Nightmare On Receivable Financing Street ? Understanding How Canadian Business Factors Price A/R Factoring In Canada

Understand And Achieving Good Factoring Rates in Canada


Information on receivable financing in Canada . How to win the rate game at factoring and business factors pricing .




Sounds like a great name for a movie right? Well, maybe not, but Canadian business owners and financial managers seem to have one large struggle with the cost of receivable financing from Canadian business factors. But when you understand how the cost of this finance vehicle works then factoring, aka ' receivable finance ' suddenly becomes a lot more clear, and desirable. Let’s explain.

In A/R finance it's all about making the use of your second most liquid asset, your receivables portfolio. (Cash is of course a bit more liquid!)

So when you understand the true cost of the method of Canadian business finance you all of a sudden potentially realize that you are immediately more productive from a working capital and cash flow point of view.

When we step back it's somewhat immediately obvious that your uncollected A/R is only doing one thing on that left hand side of your balance sheet. Its both unproductive, hasn’t allowed you to realize your profits, and in effect is costing you money. That's a triple threat for sure!

So why then is the cost of the receivable financing solution from Canadian business factors such a mystery or concer? It’s simply that the issue is either poorly presented, or more commonly, just plain misunderstood.

While the business owner or his finance person stares into the cost of A/R finance he often forgets the carrying cost of his A/R portfolio that stands there uncollected. This can be analyzed and calculated in a number of ways, including the discounted cash flow model, but we don’t want to get too overly technical when in fact things can be explained a lot easier than that.

If you are going with a traditional method of a/r finance in Canada (and by the way, that’s not our favorite or recommended one - we prefer ' confidential receivable finance ') the other factors that affect your a/r costs are administration around your collections, the lost sales you are losing by having to instead carry your a/r, the financing costs you currently are absorbing, and of course the cost of a potential bad debt if the receivable is uncollected.

As we noted, the best solution, in our opinion, for factoring in Canada is a confidential invoice financing facility whereby you bill and collect your own receivables without any interference from your finance partner. At the same time you receive all the benefits of factoring, which include immediate cash flow advances on your A/R, allowing you to operate, and grow. This facility, as well as more traditional one offered by many does in fact take care of the time cost of your current A/R.

Receivable finance actually is a lot more simple a process then you think. You receive the cash from selling your A/R on an ongoing basis, giving you the ' opportunity ' to reinvest cash more quickly into your business. In Canada A/R financing ranges in the 2-3% area assuming a 30 day collection period from your clients.

Depending on how you allocate your time, admin, lost opportunity, and current financing costs you might find by some carefull analysis that your current costs are anywhere from 10-20% on a 2-3 month uncollected receivable .

Bottom line today? Simple. Understand the costs of your current a/r financing and investigate how you can turbo charge your cash flow via a receivable financing solution . Speak to a trusted, credible and experienced Canadian business financing advisor for help on cash flow finance.









Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


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

No Brainer Financing - Equipment Funding and Leasing Services In Canada

Smart Asset Finance In Canada Starts With Leasing


Information on equipment funding and leasing in Canada. Utilize asset finance services for maximum benefits and minimal downside risk .


The business ' no - brainer '. A sometimes overused term that means of course an easy solution that’s ' obvious'. That’s more or less how we feel about equipment funding and leasing services in Canada. Let's explain why.

Given the amount of businesses that use lease financing in Canada (approximately 80%) it’s clearly a fact that whether your firm is a start up or one of Canada's major corporations that leasing services in Canada solves asset financing challenges and problems. Rarely does one form of Canadian business financing address the ' numbers' and ' budget' challenge so effectively.

We supposed that if you consider that Canada's FP 100 largest firms consider leasing a ' sophisticated ' method of financing assets that it’s a little difficult to imagine a small start up business using the same financing vehicle, but the reality is, its one size fits all!

Part of the ‘ no brainer' aspect of equipment funding is simply the fact that every type of asset can be financing, including by the way intangible assets such as software and service type contracts.

Business owners sometimes do however actually miss the key basics of lease finance - it’s the lessor who owns the equipment, and you are paying, in effect ' rent ' to use the asset. Naturally at the end of the term of your transaction, depending on how you have structured the transaction you can either own the asset, return it, or invoke other types of flexibility - i.e. temporarily extend, etc.

It's the lease contract, either through a ' master lease ' or simply a one time transaction document that specifies your rights and obligations. Lessors in Canada register their lease under Canada's Personal Property Security Act which allows lenders, creditors, owners, etc to ensure the collateral is properly collateralized and secured.

In fact, here’s a tip. If you want to see who your competitors finance with have your lawyer run a PPSA search and you'll get a list of all secured financings on that competitor. It's a commonly used, dare we say ' trick' by numerous parties for various purposes, and there is nothing wrong with it.

A good way to assess your whole view and use on leasing is to think of it in a couple categories; they include: benefits, risk, documentation, and credit approval.

A tremendous amount of confusion exists out in the Canadian marketplace around the difference between leases and a loan. We can assure you there are differences, and knowing those differences, and how they affect your balance sheet, income statement, taxes, and rights can save you thousands of dollars .

Your business will make the final call, but if billions of dollars are financed under lease equipment funding strategies in Canada every year someone is clearly on to something, and that’s why its prudent to investigate the ' no brainer ' aspects of leasing in Canada . Speak to a trusted, credible and experienced Canadian business financing advisor on getting the best rates, terms and structures for your company or business.





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/equipment_funding_leasing_canada_services.html

Best Time To Consider Government SBL loans ? Now! The Canada Small Business Loan Works

Small Business Financing Tailored to your perfection!


Information on government loans in Canada. The attractive rates, terms and structures of this financing make now the time to consider the Canada Small Business loan, aka ‘ SBL ‘.





A whole lot of business relates to good fortune or business smarts around timing. So when exactly should business owners investigate and pursue government loans? We're talking specifically about the Canada small business loan, and our recommendation is: right about now!

When many Canadian business owners or financial managers of start up firms, or firms that are under, say five million dollars in revenue think of a government loan they might tend to think of this as some sort of handout or something involving a strategic tax break of sorts. That’s the farthest thing from the truth around the SBL loan program in Canada.

If we had to describe it simply ( that’s our style by the way ) we'd say it was a specially tailored financing program for new or smaller firms that provides access to funding and financing you normally might not qualify for under more traditional criteria and from those ' traditional' institutions, aka our beloved Chartered banks.

So when you take the time to understand the program, ensure you qualify for it you just might agree with most that its one of the most superior financings in today’s economy.

We're referred several times to the amount of 5 Million dollars as a revenue size. That’s for a reason, which is simply that the program is only offered to firms that have under 5 Million dollars in sales or who are start up, pre revenue in nature. Franchises by co incidence are great candidates for this the Canada Small Busines Loan, technically referred to as the federal BIL/CSBF program.

Recall also that we identified the SBL as being perfect for firms who couldn’t access traditional bank financing. Well, if you are looking for some irony, those same banks that might not have provided you with the financing you wanted are actually the same entities that administer and run the program. How ironic! It's just that the majority of the loan, when approved, is in fact guaranteed to the bank by those good folks at INDUSTRY CANADA in Ottawa.

So are SBL loans one of those secrets only shared and utilized by some. You decide, because for the latest statistics available over. 7000 firms in 2010 used the program for billions of dollars in financing. That might be one of your competitors by the way.

What makes the program so great? The fundamentals are simply very attractive from a financing point of view. Rates are just several points over the bank prime rate, terms are from 5-7years typically, and even items such as leasehold improvements can be financed - those items typically being very difficult to finance under any financing at any time. Actually BIL, the technical term of the program stands for Business Improvement loan.

So, yesterday? Already gone. The future - who knows where your firm will be at. So consider now as the appropriate time to investigate SBL government loans as a vehicle for business financing success. Speak to a trusted, credible and experienced Canadian business financing advisor today on why this program is right, right now!





Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 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/government_loans_sbl_canada_small_business_loan.html

Important Lessons On Financing A Franchise In Canada - Franchise Business Loan Success

Financing Those Great Franchise Opportunities in Canada

Information on financing a franchise in Canada , The right franchising business loan is critical to your entrepreneurship success!




It might be a proven business model, but funding that model can be a challenge without the right information and assistance. We're talking about financing a franchise. A franchising business loan done properly is of course what is going to make those franchise opportunities you've chose work.

So is there a cost to buying into what most people recognize as a ' proven system ‘. The essential cost of course is your own personal investment into the business, as the type of financing that you obtain to acquire, and grow your business.

While many clients come to us with the mindset that financing a franchise is a ' start up ' type of business that comes with all sorts of risk and challenges the reality is that in many ways financial institutions and other lenders view this business model a safe way to enter into entrepreneurialism. And that translates, when you know what you are doing, into financing opportunities to create success for your vision.

A typical question we get is whether the type of business or brand or reputation of franchise opportunities in Canada matters relative to the finance challenge around acquiring that business. In general we can say it does not. Of course if you have been lucking enough to acquire the rights or an existing unit with an international brand that is already established that’s one step ahead, but the reality is that each new franchise financing opportunity is typically handled on its own merits.

In Canada you can typically be expected to put in a minimum of 10% permanent equity into your business when utilizing one of the most popular finance programs available to franchisees. However to make that transaction work, and get approved realistically you should be prepared to demonstrate the ability, not necessarily the cash, to fund up to 30 -40% of the acquisition.

Don’t forget also that an existing franchise, wherein you are purchasing for a franchisee who is selling is generally financed under the same mechanisms as a new unit. In Canada it always feels like the majority of franchises are Quick Service type restaurants but given that the franchise industry in Canada represents almost 50% of the economy you can be assure there are lots of other industry business models out there offered by Canadian, U.S. and international franchisors.

If there is one ' trick ' ( can we actually call it a trick?!) to financing a franchise in Canada it probably boils down to being prepared in advance for financing while at the same time working with a franchise financing institution or advisor who has special expertise in this type of finance.

In Canada many of the well known brands in franchising do in fact have relationships and packages available to you with 2 institutions, our chartered banks and one international franchise finance firm. However, we want to make it clear there is certainly no guarantee on financing your new business just because a relationship may have been forged in the past.

A franchising business loan in Canada is most easily accomplished via the federal BIL/CSBF program. This can be complimented by equipment and asset financing as well as working capital solutions that are either entwined or independent of the main financing.

Speak to a trusted, credible and experienced Canadian business financing advisor on franchise opportunities that can be properly financing in Canada.




Stan Prokop - founder of 7 Park Avenue Financial –



http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 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/financing_a_franchise_franchising_business_loan.html

How Asset Based Loans And ABL Financing Provide Superior Canadian Lending Solutions For Your Company

Shouldn’t You Be Considering Asset Based Lines Of Credit?


Information on asset based loans in Canada and how this type of lending and financing via ABL facilities for inventory and receivables generate more cash than traditional bank lines for Canadian business .


It's certainly not an unreasonable question. The question from clients is simple: ' How Do asset based loans via an ABL financing arrangement provide more cash to a business than a traditional lending arrangement '. As we said, fair enough. Let’s explain.

Whether you are a manufacturer, a distributor or wholesaler, or even a retailer with inventory and receivable investments on your balance sheet... well guess what, you need a business line of credit.

A revolving credit facility via either a bank or an independent non bank finance firm provides you with ongoing operating capital to optimize your firm’s growth. Naturally your inventory and A/R are the essential collateral behind asset based loans. As you convert inventory into receivables or cash sales your working capital and cash flow fluctuate, on a daily basis. Naturally along the way there are seasonal or one time bulges in your sales and finance needs.

By monetizing that collateral (our aforementioned A/R and inventory) you create cash flow to keep your business surviving, and, hopefully, growing! Naturally you have one other alternative to all this, which is putting more of your own personal owner equity into the business, or bring in outside capital. That’s allowed by the way, it’s just more expensive and dilutes your ownership - so in general not a good thing for all the obvious reasons.

So back to our question, which was ' how does the abl facility add more cash than say, for example a bank facility '. The answer - it’s all in the margining. By drawing down on better margins on eligible inventory and receivables you accelerate cash flow based on growing sales. In essence you're also turning money over quickly, and those increased turns of your accounts and stock lead to a greater return on equity. That’s a good thing!

So that’s the basic theory behind abl backed revolving credit facilities - let's check into the real world for a minute and demonstrate exactly how that margining might work.


Naturally there are all kinds of ' inventory ' in the Canadian business landscape. And not to complicate things, but that inventory is broken down into raw materials; work in process (‘WIP’) and of course finished goods. By agreement with your ABL lender you create an ongoing borrowing base for your type of inventory, given its cost and salability.

In general we can make the statement that finished goods and raw materials can often be financed anywhere from 30-70 cents on the dollar.
We hate to generalize, but given the variety of inventory it’s safe to say each industry and company is a bit unique in that manner.

So, on to A/R. What's the scoop here? Receivables it can be said are the most coveted collateral by your abl lending and financing partner. Very common advance rates are in the 90% range, and it’s certainly not uncommon if you have good records and a track record to even negotiate one time temporary bulges.

In summary, when you consider that all companies in Canada of any substance are eligible for asset based loans, and giving weight to the fact that they provide more cash flow than traditional bank financing it is safe to say this financing solution should be at least examined by Canadian business owners and financial managers looking to enhance working capital .

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can get a better deal on cash flow 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/asset_based_loans_lending_financing_abl.html

Options And Sources Of Canadian Business Financing - Raising Business Finance

Canadian Business Finance Alternatives



Information on sources of business financing for Canadian companies . Raising finance capital can be achieved with a variety of options that are both traditional and alternative in nature.



Let's be honest. What business owner or new entrepreneur doesn't want options and sources of business financing for Canadian companies or new ventures. Raising finance for any firm is a challenge - the larger corporations seem to have it down pat, but what about the small and medium sized business owner.

Let's examine some options on how you can get capital for your business, and at the same time review some of the benefits, and risk, around some of these options.

Looking for capital revolves around your ability to determine whether you need operating capital or long term capital in the context of asset financing or permanent working capital.

Operating capital is required for the combination of start up expenses, as well as ongoing cash flow and working capital financing. These initial funds are used for product development, marketing, legal and accounting fees, as well as leasehold improvements to your facility or store.

Most Canadian businesses involved in any sort of research and development around their product are probably eligible for Canada's SR&ED, aka ' SRED' credit. It’s a non refundable cheque from federal and provincial authorities.

Your SR&ED claim is most successful when it is prepared by a qualified SRED consultant who can maximize the benefits of the program. We cringe when business owners or financial managers tell us that the program is ' just too much paperwork ' because they are clearly forsaking a true capital injection into their business. Many of those consultants will actually prepare your claim at their own time and expense risk, offering you a contingency agreement on those funds. The bottom line: check out this program.

Leasehold improvements are generally very difficult to finance if you are starting a business, and even if you are already established and generating revenue. That's why it's important to investigate Canada's Small Business Loan Program, technically referred to as the BIL/CSBF program. It finances leaseholds to a maximum of $ 350,000.00 and offers rates, terms and structures that even larger corporations would be envious of.

We're not big fans of utilizing so called ' love money ‘, i.e. funds from friends and family. We're even less enamored by clients who are actually prepared to collapse personal registered savings or mortgage their homes to start a business. While its important to have some ' skin in the game' as the expression goes its our recommendation that you incorporate your business and strongly seek out traditional and alternative financing to fund your business .

Some sources these two types of financing include supplier financing via extended terms, sale of receivables which is commonly called invoice discounting , merchant cash advances ( cash flowing future credit card sales ) equipment financing for hard assets, or even more sophisticated royalty arrangements that might be a hybrid of both debt and equity in your business.

In Canada venture capital and private equity is generally very difficult to obtain for most start up ventures - we caution clients to not dwell too long on these options unless you're committed to a long haul in effort!

We also point out that the size and credit quality of any business, start up or established still offers numerous sources of financing, either traditional or alternative. Speak to a trusted, credible and experienced Canadian business financing advisor on sources of business financing and options for raising capital for your venture.



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/sources_business_financing_raising_finance_options.html

A Perfect Cure? Why Canadian Business Equipment Finance And Asset Finance Via Leasing Create A Tipping Point For Success

Winning with Business Equipment Finance


Information on how business equipment finance via a solid asset financing and leasing strategy can strengthen your firms asset base and provide solid working capital and cash flow relief .


The ' tipping point '. It's one of those business terms that seems quite popular these days, denoting a ' critical point which leads to an irreversible development '. We think it's a solid term to describe how Canadian business owners realize that business equipment financing, ie asset financing via leasing suddenly becomes your new success strategy for financing your firms new /required assets.

It's a fact that over 80% of all businesses in North America lease equipment. Unfortunately we run into many clients that are not 100% sure they are at that ' tipping point yet. That could be for a number of reasons. While the majority of folks we talk to are mesmerized about the interest rates or monthly payment on a transaction they often don’t understand other risks and benefits associated with business equipment finance.

Canadian business owners and financial managers can create their own tipping point by investing just a small amount of time , either on their own or talking to a Canadian business financing advisor on the total ' lifecycle' of the lease transaction . When you minimize any penalties and risks, while at the same time maximizing benefits, it's clear you're pretty well at our ' tipping point '.

Just discovering new leasing and asset financing options can be the difference in how your firm used to look at leasing and how you might be looking at it completely from a different perspective in the future,

Operating leases are generally a very misunderstood aspect of business financing in Canada. We've got our own theories on that, because some lessors sure do a great job of confusing this offering, particularly when it comes to understanding all the flexibility that you can invoke before, during, and at the end of the term of the lease.

We never want our clients to think of their lease company partner as an ' adversary '. In Canada there are hundreds of equipment finance firms who theoretically want to provide you with the best financing terms you are looking for - that ‘nirvana’ combination of great rates, terms, and structures.

Yet many business owners and finance managers, particularly for small and medium sized companies there never sure if they are leaving money on the table.

The 5 aspects to any equipment lease transaction are the term of the lease, the interest rate, the value of the transaction, the monthly lease/rental payment and the end of term option. That’s a handful, but by simply focusing on the positive and risk aspects of any of those aspects of your transaction you are moving ever closer to our tipping point.

Even simply things like putting a one time master lease agreement in place allows you to provide a consistent program for your firm of benefits that make sense.

When you combine and understand the powerful aspects of asset financing and leasing in Canada, ie capital preservation, tax and accounting advantages, asset disposal, etc you are exactly where you want to be. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you achieve our tipping point.



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/business_equipment_finance_asset_financing_leasing.html