Business leasing and lease finance continue to play a main role in your overall equipment acquisition strategies. In Canada the equipment financing industry is very mature and developed, and as a business owner and financial manager you have a number of financing options. Most lessors are non bank entities and are much focused on certain types of assets and lease types that are offered.
Let’s examine how you can maximize your chances for approval for your asset finance acquisition. It is important to know how the other side thinks and behaves – That other side is your lessor. Your lessor is motivated in three ways, and if you know those motivations you can focus on maximizing the benefits in leasing and, of course, get approved.
We can safely say that the three motivators for any lease company are the tax and accounting benefits they derive from leasing you equipment, the interest rate they charge you on the transaction, and finally the asset re sale or disposition if the asset is structured as a return to a leasing company.
Let’s focus on lease company motivator # 3 for a moment – the remarketing of the asset. If you do not want to retain ownership of the asset at the end of the lease you are probably going to want to enter into what is known as an operating lease. The key elements of any lease structure are: term of the lease, interest rate, value of your transaction, the monthly payment, and you obligation at the end of the lease.
Therefore it is important to focus on a firm that specializes in operating leases if you intend to approve the equipment – and getting to the core of our subject matter, your lease approval on an operating lease becomes much easier if you structure a financing that meets both your requirements and the lessors.
We can safely say the most critical element in getting your transaction approved is the overall credit quality that your firm portrays on your lease application and supplemental business info that might be required by the lessor. You should know that the smaller your equipment lease the less attention will be paid to overall credit and due diligence – that just makes sense. In Canada many leases under, say $ 50,000 as an example are credit scored via some basis info that the lessor acquires on your firm or the business owner. This data might be a commercial credit report, a credit report on the owners, and viewing some payment experience with some of your other suppliers. Small ticket leasing in Canada is very easy to acquire.
The larger challenge comes when you are acquiring assets over the 50k range. If your overall credit and financial position is weak you can well be expected to offer up items such as additional collateral, a down payment, or a guarantee buyback from the vendor.
Your focus on getting approved is the challenge, so you should know that there are different tiers of credit quality, and the lessors adjust the rate on your transaction to reflect the overall credit quality of your business, taking into consideration the asset also. So if your firm does not have pristine credit you should still be 100% aware that lease financing can still be approved and is available. Factors that now come into play under this scenario are the higher rate, a down payment request, etc.
Clients are always asking how they can position their transaction for approval. The reality is that you are, in many ways, in charge of your own approval. What do we mean by that .Simply by putting together a basic package that focuses on key areas such as your years in business, your ability to make the lease payments in question, your industry experience, etc can often garner a positive approval?
Financial statements may or may not be needed for your lease approval – this often depends on the amount and the policies of that lessor. If you are required to provide financials then the focus will be on historical cash flow. We tell clients that it is a bit of an irony that many lessors use your historical cash flow to approve your future dealings. From our perspective that was then and this is now!
In summary, you as the lessee can be key factor in your business leasing and lease finance approvals .Understand the type of lease you want, position your company in the best light possible by preparing the data we have shared with you that lessors focus on, and be fully aware that lease approvals of any size can be properly structured to make sense for both parties, your firm, and the lessor. Speak to a credible, trusted and experienced business lease financing advisor to ensure you get the approval you need and deserve for equipment leasing in Canada.
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/business_leasing_lease_finance.html
Our blog highlights Canadian Business Financing solutions via receivable finance , equipment finance, working capital financing, asset based lending, business acquisition financing,franchise finance, and tax credit monetization via SRED and Film Tax Credits. Our goal is to educate and assist Canadian businesses with their financing needs. You Are Looking For Canadian Business Financing! Welcome to 7 Park Avenue Financial Call Now ! - Direct Line - 416 319 5769
Tuesday, September 14, 2010
Monday, September 13, 2010
How to Take Advantage of Commercial Finance Factoring Services in Canada
Commercial finance factoring Services may be the solution you are looking for business financing and working capital for your firm. You may or may not be aware that this type of cash flow financing is used by Canadian firms from start up to major corporations.
So what are the benefits of such a business financing and how is your firm able to take advantage of these. The bottom line in business usually always come back to cash flow, and a commercial finance factoring service or facility ( we like to call them working capital facilities ) gives you a form of predictable cash flow . Essentially your working capital grows lock step in pace with your sales growth, and handles all those up and down fluctuations in between.
When we discuss this financing with clients we often use a term ' you pay only for what you use ‘. That is because your firm essentially controls the cash flow spigot, if we can call it that. You have the ability to finance one invoice, a number of invoices, or all your receivables. It's your call!
Invariably the discussion around factoring, also known as ' invoice discounting ‘turns to cost of this service. First of all you have to know how the financing works, at which point you can then assess the costs and the advantages.
Let's look at a quick actual example to ensure we understand the process and cost. Let’s say one of your invoices has just been issued and it’s for $ 10,000.00 - we'll use a clear example and round number in our demonstration. So what happens next? Your firm is advanced, immediately, i.e. almost same day, approx 90% of that invoice amount. So you receive $ 9000.00 at the same time your customer receives their invoice! Your factor discount, i.e. ' the fee' might typical be 2% on this transaction. So if your customer pays the invoice in 30 days (*we’ll be back o you on that one!) your firm receives the balance owing to you, i.e. the holdback, less a 200.00$ fee. ** We realize that not all customers pay in 30 days!
So what just happened here? You made a sale, you got cash immediately for 90%, and you got the balance of the cash (in our case $800.00) when your customer paid. Your cost was 200.00$.
Astute business owners and financial managers can use that immediate cash wisely and productively. You could pay a supplier invoice that you just received, and take a 2% discount for prompt payment. You have just strengthened your relationship with a supplier, and saved 2% - and wait a minute, didn’t we have a 2% factor fee. If you net those two out your financing cost has been effectively reduced to almost zero.
Are all fees in Canada the same, and do all facilities have the same sort of business model and paper flow? The answer is no, they don’t. Your final factor fee, or discount fee depends on your client profiles, how much of a facility you need, the invoice size, and, the most important - how well your clients pay. Remember you can now finance those clients that pay in 60-90 days and have tied up your working capital, but ensure they are profitable clients because at 2% per month carrying cost that erodes your profit margins.
In business it’s all about turnover and your ability to turnover your inventory and, in our case, receivables ultimately determine your financing costs to carry your A/R investment.
Think of commercial finance factoring services as your own ATM machine for cash flow. It becomes a solid potential alternative to term loans with fixed interest, or bank financing that has the requisite requirements that come with a bank deal - solid financials, profitability, guarantees of owners, external collateral, etc.
For those business owners and financial managers that want to get a bit more analytical about the numbers here is another way to look at it - let’s use our same example: If you factored 10,000 once a month all year would have had the use of 120,000.00 in total capital. So your total finance costs on that would be 2400$.
If you borrowed 120,000$ in working capital from your bank at a rate of 6% per annum on a typical 3 year term you would pay over 10,000$ in interest for the same capital . The factoring financing using that logic was cheaper than the bank by at least 8000.00$.
So whats our bottom line? It’s simply that our basic arithmetic has shown us that if we take advantage of commercial finance factoring services we are in control of our own cash flow destiny as well as having the ability to increase sales and offset financing costs with careful use of cash flow and working capital from this unique type of business financing. Speak to a trusted, credible, and experienced business financing advisor in this area to maximize the advantage!
__________
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/commercial_finance_factoring_services.html
So what are the benefits of such a business financing and how is your firm able to take advantage of these. The bottom line in business usually always come back to cash flow, and a commercial finance factoring service or facility ( we like to call them working capital facilities ) gives you a form of predictable cash flow . Essentially your working capital grows lock step in pace with your sales growth, and handles all those up and down fluctuations in between.
When we discuss this financing with clients we often use a term ' you pay only for what you use ‘. That is because your firm essentially controls the cash flow spigot, if we can call it that. You have the ability to finance one invoice, a number of invoices, or all your receivables. It's your call!
Invariably the discussion around factoring, also known as ' invoice discounting ‘turns to cost of this service. First of all you have to know how the financing works, at which point you can then assess the costs and the advantages.
Let's look at a quick actual example to ensure we understand the process and cost. Let’s say one of your invoices has just been issued and it’s for $ 10,000.00 - we'll use a clear example and round number in our demonstration. So what happens next? Your firm is advanced, immediately, i.e. almost same day, approx 90% of that invoice amount. So you receive $ 9000.00 at the same time your customer receives their invoice! Your factor discount, i.e. ' the fee' might typical be 2% on this transaction. So if your customer pays the invoice in 30 days (*we’ll be back o you on that one!) your firm receives the balance owing to you, i.e. the holdback, less a 200.00$ fee. ** We realize that not all customers pay in 30 days!
So what just happened here? You made a sale, you got cash immediately for 90%, and you got the balance of the cash (in our case $800.00) when your customer paid. Your cost was 200.00$.
Astute business owners and financial managers can use that immediate cash wisely and productively. You could pay a supplier invoice that you just received, and take a 2% discount for prompt payment. You have just strengthened your relationship with a supplier, and saved 2% - and wait a minute, didn’t we have a 2% factor fee. If you net those two out your financing cost has been effectively reduced to almost zero.
Are all fees in Canada the same, and do all facilities have the same sort of business model and paper flow? The answer is no, they don’t. Your final factor fee, or discount fee depends on your client profiles, how much of a facility you need, the invoice size, and, the most important - how well your clients pay. Remember you can now finance those clients that pay in 60-90 days and have tied up your working capital, but ensure they are profitable clients because at 2% per month carrying cost that erodes your profit margins.
In business it’s all about turnover and your ability to turnover your inventory and, in our case, receivables ultimately determine your financing costs to carry your A/R investment.
Think of commercial finance factoring services as your own ATM machine for cash flow. It becomes a solid potential alternative to term loans with fixed interest, or bank financing that has the requisite requirements that come with a bank deal - solid financials, profitability, guarantees of owners, external collateral, etc.
For those business owners and financial managers that want to get a bit more analytical about the numbers here is another way to look at it - let’s use our same example: If you factored 10,000 once a month all year would have had the use of 120,000.00 in total capital. So your total finance costs on that would be 2400$.
If you borrowed 120,000$ in working capital from your bank at a rate of 6% per annum on a typical 3 year term you would pay over 10,000$ in interest for the same capital . The factoring financing using that logic was cheaper than the bank by at least 8000.00$.
So whats our bottom line? It’s simply that our basic arithmetic has shown us that if we take advantage of commercial finance factoring services we are in control of our own cash flow destiny as well as having the ability to increase sales and offset financing costs with careful use of cash flow and working capital from this unique type of business financing. Speak to a trusted, credible, and experienced business financing advisor in this area to maximize the advantage!
__________
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/commercial_finance_factoring_services.html
Accounts Receivable Factoring in Canada
Guess what? Whether you are a start up, an established business, growing like crazy, or just trying to survive and stay competitive - you need business working capital financing. That is why one solution might be accounts receivable factoring in Canada.
We hasten to point out that while receivable factoring, factoring accounts due to your firm is often used by firms that are unable to get traditional financing that some of Canada largest corporations utilize this method of working capital financing to grow . Larger more sophisticated firms might call it securitization, or make it a component of an asset based lending facility, but, bottom lines it is still called factoring.
Canadian firms gravitate to the benefits of factoring as they are significant relative to financial resources they might be otherwise unable to obtain. At the core of the factoring accounts solution is simply the ability of your firm to get a predictable cash flow in place that is, in essence, unlimited. Why is that? Well it is because as your sales grow you create receivables and if you cant financing those receivables with traditional bank lines or working capital term loans you have the option, using receivable financing, of turning those receivables into cash flow at your discretion. So you can factor one receivable, all your receivables, or some of your receivables – you make the call!
Another way you can view this type of business financing is simply that it’s a mechanism to link your sales to your cash flow immediately. Although some view the cost of this type of financing as a deterrent we can say , after discussions with many clients, that most business owners and financial managers don’t understand the true costs of factoring, or , an even better way to put it that they don’t understand the costs of not being able to discount their receivables .
One other critical aspect of factoring is simply that it’s not debt – you are not adding debt to your balance sheet – you are simply monetizing one of your largest and most liquid assets, your receivables. In some cases if we term this type of facility a ‘working capital ‘or ‘asset based lending’ facility an inventory component can also be considered for financing, thereby even further increasing your overall liquidity.
As we said before the true beauty of this type of cash flow financing lies in the fact that it is applicable for companies of all size and type of business. As a result if your business is experience challenges, has tax or lien problems, etc you can still be a solid candidate for this financing.
Understand the basics. That’s what we tell clients when they ask us how factoring work, what are the different types, and how does a business assess the costs. Let’s recap some of those basics. If you have a bank line of credit your receivables are owned by your firm, but they are assigned to the bank, which finances them. In factoring accounts receivable are sold, giving you immediate cash , almost same day, in fact usually the same day . You are then in a position to grow sales and extend credit to customers.
Costs and they way factoring works on a day to day basis should be understood also. Invoices are typically funded in the 90% range, meaning you get 90% of funds for the invoice immediately, the rest is held back. Factoring fees in Canada vary from less then 1% per month to 2-3% per month. Factor firms in Canada don’t view this as an interest rate; they call it a discount fee. We point out to customers that they have potentially the ability to recoup a huge part, if not all of that fee by using funds to take supplier discounts and negotiate better pricing. The biggest bottom line is the elimination of your working capital worries.
In Canada things get confusing because there are many factor firms, some are foreign based, some are Canadian, some are large, some very small and unable to services your needs from a viewpoint of capital you require . In many instances the factor firm will bill and collect your receivables, we are not in favor of that method and strongly suggest you maintain account and customer control by negotiating a facility that allows you to bill and collect.
You have now seen many of the advantages of receivable factoring, and should understand now the basic of ‘how it works’. Speak to a trusted, credible an experienced business advisor in this area to determine how you can be in control of your working capital and cash flow 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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/accounts_receivable_factoring_canada.html
We hasten to point out that while receivable factoring, factoring accounts due to your firm is often used by firms that are unable to get traditional financing that some of Canada largest corporations utilize this method of working capital financing to grow . Larger more sophisticated firms might call it securitization, or make it a component of an asset based lending facility, but, bottom lines it is still called factoring.
Canadian firms gravitate to the benefits of factoring as they are significant relative to financial resources they might be otherwise unable to obtain. At the core of the factoring accounts solution is simply the ability of your firm to get a predictable cash flow in place that is, in essence, unlimited. Why is that? Well it is because as your sales grow you create receivables and if you cant financing those receivables with traditional bank lines or working capital term loans you have the option, using receivable financing, of turning those receivables into cash flow at your discretion. So you can factor one receivable, all your receivables, or some of your receivables – you make the call!
Another way you can view this type of business financing is simply that it’s a mechanism to link your sales to your cash flow immediately. Although some view the cost of this type of financing as a deterrent we can say , after discussions with many clients, that most business owners and financial managers don’t understand the true costs of factoring, or , an even better way to put it that they don’t understand the costs of not being able to discount their receivables .
One other critical aspect of factoring is simply that it’s not debt – you are not adding debt to your balance sheet – you are simply monetizing one of your largest and most liquid assets, your receivables. In some cases if we term this type of facility a ‘working capital ‘or ‘asset based lending’ facility an inventory component can also be considered for financing, thereby even further increasing your overall liquidity.
As we said before the true beauty of this type of cash flow financing lies in the fact that it is applicable for companies of all size and type of business. As a result if your business is experience challenges, has tax or lien problems, etc you can still be a solid candidate for this financing.
Understand the basics. That’s what we tell clients when they ask us how factoring work, what are the different types, and how does a business assess the costs. Let’s recap some of those basics. If you have a bank line of credit your receivables are owned by your firm, but they are assigned to the bank, which finances them. In factoring accounts receivable are sold, giving you immediate cash , almost same day, in fact usually the same day . You are then in a position to grow sales and extend credit to customers.
Costs and they way factoring works on a day to day basis should be understood also. Invoices are typically funded in the 90% range, meaning you get 90% of funds for the invoice immediately, the rest is held back. Factoring fees in Canada vary from less then 1% per month to 2-3% per month. Factor firms in Canada don’t view this as an interest rate; they call it a discount fee. We point out to customers that they have potentially the ability to recoup a huge part, if not all of that fee by using funds to take supplier discounts and negotiate better pricing. The biggest bottom line is the elimination of your working capital worries.
In Canada things get confusing because there are many factor firms, some are foreign based, some are Canadian, some are large, some very small and unable to services your needs from a viewpoint of capital you require . In many instances the factor firm will bill and collect your receivables, we are not in favor of that method and strongly suggest you maintain account and customer control by negotiating a facility that allows you to bill and collect.
You have now seen many of the advantages of receivable factoring, and should understand now the basic of ‘how it works’. Speak to a trusted, credible an experienced business advisor in this area to determine how you can be in control of your working capital and cash flow 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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/accounts_receivable_factoring_canada.html
Sunday, September 12, 2010
Financing Independent Movies Via Tax Credits For Indie Film financing
A recent article in the Canada’s business paper, the Globe and Mail, may have caught your attention – it read ‘American Actors – Canadian Movies’. That is an appropriate segues into why that title becomes more of a reality every day – and we have the 3 word answer to one of the major reasons that is currently the case. What are those three words? ‘Film tax credits ‘!
Tax credits and tax credit financing has quickly become one of the cornerstones or underpinnings of any indie film financing. We always also point out to clients that these same tax credits are applicable to televison and digital animation projects in Canada also.
Certainly funding for film, TV and digital animation projects has never been more of a challenge. In the U.S. the overall economic landscape still makes it difficult for owners and financiers to generate the type of funding they need on a project.
In a manner of speaking the Canadian available tax credits compete with themselves on a proving by province basis, with Ontario and B.C. being probably the most popular. However when you consider Canada as a whole many U.S. owners or co owners realize that the economic uncertainty they might be facing on projects can be significantly removed via film tax incentives and the financing of those incentives.
The actual tax credits themselves are very clearly defined by organization such as OMDC in Ontario Canada as an example. So there is never any mystery surrounding the qualifications and per cent ages grants within the various tax credits. What actually becomes a challenge, or shall we say, a requirement is the fact that you need to put a solid finance plan and budget in place – Best guess efforts hardly count in film tax credit incentives and their financing. Careful attention is paid to your budgets and finance timelines.
There are numerous arguments in place as to whether the Canadian film, tv and digital animation industry is flourishing because of the growing quality and bench strength of the productions, or has everyone simply jumped on the Canadian tax credit bandwagon similar to how they behaved in the 1970; s and early 1980’s when film financing was in large part accomplished by complex tax shelters that led to what many call a feeding frenzy of B type productions.
The bottom line is that the industry is quite flourishing and we can argue all day about what part tax credit incentives play – but why don’t we simply take advantage of them, including the ability to finance these credits for valuable working capital. Many feel the greater reality is that as an owner outside of the studio system independent film financing has to be assisted by foreign financing to some degree, and maximization of the tax credits available. Independent financing for U.S. films has been a challenge and Canadian producers and owners have focused on the ‘real money ‘that is available in film tax credit financing.
Your strategy in financing your production should be simple and clear - ensure that you qualify and have access to the tax credits available – ensure you can finance them to ensure you have valuable working capital and cash flow, while at the same time retaining more equity ownership in your production since you have monetized your tax credit. Naturally at the same time you have to focus on your other components, such as pre sales and distribution, etc.
Sometimes what might seem as the most boring aspects of film finance, i.e. budgets, budget adherence, and good payroll systems and production accounting are in fact the key elements that will make the eligibility and financeability of your production a success.
Speak to a trusted, credible and experienced film tax credit consultant and advisor on financing your film, TV and digital animation credits for the purposes of working capital and cash flow for your productions.
--------------
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details;
http://www.parkavenuefinancial.com/financing_independent_movies_indie_film_financing.html
Tax credits and tax credit financing has quickly become one of the cornerstones or underpinnings of any indie film financing. We always also point out to clients that these same tax credits are applicable to televison and digital animation projects in Canada also.
Certainly funding for film, TV and digital animation projects has never been more of a challenge. In the U.S. the overall economic landscape still makes it difficult for owners and financiers to generate the type of funding they need on a project.
In a manner of speaking the Canadian available tax credits compete with themselves on a proving by province basis, with Ontario and B.C. being probably the most popular. However when you consider Canada as a whole many U.S. owners or co owners realize that the economic uncertainty they might be facing on projects can be significantly removed via film tax incentives and the financing of those incentives.
The actual tax credits themselves are very clearly defined by organization such as OMDC in Ontario Canada as an example. So there is never any mystery surrounding the qualifications and per cent ages grants within the various tax credits. What actually becomes a challenge, or shall we say, a requirement is the fact that you need to put a solid finance plan and budget in place – Best guess efforts hardly count in film tax credit incentives and their financing. Careful attention is paid to your budgets and finance timelines.
There are numerous arguments in place as to whether the Canadian film, tv and digital animation industry is flourishing because of the growing quality and bench strength of the productions, or has everyone simply jumped on the Canadian tax credit bandwagon similar to how they behaved in the 1970; s and early 1980’s when film financing was in large part accomplished by complex tax shelters that led to what many call a feeding frenzy of B type productions.
The bottom line is that the industry is quite flourishing and we can argue all day about what part tax credit incentives play – but why don’t we simply take advantage of them, including the ability to finance these credits for valuable working capital. Many feel the greater reality is that as an owner outside of the studio system independent film financing has to be assisted by foreign financing to some degree, and maximization of the tax credits available. Independent financing for U.S. films has been a challenge and Canadian producers and owners have focused on the ‘real money ‘that is available in film tax credit financing.
Your strategy in financing your production should be simple and clear - ensure that you qualify and have access to the tax credits available – ensure you can finance them to ensure you have valuable working capital and cash flow, while at the same time retaining more equity ownership in your production since you have monetized your tax credit. Naturally at the same time you have to focus on your other components, such as pre sales and distribution, etc.
Sometimes what might seem as the most boring aspects of film finance, i.e. budgets, budget adherence, and good payroll systems and production accounting are in fact the key elements that will make the eligibility and financeability of your production a success.
Speak to a trusted, credible and experienced film tax credit consultant and advisor on financing your film, TV and digital animation credits for the purposes of working capital and cash flow for your productions.
--------------
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details;
http://www.parkavenuefinancial.com/financing_independent_movies_indie_film_financing.html
Purchase Order Financing and Factoring
Can you relate to the following statement a client once shared with us: ‘Getting working capital financing for my orders and contracts actually is harder than getting the order itself? ‘.
Your firm has the order and contract, now you just need to fulfill it to complete the job and get paid of course. It is the working capital and cash flow that come out of those contracts and orders that will of course help you grow sales and profits.
So how does purchase order financing and P.O. Factoring work in Canada? And is it actually available?! The answer to those two questions follows.
Purchase order financing or factoring provides you with capital for the key elements of your business, i.e. Product purchases, payroll, and working capital to carry receivables. Most clients we meet in the purchase order finance area have what can only be describe as the best and worst of problems – that is to say they have the order , they just don’t have access to the capital to complete the order or project . You also don’t want to strain your relationship with key suppliers, while at the same time you strive to deliver your product or service on an ‘on time ‘basis. Naturally your ability to accept larger orders enhances your overall competitiveness within your industry, and larger orders usually translate (hopefully!) into larger profits.
Canadian business owners and financial managers consider purchase order financing and the factoring of their purchase orders, but at the same time they don’t want to take on additional debt, or give up ownership of their business to an investor / partner.
So how does this type of financing work in the day to day real world. You have a P.O. and contract from a legitimate credit worthy company – More often than not some of these clients can actually be outside of Canada – we see that all the time. The purchase order finance firm provides you with the minimum amount of capital you need to complete the orders. Many times this simply involves making payments to your supplies on your behalf.
Therefore the benefits of this type of Canadian business financing are very clear – your company can complete orders/contracts it might otherwise have been forced not to accept – no business owner hates to turn down business. You can often also leapfrog a competitor of similar size to yours by simply the ability to finance orders the competition might not be able to.
You could enter into long term working capital or cash flow loans, but these typically involve payments that are fixed over 3-5 years. Although purchase order financing is generally quite a bit more expensive than bank financing it allows you to do short term financing without taking on additional debt on your balance sheet.
In some cases the PO finance or P O Factoring firm could be asked to issue a letter or credit to a supplier on your behalf - that is also a common p.o financing and factoring strategy that achieves similar objectives.
Speak to a trusted, credible and experienced business financing advisor who can provide you with information on how PO financing and factoring works, how you access it, and who can also assist you in determining if the cost of the financing meets your business and financial objectives .
--
http://www.7parkavenuefinancial.com/purchase_order_financing_and_factoring.html
Your firm has the order and contract, now you just need to fulfill it to complete the job and get paid of course. It is the working capital and cash flow that come out of those contracts and orders that will of course help you grow sales and profits.
So how does purchase order financing and P.O. Factoring work in Canada? And is it actually available?! The answer to those two questions follows.
Purchase order financing or factoring provides you with capital for the key elements of your business, i.e. Product purchases, payroll, and working capital to carry receivables. Most clients we meet in the purchase order finance area have what can only be describe as the best and worst of problems – that is to say they have the order , they just don’t have access to the capital to complete the order or project . You also don’t want to strain your relationship with key suppliers, while at the same time you strive to deliver your product or service on an ‘on time ‘basis. Naturally your ability to accept larger orders enhances your overall competitiveness within your industry, and larger orders usually translate (hopefully!) into larger profits.
Canadian business owners and financial managers consider purchase order financing and the factoring of their purchase orders, but at the same time they don’t want to take on additional debt, or give up ownership of their business to an investor / partner.
So how does this type of financing work in the day to day real world. You have a P.O. and contract from a legitimate credit worthy company – More often than not some of these clients can actually be outside of Canada – we see that all the time. The purchase order finance firm provides you with the minimum amount of capital you need to complete the orders. Many times this simply involves making payments to your supplies on your behalf.
Therefore the benefits of this type of Canadian business financing are very clear – your company can complete orders/contracts it might otherwise have been forced not to accept – no business owner hates to turn down business. You can often also leapfrog a competitor of similar size to yours by simply the ability to finance orders the competition might not be able to.
You could enter into long term working capital or cash flow loans, but these typically involve payments that are fixed over 3-5 years. Although purchase order financing is generally quite a bit more expensive than bank financing it allows you to do short term financing without taking on additional debt on your balance sheet.
In some cases the PO finance or P O Factoring firm could be asked to issue a letter or credit to a supplier on your behalf - that is also a common p.o financing and factoring strategy that achieves similar objectives.
Speak to a trusted, credible and experienced business financing advisor who can provide you with information on how PO financing and factoring works, how you access it, and who can also assist you in determining if the cost of the financing meets your business and financial objectives .
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http://www.7parkavenuefinancial.com/purchase_order_financing_and_factoring.html
Friday, September 10, 2010
Finance Your Sred Claim Now . Take Advantage Of Your Grant today
Your ability to finance your sred claim (aka ‘sr&ed claim) simply signifies the cash flowing of your non repayable government grant. We think that anytime you can hasten cash from the government and turn that into immediate cash flow and working capital, well... that is a good thing.
SRED grants, (sr&Ed grants) are of course the funds you received from Canada Revenue Agency based on the filing of your Scientific Research and Experimental Development (SR&ED) claim. These funds have never been more generous and many Canadian business owners and financial managers are not aware that the program even exists, let alone their ability to partake in the billions of dollars of non repayable grants issued by this department within CRA Canada. Essentially it is the largest support for research in Canada. Many clients are always asking us if there are ‘government grants and loans ‘. We are of the opinion that the two best programs in Canada to finance your firm are the federal BIL/CSBF loan and of course the SRED program.
Your firm ability to generate a claim immediately turns into a non repayable cash grant. Timing is everything, and you have the ability to finance that claim if you want to monetize those funds and get them working inside your firm. For many early stage and start up firms the ability to finance their sred claim is often the largest receivable the firm has that year. And the beauty of the program is of course that as along as your firm is a private corporation you can partake in these funds.
As companies, and even as consumers we generally use an ‘expert ‘to prepare our taxes and file them. It is certainly no different with SRED and we recommend that you use a sr&Ed consultant to ensure your claim is prepared properly. Naturally using their own expertise, or the governments self assessment tool you want to be sure you are eligible for the grant, given that it takes time to prepare and file the claim.
Naturally after filing a professionally prepared claim you are of course entitled to wait for you cheque – that timeframe can be anywhere from a couple of months to potentially close to a year depending on some key factors as your first time filing, and the due diligence that SRED employees do on the technical and financial aspects of your claim .
So you are eligible for Sr&Ed. You have filed a claim. You have been made aware you can finance the claim, but you are not sure how. In general the banks in Canada don’t finance these sorts of claims – that’s a general statement, but 99% of the time we are pretty sure we are correct in making that comment. Therefore it is strongly recommended you contact a business financing advisor who specializes in sred finance. At that point it’s a relatively simply process, and we encourage clients to view it as they would any business financing, from a lease to a loan arrangement. There is standard application information, and the whole process, up to an including funding, can be completed in a manner of weeks.
As a general rule it makes sense to finance claims that are over 250k in size, but quite frankly smaller claims can also be financed. There is no challenge to the amount of financing re the size of a sred filing – Claims well in excess of a million dollars can be easily financed.
The key advantage of financing a claim is that you are not undertaking any debt; you are just discounting a receivable that you have – that receivable being the sred claim itself. The sr&ed filing itself is the actual collateral for the financing – and if you want more good news then you should be aware you don’t makes payments on a sred claim finance. The funds advanced are netted out from your final chq from the government. Usually sred claims are financed at 70% of their filed value that leaves a buffer in case part of the claim is downsized when approved.
Cash flow is king, if you have a sred claim be aware that claim is financeable , and your ability to get those fund working again usually puts you in a more competitive stance within your industry , and allows those funds to be used for further research or any general working capital purpose . Speak to a trusted, credible and experienced advisor in this area to ensure you are aware of the benefits of sr&Ed finance – claim those funds!
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/finance_sred_claim_finance_sr_ed_claim.html
How You Can Address Franchise Cost and Franchise Financing In Canada
It is of course, understandable that franchise cost and franchise financing can be two major challenges, or worries, that you face when you make the decision to be an entrepreneur in the franchise environment. Let’s look at how you can address some of those issues and concerns with information that will assist you in making an overall solid franchise investment decision.
Franchise financing and franchise cost should never be put near the end of your decision making process. You should address those key areas up front and be armed with the right information on how the industry finances a franchise.Many clients, somewhat mistakenly, think they will receive franchise financing assistance, or even the financing itself from their franchisor. Nothing could be further from the truth – you should simply focus on the fact that the franchisor is in business to sell units and grow their business, not put capital into your venture. That being said we hasten to say that almost all franchisors can be a valuable tool in the franchise finance arena in a number of ways.
So how can you use the franchisor itself as a tool for your financial planning around your venture? Follow a couple basic rules – review the franchise disclosure documents carefully for any financial data that will help you make a better financial decision. Also, ask for franchisee testimonial and contact info – if possible talk to some franchisees in the chain and ask them about their finance strategy hen they acquired the business. Also cover off if the financial expectations they had around the business in fact materialized.In some cases your franchise lender may wish to obtain info on the franchisor and their overall financial status. This generally is not required with well known brands.
In the challenging economic environment we are currently in it is important to deal with an expert to ensure you have the right financial strategy in place – your lawyer or accountant might be familiar with a franchise financing expert in
In order to finance a franchise successfully in Canada we recommend to all clients that you have an appropriate mix of debt and equity – equity is of course the funds you put into the business yourself, and debt is the franchise financing itself . Typically we see clients putting anywhere from 10-50% of the franchise cost in as owner equity. This varies per type of business, and whether the business is somewhat asset based or service based.
You need a business plan and financial projection! We can’t be clearer than that. This valuable tool serves a number of purposes – it shows the lender you have thought out the ‘ financial ‘ aspects of your business – and quite frankly it should solidify in your own mind that you have a solid business opportunity . Carefull attention to revenue projections, costs, and debt servicing should all be a part of that plan. Typically you should have the plan prepared by a professional and we don’t think you should pay more than 750-1000$ for a decent plan.Don’t spend thousands on a business plan – that’s a waste of money in our opinion.
So how is the franchise cost financed in
It is rare that one financing will cover all your total financing. Many of our clients that require some form of asset financing with their franchise investment utilize an equipment leasing or equipment financing option. This makes sense from a variety of reasons – it spreads out your credit so you aren’t concentrated with one lender, it is easier to get approved, and you can use the government loan to cover a lot of the leasehold costs that otherwise might not be able to be financed .
In franchise financing you should categorize your financing needs in three areas – soft costs, hard asset costs, leaseholds. Soft costs might be things such as the franchise fee, hard costs might be signage or POS computers and software, and leaseholds might be painting, pluming, air conditioning, etc.It is absolutely critical to segregate these into separate categories and ensure you have a financing strategy in place for each one. You do not want to finance all your hard assets via the government loan and then find out you can’t get leasehold financing from anyone else.
So whats our bottom line in franchise cost and franchise financing. Its simply do your homework, solicit the help of a franchise finance expert, prepare a solid business plan and segregate your costs so that you can finance them in the right manner. Completing all that should put you in a perfect position to execute on your franchise ownership dream.
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