Receivable Financing In Canada : How To Use AR Factoring Finance To Your Firms Benefit

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What's All The Commotion About A/R Finance In Canada ?

Information on factoring and receivable financing in Canada. A/R Finance and debt factoring play key roles in the cash flow of thousands of Canadian businesses just like yours - Here's why

Canadian business owners and financials managers continually are hearing about factoring in Canada. It is difficult to separate the information Canadian firms need to know from the ‘noise ‘and misconceptions about Canadian factoring and receivable financing .

At no time in recent history have Canadian businesses been challenged with obtaining the acceptable amount of capital they need to run and grow their businesses. The cash flow shortage can often be the death knell of a company, as it has the ability at that point to go into a long term death spiral, ultimately ending in potential business failure.

All business owners can recognize they have limitations in generating capital and cash flow for their firm. The usual cast of characters includes, of course:

Bank Financing of current assets

Canadian Government working capital term loans

Owner equity

Asset sale and leaseback strategies

So, as we have noted, with all the commotion and market noise about ‘ factoring ‘ how does the business owner in Canada understand how this financing works , what is the upside and downside, and most importantly, is it right for your business .

In Canada factoring, also known as ‘invoice factoring ‘mirrors the U.S. method of doing business. Your company in effect ‘sells ‘its accounts receivable at point of invoicing, with your company and your factor partner determining who will bear the ultimate risk of non collection of the receivable. If you bear the risk its called ‘recourse ‘– if the finance firm bears the risk it is called non-recourse. Many factor firms insert a third scenario into the above mix; they require the receivables to be insured, which adds an additional layer of expense for your firm, generally in the 1-2% range. However there is of course solid comfort in knowing that the receivable is in fact insured and that no bad debt expense will come back to your firm!

Business owners need to understand that the receivables you are in effect ‘selling ‘for immediate cash are current, valid, and earned receivables. Your firm has to have delivered the product or service, your customer should have accepted that same product or service, and the invoice must be ‘due ‘per your payment terms. Generally you are in no position to sell a receivable and expect to receive cash for that sale if the invoice is greater than 90 days old, as there is some doubt as to the ultimate collection of that account.

So let’s also get back to the ‘noise and commotion’ in the Canadian business financing marketplace about this alternative method of financing. What’s the good and bad from your perspective as the Canadian business owner.

First of all you are, to some degree, out of the collection business. The factor firm now does that. We can almost hear you breathing a sigh of relief – but remember that one of your most valuable assets, your customer relationship, is now partially in the hands of a third party finance company. To eliminate such issues we are a huge proponent of CONFIDENTIAL RECEIVABLE FINANCING .

So what’s the bottom line – it’s of course to ‘pick your partner ‘carefully. We recommend that you use a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
in this alternative financing method, allowing you to reap maximum benefits from this relatively new form of Canadian business financing.



Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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

Funding SRED Refundable Credits Via SR ED Loans: Taking Sr&ed To A Whole New Level !

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This Just In – SR&ED Financing Is Not A Long Shot !

OVERVIEW - Information on financing SR&ED refundable tax credits in Canada. Key elements of the value of SR ED loans via SRED finance are discussed. Companies looking to monetize r&d capital investment should consider sr&ed financing

SR&ED financing does absolutely not have to be a long shot. In fact preparing and submitting your R&D claim properly helps to almost guarantee your claim can be financed via a SR ED bridge loan. Let's dig in.

It certain though that the general debate about the economic values of the program rages on. Recent major editorials in Canada's business press focus on the issues and questions. In a nutshell:

- inability of Canadian firms to maintain competitiveness
- lack of products being taken to full market potential
- improper alignment of federal and provincial resources

And on it goes!!! We have to love those govt and economics folks; we'll continue quietly toiling away in the real world helping those 18,000 + claimants of the program who benefit from billions in refunds from federal/prov authorities.

We'll let other debate these issues, notwithstanding their importance, ad nauseum . Our goal - effective SRED funding that speeds up cash flow recovery for your R&D capital investment.

Cash flow from SR&ED factoring (i.e. monetizing your claim) means different things to different types of firms. Many ' start ups' we work with use sr&ed financing in some cases as their most critical source of cash during their early development. Other firms of course simply take advantage of the program for reasons as simple as cash flow mgmt.

Not everyone knows that even publicly traded companies can actual benefit from refundable tax credit for the provincial portion of their claim - those claims are 100% financeable!

How then does the SR&ED loan work? It certainly helps to ensure that your claim follows the proper admin and filing guidelines under the program. The vast majority of claims are prepared by qualified SR ED consultants. Aligning yourself with a reputable consultant allows you to help insure the integrity of your claim. Most of these folks work on contingency so their work and reputation is at risk also, as well as minimizing your upfront investment in claim prep and filing.

Tax credit loans for SRED are funded at 70% of the total value of the claim, and no monthly payments are made during the duration of the loan, which is usual sometime within a 12 month period. The entire loan funding process can usually happen with a couple weeks -start to finish.

If you're looking to monetize your Sred claim seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can outline the benefits of sr ed loans for your company .



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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

Business Bank Loans In Canada : Checking Out Banking & Asset Based Lending And Working Capital Finance Alternatives

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Everything You Wanted To Know ( but were afraid to ask ? ) About Business Bank Loans In Canada !

Information on business bank loans in Canada. Financing your business requires a knowledge of working capital solutions that comes from traditional banking or alternative asset based lending

Banking and business borrowing in Canada is significantly different than in the United States. That is primarily driven by the fact that our banking system is uniquely different. In the U.S., borrowing finance is driven through various entities - which include major ' money center banks ', Commercial banks, community banks, and what are know as S&L's, ( savings and loans ). In addition the American landscape is populated by community banks.

The Canadian banking system is different, in that the country has chosen to adopt a more smaller ( by competitor ) banking system that is extremely concentrated and dominated by a handful of major players. Primarily these are:

* RBC ROYAL BANK, * TD CANADA TRUST, * CIBC * BANK OF NOVA SCOTIA, * BMO BANK OF MONTREAL, * LAURENTIAN * NATIONAL BANK OF CANADA

All of these banks support the Canadian Small Business Financing program sponsored by the federal government.

There is a decent sized credit union movement in Canada, and many of these credit unions are making forays into Commercial banking and financing. Many people tend to feel these credit unions have not yet accumulated either the talent or the capital pool to properly play in business banking and commercial lending.

We would point out that some time ago now the government introduced legislation to allow foreign banks to lend in Canada. These banks are known technically as ' SCHEDULE B ' banks, and are referred to a briefcase bankers in that they do not have the large branch networks that are the domain of our BIG 7 banks as listed above.

Capital for Canadian firms is traditionally much harder to secure in the Canadian banking system. Outside of the aforementioned CSBFL program that is federally underwritten the banks tend to secure small business loans with usually up to 100% of personal collateral. That of course has the customers pledging personal assets, savings, etc. There certainly are no ' templates ' for fast quick borrowing in the Canadian small business banking. Loan criteria is judiciously adjudicated by underwriters on a case by case basis, and as has been noted, relies heavily on the traditional three C's of credit -

character - capacity - capital

And don't forget collateral !

As the Canadian banks have emerged from the current world economic crisis they do however seem to be placing more focus on smaller firms. For example new divisions for small business banking are being created within some players, seminars and trade shows are being offered, and they often sponsor local events.

Larger firms who in many cases do not meet the requirements of the Canadian banks when it comes to significant borrowing requirements are often forced to consider asset based lending arrangements with Canadian and U.S. commercial finance companies who have stepped in to play a role in this vital area.Even though the larger firms may in fact have been in business a number of years their balance sheets and income statements do not meet the borrowing requirements of the Canadian loan committees. During the 2009 world economic crisis and financial meltdown the Canadian banks were consistently lauded for being some of the best run in the world. However, the downside of this is that ' best run ' in many cases means risk averse and commercial borrowing in Canada is significantly more difficult than in other countries such as the U.S.

The Canadian banks have distinguished themselves by developing software and technologies that have put them at the forefront of commercial borrowing/lending.

In summary, the Canadian banking system is uniquely structured and Canadian business, both larger and small,should focus on the unique strengths of the system borrowing and banking needs. Not all companies will be successful and business owners should ensure their financial executives or advisors know who can best meet their borrowing needs. 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 business funding needs.





Stan Prokop - founder of 7 Park Avenue Financial –


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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

Cash Flow Financing Challenges ? How To Recognize Business Finance Working Capital Needs

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Simon Says .. You've probably got the business 'cash flow gap' all wrong ! Here's Why

 

 

 

 

 

Information on working capital and cash flow financing solutions in Canada. Business Finance is almost always about finding the right solution to your funding needs.

Cash Flow Financing : Fundamentally it seems easy - make or deliver your product and service, collect the money, and start over. Simple, right?

Well, not really, as most business owners quickly recognize. What many business owners and managers fail to recognize is what we will call the ' working capital gap '. Simply speaking it's the amount of time that it takes for a company to produce, sell, and collect on that product or service. During that period inventories and receivables and bank accounts fluctuate greatly, and deficits and surpluses are potentially significant.

Is that a bad thing.? Definitely not. Does it indicate that a company is weak or failing? Most definitely not! Strong business managers can in fact prepare to cover those temporary deficits - if they don't however the firms creditors can withdraw from support, leading to a potential failure.

Let's understand the cash flow cycle a bit more in detail. We will assume a company is in fact producing goods, although many service companies have the same challenge but in a somewhat different manner, given there is not inventory or product per se.

Back to the cash flow cycle then - the company buys raw materials and supplies. Payables are created and inventories mount. Product is produced and sales are made on credit, most normally ' 30 day terms '. (Of course most business owners quickly realize that terms are 30 days but no one pays in 30 days!).

Finally though the receivable is collected and the cycle repeats itself. However the number of days that all of this takes to transpire is of course most commonly known as the ' cash flow gap ', in our working capital cycle.

In a perfect world the company finances it's receivables with the bank, as the cash flow cycle repeats itself over and over again.But if a company relaxes its payment terms, or gives formal extended terms to customers, the time factor is significantly augmented. Companies that have strong financing in place can of course increase sales and profits by offering extended terms to their customers. They can also increase their own profits by using the cash flow financing from their bank to take supplier discounts and negotiate better pricing on materials.

Banks and finance companies are critical in this entire process. If the customer can obtain the right working capital and cash flow financing a proper balance can be achieved in sales, profits, and asset turnaround.

However if a firm cannot properly finance the working capital assets the firm experiences serious financial challenges.

In summary, business owners need to understand the ebbs and flows of the cash flow cycle as it relates specifically to their business and industry. Banks and other private finance firms are critical to the working capital cycle. Customers must have the support of the bank with respect to proper credit lines.

The bank of course needs to be convinced that the customer understands it's cash flow gap, and can manage properly through the working capital cycle. If a firm cannot achieve proper bank support re their working capital requirements other alternatives will need to be assessed. To discuss bank or other business financing alternatives such as:

Receivables Financing

SR&ED finance

PO Financing

Inventory Finance

Asset Based business credit lines




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 - founder of 7 Park Avenue Financial –
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

Business Financing In Canada : Unlocking The Mysteries of Commercial Finance Funding

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Looking for a Hot Tip?

Tips on successfully securing business financing in Canada

Information on business financing in Canada . Commercial finance solutions require certain information and strategies for funding success . Here's why.. and how

Business financing is a challenge anytime, from the entrepreneur's dream of a small start up to major corporate needs.

The current economic downturn makes the above noted challenge even more daunting. Whether a firm is established and doing well, or experiencing financial distress or working capital or growth needs - the challenge remains the same.

What is the 'challenge'? Simply speaking it is identifying the proper financing solution , determining whether the solutions is a short term fix or a long term solution , and then, most importantly executing with experience the proper financing solution.

The business owner must be able to properly position the current shortcoming as both an opportunity and risk appropriate.

Proper financing begins with the owners and his advisors ability to identify the current financing challenge. The owner and advisors must provide a compelling reason for the lender to assist in an appropriate financial solution.

Who are these 'advisors'? Typically they are internal financial staff, i.e. CFO/Controller, etc, or alternately third part accountants and experienced financial intermediaries with a track record of success.

Business Financing is complex - However at the end of the day the financing solutions are actually very well defined - They are as follows:

Leases and Term Loans

Working Capital Loans

Asset Based Lines of Credit

Bank credit lines

Non bank credit lines

Receivables purchasing

Inventory Lines of Credit

Purchase Order Financing

Unsecured cash flow loans / Mezzanine finance

Commercial mortgages

Tax Credit financing

The business owner, and their advisor, should have a very clear focus - That focus is as follows: What is the best financing solution on either a short term or an intermediate/long term basis for the business. Does the business owner or executive clearly understand all the financial options available - what are the criteria for these different options - what are the rates/terms and structures for each option. 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 finance needs.


Stan Prokop - founder of 7 Park Avenue Financial –


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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

Alternative Financing Solutions In Canada : Working Capital & Debt Factoring Solutions

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Mind The Gap ! That's The Working Capital Gap by the way !

Information on working capital financing . Alternative financing solutions such as debt factoring provide timely and valuable cash flow

for your business





Canadian firms who sell on credit terms to their customers (that's almost everyone!) require an appropriate amount of financing vis a vis the investment they carry in accounts receivable and inventory .Although the Canadian business owner and financial manager likes to think their firm sells on thirty day terms they of course have the hard reality of continually trying to sell receivables that are 60 and 90 days old.

The classic 'working capital 'gap is a huge challenge for most small and medium sized firms in Canada.

Enter factoring or receivable financing, a k a receivable discounting. This type of financing often becomes the alternative to the Canadian firm that is unable to generate the full amount of bank financing they require for operating lines of credit.

Factoring is of course the alternative to that 'operating line of credit. That type of facility allows you to pay suppliers, employees, etc while you wait for your receivables to be collected. Your receivables are in essence pledged as the collateral for the operating line of credit, or, in our case the factoring facility.

We need to also understand of course that the reason the firm cannot generate a bank facility is the requirements of the bank necessitate strong balance sheets, solid operating efficiencies, and profits and cash flows. Many businesses have challenges in some of those key areas that the bank focuses on.

So, is there a better solution to factoring as we have posed in our article title? The best solution is a true working capital facility of asset based lending facility. This is a non bank facility but operates in much the same manner as the margined bank facility. The facility allows your firm to meet payroll and supplier commitments and is significantly easier to arrange.

One of the main disadvantages of factoring, as perceived by Canadian business owners, is the intrusion that factoring can make into your customer based. Pure factoring along the lines of what is practiced in the United States involves notification to your customers, collection calls by a third party to your customer, etc.

A true asset based line of credit, which we call a 'non - notification' facility, has no level of customer intrusion. Yes this type of facility, similar to factoring, is more expensive than bank financing, but it removes much of the stigma that Canadian business owners associate when they hear the word factoring. It's Confidential!

The Canadian market place if very segmented in factoring, receivable financing, and true asset based lines of credit lending. Companies are best served to align themselves with a true business financing and working capital expert who can ensure the optimal facility is originated for your company on your behalf .Working with a trusted financing will ensure you have the optimal rates, structure, and day to day working capital facility that meet your cash flow financing needs.

If you're looking to ' fix the gap ' 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 alternative financing and cash flow needs.


Stan Prokop - founder of 7 Park Avenue Financial –


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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

The Operating Credit Line : Revolver Loan Financing Is A Key Business Finance Solution

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Will A Business Credit Line Revolver Financing Fix And Grow Your Business ? You Decide !

Information on revolver loan financing in Canada. Business finance solutions for your business includes the operating credit line

Business finance includes the need for working capital, and a valuable financing tool is the 'operating line of credit '. This facility is also commonly called a 'revolver' by finance professionals.

What is the revolver? It is a financing facility, most commonly done with a bank that provides credit against the customer's receivables and inventory.

How does the facility work? After the facility is approved and negotiated with the bank the customer submits, usually monthly, a detailed list the firms account receivables and inventory. The bank calculates what is known as a 'margin limit 'and advises the customer that the business can write cheques against that overdraft, or line of credit up to the maximum of that margin limit.

That new limit is of course approved until the next month's receivables and inventory are reported on by the customer. We would say that in 99% of industries the reporting by the customer is done once a month, but on occasion it can be more regular with some customers, and on rarer occasions it can be less often.

How does the bank or financial institution calculate the approved amount? Typically the bank looks at the accounts receivable and calculates how much of the receivables less than 90 are days old. Banks assume there is a high level of uncollectibility on receivables older than 90 days. This may or may not be the case according to the customer - but the bank makes the assumption on the conservative side. (What a surprise!) Given that the bank now has an amount of A/R less than 90 days they take 75% of that amount, typically, and use that as the credit limit. A similar calculation is done for inventory.

The inventory calculation is a little trickier. Why? That is because the bank understands receivables and could step in to collect them if they had to - however, they don't understand inventory, and their customers have all types of inventory! Our experience is that as a rule the banks will pick an amount close to 40% for the inventory portion of the credit line. So if a customer has a month end balance of 200,000.00 in inventory the bank will arbitrarily allow them to write cheques of 80,000.00 against the inventory.

The bank has now calculated the facility based on our above A/R and inventory figures.

It is very important to know that the whole exercise with the bank is subject to a number of other factors, such as the profitability of the business, the risks associated with the customers industry, and any personal guarantees that also support the facility.

In summary, operating lines of credit are important, dare we say critical, to a customer that is growing and needs working capital. More cash is available, per our formulas, as the business grows. Problems can arise when a business is no longer growing though - the bank restricts the borrowings, less cash is available, and supplier payables place pressure on the company's working capital.


It is also important to note that if the operating lines of credit are significant the customer may lose focus on profits and operations, thinking he or she has all the cash they need. That's not good. Business owners are cautioned to used operating lines properly, and also focus on their profits and operating capabilities. Seek out and speak to trusted, credible and experienced Canadian business Financing Advisor with a track record of success for help in your business growth financing needs.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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