Factoring Is The Secret Weapon In Canadian Receivables Financing - Here's Why!

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YOUR COMPANY IS LOOKING FOR FACTORING AND CANADIAN RECEIVABLES

 FINANCING! 

Transform Your Cash Flow with Receivables Financing: A Guide to Solutions by 7 Park Avenue Financial

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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?

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

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

Exploring Receivables Financing as a Funding Alternative 

 

Bridging the Cash Flow Gap: Explore Receivables Financing with 7 Park Avenue Financial

 

Canadian business owners and financial managers can find an alternate route for financing working capital and cash flow needs in factoring, also known as accounts receivables financing of outstanding invoices.

 

This method can be particularly beneficial when your company experiences rapid growth or struggles to finance day-to-day working capital needs due to significantly larger orders or contracts. Fundamentally, factoring in Canada involves financing through good accounts receivables on the company's balance sheet. Choosing the best technical method of factoring necessitates due diligence on your part.

 

 

 

 

INTRODUCTION

  

 

In Canada's fast-paced business world, keeping cash flowing is critical to staying in the game in your industry. That's where receivables finance comes in; you might also hear it called invoice financing or factoring. It's like a life preserver for businesses, giving them quick cash from unpaid invoices when traditional bank loan financing is unavailable.

 

It's a way for businesses to keep the money rolling between when they deliver a product or service and when they get paid. But that's not all. Besides boosting your cash flow, receivable financing can give you more flexibility, less risk, and more chances to grow your business.

 

The cash flow challenge

 

 

Cash flow issues can hit any business, big or small, and managing it well is vital for survival and growth. If cash is short, a company might have trouble meeting financial needs, paying suppliers, investing in growth, or even covering everyday costs. Slow-paying customers, seasonal ups and downs, unexpected expenses, and late payments can all create cash flow gaps that disrupt business.

 

Receivables financing is a solution here. It allows businesses to turn their unpaid invoices into immediate cash. Businesses can sell their invoices to a financing company, or "factor," giving them around 80-90% of the invoice value upfront.

 

This provides the business with the cash to keep running and growing. Once the customer pays the invoice, the factor takes their fee and gives the rest to the business, ensuring a regular cash flow. This way, companies can deal with cash flow problems and concentrate on their main activities.

 

  What is receivables financing or factoring? 

 

Receivables financing, also known as factoring, is a method where a business uses its receivables (money owed by customers) as collateral in a financing agreement. In this process, a business sells its accounts receivable to a factoring company to receive immediate cash flow rather than waiting for the payment period.

 

  

  

Diving Deep into Non-notification Factoring - aka ' Confidential Receivable Financing "!   

 

One such method recommended is non-notification factoring, which puts you in complete control of your receivables and working capital.

Under this method, while you bill and collect your receivables, as always, you receive immediate cash flow and operating capital when a valid invoice is issued to your customer. This innovative approach enhances the fluidity of your business operations, contributing to seamless growth and financial stability.

 

 Balancing the Costs and Benefits of Factoring 

 

Though factoring can carry higher costs, more intelligent purchases and leveraging discounts can offset these. Traditional payment habits often stretch to 30, 60, or even 90 days. Factoring enables cash generation from these sales 2-3 times quicker, providing much-needed liquidity.

 

1. Flexibility: This type of financing is based on the value of your invoices, not your credit score or collateral. It focuses on the creditworthiness of your customers, who are responsible for paying the invoices.

2. Revolving Financing: As your business produces new invoices, you can continue to get financing. This adaptability allows companies to constantly cope with cash flow changes and grab growth opportunities without needing new loans or credit lines.

3. Reduced Risk: The risk of non-payment or late payment from customers is transferred to the factor in receivables financing. This protective layer allows businesses to focus on their core operations rather than credit and collection responsibilities.

4. Supports Growth: Immediate cash access via receivables financing allows businesses to capitalize on growth opportunities. This could involve investing in new equipment, expanding the team, entering new markets, or introducing new products.

5. Better Supplier Negotiations: Regular cash flow can improve supplier relations, potentially leading to discounts, extended payment terms, or better pricing.

6. Capability to Take on Larger Projects: With instant access to cash, businesses can confidently accept more significant contracts, knowing they have enough working capital to cover costs such as materials, labour, and overheads. This can open new revenue streams and support long-term growth.

 

Factoring as a Bridge to Growth

 

Factoring, in essence, is about working capital turnover. It may not be the ultimate solution for your firm, but it serves as an excellent bridge to your next growth level. Whether your firm is new, faces financial challenges, or grows too quickly for traditional bank financing, factoring offers a solution.

 

Factoring versus Traditional Bank Lines of Credit

 

Factoring and receivable financing (also referred to as invoice discounting) contrast with traditional bank lines of credit.

 

Factoring focuses on your business assets rather than your balance sheet or income statement. Bank lines of credit, conversely, focus on you as the owner, your balance sheet, income statement, industry, and years in business.

 

Choosing the Right Factoring Facility

 

When considering factoring, the focus should be on having financeable assets (receivables) that can be turned into immediate cash flow.

 

The challenge lies in understanding the differences among various factoring facilities, their operation, pricing, whether you prefer a contract or an open-ended arrangement, and your comfort level with the factoring business model. Ensure to engage with a trusted, experienced business advisor in this area to harness the full potential of this financing method for your Canadian firm.

 

Key Takeaways 

 

1. Problem: Cash flow issues can hamper business growth.

2. Solution: Receivables financing converts unpaid invoices into instant cash, improving cash flow.

3. Additional Benefits: Enhances flexibility, reduces risk, and enables businesses to seize growth opportunities.

4. Choosing the Right Provider: Factors to consider include reputation, terms, and fees.

5. Evidence of Success: Many businesses across different sectors and sizes have used this tool to overcome cash flow issues and fuel growth.

6. Action: Don't let cash flow challenges hold your business back. Use receivables financing to achieve long-term success.

 

 

Receivables financing, or factoring, offers an alternative method for financing working capital and cash flow needs in Canada.

 

It allows companies experiencing rapid growth or with large orders or contracts to finance their operations more effectively.

 

One method, non-notification factoring, provides companies with complete control over their receivables and immediate cash flow upon issuing a valid invoice. Factoring, while more costly than traditional methods, can speed up cash generation and serve as an excellent 'bridge' to the next level of growth.

 

The selection of a  receivable financing/factoring facility should be carefully considered, considering factors such as its type, operation, pricing, and the company's comfort level with this model. It's crucial to consult with a credible, trusted, and experienced business advisor to make the most of this financing opportunity.

 

CONCLUSION

 

So, in summary, is it that easy? Yes. And no. We say no because the challenge in setting up a proper factoring facility in Canada is simply understanding the differences in the types of facilities that are set up on your behalf, how they work, how they are priced, determining if you wish to lock into a contract or leave it open-ended, and your overall comfort level with the day to day business model of factoring receivables as you generate sales.

 

Speak to 7 Park Avenue Financial,  a credible, trusted and experienced business advisor in this area and ensure you understand how the benefits of this type of financing can be crafted into a facility that works for your Canadian firm.

 

  

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

  When might a company consider using receivables financing?

    

Companies often consider receivables financing when they need immediate cash flow for day-to-day operations or growth. It benefits companies with large orders or contracts or those experiencing rapid growth that traditional bank financing cannot support.  

 

  

What is non-notification factoring?

 

Non-notification factoring is a method of receivables financing where the company retains control of its receivables and working capital. The company continues to bill and collect its receivables as normal but receives instant cash flow and working capital as soon as a valid invoice is issued to a customer.

 

How does receivables financing compare to traditional bank lines of credit?

 

Receivables financing differs from traditional bank lines of credit in several ways. While bank credit lines focus on the business owner, the balance sheet, income statement, and years in business, factoring concentrates solely on the company's assets. This allows businesses to have unlimited access to working capital potentially.

 

What should a business consider when choosing a factoring facility?

Businesses should consider the different types of factoring facilities available, their operations, pricing, and whether a contract or an open-ended arrangement suits their needs. Considering the comfort level with the business model of factoring receivables is also essential. Consulting with a trusted, experienced business advisor can help make these decisions.

 

What are the different types of factoring?

 

A/R financing makes sense when a company has structural cash flow gaps - numerous solutions are available

 

Types of Receivables Financing Options:

1. Invoice Factoring: Businesses sell unpaid invoices to a factor at a discounted price. The factor then handles the collection, and the factoring company pays and returns the remaining balance to the business after deducting its fee.

2. Invoice Discounting: Businesses use their invoices as collateral for a loan or credit line but keep control over collections. They get upfront cash and pay back as customers clear their invoices.

3. Spot Factoring: Businesses can choose to finance specific invoices on the company's accounts receivable, giving them more control and flexibility. It's great for businesses with large invoices or occasional cash flow gaps.

4. Recourse vs. Non-Recourse Factoring: Recourse factoring means businesses are responsible for any unpaid invoices. In non-recourse factoring, the factor takes on the risk of non-payment / collect payment, giving an extra safety net for businesses.

 

 

 

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

Asset Based Lender Solutions: Journey To The Center Of Non-Bank Receivables Financing

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Receivables financing in Canada is somewhat the crown jewel of the asset-based lender and asset based lending facilities in Canada . We're taking you to the center of non-bank A/R financing as an asset based loan . Let's dig in.

WHAT DOES ASSET BASED LENDING MEAN

Asset based lending, often called ' ABL finance  '  is simply short term loans secured by the collateral of a business. In the case of asset based lines of credit assets such as inventories, a/r, and fixed assets are margined in one facility to create a constant source of cash flow as sales are generated.

Asset based lenders allow your business  to leverage the sales and assets of your business to operate and grow the company. These facilities come with maximum flexibility and range in size from a small 250k facility to the tens of millions of dollars. ABL financing grows in tandem with your company!

Asset loans are almost always ' business to business ' type lenders for working capital and cash flow financing and lending needs for almost every size of business - from startups to sizeable corporations. The financing that these firms provide allows your company to consider almost all options - that includes:

Growing your business

Expanding into new products/services and geographies

Engineering a turnaround

Refinancing

Companies that typically manage their A/R well are also more inclined to take advantage of supplier pricing/discounts and are viewed more positively by trade creditors. A solid receivable financing solution will allow your company to do that.

Why do thousands of businesses seek and utilized the services of an asset based lender that specializes in receivables loan  A/R solutions? One of the most common reasons is their company's inability to access traditional bank financing. Owners are typically reluctant or unable to access additional equity financing that might be used to bolster cash flow.

One key aspect of a non-bank A/R financing solutions is the fact that a full facility will also include combining inventory and fixed assets into that same credit line!

 These solutions typically do not compete with banks as they are taking on more and different assets in an entirely different manner when it comes to margin calculations and borrowing limits. The asset based lender typically advances 90% of A/R as well as higher margins on both inventory and equipment which become part of that new borrowing facility.

Non-bank lenders also have the reputation of being timelier on approval. It is critical to note that in almost all cases the typical asset based borrower has a goal to migrate back to traditional banking.

HOW DOES ASSET BASED FINANCING WORK?

Companies who cannot access traditional capital will often turn to asset financing solutions to solve their working capital needs. Having said that we also note that many of Canada's largest and most successful corporations also utilize this method of financing as an alternative to bank and insurance company financing.

But it's those ' SME ' companies, the small and medium-sized companies in Canada that fuel the entire economy, using the  ABL  facility because it's flexible and customized to their particular needs when it comes to the balance sheet and their sales revenues.

While we are talking mostly about non-bank asset based line of credit solutions, these same facilities are used to complete acquisitions, restructuring, and m&a type activities.

The ABL lender will take time in due diligence to properly evaluate the true value of company assets - that's the flexibility that might not always come with a bank solution, as banks are reluctant to fund hyper-growth companies, as well as occasionally having the inability to understand different types of inventory.

That additional time spent in truly evaluating your asset mix allows for more margining of your assets, thereby increasing borrowing power. And, as we noted, your facility can usually grow with a phone call as long as sales are increasing commensurately.  It is very normal for a/r to have a 90% funding margin.
Unlike traditional bank credit lines the value of your real estate, if applicable, as well as your fixed assets are combined into one operating facility. ABL loan credit facilities revolve and fluctuate as you generate sales and collect receivables to reduce the operating line.

You should consider an ABL solution when you're looking for the optimal working capital/cash flow generation financing that might not be accessible via a bank for a variety of reasons. It the funding of those liquid assets on the balance sheet, namely a/r and inventory combined with maximum borrowing power based on the pre-agreed percentage of drawdown.  

That comes from what's known as a ' borrowing base certificate ' - allowing your firm to always know what it's borrowing power is as you generate sales and replenish cash. The borrowing base certificate is usually recalculated monthly, allowing you to always know the value of your remaining borrowing power on the sales and assets.

We note that businesses who might not qualify for asset finance credit lines can use based a/r factoring to still generate cash from sales revenues - usually it's a situation of a facility being too small to not make sense for the lender and borrower re costs,  set up fees, etc.

Fees associated with asset financing and factoring typically run in the 1.5-2% range on a monthly basis, so a firm should have decent gross margins to absorb the cost of the financing as well as take advantage of the benefits of receivables financing.

While bank credit lines typically tend to have fixed credit lines and yearly renewals the true beauty of receivables finance from asset based lenders is the flexibility to grow the facility almost instantly as sales and working capital assets grow. Simply speaking these facilities fund growth!

APPROVAL CONSIDERATIONS OF THE ASSET BASED LENDER

What do asset based lenders look at when it comes to approving and setting up such facilities. Key issues include:

Cash flows within the business

The ability of the company to report on financial performance - i.e. monthly financial and aged schedules of A/R and a/p

Government sources deductions being paid (Note - in numerous cases asset based lenders will construct financing to handle and payout CRA arrears)

Profitability (or the road to profitability)

Asset lenders put appropriate controls in place to make sure credit facilities are properly controlled.

HOW DO I GET AN ASSET BASED LOAN?

The bottom line, it's official - Asset Based Lending is a hit with companies of all sizes and financial positions in Canada. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you put working capital/cash flow solutions in place that match your firms borrowing needs.




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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


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







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Factoring Finance in Canada : Receivables Financing

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Inside the Growing A/R Finance Market - Factoring & Alternative Business Credit Lines


Information on factoring finance in Canada. Receivables financing is a solid alternative to a full business line of credit - Here's why

Canadian business owners and financial managers keep hearing about factoring their accounts receivable as a viable working capital solution to generate cash flow for their firm.



How does factoring work in Canada, and how your firm benefit does from this type of financing. Also what are the costs of factoring? Let’s discuss those issues.



Canadian firms are challenged in the current environment to deliver the financial performance they need to operate and survive. The global financial woes of 2008-2009, out of which we are now emerging didn’t to anything to help those challenges in a positive manner!



While most business owners rely on banks to get their financing, many firms either are new, don’t qualify, or qualified previously but had financial challenge and are unable to get the financing they need for their working capital accounts, which are of course mainly receivables and inventory.



Canadian business owners want alternatives, and factoring provides one of many alternatives as a working capital source. If anything relying on just one source of financing, such as a bank or other outside lender has proven to be dangerous for many smaller to medium sized firms.



Factoring is the monetization, or in simply layman’s terms, the immediate cash flowing of your accounts receivable. The factoring process allows you to immediately overcome the biggest working capital challenge most businesses have, namely providing payment terms to customers, and seeing those customers even taking longer to pay than your terms!



Factoring puts you back in control of this timeless business challenge. Many of our clients use this type of financing as a bridge to get back to traditional financing, because your bank sees the cash flow coming into your firm on a regular basis.



Also, by providing extended payment terms that you are comfortable with to new or existing customers allows you to maintain a competitive advantage with your customs.



Factoring is the sale of your accounts receivable to a finance factor firm. We encourage all clients to understand the different types of this financing – which are:



recourse factoring

non recourse factoring

insured receivables factoring

non notification factoring



We strongly recommend non notification factoring to clients who qualify because it allows you to bill and collect your own receivables with no notification to your customer based.



Factoring is perceived as expensive, but a true analysis will show you that in many cases you can make money by using factoring. The financing costs associated with this type of cash flow financing can be offset by collecting your receivables faster and allowing you to buy smarter and take supplier discounts. Not to mention improving relations with your supplies.



In summary, factoring is a new great alternative financing vehicle. It works because you receive immediate cash for accounts receivable, allowing you to kick start your business cycle all over again. There are a number of different types of this financing offered in Canada – speak to a trusted, credible, and experienced advisor in this area to maximize the advantages of this cash flow financing .

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


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

Receivable Factoring : Three Things You Didn’t Know About A/R Factoring Services

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Secret's Of A/R Alternative Finance

Information on receivable factoring in Canada. Knowing how this business financing works , what it costs, and it's key benefits are critical to understanding this valuable alternative financing tool

Canadian business owners are demanding more information on receivable factoring and how factoring services can help their working capital and cash flow needs. When we talk to clients we talk about several myths and misconceptions about factoring in Canada .Let explore some of those myths, misconceptions and mis understandings.

Factoring is pledging your receivables - (Wrong!)

Factoring is expensive (We will let you decide!)

Canadian factoring services are the same as in the U.S.( Not necessarily)



1.Factoring is pledging your receivables - This is a popular misconception around receivable financing. Some of the misconceptions revolve around the fact that various terminologies are used to describe factoring – these include invoice discounting, receivable financing, etc. The reality is that factoring is the sale of your receivables for immediate cash. In effect your company sells its receivables and your firm gets immediate, almost same day, (often same day) working capital and cash flow for your business.

The factor firm benefits as they make an immediate profit on the purchase of that receivable. We should point out that customers in Canada can sell one receivable or all their receivable; they have that option and often don’t necessarily know that. The transaction becomes extremely favorable to the factor firm based on the amount of holdback you negotiate on your transaction. Many factor firms hold back up to 20% of the receivable and don’t give those funds back to you until your customer pays.


2.Factoring is Expensive: This is clearly at the top of the list of every discussion we have with customers around factoring. The reality is that customers view the cost of factoring as an interest rate, while the industry itself views it as a discount on the sale of the receivable. Discount rates in Canada vary from 9% per annum to 2-3% per month. So yes, if you as a business owner view the factors ‘ charge ‘ as a finance interest rate you will perceive it as expensive . What Canadian business owners don’t do is to reflect how much it actually costs them to carry receivables for 30, and sometime 90 days.

And, get ready for this – they also many times don’t realize they can use the immediate same day cash they get for their receivables to take prompt payment discounts with their suppliers, and, furthermore to negotiate better pricing and larger purchases with valued suppliers . We have know some customers do totally 100% eliminate the entire cost of factoring by buying smarter and better and paying suppliers on a 2% 10 day scenario. That is true cash flow power!



3. Factoring came to Canada from the U.S. and Europe. It was very slow to catch on and is catching on very quickly these days, aided of course by the overall global credit crunch of 2008 and 2009 – We are still in that crunch of course and business financing is still difficult to achieve for small and medium sized business in Canada. Factor firms in Canada vary in size, and many are simply branches of foreign operations.

We believe a Canadian factor firm who understands the needs of Canadian business is best suited to your needs. Each factor firm has a different way of doing business, has a daily paper flow that differs often substantially, and prices their rates and holdbacks (remember the holdback!) in a different manner.


Speak to a trusted, credible and experienced financing advisor who will ensure you working capital and cash flow needs will be met by such a facility. Use the facility wisely to grow profits and cash flow.



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

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

Asset Based Lender Solutions: Journey To The Center Of Non-Bank Receivables Financing

The Reviews Are In : Asset Based Lending Is A Hit!

OVERVIEW – Information on asset based lender solutions in Canada. Receivables financing is a cornerstone of asset finance for cash flow and working capital needs in Canadian business finance

Receivables financing in Canada is in somewhat the crown jewel of the asset based lender. We're taking you to the center of non bank A/R financing. Let's dig gin.

Asset based lenders are almost always ' business to business ' type lenders for working capital and cash flow financing needs for almost every size of business - from startups to sizeable corporations. The financing that these firms provide allows your company to consider almost all options - that includes:

Growing your business

Expanding into new products/services and geographies

Engineering a turnaround

Refinancing

Companies that typically manage their A/R well are also more inclined to take advantages of supplier pricing/discounts and are viewed more positively by trade creditors. A solid receivable financing solution will allow your company to do that.

Why do thousands of businesses seek and utilized the services of an asset based lender that specializes in A/R solutions. One of the most common reasons is their company's inability to access traditional bank financing. Owners are typically reluctant or unable to access additional equity financing that might be used to bolster cash flow.

One key aspect of a non bank A/R financing solutions is the fact that a full facility will also include combining inventory and fixed assets into that same credit line!

These solutions typically do not compete with banks as they are taking on more and different assets in an entirely different manner when it comes to margin calculations and borrowing limits. The asset based lender typically advances 90% of A/R as well as higher margins on both inventory and equipment which become part of that new borrowing facility.

Non bank lenders also have the reputation of being timelier on approval. It is critical to note that in almost all cases the typical asset based borrower has a goal to migrate back to traditional banking.

While bank credit lines typically tend to have fixed credit lines and yearly renewals the true beauty of receivables finance from asset based lenders is the flexibility to grow the facility almost instantly as sales and working capital assets grow. Simply speaking these facilities fund growth!

What do asset based lenders look at when it comes to approving and setting up such facilities. Key issues include:

Cash flows within the business

The ability of the company to report on financial performance - i.e. monthly financial and aged schedules of A/R and a/p

Government sources deductions being paid (Note - in numerous cases asset based lenders will construct financing to handle and payout CRA arrears)

Profitability (or the road to profitability)

Asset lenders put appropriate controls in place to make sure credit facilities are properly controlled.

Bottom line, its official - Asset Based Lending is a hit with companies of all size and financial position in Canada. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you put working capital/cash flow solutions in place that match your firms borrowing 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 - 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


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 '


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 Financing : Cost And Benefits Achieved Via Receivable Companies In Canada

True Or False? You Understand Receivables Based Financing

OVERVIEW – Information on receivables financing in Canada. The solutions offered by receivable finance companies enhance cash flow and are solid alternatives to working capital challenges

Receivables financing in Canada might well solicit the question: True or False - Do you understand solutions offered by receivable companies in Canada? We're examining the benefits and costs of such solutions. Let's dig in.

Suffice to say there comes a time when your company will require some methods of external financing - your company can only grow so far when it finances itself internally. The main reasons typical external finance solutions are required revolve around expansion of your products and services. In other cases the amount of owner equity you have in the business simply won't carry your operations and growth.

A/R Receivables financing is the solutions that is most often required when it comes to the need to ' smooth out ' day to day operations. Solutions offered by commercial receivable companies in Canada also diffuse the need to either take on debt on your balance sheet and also eliminate the need to raise owner equity, which is always a daunting task in the SME COMMERCIAL FINANCE sector. The reason: you are simply cash flowing your A/R assets!

Many clients we meet are often ' scrambling ' for cash flow almost on a daily basis. How then does the owner/mgr eliminate typical tactics such as delaying their payables or using credit cards and personal collateral for business cash needs?

The answer: A/R Finance. We're of course making the assumption that full bank financing is not available for your firm. Typical reasons your firm can’t access some or all the bank credit it needs are:

New company/ start up
No financial track record
Too much business with just one or two clients
Quality of A/R
Foreign clients

A/R finance solutions make your business a net generator of cash, and if you can't generate ' excess cash ' the feeling of generating enough to run your business is simply a good feeling.

The strategy? Use your receivables to generate a constant flow of cash. The main difference in a commercial receivable facility is essentially ' the paperwork ‘. which specifies that on an ongoing basis as you generate certain, or all of your A/R these are constantly funded as you generate those invoices to clients for products or services delivered.

The cost of receivable companies solutions is calculated as a fee, as opposed to an interest rate, which comes back to the concept of ' selling your a/r ' as opposed to collateralizing it with the bank.

While costs are typically much higher than business credit lines offered by banks the solution allows you to stay in business and have enough cash on hand to run/grow the company. Note also that you can combine A/R with inventory and equipment and lump these three together in what’s called an ' asset based non bank line of credit '. It[s interesting to note that you can also borrow more under A/R financing which typically advances 90% of your a/r. as opposed to 75% at the bank

Our recommended solution in this area is CONFIDENTIAL RECEIVABLE FINANCE, allowing you to bill and collect your own receivables without any notification - that customer notification is typical of ' old school ' factoring offered by the majority of firms in this area.

If you feel that receivables non bank financing is a viable solution 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 in assessing costs and benefits.



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 . Info /Contact :



7 PARK AVENUE FINANCIAL = CANADIAN RECEIVABLE FINANCE EXPERTISE



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 '

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

Reduce Business Financing Turbulence With AR Finance ! Why You Just Might Need Receivables Financing

Why You Just Might Need Factoring

Information on AR Finance as a business receivables financing solution in Canada



Fasten your seatbelts. if you are encountering some business finance turbulence these days. Our good friends at Webster’s define turbulence as a ‘disorder... or commotion” That’s why one new tool in your finance toolkit just might be an AR Finance facility! Let's look at receivables financing and what you need to know.

More often than not, but not always, it’s simply an alternative to a bank line of credit. And the reality in our current environment economics is that this financing often becomes either the first or only choice when any business, from start up to mature, cannot acquire the financing they need, or better said, the amount of financing they require to grow.

To put it in the proper context what this is simply, is a sub set of what we term asset based lending. We hate to get lost in the terminology sometimes, but when you combine a Receivable facility with inventory financing it’s often called a working capital facility. That is to say that both A/R and inventories are margined at a pre agreed amount, and you borrow against them.

The fundamental belief of your AR finance partner is that the quality of the underlying collateral alone is good enough for you to borrow against. Banks in Canada are challenged to accept just that collateral alone, as their rules and regulations force them to focus on cash flows, balance sheets, historical profits, and all the ratios and covenants that come along with that.
Just leverage alone sometimes, i.e. too much of it, ensure you won't qualify for a traditional bank facility.

By the way, that brings up an important point, which is the actual financiers of AR Finance receivables financing are in fact non bank commercial finance firms. They vary in size from huge corporations, or subsidiaries thereof, to small boutique firms specializing in a certain size of deal of industry. That’s of course why talking to an expert in the field allows your firm to quickly focus in on working with the right partner in your firm’s particular situation.

Receivables financing works because it maximizes the amount of cash flow and working capital you can draw on, and, as we noted, if you combine it with an inventory line you're more often than not either doubling or tripling your access to capital. So when your current finance model isn’t working it’s absolutely never too late to consider a new finance tool for your firm!

We are often asked by clients if they are required to provide personal guarantees for such a facility. If you're a private company in the small to medium enterprise sector the answer is, yes, probably. But, and it’s a key point here, the emphasis on any A/R financing facility is never the personal guarantee, it’s the underlying receivables or inventory that is being financed.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining if its time for your company to consider this growing from of business finance.

7 PARK AVENUE FINANCIAL
CANADIAN A/R FINANCING EXPERTISE




Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

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

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

























Stan Prokop

AR Finance … 6 Things Mom Never Told You About Factoring & Receivables Financing In Canada

You Asked For It ! A Clear Explanation of The Invoice Financing Industry In Canada

Information on receivables financing in Canada . You Need To Know 6 Key take aways for factoring and AR Finance .



AR finance, aka ' factoring ' in Canada. You have to admit, of all the great advice you got from Mom on life and perhaps business she never really covered off critical aspects of receivables financing in Canada! So we suppose that’s our job...

Some of both the terminology, as well as the methodology of invoice finance in Canada is potentially very confusing to the Canadian business owner. Let's cut through some of that confusion and explain 6 things you need to know.

First of all, all receivable finance in Canada is done on either a ' recourse ' or ' non recourse ' basis. Two very legal sounding terms that simply mean one thing - if your client goes under you're either ' on the hook ‘, or ' off the hook ' respectively. There are in fact facilities that you can obtain that are non recourse - just imagine, a perfect world, you sell your A/R as you generate sales, and your finance partner takes all the risk. Naturally this type of financing is a bit more expensive... a better solution might be in fact to take on some credit insurance , which you probably want to do anyway if you have high risk , concentrated, or foreign receivables . 7 Insurance companies in Canada offer credit risk insurance.

Point 2 - This is probably our greatest area of discussion with clients. The majority of AR finance, aka ' factoring ' in Canada requires that your clients be notified about your sale of receivables to them. We don't like this practice; it can easily be avoided if you’re working with the right party. That way you can CONFIDENTIALLY finance your firm and be successful without others, aka suppliers and clients, knowing your business. Point importantly taken! Hopefully!
POINT 3- Advance amounts. When you finance receivables via a factoring process you get immediately, same day, cash for sales you choose to finance. Typically you should receive 90% of the invoice amount; the balance is a hold back, which is remitted to you as soon as your client pays... less financing costs. That’s the ABC of receivables financing!

POINT 4 - Remember Mom talking about marriage and picking the right partner. She probably wasn’t referring to a corporate marriage of sorts, but you need to pick a partner finance firm that meets your goals, provides you with a rate and structure that is clear and understandable, and that fits your day to day method of doing business. Nothing could be more important... after we talk to clients that have been misinformed, overcharged, etc its clear that they missed the boat on Point 4!

Point 5 - Rates .This is not important when it comes to AR finance in Canada. HELLO???? Yes it is, as this seems to be the only issue clients want to discuss when it comes to financing their firm. In Canada rates in general are in the 2% range for a 30 day receivable .That means you receive a total of 49,000.00 for your 50,000.00 invoice - as an example. Don't forget to take that reserve into account, that we mentioned in Point # 3. Oh and by the way, take that 49,000.00 and pay some supplier invoices utilizing the 2% prompt pay discount your vendors offer.

Congratulations, as you have just cut your financing costs by 50% or more!!

Final Point: Spend some time on the basics of receivables financing as it would pertain to your firm - focus on the process flow. It's as follows: You sell your products or services, you invoice your client who accepts the invoice - you get your cash immediately from your AR finance partner firm; your client then pays you and you receive the balance of the holdback - less financing costs. See point 3 above.

Business owners searching for valuable financing methods can keep it complicated, or simple. Use our 6 points Mom never told us to understand how this financing works and then fit it into your business model, with a suitable party that meets your needs. Speak to a trusted, credible and experienced Canadian business financing advisor for assistance on proper structuring of AR finance for your Canadian company.

7 PARK AVENUE FINANCIAL
CANADIAN A/R FINANCE EXPERTISE