Receivables Funding In Canada: Let A Receivable Credit Solution Become Your Key To Cash Flow Challenges

Is Receivable Funding Your Golden Chance For Cash Flow Success?

OVERVIEW – Information on receivables funding solutions in Canada. The Receivable Credit solution comes in various forms – which one works for your firm


Receivables funding in Canada, thankfully, comes with choices. Is a receivable credit solution your firm's ' golden chance ' at working capital success. It just might be, and here's why. Let's dig in.

It clearly is a good thing that the business owner has choices in A/R financing. One of those reasons is that bank financing, for some, or all of the cash flow financing you need simply might be unattainable by Canadian chartered bank standards.

So enter A/R finance. It comes in various ' sizes' and ' flavors’. It can be a stand alone solution, or in some cases it can be a sub set of an asset based line of credit, that type of facility monetizes both receivables and inventory and equipment into one revolving line of credit.

And, throwing more choice into the mix, the Canadian business owner and financial manager has the choices of utilizing ' traditional ‘A/R factoring, or it can opt for our preferred and recommended solution: CONFIDENTIAL RECEIVABLE FINANCING.

The key difference in understanding non bank receivable financing simply boils down tot two things:

UNDERSTANDING PRICING
UNDERSTANDING HOW IT WORKS

While it only makes sense that an alternative non bank solution will be more costly thousands of firms gravitate to this method of business financing simply because it gives them all the cash flow and working capital they need based on their sales level - with virtually no upper limit to financing available.

If you opt for traditional financing, most typically called ' FACTORING' you're involved in a tri part deal between yourself, your lender, and your client. Your client pays the lender, the one key advantage to your firm is that you receive the cash, at your option, the day you make and invoice the sale. That's clearly cash flow power. The cost of that transaction, typically 200$ on a $10,000.00 invoice ( assuming 30 day terms/payment) can often be very justified when you consider your new found ability to buy inventory, reduce payables, take discounts with your own suppliers, or negotiate better pricing.

Two other key factors come into play when considering non bank receivables funding. First of all, you aren't taking on debt; the accounting treatment of A/R financing is simply not ' borrowing' when recorded by your accountants. And finally, you can of course bring in new equity into your firm, or consider a working capital term loan - but those two solutions simply dilute ownership and bring debt to the balance sheet.

The Confidential A/R financing we mentioned simply allows you to receive all the benefits we mentioned, but it’s not longer a ' 3 way ' - because you bill and collect your own receivable with no notice to any client or vendor.

Is a receivable credit solution in the works for your firm? It just might be the ' golden chance ' for cash flow peace of mind. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can guide you through the myriad of lingo and options for this very popular method of financing growth.



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 Funding Solutions





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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

Accounts Receivable Credit Financing . The Non Bank Financing Difference ! How Receivables Funding Works .. and Doesn’t Work

No Need to Be Naïve About The Difference Between Accounts Receivable Finance and Invoice Discounting And Bank Financing



OVERVIEW – Information on how an accounts receivable finance solution works in Canada . This type of receivables funding is dramatically different from bank financing and being adopted by firms of all size



Accounts Receivable Credit Financing . For the majority of Canadian business owners and financial managers that are considering receivables funding as a finance strategy the main question seems to be:

What is the difference between A/R finance and bank financing for their company? It's a legitimate question, so let’s dig in!

One of the main reasons in fact that many companies choose an A/R receivable credit solution is that is simply doesn't involve new long term financing for your company. The most simple explanation of that difference between a commercial finance solution vs. a bank scenario simply involves understand that the receivables factoring / discounting solution is simply the sale of your receivables, as opposed to the financing of them. Both get you immediate cash flow - they just work a little differently.

On a daily basis the sale of a receivable generates cash flow for your firm. In Canada you typically get 90% of all your invoice the same day you instigate the A/R discounting process. The other 10%, less financing costs of approx 2% is remitted to you as soon as you client pays. Simple so far, right?

That 2% fee in fact becomes larger, commensurate with the time your A/R is outstanding. So don’t be prepared to lull yourself into a fall sense of security on your new cash flow tool, because whether you are holding receivables and waiting, or financing them in an accounts receivable credit factoring situation is still going to cost you money . Carrying balance sheet accounts such as A/R and inventory are a hidden but very real cost of doing business - and the faster you turn over balance sheet accounts leads to great profits and operating efficiencies.

The key advantages of a factoring solution are:

Immediate on going cash flow

Funding as needed for your business if you have seasonality or bulge requirements

A more solid balance sheet that reflects cash, not A/R

It's important to us when we’re in front of clients to maintain a balanced position when it comes to explaining receivables funding. So we do point out that if you enter into the wrong facility (and Canadian companies do that everyday) the actual optics of how people thing you are financing your company can be perceived as negative. It should not be that way, but it is.

Remember also that this method of financing doesn't take away the risk of carrying A/R, unless you have a receivables funding insurance program, which most companies don't. So making proper credit decisions around your clients needs should still be top of mind.

One of the key things to understand in a/r financing is simply that the cost of using this method of cash flow and working capital is a rising and falling process, depending on how much you are drawing down, what that final approximate 90% advance rate is, and the administrative costs you need to run an a/r finance program.

So , no need to be naïve when you weigh the costs of receivables funding vs. bank financing consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can help you set the record straight on those pros and cons of each method of 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 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 :


ACCOUNTS RECEIVABLE CREDIT AND RECEIVABLES FUNDING





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