Business Receivable Factoring – Rethinking AR Finance Solutions

Turning Cash Flow Scarcity Into Working Capital Prosperity Via A/R Financing



OVERVIEW – .Information on business receivable factoring . How does the AR finance solution compliment and improve cash flow and working capital challenges?




Business receivable factoring in Canada . We suppose you can over think anything in business today, but top experts in Canada say that more and more companies are choosing financing with receivables as their stated cash flow and working capital strategy. Let's examine why that might be the case with AR finance.

There are of course a number of ways in which the Canadian business owner and financial manager can finance their cash flow. Next to ' cash on hand' of course receivables are your most liquid asset. Therefore their ability to turn customer commitments, i.e. your receivables, into that 'cash on hand' is an attractive option - if you're doing it for the right reasons, and also ' doing it right!’

When we say doing it right we mean of course that there are a number of different approaches and options available to the business owner/ financial manager. All of those options revolve around the risk your finance partner is willing to take, and how your facility operates on a daily basis.

Chartered banks of course finance receivables - they do this under their ability to provide Canadian business with an operating line of credit. Their approach differs from factoring, aka ' invoice discounting, aka invoice financing. Your firm holds the risk on collecting your accounts while the bank holds the security to your A/R, typically via a GSA, a general security agreement on all your company.

AR finance differs in that the mechanism under which your receivables are financed in a manner where the paperwork has you selling your A/R as you generate those sales. Ultimately under both scenarios, the bank and the finance factor firm, you have the ability to borrow and draw down on your receivables as you generate revenue. Naturally it’s your call as to how much you borrow and when, according to your needs.

We also point out to clients that financing your A/R is essentially a subset of asset based lending and bank borrowing in Canada. Depending on whether you are dealing with a bank or an asset based lender you also have the ability to margin your inventory and equipment assets in to a business line of credit. We don't want to get overly complex today, but there is also a business financing mechanism called ' Securitization' which is a more sophisticated form of moving your receivables from your balance sheet while generate cash . This is used by larger corporations and finance firms, but not today's subject matter - but worth mentioning.

In business receivable factoring you simply pay a fee, called the ' discount fee' every time you finance your a/r, In Canada on a typical $ 10,000.00 invoice that fee would typically be $ 200.00 for a 30 day period.

It's important to spend a lot of time, and get some solid advice around a business receivable factoring facility that you are paying for only what you use. You would be surprised at some of the tricks of the trade when it comes to the fine print from certain finance firms. In fact our own chosen and recommended method of financing is the CONFIDENTIAL RECEIVABLE FINANCE SOLUTION , allowing you to bill and collect your own receivables and only pay for what you use, when you want. Bottom line, you’re in charge.

Don't get caught in the ' illusion ' of thinking you understand all the technical aspects of AR finance. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow financing 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 10 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 :


BUSINESS RECEIVABLE FACTORING AND AR FINANCE


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com












Stan Prokop

Business Equipment Financing In Canada . Cornering That Lease Approval !

Can You Control An Equipment Lease Approval?


OVERVIEW – .Information on business equipment financing in Canada . What conditions are required to get your asset lease approved under rates, terms and structures that work




'What is my rate?' is a question we’re often asked by customers when they work with us with respect to equipment and lease financing .

They are surprised when I tell them that they get to pick their own rate! (All customers want the lowest rate!)
We’re not trying to be facetious when we make that statement. What we are saying is that the over all credit quality of a customer, as perceived by the lender ( that's important!) is in fact set by the customer, thereby driving a final approval on rate, term and structure of the proposed financing request.


The role of the customer, or their trusted advisor is to understand the basic credit information requirements and how the overall risk to the customer and their industry will be perceived by the lender. The irony of a lot of business leasing is that the industry for the most part used historical analysis to project future ability to pay. That is a difficult concept for the customer to handle more often than not - as an example the customer may have lost some money last year, driving a negative cash flow figure. Prospects have improved, new orders are coming in, and yet the business has a problem in getting new financing.
The customer needs to ensure that the information and ' story ' make the transaction become more ' approvable'.




Critical categories in the information submission by the company are as follows:


Length of time in business
Personal credit history of the owners
Relationships with other financial institutions
Quality of the financials (Some customers submit balance sheets that don't balance!)
Additional collateral available if necessary
Summary of key financial info such as depreciation, cash flows
Positive focus on management and its background and experience


If the customer is qualified to make such a submission a solid package as per our list noted above should lend itself towards an approval at current market rates and structures. If the customer feels they are not properly qualified to make such a submission they are strongly encouraged to used a qualified intermediary who knows the industry and, more importantly, knows the specific weighting given by a lender to the above noted submission requirements.


The amount of information required around each component is more often than not determine by the size of the transaction or the lenders total exposure to that customer. In many cases small ticket transactions (those under $ 25,000.00) are adjudicated via a credit application and public reporting sources such as Equifax or Dun and Bradstreet. Typically 60-70% of all small ticket transactions are approved.


In summary, customers who want to get a prompt and of course positive lease approval should focus on providing a clean package of required information that will ensure a prompt approval based on specific industry requirements around the transaction size and asset type.


Knowing that the lender will focus on future potential of the firm, the management experience, and the collateral asset are valuable data points for any business seeking a business equipment financing lease. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your lease finance 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 10 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 :


BUSINESS EQUIPMENT FINANCING CANADA – LEASE FINANCING



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com












Stan Prokop

The Govt Loan For Business. Why SBL Loans In Canada Deliver On Financing

Less Syllables. More Financing. The SBL Loan Works !


OVERVIEW – . Information on the govt loan for small business in Canada . Commonly called ‘ SBL loans’ this financing delivers on financing needs for start up and established companies with revenues less than 5 Million $




SBL loans . It's the govt loan for business in Canada if your firm has under 5 Million dollars in revenue or is a start up. Yes, we said start up! SBL is the acronym for what we lay people call the government small business loan.

So why does this method of financing have the potential to deliver for your firm or start up business. The fact of the matter is the SBL loan has helped close to 8,000 businesses in Canada every year, to the tune of several billion dollars. In many ways it’s the ' go to ‘to purchase and finance machinery, furniture, fixtures, and leasehold improvements. Included in that category are your computer and application software needs also.

We forgive clients who think that for some reason that they will be dealing directly with ' government ‘, which, rightly or wrongly has all sorts of connotations of red tape, delay, forms , etc. Nothing could be farther from the truth. Although the program is regulated and mandated by INDUSTRY CANADA in Ottawa the day to day reality is that the SBL'S are in fact delivered daily in your own community via chartered banks which , shall we say ' run' the program for the government .

So if you in fact thought you would have the pleasure of meeting with government for your loan we're going to have to disappoint you. It's much easier than that. Our own personal gripe with this is that each Canadian chartered bank, in our opinion, has a little different ' spin ' on the program . But we digress. Luckily we know the right ones!

We're the first to admit that you are very mistaken if you are looking for the proverbial ' easy money '. That is not the case. Although the actual deliverables of the loan are very attractive:

5 -7 year terms

Low competitive interest rates - (3 over prime)

No early repayment penalties

Nominal 25% Personal Guarantee

You don't necessarily need to be incorporated - partnerships and proprietorships ok!

Your opening balance sheet must be constructed to meet a proper debt /equity and current ratio

350k borrowing cap

Some relevant business experience





We can categorically call out that this is not ' easy money'. However, are the qualifications stringent or difficult? We don't think so. They are:

- You must be legally allowed to borrow in Canada
- You must have a reasonable personal credit history
- You must have a business premises lease for your company
- You need to have a minimum permanent 10% down payment/equity in the financing desired
- Strongly recommended/required that you have a business plan/cash flow forecast for the business

In your business plan and financial forecast you need to pay attention to the fact that cash flows from the business will be able to retire the loan properly.
It's strongly recommended that your opening line NOT be: We don’t have the money now, but if we do in fact get approved we'll repay you from sales ...'! . AGAIN, not recommended!

As a business owner you have the ability to make the whole process as complicated or easy as you choose. A better idea? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can ensure the govt loan for business, the 'SBL ' works for your Canadian 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 10 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 :

GOVT SBL SMALL BUSINESS LOAN




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653


Email = sprokop@7parkavenuefinancial.com















Stan Prokop

Canadian Business Financing Blog hits 50,000 Pageview Milestone

Our Canadian Business Financing Blog hit 50,000 page views today.



CLICK ON THIS IMAGE -->




Thanks to clients and readers who continue to have interest in our desire to spread the word on Canadian business financing solutions and alternatives !

Financing Franchises In Canada . Expert Facts On Obtaining A Franchise Business Loan In Canada

A STUPID QUESTION ROUND UP ON FRANCHISE FINANCING


OVERVIEW – . Information on successfully completing a franchise business loan in Canada . Financing franchises requires the right expertise and professional advice


A franchise business loan in Canada . We challenged ourselves recently to come up with some ' stupid' questions on financing franchises in Canada. Actually it turned out to be not that hard. No one would ever ask these questions would they? We're hopeful they wouldn’t but there’s a lot of misinformation around these days. So let’s dispel some serious fallacies around financing your business as a franchisee entrepreneur. Let's dig in!

Question # 1 - ‘Do I really need to finance a new franchise. Can I just pay cash or collapse my savings, registered, investments, or put a collateral mortgage on my house. That's what my banker recommends’

Answer - We suppose that you could pay your franchisor the full amount per your banker’s request. But why would you honestly do that? You incorporate as a franchisee to separate your business life from your personal life. That limits your liability to the assets of the franchise, aside from any personal guarantees. There’s a whole world of financing help out there when it comes to financing your business - specialized franchise finance firms, leasing companies, working capital solutions, even private equity firms in certain circumstances. Don't risk your personal financial assets if you can properly finance a franchise with rates, terms and structures that make sense.

P.S. You might want to remind your banker that the Canadian SBL/BIL/CSBF loan program is in fact one of the most popular methods of financing a franchise via a bank . Or is it that they don’t want to do the extra work that’s required to complete one of the best loan facilities in Canada for a franchise .


Question # 2 - ' I know what I am doing; I don’t need to spend time or pay for a business plan, do I?

Answer - Business plans, whether they be detailed or in executive summary format are required for all commercial lending opportunities when it comes to buying a business such as a franchise. They also later serve as a management tool to measure how well you are doing compared to your original financial goals. It's one of the best scorecards you can have when done properly. If you don’t have the time or financial expertise to prepare a business plan seek the advice and help of a Canadian business financing advisor.

Question # 3 - ' Once I finance via a franchise business loan I don't require further financing, right?"

Answer - While many types of franchises are in fact cash flow positive from day one certainly not all come under that category. So you need to spend some ' financial time ' in two areas - the early days of the franchise when more is going out than coming in, and secondly for long term growth and replacement of assets or leaseholds that might need updating. In some cases your franchisor may in fact insist that certain assets and leaseholds be updated/replace. So don’t forget to factor in ongoing working capital needs which can often be identified through your business plan or a cash flow forecast.


In summary - don’t let the challenge of financing franchises become a major hurdle in your success as a franchisee. The research and effort you put into picking and checking out a franchise should continue in the financing process.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your franchise business loan project.



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 10 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 :


FRANCHISE BUSINESS LOAN - FINANCING A FRANCHISE




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com













Stan Prokop

Unlocking Business Credit Lines Secrets. Why ABL Just Might Be TheBest New Offering From The Commercial Lender

Can You Name The New Trendsetter In Business Financing?



OVERVIEW – .Information on business credit lines in Canada. The asset based non bank line of credit, the ‘ ABL’ , is the new trend in finance from your Commercial Lender





Business Credit Lines Via ABL . It's our feeling that this business financing solution via a commercial lender is the newest trendsetter in commercial finance in Canada. We've checked with legal and we're most comfortable in saying that. Why? Let's dig in.

We're told that a ' trendsetter ' is simply a person or thing that establishes a new trend. And that new trend, as far as we are concerned is the ' ABL ' (Asset based line of credit for business).

Thousands of business in North America, Canada included by the way! , are utilizing this unique business financing service to grow their company. ABL , most people agree originated in the U.S. and has gradually over the years moved to Canada and other European countries.

And what is ABL? It's simply speaking a method of borrowing against all your business assets under one operating line of credit formula. Those assets are receivables, inventory, equipment and real estate if that latter is applicable.

The true beauty asset based business credit lines is that they work in a large variety of circumstances. Those include:

- Fast growth scenarios
- Management buyouts
- Acquisitions
- Turnaround refinancing

Unlike some methods of financing it’s also perfectly suited to both public and private companies

It also works well in both good and bad times - good time’s typically meaning fast growth situations where maximum borrowing power is needed, and those not so good times when business credit is hard to achieve.

Why is this new form of business credit lines gaining more traction everyday? Top experts in the field say that it’s because of the flexibility that’s available to business owners and their financial managers. More and more companies are using it, so it’s all about market acceptance we suppose. While Canadian chartered banks provide tremendous amounts of liquidity to Canadian business it definitely can’t provide it all, primarily due to lending restrictions.



How much new working capital/cash flow can be obtained from a commercial ABL lender? We can comfortably say that it often is anywhere from 30-100%, as we have seen those examples all the time. Take the simple fact that ABL typically offers 90% A/R margining versus the banks 75%. Also inventory and equipment are then bundled into the equation; create a new surge in your borrowing power. It’s simply a case of quickly reaching your maximum borrowing power.

One key point that we make to clients is that the actual approval criteria when you compare bank credit lines with ABL are significantly different. While the chartered banks, by virtue of their mandate rely heavily on the quality of your profits, strong balance sheets and ratio and covenants that define those the ABL lender focuses on one thing - ASSETS!

Business owners and their finance managers that plan for the future pay close attention to their future borrowing power. When that ability to borrow what they need to survive and grow is restricted... well you can take it from there!

We point out to clients that there are some unique ' sub sets' of ABL business credit lines. They might just be for A/R, or just inventory (in the case of a retailer), or combinations of those that might include equipment, tax credits, etc. That same day / all day access to credit capacity is what differentiates ABL as the new ' trendsetter' in business finance.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the needs you require from a commercial lender.






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 10 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 :


7 PARK AVENUE FINANCIAL – ABL BUSINESS CREDIT LINES







7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com
















Stan Prokop

Business Financing Services In Canada . Fixing Financial Emergencies Via Specialized Funding

Putting The ‘ Ding’ In Fun When It Comes To A Financing Emergency . It’s Funding !



OVERVIEW – Information on business financing services and financial strategies for the funding needs of your firm when emergencies arise.



Business financing services in Canada . That's where the Canadian business owner and financial manager looks when they need to quickly put the ' ding ' back in the fun; which equates to FUNDING of course!

We meet many clients who fortunately are doing a pretty good job of planning ahead for their financing needs. What they don't forsee is the unanticipated event that causes an immediate negative reaction in their cash flow and working capital funding needs. Just the other day we met with a client who had lost their major client. The problem? That represented 80% of all of their business. The adverse reaction? Well, you can pretty well feel the pain, but one immediate thing that happened was that their bank called their operating line of credit.

Is there some ways to take stock of how you can plan for adverse business events that happen pretty fast? We think there is, so let's dig in!

A lot of the points we'll make revolve around three areas, growing your business, generating profits, and just plain surviving! It's the goal of the owners and financial managers to keep cash flowing through all those periods, and each of them has their challenges.

It seems easy to prepare a cash flow forecast and get a strong sense of your inflows and outflows over time based on your own experience. But what will you do when the unexpected occurs: That might include:

Competitor issue re pricing/products
Government legislation
Technology change

Etc!

That's when things get exciting, in the worst way!

So how can the business owner plan for funding when an emergency situation occurs? To us it comes down to three elements:

1. Having a strong sense of the time it takes to search for funds - It just might be recommended that you always have an expert in Canadian business financing to talk to - even in the good times

Knowing what options are available - These might include a temporary bridge loan on unencumbered assets, a receivable finance strategy, Purchase order financing, an unsecured cash flow loan, and finally a monetization of any tax credits which can be financed . (Yes you can finance a SR&ED claim), and the sale leaseback of owned assets. Oh, and by the way, do you recall that client that had their chartered bank operating line of credit called - they are fully eligible for a non bank asset based line of credit?

3. Knowing that you do have a strategy to mobilize resources you are not using today. At this point you are no longer ' keeping score' in business; you're taking stock of all your financial resources in business assets, financing relationships, etc

Financial emergencies can happen to your company at any time. At that point you need to ensure you know what your resources are, what assets can be liquidated, and knowing you have alternative financial vehicles to cope with planned outflow of cash.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a financing emergency, or help you to avoid one!





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 10 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 :

7 PARK AVENUE FINANCIAL – CANADIAN BUSINESS FINANCING SERVICES


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com











Stan Prokop