Why Canadian Companies Use Factoring Receivables Solutions for Business Financing

Knowing you are making the right choice in factoring receivables for your Canadian business is half the battle. You then have to pick the best firm to facilitate your transaction, and like most business owners you want to know you have made the right decision.

Let's recap why A/R financing works, and more importantly, how to select the best companies to work with based on your own needs.

There are numerous reasons why you might want to use a factoring receivables strategy to finance your business. The best reason you can have is that you are growing! And growing quickly - Because in that situation you are unable to achieve the sort of traditional financing you need to run and finance your business on a daily basis. Simply speaking working capital and cash flow become your overwhelming priority on a day to day basis, and that shouldn’t be the case!

So, yes... you have identified invoice factoring and financing as your solution - but more importantly you also want to know how it works and how it will both affect and benefit your business on a day to day basis. The reality is that if are a small and medium sized business owner in Canada you are probably relying heavily on what the finance folks call a ' self financing' strategy. That simply means that you are only using your existing cash flow to finance your growth and profits - you are not in a position to, or don’t want to... take on more debt for your company.

Enter at stage left receivables financing companies! They purchase your a/r a daily, weekly, monthly ( its your choice!) basis and provide you with same day cash flow as soon as you have generated a valid sale and invoice .

And why does this strategy appeal to Canadian business owners? Simply because you are not creating debt on your balance sheet, and the personal guarantee situation is all but eliminated and you have the ability, ( if you choose the right partner firm ) to exit this financing at any time .

So, it all seems like a perfect world right? in effect the perfect business financing situation . Well in business it doesn’t work that way, there are pitfalls and mistakes you need to avoid when utilizing a factoring receivables strategy.

So what are those mistakes you should not make? Partnering... you need a firm that meets your needs, both geographcially, with competitive rates, and the ability to transact with you on a daily basis. We strong recommend what we call a C I D solution, which is the acronym for Confidential Invoice Discounting. This allows you to bill and collect your own receivables, finance them when you want, and receive the same rates as your competitors who aren’t using this C I D strategy. In their case their customers are contacted for payment by the factor firm, and this is unappealing to many Canadian businesses.

Whether we like it or not our clients always focus on rate when talking about a move to companies that will finance their receivables. Factoring rates are perceived as more expensive but in many cases when you factor in use of funds, ability to grow your business, etc the decision is not as difficult as you might think.

Speak to a trusted , credible, and experienced Canadian business financing advisor who is an expert in factoring pricing, picking the best solution for your firm, and negotiating pricing and fees and advances that work best for your future growth and profits .

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

How Financing Options In The Canadian Equipment Leasing Industry Can Benefit or Harm Your Overall Profitability When You Lease Equipment !

As a Canadian business owner and financial manager you need to investigate your financing options when you lease equipment. Equipment leasing provides you with a combination of rights and obligations.

One critical area is the type of lease you choose and any residual values associated when you lease equipment .These residual values may represent an additional significant profit to the lease company in the transaction. Are there ways you can actually profit from the type of lease you choose? We think there are, and we will demonstrate how

The residual value is a solid portion of the lenders over all ' return ' on the transaction. Again, lessor return often equates to lessee shortfall, and you are the lessee!

So what is that residual value? At the end of the term of any lease there are options that any savvy borrower should both negotiate and understand. If You enter into a ' true operating lease ' then you have the option to return the equipment to the lessor (or maybe it is the manufacturer itself) when the lease transaction has terminated. Many major manufacturers of equpment, computers, etc have large in house leasing divisions which are profit centers for their financing options they provide customers.

When the equipment is returned the lessor re-sells the equipment, or in some cases actually rents or leases out the equipment again, obviously on a ' previously used ' basis. In the construction or aircraft industry assets can be used as long as 10- 20 years!

Borrowers need to understand that the potential profit the lender/lessor realizes on a transaction hinges significantly on the final value of the asset at the end of the term.

Let's use a simple example. If a customer purchases something for a value of 100.00 and wants to lease it the lessor will perhaps estimate that the equipment will be worth 10% of its original value, or in our case, $ 10.00 at the end of the term of the lease. He will often base his rate on the expected recovery. Naturally the lender could receive more or less at the end of the lease term - he bases his price and interest rate accordingly.

Borrowers therefore might want to significantly investigate the residual value being contemplated in this type of operating lease transactions, and, in some cases, invoke their right to buy the equipment at the end of the lease. It could in fact be resold for a profit if the company has a strong sense the asset will maintain its value. Again, think aircraft and construction equipment in the equipment leasing example we used.

Naturally lease companies want to earn a profit - the question becomes what a reasonable profit is and is at your firms expense.
Speak to a trusted, credible and experienced Canadian equipment leasing advisor who can provide you with real financing options when you lease equipment that make sense from your perspective, the borrower!
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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Looking For a Business Cash Advance And Merchant Funding Via A Cash Flow Loan? Here's How!

Could a business cash advance help your firm? The dramatic rise of small business financing in merchant funding via a cash flow loan is simply a factor of companies such as yours wanting to capitalize on the working capital and cash flow that is, in effect, locked up in your future sales and growth potential.

It doesn’t take rocket science for any business owner of financial manager to figure out that if his or her firm has investments in receivables and inventory then those assets, typically called ‘ current assets’ requires financing in some form.
Of course you can ' self finance ' - meaning simply wait for your inventory to turn into receivables, and then wait probably even longer for your inventory and perhaps receivables to turn into cash. But, doing that forces you to give up on sales opportunities and challenges the very core of your financial health, given that we all agree cash flow is king.


If you are fortunate enough to be financing via a Canadian chartered bank you are of course familiar with ' collateral '- our banks do a great job of explaining that to you! Why don’t you use your own firm’s collateral, its assets, mainly accounts receivable, and monetize that asset into cash.

Clients are often fairly clear on the benefits of a business cash advance and cash flow loan, which is also called ' merchant funding ‘. What they don’t seem to have the best handle on is how it works.


One you have such a facility set up it quite frankly is one of the easiest and quickest ways to unlock cash flow and working capital on a daily, weekly, or monthly basis. And by the way, you only pay for the financing you are using. Let’s get back though, to how it works.

Funds via the cash flow loan are advanced immediately on the approval of your facility. There is no direct collateral for the transaction - the collateral is your future sales.
Didn’t you just feel your cash flow being totally unlocked and flowing?! Approximately 15% of future sales are used to reduce your cash flow loan via the merchant funding facility. In general rates on the transaction are in the 2% range.

2% you say! Isn’t that expensive for small business financing. Absolutely, positively maybe, but we actually don’t think it is. That is because all in rates from your bank when you total up all the fees, services, standby fees etc often total in the 11-12% range , not the 6% or 7% you think you are getting . And furthermore, if you take the huge amount of cash you just receive and use it to purchase more efficiently, or takes discounts on supplier invoice payments you make your total cost of capital goes down . And, another point, if you are in a competitive environment, (who isn't) does your ability to have unlimited cash flow put you steps ahead of your competition? We think it does.

There are a number of ways to finance your business. If your firm has sales potential, and you are challenged by the timing in which money flows through your business then consider the benefits of account a business cash advance via a cash flow loan for under a merchant funding program . Speak to a trusted, credible, and experienced business advisor on this popular financing tool for small business financing in Canada.
--


Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

How To Borrow Against Sred Claims- Use Your sr ed (SR&ED ) tax credits & Finance For Cash Flow Today!

In the world of finance more often than not today is better than tomorrow, and when it comes to borrowing against your sred claims your ability to monetize sr ed tax credits for working capital is the ultimate win win situation . Here is why!

The Canadian governments Scientific Research and Experimental Development (aka ‘sred’, 'sr&ed') program provides in the area of 4 Billion dollars per annum to Canadian businesses in the form of a non repayable tax credit cheque. The only reason you wouldn’t get your cheque is if you had corporate tax arrears, and that’s still a good thing we think, because at lease then the government offsets your tax arrears with your credit. (By the way, we don’t recommend tax arrears as a financing strategy!)

Your company is using the program for all the right reasons, i.e. improving products and services, staying competitive, etc. But many firms either haven’t heard of or lose sight of the fact that the sred tax credits can be even more 'accessible ' if you will, when you borrow or finance your claim.

Turning your sr&Ed tax credits into valuable cash flow and working capital moves you one step ahead of your competitors we have always maintained to clients. Why. It's simply the old finance adage that a dollar today is worth more than a dollar tomorrow, as it can be re invested in your operations for a variety of reasons.

A typical question we get from clients considering the financing of a sred claim is ' what are we allowed to use the funds for?’. And of coruse they love the answer, which is simply for any general company purpose you choose - typically that becomes reduction of working capital, clearing up or lowering payables, and just general day to day operations.

Financing your sred claims in essence ' invigorates your working capital.

So who finances these claims and how would be describe the process. Is it complicated; easy, how long does it take? Those are the typical client questions in consideration of sred finance.

We can make a broad pretty safe statement that banks in Canada don’t finance sr&Ed claims for your tax credits. If they do, it is in conjunction with other security and arrangements you have with your bank. Most firms we talk to either have approached their bank, been declined, or simply have not been aware that sr Ed credits can be financeable.

We recommend you speak to a trusted, experienced and credible Canadian business financing advisor who is knowledgably in the area of sred tax credit finance. That will shorten your process, maximize the amount you can receive under you claim, and in almost all cases simply reduce the time and effort you might normally expend to investigate sred financing.

The reality is that a sred finance expert can usually originate a full financing of your claim in a manner of a couple weeks, allowing for simple basics such as an application, review of your actual sred technical filing, etc.

So, can you borrow against sred claims? The answer is of course yes. Should you? That’s your decision, but if you need cash flow and working capital today from a non repayable government tax credit that you certainly know what to do now!

-

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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

How To Get And Finance A Franchise Purchase In Canada

The decision to both get a franchise opportunity and then finance a franchise purchase are of course intertwined. Is picking the right franchise more important than financing the new business venture ? - we're not sure – probably equally as important - but let’s look at some solid tips and info on franchise financing in Canada, how it works, and how that choice or pick you just made can be translated into a successful entrepreneurial career.

There is a whole industry known as ' franchise consultants ' that have the skills and ability to help you assess which type of business best suits yourself. If you talk to these people it always comes down to matching your basic personality to your business strengths and interests. Your ability to match those against a solid business opportunity in the franchise industry will ultimately be your success.

We're the first ones to agree that when you pick a franchise that matches your skills and overall financial capacity your chances of profit and success greatly improve.

So, you have made you finance decision, now how do you get and finance a franchise purchase. In Canada there is one major program our clients use to qualify for franchise financing - it’s a loan program called the CSBF / BIL program, which is the way in which the majority of franchises are financed in Canada. Utilizing this program properly will guide you ultimately to a well financed business that should allow you to meet your personal and business goals.

Your ability to get a franchise purchase closed successfully requires you meet the requirements of your franchisor, i.e. your new business partner so to speak, as well as the lender. You need to understand your initial costs, which are often a combination of soft costs and hard costs. In our experience you will have greater challenge financing the soft costs; they include the franchise fee, and other misc items that are not tangible assets.

The BIL/CSBF program we mentioned covers assets such as fixtures, equipment and also leaseholds. Your ability to finance leaseholds under a franchise loan is very important, as these items are typically not able to be financed under conventional means.

Money. Yours and the lenders. By that we are referring to your ability to put a reasonable down payment, or what the lender calls ' equity ' into your transaction. And, you're right. We already know your next questions, because it’s been asked a thousand times: ' How much do I have to put into the business to get and finance a franchise purchase properly ‘. Answer : It depends, but a typical franchise investment should be in the 30 -40% per cent range to allow you to have the right combination of both debt ( i.e. borrowed funds) and equity - which is your cushion that allows you to maintain proper leverage around how much debt the business can manage .

One mistake many new franchisees make is that they finance the business from an opening purchase perspective, and aren’t focusing on ongoing working capital needs, which is in our opinion just as important.

In summary, use you own skills or that of a consultant to match your strengths and experience and personality to a franchise that will work for your from a personal and financial goal perspective. Speak to an experienced, credible and successful Canadian business financing advisor on how to best structure the finances around your purchase. Utilize the BIL/CSBF program to the maximum that you can, as it provides solid terms, minimal guarantees, and great rates and flexibility.
P.S. Keep us posted and congratulations on your new role as business owner and entrepreneur.

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

The Key To Working Capital Financing - Asset Based Lenders

Wondering how your competition seems to have all the working capital financing they need and you don’t - the key to that answer might just be asset based lenders and the asset based lines of credit they offer to Canadian businesses such as yours.

Let's examine how this relatively new and unique method of business financing can totally alter your business financing success.

The acronym for this type of financing is A B L ; simply speaking its daily cash flow provided against your current, and sometimes now so current assets . What do we mean by that? Simply that this facility allows you to margin your receivables, inventory, and in most cases, should you choose, fixed assets and real estate. You are probably saying to yourself that you could arrange financing on your own re those fixed assets and real estate - but we are talking about using those assets as collateral for your daily revolving line of credit. So you aren’t borrowing, you are not bringing debt on to your balance sheet, you are just leveraging your ' assets ' (that’s the 'A' in ABL!) for daily cash flow and working capital.

And why are we claiming that this type of working capital financing just might be your key to business success. Simply because you have probably found it has been challenging to get the full amount of business credit you need. In some cases you might have discovered its been a challenge to get business lines of credit of any manner.

So if your competitors are using this type of financing today, who exactly is eligible for it, and is your firm a candidate. The answer is simply that if your firm has a combination of 250k in working capital assets you are immediately eligible for asset based lines of credit. We would add that firms with smaller asset sizes can still monetize those receivables via invoice financing or discounting, but that’s not our key focus for today’s information exchange .

So now you now the offering are out there. But why should you consider it. Simply because your firm might be in one of a number of special situations - that includes issues such as your need for increased daily operating cash, you wish to merge with or finance an acquisition, you have been unable to obtain inventory financing elsewhere, you are growing to quickly for traditional Canadian chartered banking financing, etc ! We are pretty sure you get the picture now!

The benefits to this type of business financing must by now be pretty obvious. It’s all about access to working capital financing and cash flow that you couldn’t access before. Assets that couldn’t be financed are now financeable, and inventory financing, previously limited or unavailable now looms on your growth horizon.

Who are these asset based lenders, and what is the cost of this financing? We'll leave that one for another day, but if you want to investigate asset based lines of credit for your firm ( remember , your competitor probably already has ) then speak to a trusted, credible, and experienced Canadian business financing advisor who will assist you with identifying benefits and the best solution for your current strained needs in business finance .
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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/working_capital_financing_asset_based_lenders.html

Stop Dreading Working Capital Financing – Cash Flow Lending and Loans That Make Sense

Managing and getting working capital are two different things, and worrying about cash flow financing and what type of lending and loans are out there is of course another, and probably the issue that concerns your firm most.

Let's looks at some key issues around sourcing working capital for your Canadian business, although we are quite sure our information applies universally. How you have managed or are managing your internal financing is directly related to what solutions you have available.

Let's also be clear on what we are talking about, which is essentially your current assets and current liabilities. The accounts consist of receivables, inventory, your access to credit lines, and on the other side of the balance sheet your accounts payable. You want to have sufficient funds to satisfy your short term creditors, i.e. your suppliers, make any long term loan payments you have, and, most critically access cash for day to day working capital and growth.

We have mentioned how you manage your cash flow. Most business owners we meet do it intuitively, i.e. your business has a flow or rhythm around paying suppliers, billing your product and services, and finally creating receivables and getting paid. We also find working capital an interesting term, because in reality the accounts we mentioned, i.e. a/r and inventory are in effect tied up . They are unable to be monetized or cash flowed, and that’s why you need working capital solutions.

Most business owners don't know the technical term for monitoring their cash flow and working capital. A great tool is called the cash conversion cycle; another is called the DuPont Cycle. Each of those two tools provide you with some very rudimentary calculations you can make to monitor how fast a dollar travels through your company, and what effect on your profits and returns faster turnover has . Check those two out!

So, we've done a fairly good job of identifying our issue and problem... you were probably looking for solutions, right? The good news is there are several. The optimal solution in any business is to have your suppliers finance your firm - your cash flow increases when you don’t pay suppliers and are billing and collecting your own receivables. However, slow down payables to an extreme is not a recommended solution, certainly in terms of your supplier’s way of thinking!

The solutions to cash flow financing in Canada are as follows: asset based lending, receivable financing, purchase order financing, and working capital term loans. All these solutions are either very suited to your firm or not applicable.

Our favor rite and probably most recommended client solutions asset based lending; it’s simply a revolving line of credit on which you borrow daily against A/R and inventory. Yes, we said inventory. And these facilities are not loans per se; they are simply credit lines you access for your assets. Smaller firms should consider C I D invoice discounting, it’s our recommended solution, allowing you to bill and collect your own receivables but monetize them when you want. That’s true cash flow financing.

Whatever your challenge speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in accessing working capital and cash flow financing that most makes sense for your business growth and profits .


-
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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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