

Understanding the type of factoring company behind the term sheet makes it easier to choose the right fit for your cash flow and business operations.

 

 

The 4 Types of Receivables Factoring Companies in Canada

 

 

1. Bank-Owned Factors

Best for established businesses with strong financials and customer credit. Pricing may be lower, but underwriting, covenants, and reporting often resemble traditional bank financing.

2. Independent Canadian Factors

Best for growth, turnaround, bank-declined, or customer-concentration situations. More flexible than banks, but compare fees, contract terms, termination clauses, and funding stability carefully.

3. U.S. Factors Serving Canada

Often suited to Canadian exporters and cross-border businesses with U.S. receivables. Review currency costs, PPSA/UCC priority, governing law, and collection practices.

4. Fintech Factoring Platforms

Designed for speed and selective invoice funding. They may offer simple per-invoice pricing but typically have lower funding limits and less flexibility for complex receivables.

Key takeaway: The best receivables factoring company is not simply the cheapest. Match the factor's structure, funding capacity, and operating model to how your business invoices and collects.

 

 

Key Buzzwords: Cost-Efficiency and Business Focus

 

Our key buzzwords are-

Cost-efficient

Allow you to mind your business - what a combo!

 

 

Why Do Canadian Businesses Choose Receivables Factoring Companies Over Bank Loans?

 

The correct comparison is not simply factoring rate versus bank interest rate. Compare the financing cost against usable cash, supplier discounts, avoided late costs, and the gross profit from orders you can now accept.

 

Traditional bank financing typically relies on historical profitability, financial strength, and available collateral. Receivables factoring companies focus primarily on the credit quality and payment history of your customers, allowing growing, newer, or bank-declined businesses to unlock working capital from unpaid invoices.

 

 

 

 

Understanding the Trend: Factoring Receivables Gain Momentum

 

Factoring receivables continues to gain daily momentum in Canada.

 

If you feel either confused, misinformed or just generally out of sync with how this type of financing works and what it costs, let's get you up to speed.

 

 

Demystifying the Process: How Receivable Financing Works

 

It's not as complicated as you think. You provide your invoices and proof of delivery and shipment on a daily, weekly, or monthly basis (it's your call). Then what happens? You receive cash the same day for those funds.

 

Clarifying Advances: Understanding Cash Advances

 

To clarify, the advance on your invoices is 90%. You receive the rest of the funds, i.e., the 10% when your customer pays, less the financing charge.

 

Revealing Costs: Debunking the Myth of Financing Charges

 

Trust us—from experience, clients always want to know and talk about that financing charge, so let's clarify that point immediately.

 

First of all, did you know that some of the largest corporations in Canada use this method to finance their receivable portfolios? Their cost is often the same as that of traditional bank financing and sometimes lower.

 

Examining Expenses: Understanding Monthly Factoring Charges

 

However, most businesses in Canada that seek to factor receivables pay anywhere from 1% to 1.5% per month for factoring.

 

But let's be clear here: Receiving those funds when you invoice allows you to maintain a positive cash flow and continue to grow sales and profits.

 

Maximizing Benefits: Leveraging Positive Cash Flow

 

Another benefit? We point out to clients that they are now in the enviable position of taking 2% discounts on all their qualified purchases with their suppliers and, if they are smart, can negotiate better terms and pricing on those products.

 

Exploring Confidential A/R Finance: A Unique Factoring Solution

 

We referenced the term CONFIDENTIAL A/R FINANCE. So what is that exactly?

 

It's a unique form of factoring that, by the way, costs the same as other types of factoring receivables financing. However, unlike traditional A/R financing, you can bill and collect your receivables confidentially.

 

Highlighting Advantages: The Power of Confidentiality

 

Key benefit? Your suppliers, clients, etc. are unaware of how you finance your company, which we think is essential.

 

So again, to clarify, you are funding your business on a confidential basis - your competitors who use this type of financing are not. That's your key advantage, and we think it's significant.

 

Navigating Options: Selecting the Right Financing Partner

 

Selecting a receivables financing partner can be challenging because hundreds of small and larger firms have different criteria.

 

You have to distinguish between recourse and non-recourse factoring when it comes to accounts receivable ar financing, and whether the firm even offers (or has heard about!) this method of cash flow finance.

 

 

Considering Factors: Size, Fees, and Pricing Structures

 

Other factors (pardon the pun) to consider are the size of your portfolio and miscellaneous fees that add up, which must be understood or negotiated.

 

Pricing is reflected to a certain degree by the size of your monthly receivable financing. A/R portfolios of 250k per month generally receive better pricing and structures from a factoring company. The maximum financed? There isn't one!

 

Can Factoring Be Used as a Growth Lever?

 

Yes. Factoring can act as a growth lever by converting unpaid invoices into immediate working capital. As sales and eligible receivables increase, funding availability can also grow, helping businesses finance payroll, suppliers, inventory, and new contracts without waiting 30–90 days for customer payments.

 

 

What Is the Difference Between Factoring and Receivables Financing?

 

 

Factoring generally involves purchasing or financing invoices and may include customer payment administration and collections.

 

Receivables financing commonly uses accounts receivable as the borrowing base for a revolving credit facility while the business retains greater control over customer relationships and collections.

 

In practice, terminology varies between lenders. Always review the actual legal and operational structure rather than relying on the product name.

 

 

 

Bank vs. Non-Bank Lenders: Cost and Criteria Comparison

 

Provider Type	Typical Cost	Main Approval Criteria	Best Fit
Bank / Bank-Affiliated	Lower	Profitability, balance sheet strength, collateral, covenants	Established, financially strong businesses
Independent Non-Bank Lender	Moderate to higher	Receivable quality, customer credit, borrowing base	Growth, turnaround, or bank-declined companies
Fintech / Online Provider	Often higher	Automated credit and transaction data	Smaller or short-term funding needs

 

 

Key takeaway: Banks usually offer lower-cost capital but apply stricter borrower criteria. Non-bank lenders may cost more but provide greater flexibility by focusing on receivables, customer credit quality, and available assets rather than historical profitability alone.

 

 

Case Study: Matching the Right Factoring Company

From The 7 Park Avenue Financial Client Files

 

Company: Ontario facilities services firm with 60 employees.

 

Challenge: Weekly payroll, 55–70 day customer payments, and a bank line decline created a working capital gap. Three factoring offers had very different pricing, funding limits, and volume requirements.

Solution: 7 Park Avenue Financial matched the company with an independent Canadian factor that accepted its customer concentration. We secured an 85% advance, month-to-month terms, and no standby fee.

 

Results: Funding arrived in six business days. Payroll stabilized, two new contracts were accepted, and revenue grew 30% within eight months.

 

 

Case Study # 2: Accelerating Invoice Cash Flow

 

Company

ABC Company, an Ontario-based commercial manufacturing and assembly firm.

 

Challenge

The business secured a contract with a major North American manufacturer but faced a severe working capital deficit. The bank operating line was capped, leaving $620,000 in vital capital locked in outstanding 60-day invoices while production demands and weekly payroll surged.

 

How We Got There

We established an accounts receivable factoring facility that integrated directly with the client's accounting software. The facility automatically approved and advanced 85% of verified invoice amounts within 24 hours of shipment, bypassing the lengthy credit approval processes associated with traditional bank credit extensions.

 

Results

• Unlocked $527,000 in liquid capital within 48 hours of setup.

• Maintained all critical raw material supply chains and met bi-weekly payroll without interruption.

• Funded 35% production growth over three quarters.

• Successfully transitioned to a traditional bank line of credit within 14 months due to improved balance sheet performance.

 

 

Key Takeaways

 

1. Invoice Factoring: Understanding how to leverage outstanding invoices for immediate cash flow from unpaid invoices

2. Cash Flow Management: Effectively managing incoming funds to sustain business operations and growth.

3. Recourse vs. Non-Recourse: Distinguishing between the two types of factoring agreements and their implications.

4. Confidential Invoice Financing: Maintaining privacy in financing arrangements to preserve competitive advantages.

5. Supplier Discounts: Capitalizing on improved payment terms with suppliers to enhance profitability.

 

Conclusion - Accounts Receivable Financing Advantages

 

Interested? Confused? Hopefully, not the latter!

 

Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who will guide you through the maze of financing receivables.

 

We're sure you'll emerge well-informed and with a factoring facility that works best.

 

 

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

 

How Much Will a Receivables Factoring Company Advance?

Many commercial factoring facilities advance approximately 80% to 90% of eligible receivables.

A simple example:

Eligible Receivables	Advance Rate	Initial Cash Available
$500,000	80%	$400,000
$500,000	85%	$425,000
$500,000	90%	$450,000

 

What Receivables Are Usually Ineligible for Factoring?

Common ineligible receivables include:

• Invoices over the lender's aging limit

• Disputed invoices

• Related-party receivables

• Contra accounts

• Progress billings that are not fully earned

• Foreign receivables without acceptable risk coverage

• Invoices with missing proof of delivery

• Customer accounts subject to excessive credits

• Receivables subject to set-off rights

• Consumer receivables

What Do Receivables Factoring Companies Charge?

Factoring costs vary according to risk, volume, customer payment speed, and administrative complexity.

Pricing factors commonly include:

• Monthly invoice volume

• Average invoice size

• Customer credit quality

• Days to payment

• Customer concentration

• Number of invoices

• Industry risk

• Dispute frequency

• Documentation quality

• Recourse or non-recourse structure

• Full-ledger or selective financing

 

 

What are the benefits of accounts receivable financing?

AR Financing provides quick access to funds, improves cash flow, allows for better expense management, and helps negotiate favourable terms with suppliers.

 

 

Is accounts receivable financing suitable for small businesses?

Yes, solutions from accounts receivable financing companies are suitable for businesses of all sizes, providing flexible funding tailored to their specific needs.

 

 

Can I maintain confidentiality with accounts receivable factoring?

Yes, with confidential invoice financing, businesses can maintain privacy in their financing arrangements, ensuring that clients and competitors are unaware of their financial agreements.

 

 

How do I choose the right accounts receivable financing partner?

It's essential  when looking at the best factoring companies to select a reputable and experienced financing partner who offers competitive rates, transparent terms, and personalized services to effectively meet your business requirements.

 

 

What is the difference between factoring and invoice discounting?

Factoring involves selling outstanding invoices to a third party, while invoice discounting allows businesses to borrow money against their invoices without transferring ownership.

 

 

How does cash flow affect business operations?

Cash flow significantly impacts business operations as it determines the company's ability to meet its financial obligations, invest in growth opportunities, and sustain day-to-day activities.

Insufficient cash flow can lead to liquidity issues, hindering the organization's capacity to pay suppliers, employees, and other expenses on time. This can result in disrupted operations, damaged stakeholder relationships, and potential business failure. Conversely, healthy cash flow enables businesses to seize expansion opportunities, invest in innovation, and navigate economic challenges more effectively. By maintaining positive cash flow, organizations can ensure the smooth functioning of their operations, supporting long-term growth and success.

 

 

 

Can businesses negotiate better terms with suppliers through invoice financing?

Yes, by accessing immediate cash flow through invoice financing, businesses can negotiate favourable payment terms with suppliers, including discounts for early payments.

 

 

What is supply chain finance?

 

Supply chain finance, or reverse factoring, allows suppliers to receive early payment based on the buyer's credit strength. Suppliers improve cash flow while buyers extend payment terms and manage working capital more effectively, creating a stronger, more resilient supply chain.

 

Statistics & Authoritative Context

The global landscape for alternative commercial liquidity has expanded rapidly to meet SME demands.

• Global Factoring Services Market Size (2026): Projecting at approximately USD 4.72 trillion to USD 5.31 trillion, illustrating the scale of invoice-backed liquidity worldwide.

• Expected Growth Rate: The global accounts receivable financing market is experiencing a compound annual growth rate (CAGR) of approximately 11.3%.

• The Primary Beneficiaries: Small and medium-sized enterprises (SMEs) represent the largest user segment, seeking flexible alternatives to rigid banking covenants.

 

 

Citations

 

Mordor Intelligence. "Factoring Market Size, Trends, Share & 2025–2030 Report." Mordor Intelligence, 2026. https://www.mordorintelligence.com/industry-reports/factoring-market.

Harrington, Andrew. "Factoring Industry Statistics." WiFi Talents, February 12, 2026. https://worldmetrics.org/factoring-industry-statistics/.

The Business Research Company. "Factoring Services Global Market Report 2026." The Business Research Company, 2026. https://www.thebusinessresearchcompany.com/report/factoring-services-global-market-report.

Blogger/7 Park Avenue Financial."How Accounts Receivable Factoring Loans Improve Cash Flow".https://businessfinancingcanada.blogspot.com/2026/07/how-accounts-receivable-factoring-loans.html

Grand View Research. "Factoring Services Market Size & Share Report, 2026–2033." Grand View Research. https://www.grandviewresearch.com/industry-analysis/factoring-services-market.

7 Park Avenue Financial."https://www.7parkavenuefinancial.com/business-receivable-factoring-ar-finance.html".https://www.7parkavenuefinancial.com/business-receivable-factoring-ar-finance.html

Coherent Market Insights. "Factoring Services Market Size, Share & Forecast, 2025–2032." Coherent Market Insights. https://www.coherentmarketinsights.com/industry-reports/factoring-services-market.

Medium."Breakthrough in Financing Accounts Receivable! New Fresh Approach to the Best Invoice Factoring in Canada"https://medium.com/@stanprokop/breakthrough-in-financing-accounts-receivable-2f8206ba52c9

Wikipedia. "Factoring (Finance)." Wikimedia Foundation. https://en.wikipedia.org/wiki/Factoring_(finance).

 

Modern Factoring & Accounts Receivable FInancing In Canada

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The 7 Park Avenue Financial Way to Solve Lack Of Business Financing

Receivables factoring . Here is your daily spoiler alert - Factoring accounts receivable has entered in to the modern day financing arena , big time !

For those firms that either can't or don't want to access traditional bank financing the ability to cash flow your receivables on an ongoing basis is a solid way to generate immediate cash flow . Not do overdo our cliche's but in case you haven't heard - Cash is King .

But is this method practical for your firm when in fact there are other options our there in today's large array of business finance mechanisms. In fact there are a number of reasons why factoring accounts receivable is a preferred solution for many Canadian firms.

In today's world of globalization and highly competitive business environments business owners and their financial managers don't want to be constantly struggling for cash flow solutions. While receivables factoring is more expensive than traditional bank based line of credit facilities the vast majority of business owners are willing to give up 1-2 per cent of their gross margins as opposed to losing large or new clients or slowing down sales growth on purpose in order to conserve working capital.

We've referenced ' modern day ' receivable financing - that's because a perception remains that under ' old school ' a/r finance there was a perception that your clients would potentially lose faith in your company as a supplier. That's no longer an obstacle when utilizing such solutions as Confidential Receivable Financing .

Clients of 7 Park Avenue Financial will often ask  us why thousands of firms are now utilizing this method of financing . That requires a quick history lesson, in that after the 2008 recession business lending took a dramatic turn, with many firms exiting the marketplace or just disappearing themselves. Enter factoring of trade receivables as an option - given that same option has been utilized in various forms for hundreds of years.

Benefits of commercial a/r financing strategies should be obvious to all parties :

1. Businesses generate immediate cash

2. Your balance sheet remains intact - factoring is not a debt facility - you're simply cash flowing current assets .

By the way , your borrowing facility can be further enhanced by combining inventory, receivables and equipment into one asset based business line of credit . In our experience these facilities almost 99% of the time provide more liquidity than you can ever achieve from a bank, without all that emphasis on personal guarantees, covenants, restricted borrowing, etc!

Although it's fair to say that a/r financing seems to lend itself to smaller firms in the SME COMMERCIAL FINANCE space business owners might be surprised to know that large corporations also utilize this method of financing . Naturally the big boys prefer some fancier names, such as ' securitization ' etc.

If you are looking for invoice financing solutions seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success .



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 For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value added financing consultation for small and medium sized businesses in the area 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.
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

Has Your Company Overlooked the Business Financing of Receivables or Factoring as a Working Capital Strategy?

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Here's A Solid Working Capital and Cash Flow Solution for Canadian Business

Information on receivable financing & factoring as a consistent cash flow business financing solution for Canadian businesses

Have you forgotten something? Perhaps it is just a case of overlooking or not knowing all your alternatives in business financing for working capital. Factoring receivables for cash flow is just one of those strategies that you may have missed, not heard about, or not fully understood or investigated.


Let's do a basic ' primer' on this somewhat unknown or mis-understood form of business financing. Many Canadian business owners or financial managers mistake factoring or the selling of your receivables as a ' loan '. That is not the case, it’s simply the case of monetizing or cash flowing your probably largest current asset, your receivables, and paying a financing charge, or discount fee for the service



In general approximately 90% of the value of an invoice is advance to you pretty well the same day that you issue your invoice. Your normal obligation is to provide some sort of proof of delivery or acceptance of that invoice related to your goods and services.


We're of the opinion that factoring receivables seems to be viewed as a small business financing tactic , but we can assure readers that some of the largest corporations in Canada utilize the tactic also - in some cases its simply jazzed up with a fancier name such as ' securitization' or financing via 'asset backed commercial paper ' , etc. So the big boys are doing it also! Don't forget that.


When clients talk about moving forward on this type of business financing the largest challenges seems to simply be their ability to understand pricing, pick the right firm to work with, and finally, to ensure that the daily flow of paperwork around this type of business financing makes sense . If the wrong factor partner is selected there are countless stories out there of firms who have experience a negative level of customer intrusion around the whole factoring receivables process. So choose your partner well, and probably the best info or advice we share in this regard is to seek the services of a trusted, experienced and credible business financing advisor who can steer you towards financing and cash flow success.


A common question related to our 'primer' on factoring (also called invoice discounting or receivable financing) is: ' Do we qualify '. The short and positive answer is absolutely, if you have receivables you qualify, that's what this form of business financing is about.


Many business owners or their financial manager’s struggle with the cost of this type of financing which typically is in the 1- 2.5% range in Canada. The bottom line on the costs is simply that they will vary relative to the size of your receivables, the perceived credit quality, and the type of firm you contract with in this regard. That’s where the help of a Canadian business financing expert can help you immensely. In fact more often than not that expert can demonstrate how you can significantly reduce the cost of financing receivables to almost zero in some cases, but certainly a reasonable amount in most situations.

So whats our primer summary on receivables and business financing via factoring. It’s simply that if you’re reading this you probably have a business financing challenge. A/R financing is a method to eliminate that challenge. Working hard on your financing is commendable; working smart on your financing with an expert is a must. Investigate the solution that will bring cash to your firm’s door tomorrow.

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

Click here for 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 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

Receivables Factoring And AR Financing Canada : Talking Points On A Receivable Loan

Removing The Ouch From A/R Financing Solutions in Canada

OVERVIEW – Information on A/R financing in Canada . Receivables factoring via a receivable loan ( it’s not really a loan ) can work as a short to intermediate term solution for cash flow and working challenges . Costs, issues and how the facilities work is discussed

Receivables AR financing in Canada comes with the perception of an ' Ouch ' when it comes to entering into this type of cash flow facility. But is perception reality in this case? We’re quire sure it isn’t so let’s focus in on the total ' receivable loan ' experience. (By the way, it’s not a loan; you're just cash flowing current assets). Let's dig in.

Whether a business is profitable or struggling back to profitability the issue of liquidity and the ability to meet your obligations is always supreme. The ability to finance your sales via a receivable factoring solution is a solid tool when traditional bank financing can’t be achieved. But the type of facility you enter into, its cost, and how it works is really the ' ouch' factor you need to address to be successful with this type of financing.


While the bank paperwork on A/R financing is done through an ongoing ' assignment ' of your accounts the receivable loan (again, it’s not a loan!) paperwork provides that you are in fact ' selling ‘the receivables you wish to finance.

The biggest ' ouch ' for most clients is that as cheques are collected from your client they are deposited directly into the lenders account, not yours, given you have received the benefit of the cash . Can this process be overcome? It sure can! And that comes via entering into a Confidential Receivable Finance facility that allows you to bill and collect your own accounts. By the way, whether it’s a Canadian chartered bank or your receivable factor firm each of those has a ' lien' on your receivables. That's the collateral for the cash flow.

By the way some of the largest companies in Canada or the world for that matter use these types of facilities. In some cases a fancier name (‘Securitization ' ) is attached to the loan (it’s not a loan - have we mentioned that?!) but at the end of the day it’s the same process - eliminating a/r from the balance sheet and generating cash at the exact same time.

Typically the same type of borrowing restrictions come with this type of financing - with one positive exception. Receivables factoring typically allows borrowing against 90% of your total A/R, while Canadian banks prefer a 75% borrowing base margin. (You’d think they were more conservative or something?!)

Otherwise the following borrowing base has the same rules:

All North American receivables can be financed

Receivables must be 90 days or less current

If you are billing and collecting your accounts on 30 day terms the cost to finance a $10,000 invoice as an example would be in the 200$ range . That 9800$ you receive when you generate a sale can be ploughed back into working capital needs, utilized for purchasing more inventory, or you can get back your 200$ by taking a discount with your own suppliers or arranging better pricing based on volume purchases .

Thousands of Canadian businesses utilize this financing as a ' bridge' back to traditional financial solutions. In fact if your business is growing ' too quickly ' for traditional financing it's often the best solution.

If you want to both remove the ' ouch ' from the receivable loan facility ( it's not a loan ..................) and wish to cover off more talking points on how this facility would work for your firm 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 cash flow 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 A/R FINANCING 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

Canadian AR (A/R) Finance Exposed – How Receivables Factoring Companies Invoice Finance

Laid open to view. That's a solid definition for ' exposed '. It almost sounds like a steamy spy novel..! Well... perhaps not as exciting as that... but lets take the covers off A/R finance in Canada. How does receivables factoring and invoice finance work and another thing... didn't we hear it was expensive..?????

It's our observations that usually after Canadian business owners and financial managers understand how ar ( a/r ) finance works that they immediately focus in on trying to understand how they can achieve the benefits of receivables factoring , while at the same time reducing the cost . In years gone by the perception of factoring was that it was akin to the same negative perception we give to unscrupulous car dealers.

Bottom line? Things have changed, and invoice financing is powering, yes we say powering! thousands of companies all across Canada.

So, back to pricing - we're going to expose some of the key fundamentals around this type of business financing. In the case of how you are charged its actually more simply than you think, the pricing of your transactions revolves around the total time it takes to collect your invoices, the actual size of your approved facility, and thirdly, an d in our opinion as important, who you choose as an invoice finance partner !

So what actually is the best pricing you can achieve in Canada from an ar finance strategy point of view? Well, let’s just say the spectrum is broad, with costs ranging from 5-6% per annum to 1-3% per month. Wow! Let's repeat that wow! That is clearly a huge range. So clients tend to ask where they fit into the pricing of their receivables factoring equation.

In Canada there are 2-3 tiers of firms which dominate invoice finance. They are a select group of U.S. and Canadian banks, some major independently owned Canadian and U.S. firms, and finally, hundreds of what ca be only termed as small ' mom and pop ' shops, providing facilities that might range in the 15-25k/month range .

Where does your firm fit. The truth around pricing is that once your firm has a volume of approx 250k per month you can start to achieve some significant invoice finance savings. Want to know another secret of the industry. It's simply that if lock into a facility for a year then you can actually achieve a price reduction, while open facilities tend to charge a bit more.

Our favorite and recommended type of facility is called C I D - It stands for confidential invoice discounting. What is it? It's simply a receivables factoring facility that allows you to bill and collect your own receivables. Your competitors might be using invoice finance but they are under the stringent control of their factor partner, who is intensely involved in the invoicing and notification to your customers of the financing you have arranged.

And, guess what, C I D financing, contrary to popular Rumour, is the same or less expensive that traditional U.S. and U.K. type factoring which have dominated the Canadian landscape for years,

AR Finance is at the end of the day a business financing facility that involves yourself and your partner firm. We recommend you deal with Canadian firms who understand the business landscape here and who ensure you have a facility that makes sense from a cost point of view. The right partner will also not ' nickel and dime ' you with respect to hidden fees, surcharges, etc. There isn’t a day when we don’t meet a client who ' thinks' he knows what they are paying for invoice financing, until, unfortunately, we expose the true pricing around his or her facility.

Want the real straight talk and goods on receivables factoring in Canada. Perhaps, just perhaps you might want to talk to an unbiased expert. Seek a trusted, credible and experienced Canadian business financing advisor, and get on the inside of the true benefits of receivables finance!





Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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