Finance Factoring. Looks Like You Finally Got Answers On Receivable Financing In Canada

Financial Engineering Via A Canadian Business Financing A/R Strategy


Information on finance factoring in Canada. How does a receivable financing strategy from a commercial finance firm differ from standard bank financing ?



Receivable financing in Canada . Canadian business owners seem to have a major point of confusion around finance factoring and why this for of ' financial engineering ' differs relative to bank financing. Let's find out why. Let's dig in!

An A/R finance strategy is not tied to a long term financing via debt. That in general is a good thing, and, as well it delivers constant recurring cash flow and working capital needs for Canadian business.

At the core of understanding the A/R financing process via factoring is the need to understand the difference between ' assigning ' and ' selling'. When you finance your A/R through the bank you provide them with an assignment of your book debts, i.e. your receivable base. In finance factoring the paperwork around your transaction revolves around the actual sale of the receivable as you finance them.

What then are some of the key advantages of invoice financing utilizing a commercial third party finance firm, vs. a bank? They might include:

Constant availability of cash

The ability to address seasonal bulges in financing needs

A strong balance sheet relative to the amount of cash you have on hand

When we talk to clients about those advantages the one negative issue in their mind is the higher cost of this method of financing. Remember though that this higher cost is what we could term a ' rising and falling ' issue. The actual costs of factor finance depends on several key factors - they include how fast you collect your accounts, the discount rate at which your sales are purchased at, and the advance rate on your cash , which is typically 90% of your a/r balance. (Banks in Canada only advance or allow you to draw 75%).

Remember also that we spoke of finance factoring as being a short term day to day cash flow solution. Yes, the business owner/manager could in fact implement a ' permanent working capital solution ‘. But when you weigh the costs of borrowing a large sum for a term of typically 5 years at a fixed rate you will see that the actual financing costs of a permanent bank term loan are in fact significant. Using that example the business owner or financial manager may well find that receivable financing is in fact a better strategy!

So it is very important therefore to analyze the actual costs, and benefits around either pledging (bank) or factoring (commercial finance firm) your accounts receivable base.

If you use a confidential accounts receivable finance solution you also can avoid any notification to your clients that is traditionally required by old school finance factors. That’s a key benefit!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing engineering around cash flow and working capital.




7 PARK AVENUE FINANCIAL - CANADIAN BUSINESS FINANCING EXPERTISE


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 = RECEIVABLE 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

Government Tax Credits In Canada . Are You Underly Financed Around Your Sred And Film Non Refundable Credits?

Plain English Tax Credit Financing – Film to SRED


OVERVIEW – .Information on financing government tax credits in Canada . SRED, film and digital media projects are 100% financeable when it comes to federal and provincial non refundable programs claims



Government tax credits. While many view SRED (SR&ED), Film, Animation and other non refundable tax credits as the proverbial cash grab we try hard not to weigh in too much on the merits or non merits around this area of the ' public purse'.

What we do weigh in on though is the fact that numerous types of tax credits are 100% financeable in Canada, so whether its a SRED manufacturing or software credit, or a film TV or animation project we want to ensure Canadian business owners, producers , etc understand that tax credits can be ' cash flowed '! Let's dig in.

The SRED program has been around a long time - it has undergone fairly significant changes recently but still is relatively intact, and, as we said financeable, as always, in the same manner. While the focus of the government is to ensure that SRED claims aid in the technological advancement of Canadian business owners and managers simply want to stay competitive, grow their company, and know they can, if needed, finance their tax credits.

Somewhere between 3-4 Billion dollars each year are claimed by companies who, either on their own, or with the aid of a SR&ED consultant file claims.

When you finance a SRED claim it does not have to have final approval Vis a Vis a final audit, etc. We do hasten to add though that while a claim prepared by yourself is financeable, typically more weight is provided when it is prepared by a professional.

The other area of government tax credits in Canada that are quite popular, and oh so non related, is the credits that are available in the FILM, TV, and DIGITAL MEDIA/ANIMATION industry. These credits can help to provide total financing for projects pretty well up to the 40% range. While SRED claims focus on inventing or improving a process or a product the media credits tend to simply be in projects that inform or entertain. It is interesting to note in some cases that a film//TV/animation project might also have a SR&ED claim attached to it. Talk about a double whammy.

Clients are often asking what is in fact eligible spend on the media type projects. Its things like salaries and wages, tangible expenditures, service contracts, etc.

Canadian tax credits compete with American and European jurisdictions who in fact offer similar programs. It’s quite acknowledged that the Canadian tax credits are in fact the best, certainly they seem to have proven to be most reliable. For certain media tax credits you require a pre approval certificate from the government and key personnel, i.e. the producer for example should be a Canadian citizen.

Tax credits don't have to be a complex area when it comes to financing. If you have a good SRED consultant, or a solid Canadian tax credit budget a trusted, credible and experienced Canadian business financing advisor can assist you in cash flowing your non refundable credits into working capital for your company or project. Don’t be ‘ underly financed’!




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 TAX CREDIT 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 Federal Small Business Loan In Canada . There’s No ‘ What If ‘ When It Comes To SBL Loans

There’s No Shenanigans When It Comes to SBL Loans in Canada



OVERVIEW – .Information on the Canada federal small business loan . Why the ‘SBL ‘ Can help your business financing needs





The Federal Small Business Loan. When we think of the term ' shenanigans ' it conjures up images of fooling around. There are no shenanigans when it comes to the Canada ' SBL' loan. It's a straight forward program for Canadian firms, start up included, to get the financing they need to start/grow their business.

Is the program a great idea? We think so and here's why, so let's dig in.

For starters any connotation you have with grants or hand outs need to be dispelled right away. You don't have a ' right ' to receive approval for such financing, so it’s a bad idea if you think you are on the ' auto qualifies ' path. You are not.

What SBL loans are about is the fact that its a government guaranteed financing program that is the cornerstone of at least 7000-8000 businesses every year – for Billions ( yes that’s with a ‘ B’ ) . The government, under ' INDUSTRY CANADA ' guarantees the majority of your loan to Canada's chartered banks. The general theory around the federal small business loan is that the bank is making a loan under conditions they otherwise might not be able to make to Canadian businesses with revenues up to 5 Million $, which is the size cap for companies wishing to apply .

When you are approved for such an SBL loan financing its safe to assume you have a good deal. Why? Simply speaking rates, terms and structures are both attractive and competitive. Loan rates are 3% over prime, financing is repayable at any time without penalty, and the whole issue of personal guarantees is often allayed because of the need to provide only a 25% personal covenant for the loan. Those sorts of terms, especially when it comes to start ups, or franchises, are ultra attractive and simply not available with other more traditional loan financings.

So how does the bank, which administers the loan program for the government, assess credit criteria? As we said, there are no shenanigans here; it’s a very simple short list of criteria. Owners must have reasonable personal credit, they must be able to make a 10% permanent down payment (equity) contribution, and they must have a proper business location backed up by a premises lease.

By the way, the SBL program in Canada is really one of the only vehicles that allow you to finance leasehold improvements which typically are difficult to finance under normal circumstances.

You also must ensure you supply a business plan and cash flow projection that demonstrates your ability to repay the loan, which has a maximum borrowing of $ 350,000.00. Remember that the SBL lender, aka our Chartered banks are not equity players. They have no upside! They’re just happy that you can make the loan payments out of cash flow from profits.

Most Canadian business owners and managers never seem to feel that business borrowing is straightforward. In reality we agree its a bit of an art and science ... so seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a business financing track record who can assist you with your SBL small business loan 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 :


FEDERAL SMALL BUSINESS LOAN – THE SBL




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

Financing Franchises . The Rules For Franchise Funding In Canada

Can You Imagine Franchise Funding Going Smoothly ?



OVERVIEW – .Information on franchise funding in Canada . Financing franchises is not easy, but gets easier when you know the rules and have he right access to help and expert information




Financing franchises in Canada. Boy would it help to know some of ' the rules ' when it comes to franchise funding going smoothly. We know some of those rules, so let's dig n.

To say that the actual successful acquisition and financing approval for a franchise is a big step for the entrepreneur is a bit of an understatement. Coupled with all the selection, administrative and legal issues that surround acquiring a franchise comes the finance challenge. In some ways entrepreneurs view it as the biggest challenge.


The amount of funds you yourself have to invest often plays a key role in your final franchise decision. While a good portion of your total purchase will in fact be debt of some sort - (leases, loans, working capital, etc) there is the equity component you have to consider. You may not be aware, but many franchisors in fact make a franchisee decision related directly to the amount you have to invest, and they are pretty clear about that on their website and introductions with you.

So where do clients we talk to raise equity for their ' down payment ' portion of the transaction. Some collapse savings, some approach friends and family. While using savings as a key component of your equity in the deal it is certainly not preferred to collapse registered type investments, RRSP's etc in order to avoid the tax bite.

When approaching a bank or a specialized finance firm they will absolutely be focusing on that down payment. And it’s not a question of just showing up with the down payment ability - the bank or lender will typically want to know how it was achieved.

We have referenced banks as a source of financing for financing franchises - that needs to be clarified. Unless you are a very high net worth and valued client of the bank it is somewhat, in fact quite doubtful that the bank will finance the purchase directly. While Canadian chartered banks do realize the benefits a proven business models and market share and systems in place to succeed they rarely finance a franchise outright.

What they do though is to in many cases; utilize the Canadian BIL/CSBF loan program that is provided under the auspices of the government. It's a perfect match for franchise funding by the way, even though we suspect it was designed for that!

The true beauty of that loan also is the fact that no outside collateral is required, so you won’t be asked to collateralize your home, other personal assets etc. Clients are always asking us for a clear explanation of the loan criteria for a BIL Franchise loan. That basic criteria is as follows -

- Good personal credit history
- Ability to contribute 10% minimum permanent equity in the business
- You must have business experience and be able to demonstrate that in a business plan and cash flow forecast
- Your business must have a permanent address and lease that is at least as long as the loan term
- You should be able to demonstrate commitment and enthusiasm - just ' buying a job ' doesn't cut it!


In many ways you can expect that the bank and franchisor are looking at the same things - your business experience, your financial stability, etc. Remember though that the bank or specialized franchise lender isn't an equity partner, they also won’t be sharing in monthly royalties.

So ensure your business plan and cash flow reflects profits and repayment ability! Don't forget also to address the fact that you have working capital and potential long term financing needs, which need to be well thought out.

Can franchise funding go smoothly? It can with the right knowledge, info and resources. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who is an expert and has a track record and can assist you with your franchise financing needs via the right ' RULES'!





CANADIAN FRANCHISE FUNDING




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
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 Credit Lines . What Went Wrong And Why Asset Based Funding Can Fix That

The Real Reason Asset Based Funding Works Better


OVERVIEW – Information on why asset based funding is the new alternative when business credit lines don’t work for Canadian business financing needs




Business credit lines in Canada . What went wrong ? When we talk to Canadian business owners and financial managers it's simply a case often of ' not enough ‘, or not at all. They have challenges obtaining traditional bank financing for their operating needs. Is there a solution? One solution is in fact asset based funding for credit line need. Let's dig in and examine why!


The good news about asset based lending is that its pretty well for everyone - from start up to it's current usage by some of the largest companies in Canada . No industry cannot be disqualified by an asset based lending solution, if in fact you have the one requirement - assets!

Asset based funding for credit lines works because it uses somewhat of a... shall we say ' buffet ' approach. By that we mean that it takes a look at all of your assets and picks and chooses to combine into one borrowing facility that you draw down on an ongoing basis. It's that pooling concept that makes ' ABL ' (asset based lending') work. That pool of assets by the way includes receivables, equipment, inventory, even your real estate if your company owns it. Imagine using a portion of your companies building and premises as part of your day to day business line of credit. That's what ABL is/ does.

As a business you have in fact ' unlocked' your borrowing power, and when you combine that with the flexibility of bundling them together into one borrowing facility you in fact have... you guess it, cash flow power!

One aspect of ABL that is sometimes misunderstood, although we have hinted at it already above, is that it has various subsets. So yes, you can just have an ABL A/R facility, in industries where inventory is heavy on the balance sheet - for example a retailer, just the inventory becomes the borrowing power. Ditto for equipment and real estate.

Asst based funding almost always works better if only for the fact that it increases borrowing power. We've seen clients with no borrowing facilities finding themselves in a position of finally have a business credit line.

A recent example - take the case of a manufacturer who re organized their business completely due to a law suit by a major client. That re organization found them with zero borrowing power. Enter the ABL. By putting together a facility that includes receivables, inventory and unencumbered equipment a new facility was created for 500k. So 500k from zero - that’s new borrowing power.

Costs of finance ABL vary significantly. While it almost always is more expensive the business owner / manager has the ability to generate cash flow, grow their business in an almost unlimited fashion, etc. We do hasten to add though that in some cases on larger transactions Asset based funding is in fact cheaper than traditional chartered bank financing. But for the SME owner expect more borrowing power at higher costs.

If you want to discover why business credit line via asset based funding work better seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your credit facility needs .. but better liquidity - that's the trade off.




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 IS .. 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

How Working Capital Companies Prevent Cash Flow Armageddon Via Commercial Business Loans

It All Comes Down To Good Working Capital Chemistry


OVERVIEW – .Information on solutions via working capital companies for commercial business loans that accelerate cash flow financing for Canadian companies.



Commercial business loans and asset monetization from working capital companies. It all comes down to some good working capital chemistry if you want to avoid the kind of cash flow Armageddon that besets many firms that we read about in the business papers everyday.

There is no better subject that the Canadian business owner or financial manager can focus on when it comes to improving your chances of busines survival.

And it always comes down to only a few core competancies that you must master , namely collecting your receivables as they come due, managing those payables with your preferred vendors, and turning your inventories, if applicable, over properly . One of our favourite writers described your balance sheet recently as the place where all the dead bodies are buried .

What did he mean by that - simply that that’s where business mistakes tend to accumulate - old inventory, 90 day + receivables, and payables and accruals that aren't recognized properly.

One of the best ways to aggressively generate cash flow is to ensure you have a proper financing vehicle in place for your A/R. That might be a Canadian chartered bank line of credit, or in some cases it might be a receivable financing solution from an idependent commercial finance firm. In certain cases also A/R finance might be a ' subset' of an asset based line of credit. All of these solutions allow you to monetize balance sheet assets into cash flow/working capital needs.

The business owner/ manager in the SME sector can be forgiven for viewing the cash flow situation in his or her company as complex. Bottom line, a whole bunch of things needs to happen to ensure proper business survival.

Inventory is probably even a touchier subject - it's really easy to lose more sales opportunities and larger contracts and orders because of your improper management and financing of inventory. It's a fine line of course because you want to keep the investment you need to make in inventory (and A/R) low but be able to satisfy all your revenue creation needs.

Ways to monetize and properly finance working capital are both traditional and alternative, and diverse. A lot of the choice you can make to finance your company really revolves around what stage your business is in when it comes to borrowing power.

That will dictate whether you can access:

Canadian chartered bank lines of credit
Receivable financing solutions
Inventory finance
Asset based non bank lines of credit
Tax Credit Monetization
Securitization
Purchase Order/ Supply chain finance

All of these will get you to the goal line. But it’s simply a case of knowing how and when. Seek out and speak to a trusted, credible and experienced
Canadian equipment financing advisor who can assist you with commercial business loans from working capital companies that address your firm’s particular needs. It's a great way to avoid cash flow Armageddon!





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 :

WORKING CAPITAL COMPANIES COMMERCIAL 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

Customer Financing . A Vendor Financial Services Lease Offering Is The Lightbulb That Sparks Sales!

Losing Sales Because You’re Not ‘ Optimized ‘ ?


Information on customer financing solutions for Canadian business . A formal, or informal vendor financial services program via lease finance might just be the solution to ‘optimizing ‘ sales!


Customer financing . Could it be the reason your firm is not ' optimized’ for better sales revenues that translate to profits and cash flow. We're told that being ' optimized ' focuses on being ‘effective and useful '. That’s why knowing a bit about how you can master vendor financial services via something such as a lease offering makes your firm optimized to generate more revenues. Let's dig in and examine why!

Most Canadian business owners and financial managers realize that the obstacle of ' pricing ‘is in fact one of the biggest challenges that your clients face when acquiring your products and services. By providing them with a method to defocus on price (ie offering a financial solution such as a lease) you are in a much more competitive position to win sales.

Many significant opportunities for Canadian business are in fact lost because no financing solution was provided. Sometimes we assume the customer will make their own arrangements - while that may sometimes be the case we can assure you that many clients are looking for a total solution. So when they perceive that you are in fact providing a product /service solution, as well as the financing vehicle to complete the transaction... well you know the positive results around that.

Top experts also indicate that many clients will come back to a vendor such as yourself simply for that ' ease of doing business ‘which has included our finance solution.

A common misperception among many companies is that you have to devote a lot of time and financial resources to offer such a solution to clients. Nothing could be farther from the truth. All that you have to do is find a suitable financing partner who can assist you in arranging financing for your clients. The consumer industry is of course, shall we say ' littered' with retail financing schemes, everything from ' don't pay a cent even', and on it goes. Why do these huge corporations offer financing? For the same reason we have maintained that you should - it increases revenues and profits.

There are numerous methods in which the business can enhance their finance offerings. Some of those include offering deferred payments, and another popular method is using a bit of your discount to lower your clients overall rate. That amount typically is much less than if you had no finance offering and in fact were being forced to offer huge discounts to your clients to be perceived as the best competitive offering. What we are saying is that a finance offering simply defocuses your client from price.

Utilizing a customer financing program also generates sales and cash flow in a more positive manner. How? Simply speaking you are paid in full as soon as your client accepts your products and services when offered in a finance solution. Also medium sized and larger companies are always wrestling with budgets and capital expenditure challenges. When you offer a customized finance or lease solution you help eliminate those obstacles of capex budgets and cash flow constraints.

Sales cycles tend to shorten significantly when a financial services customer financing offering is held out to your clients. By working with someone such as a trusted, credible and experienced Canadian business financing advisor you are able to ensure that all the financial issues associated with approval and documentation will be handled efficiently - with little to no involvement by your firm.





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 :



CUSTOMER FINANCING VENDOR FINANCIAL 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