What To Consider When Funding Your Company Via Accounts Receivable Financing As An Alternative

Use A/R Finance For business Capital – After You’ve Read This!

Information on accounts receivable financing in Canada . When funding your company with business capital via a/r finance consider these key issues .


So, you're almost there. After evaluating a number of both traditional and alternative business financing and capital cash flow alternatives you've chosen a non bank accounts receivable financing strategy as your new form of company funding.

So far so good. Right? But let's get you some expert help, guidance and tips around selecting the right strategy for your new financing. We'll focus on some key issues that traditionally in our experience have made it hard for client to both understand and be successful with this form of working capital financing.

First things first, so lets cover off a very basic question - which is simply ' how does the facility work on a daily basis?’ You need to understand that the amount you can borrow in A/R financing revolves solely around your ' eligible ‘receivables. So what do we mean by eligible? Depending on who you are dealing with ( we prefer you deal with the good firms, not the less than good ones !) eligibility traditionally revolves around your Canadian and U.S. invoices under 90 days from an a/r aging point of view . Also, if you find you are unable to finance clients who are U.S. based you are absolutely working with the wrong party.

Drawing on a day to day basis on this facility are based on your a/r aging report .Company funding of your receivables revolves around your ability to produce an a/r aging that balances of course, and reflects invoices that are due and owing by your clients .

Many of our clients don’t understand a key process around which your day to day operation works. It’s called a 'blocked account ' process. Sounds complicated, but really isn’t. Here's how it works. Receivables that you submit are financed on a daily basis, with those funds being deposited directly into your regular commercial bank account. An accounts receivable financing company is generally, almost always, NOT a bank, but you still use your general bank account for all financing under this facility. Funds are usually deposited daily, as you need them.

But, when you clients pays, the process changes. You deposit those funds into a blocked account which is in the name of your financing partner. That makes sense, since you have already received the benefit of those funds. At this time any holdbacks that are in place with your facility ( generally no more than 10% are paid back to your firm, less of course , and here it comes .. the financing charge!

And now to that almighty question that we get, pretty well every day these days. What is the financing charge from a funding company for accounts receivable financing? This form of financing in Canada should typically not exceed between 1.5-2% per month. What clients need to bore down and understand is some technical terminology around what the actual charged ' discount ' (aka interest financing charge) rate is, what funds are held back in reserve on each invoice, and any small nominal charges re wire transfers, processing, etc.

Want to understand A/R finance a lot better? It’s easy to get bogged down in the technical terms, and some of the players out there do a great job of confusing this valuable type of financing. Focus on how it works, what it costs, and more importantly who you're dealing with. Consider seeking and speaking to a trusted Canadian business financing advisor who can assist you in ensuring this for of business capital works... for your company!


Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

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

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

A Common Sense Way To Choose Canadian Business Leasing Companies For Equipment Loans – A Lease & Loan Alternative

Make the Right Choice for Lease Finance in Canada



Information for Canadian business on choosing the best method to select leasing companies for equipment loans – A lease and loan alternative selection process .




Rest assured you're in the same boat as thousands of your competitors - and whats that boat about? Simply not knowing who or what to turn to when selecting business leasing companies for an equipment loan for your business. More importantly, leases and loans that makes sense, not the kind where you wonder if your firm got a transaction at market rates, terms, and structures.

So is there a fast track to selecting the right lease finance company for asset financing that works, and makes sense? There are a couple of challenges we try and help clients overcome, not the least of which is the fact that there are tens and literally hundreds of firms all across Canada that ' seemingly ' fit your needs. And, and it’s a big and... if you have all the time in the world to develop relationships with these hundreds of firms, well then... let’s just say we're jealous!

But not knowing who to turn to can in fact, as many clients have experienced, cost you tens and thousands of dollars, depending on your past experience with leasing companies in Canada. One alternative is of course to send a lease bid document out to a large number or select number of parties. That makes sense for government agencies and large corporations probably, but not for small and medium sized businesses in Canada.

The reality is that all those lessors out there have their own unique business models, and are you ready... because this could be painful... they are going to try and fit your firm in a box . In a box? We're talking about the ' credit box ‘... that elusive credit policy that seems to be understood, by the lessor, but not perhaps yourself. You see each firm (who by that way had to go out and borrow money to lend it to you) has a credit box. In that box is a set of criteria around asset types, deal sizes, ratios, covenants, personal guarantees, outside collateral, years in business... well we think you get the drill

And oh yes, if there were one type of business equipment leasing company in Canada the search for asset financing might not be so daunting. In reality those hundreds of different firms are actually in 4 sub categories.

Those sub categories are bank lessors, independent leasing companies, captives (ouch! that even sounds painful - do they have a box also?) , and insurance companies.

So do we have a favorite and a recommended solution for each and every business owner and financial manager in Canada? Actually we do its number 5 in our list of 4! We're talking about an independent, experienced, trusted, and credible Canadian business financing advisor... one who should be an expert in lease financing. Utilize their experience for market knowledge, eliminating financing sourcing time, and ensuring you are getting market rates in the current low interest rate environment of 2011 where in fact lease financing is very competitive and wants your business. Adding value and saving your firm money is a powerful double punch in Canadian asset financing.




Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

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


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

Is There A Small Business Loan From Government ? Yes, Here’s Why Canadian SBL Loans Work !

Canada’s Small Business SBL Loans Solve Your Finance Challenges

Information on why the small business loan from government is one of the most sought after loans from small and medium sized businesses in Canada . Let SBL financing help your start up or established business.


If we had to separate some of the major confusion surround two to three key areas of the small business loan from government in Canada , aka ' SBL loans ' it would be quite easy, as clients seem continually mis informed about some of the key attributes and benefits of this program .

Let’s get ' small ' out of the way first. The Canadian SBL loan underwritten by the government (more about that later!) actually goes to $ 500,000.00 dollars from a lending limit. That’s one of the initial sources of confusion for our clients... because the 500k amount refers solely to your utilization of the facility for a real estate deal. All other transaction under the program is capped at 350,000.00$.

In many cases it actually might make sense to do a real estate deal under SBL loans. For example your 10% required equity under the program is significantly less than the 25- 30% or more that is required by other lending institutions under a conventional mortgage scenario.

We've done a calc and a 500k mortgage utilizing the SBL would run you around 5500 a month for a commercial transaction. That is a higher payment than a longer amortized commercial mortgage but consider the fact also that your required permanent own equity into the deal is only 10%, and you personal guarantee under the program is actually only 25%. Try getting that lower personal guarantee from another commercial lender... we dont think you'll be able to.

Let's circle back again to what the word small means in a small business loan from government sources. The program, which actually is officially called the BIL /CSBF program actually stipulates that your current or projected revenues cannot exceed 5 Million dollars per annum.

As you can imagine, and as we experience, that covers thousands of business in Canada that should be accessing the program, but either aren’t aware of it or don't fully understand some of the rules and guidelines of the program .Oh, and by the way, almost 7500 Canadian firms used the program in 2010... so somebody out there, including your competitors perhaps?.. accessed over 957,000,000.00$ in capital in 2010. So we think it’s about time you got on board.

We think the program works for a couple of great reasons... it usually can finance companies who would not otherwise be able to receive traditional financing - aka your ' friendly chartered bank ' , and , secondly, it covers the financing of assets that you need to grow ( or start ) your business .

The two main asset categories that the program finances are equipment and leasehold improvements. That covers a lot of what you need to be successful. And by the way things such as computer software are covered under the program also. as that generally falls under the equipment category.

So as a Canadian small business owner do you feel challenged on whats available and how to proceed to successfully execute on SBL loans financing. Speak to a trusted, credible and experienced Canadian business financing advisor on why the small business loan from government, aka ' the SBL ' will help your firm go to the next stage of its growth or development.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


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

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

Don’t Risk Losing Out On Franchise Financing Loans - Info For Canadian Franchisees Re: Franchising Loan Success

You’ve Got An Important Decision To Make - So Get Informed On franchise finance in Canada

Information on Canadian franchise financing . What types of loans are available , who is lending , and is there one franchising loan strategy that makes the most sense .




The reality of owning your own franchise business should not be over shadowed by the risk of not obtaining the right, and full amount, of franchise financing you need for a franchising loan. So let’s examine the right, and wrong way, of franchise loans and lending in the current environment.

The right amount of financing you need for your acquisition is often a somewhat stressful time in the total process of buying a business in this segment of Canadian business ownership.

Commercial lending financing does exist in the Canadian environment, it’s a situation of knowing what’s available, and then, of course, executing on completing the financing. Sounds simple, but many Canadian would be entrepreneurs often find themselves challenged by the whole franchise financing journey... and in reality it’s a process, not a journey.

In a perfect world you are looking for a franchise loan that has low or at least acceptable interest rates, nominal fees associated with the transaction, and has the right term or maturity that suits your payback plans and general cash flow situation.

But, does such a loan exist? It actually does, and you'd be surprised where you might find it. Many clients tell us they have spoken to the Canadian bank with whom they typically have had a long term relationship, only to find that little information has been forthcoming as to how they might be able to successfully finance their new business venture .

Naturally any bank that finds you willing to personally pledge and collateralize your home, savings, etc is very anxious to have your business and approve that loan, but it mixing your personal assets with your business venture the optimal solution. We find it rarely makes sense to follow that strategy, buy hey... that’s just us.

In Canada the financing options of franchise lending and loans is available, but somewhat less limited than in the U.S. . . . One or two large firms dominate the major franchise financing opportunities in Canada - these firms focus on the largest name brands and larger transactions that in many cases can range up to several million dollars in total financing required.

But what about the hundreds, even thousands of franchise loans that are required for purchases in the 100-500k range. Who finances those, and if they are financeable does the financing come with those low rates and great terms and structures we spoke of previously?

Actually the Canadian BIL/CSBF loan program addresses that question pretty perfectly. It finances your franchise on terms that compete with the big boys. And we're always rooting for the little guy!

The BIL program assists business purchasers such as yourself to effectively finance the franchise you wish to purchase. Rarely will your franchisor be able to assist you with financing so your ability to prepare a solid 'package' of info and position the package from a solid financial point of view is critical. Other financial solutions such as specialized equipment and asset financing can also round out your financial solution.

Bottom line, franchise financing should not be a risky or stressful time for the completion of your business acquisition. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you complete franchise financing with lending that makes sense... today.

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

Canadian Asset Based Finance Has All The Best Ingredients For A Business Line Of Credit – Business Receivables Financing

A winning strategy for business lines of credit in Canada


Information on asset based finance facilities in Canada – Why ABL working capital facilities are a solid line of credit solution for business receivables, inventory and equipment finance.



Asset based finance is a solid working capital solution for a business line of credit as an alternative to bank financing. An ABL (asset based lending) line of credit provides an operating line of credit facility for a combination of both receivables and inventory. This can be achieved in Canada via a traditional receivable financing facility for firms that have both domestic and out of country receivables.

Often times this type of facility provides cash flow when your company is growing, or perhaps wants to acquire another firm... even a competitor. If we had to label many clients that are searching for the right asset based finance facility we would quite frankly put them in the category of being in a turnaround or restructuring situation.

Proceeds from this facility can be viewed in many positive ways, one of which is to simply give you leverage and negotiating power with suppliers for pricing and discounts ... and why? Because you now have cash flow that allows you to buy smarter, purchase larger quantities of materials - all of which are on top of your new found ability to feel more comfortable about day to day financial burdens such as payables, salaries/wages , etc.

Many Canadian companies that approached asset based finance solutions have often exhausted traditional financial solutions. We stress to clients that asset based finance solutions are the last thing from ' lending of last resort '. In fact they in some cases can be more cost effective, and almost 99% of the time, in our experience, provides clients with more liquidity and access to capital.

And don’t forget also that when you approach asset based finance from a business receivables or inventory financing point of view you are no longer forced to consider scenarios such as raising additional equity and diluting ownership .. and that’s a good thing if you're a business owner in Canada.

So how exactly do asset based finance solutions provide that much more liquidity, than say... a traditional Canadian chartered bank line of credit. They do that by margining you receivables at higher levels, or margin rates that banks, and also include additional borrowing on that same facility based on inventory, equipment and real estate, all of which are rolled into one day today borrowing facility.

In order to qualify for this type of financing it becomes a question of controls and reporting. Your firm should be in a position to report on an on going basis on aged receivables, payables, inventory counts, etc. It's that level of business control that will get your firm the highest asset based finance facility.

Look at business receivables financing via an ABL facility as a type of financing that becomes the bridge for your firm to either move to a Canadian chartered bank facility or a true tier one ABL facility with comparable bank rates and structures.

When you are not aware of all the possibilities available to your firm for a business line of credit option speak to a trusted, credible and experienced Canadian business financing advisor who can help you reach the higher ground in asset based financing in Canada.



7 PARK AVENUE FINANCIAL

Canadian Business Financing

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

What They Don’t Tell You About Lease Interest Rates and Leasing Costs for Equipment Finance in Canada

Follow this formula for understand equipment lease interest rates in Leasing Finance in Canada

Information on lease interest rates in Canada . What are some key factors in leasing costs and asset finance that allow your firm to win the equipment finance game.




Is it wrong for Canadian business owners and financial managers to want the lowest interest rate and best overall leasing costs and rates in asset finance in Canada? We've never been convinced that a ' low rate' per se is absolutely the only way you should be looking at an asset finance acquisition, but it is certainly one major factor in your overall decision.

Let’s examine what factors are critical in assessing a ' best rate ' on a deal and how your lessor actually calculates finance rates in leases and equipment loans. Times change in business, Canadian business owners and financial managers are currently right where they need to be when it comes to asset finance. The industry (equipment lease financing) is currently on a roll. And what does that mean to you, the business owner or finance manager. Simply that the best competitive rates, terms and structures are available.

There are a solid handful of key issues that reflect what determines your final lease pricing. One of these is simply the asset you are financing - assets that depreciate less quickly than others can often command a lower lease rate. Extreme example of this might be computers and aircraft. Computers, from a hardware perspective, depreciate quickly, if only for the good reason that technology changes quickly and hardware offerings get better than ever. On the other hand aircraft terms can be anywhere from 5- 20 years (try obtaining lease financing on a 20 year amortization on your next laptop acquisition!), simply because the asset still has significant value over a long period of time.

Credit quality also of course plays a key role in determining leasing costs in asset finance. Lessors determine your final pricing with significant emphasis on credit criteria. Companies that receive the best pricing and lease interest rates typically they have cash flows that historically, current, and in the future have the ability to make lease payments.

In reality it’s a simple mechanical calculation - take your company’s annual current cash flow (income plus deprecation is the quick calc on this one) and factor in the amount of debt that a years lease payments might add on to that. If your cash flow is still positive then you have met a key requirement of obtaining financing leasing costs that many other firms might not be able to achieve.

Naturally the type of lease you enter into (capital or operating are the two main ones) also affects lease pricing. Either you or the lessor might have a secret plan to sell or remarket the equipment at the end of the term of the lease. That affects your pricing naturally!

The last thing we consider ourselves is tax experts, but issues such as taxes and timing of cash flows have a significant impact on lease interest rates.

Oh, and by the way, your lease company borrowed money in order to lend you money. They all have different costs of funds depending on who owns them, the amount of equity they have in their firm, and the types of losses they experience in their own portfolios. So who can you turn to in trying to understand credit criteria and which firms are the best to work with in Canada? Working with a trusted Canadian business financing advisor can help you sort through a myriad of issues that affect lease costs and asset financing.





Stan Prokop is founder of 7 Park Avenue Financial
Canadian Business Financing



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

Analyze This! What Exactly is “ Factoring” In Canada ? Business Financing Canada Options & Cost & How To!

Be your own ‘Analyst ‘ and challenge yourself to figure out the best type of a/r finance for your firm.

Information on factoring as a business financing Canada Option . What this financing costs and how it works.



It's hard enough to worry about business financing...Canada has numerous options - receivable financing... aka: “factoring" is one of them that Canadian business owners and financial managers keep hearing about. But, and its a big but, how does this type of financing work, what are the costs involved , and what type of factoring is the right one for my firm.

It kind of seems simple when you're first told about it... your company ' sells ' its receivables to a third party finance firm - you get cash ( the same day, by the way !).

The common questions asked by clients are very predicable to us - what is the collateral for the financing, how does it work, what does it cost, and perhaps most importantly, what is the key difference between this type of financing and a bank business loan.

The clearest way to explain factoring, (also often called ' invoice discounting 'and' receivable financing ' is that you should view your receivables as the essential collateral for financing of this type.

When you sell something you of course have agreed on a ' price ' with the buyer. In Canada the ' price ' of this sale is very predictable; it ranges between 1-3% per month. Your ability to have the receivable collected in a more timely fashion therefore reduces your cost of financing.

A good way to think of how this financing works is simply to think of it as a way to ' assign’ the rights you have in that A/R to the buyer, the finance firm.
Since you have received the funds for the sale immediately on invoicing your client the right to all the funds of course belongs to the buyer of your A/R.

So all of that is pretty basic, right? Where then are some of the... lets call them ' confusion points ' in factoring and business financing Canada A/R finance. A couple of key issues come immediately to mind - the finance firm holds back on each advance a certain portion of the funds - this is called the ' holdback'. If you are working with the right firm, and believe us there are some wrong ones! then the holdback will be refunded to you as soon as your client pays. The holdback you can typically expect to receive is in the 10 per cent range ... any more than that should be a strong negotiating point on the overall facility you set up.

Oh yes, what about the cost of the financing itself. Can that be negotiated? There are some quick ways to determine if you can negotiate better pricing on your facility. In factoring and A/R finance the cost often depends on a couple basics - the size of your monthly A/R, the general quality of your accounts receivable, and your own firm’s general financial condition.

The good news is that if your company is experiencing financial challenges of any sort you probably still quality for business financing Canada factoring. However, the better you are perceived as doing will often affect your ability to negotiate a better rate.

However you might perceive the cost of factoring, you need to always remember that the use of immediate fund allows you to grow your business - in other words you're finally not the bank for your clients, and that’s a good thing. S

So view factoring and its cost in the context of the tradeoff between growing and expanding your firm with benefits that exceed the cost of this type of financing. Naturally you can choose to simply self finance your firm, but why not grow your business y using external working capital financing generated by factoring. It's easier to obtain than bank financing, and can be viewed as a long term or a temporary strategy.

Speak to a trusted, credible and experienced Canadian business financing advisor who can steer you in the right direction on this valuable type of financing in Canada.


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