Financing Receivables Works Whether You’re A Start Up Or One Of Canada’s Largest Corporate Borrowers

Technically Speaking Let’s Take The Mystery Out Of A/R Financing In Canadian Business

OVERVIEW – Information on financing receivables in Canada . What are the key technical aspects and benefits of factoring / selling receivables for companies of all size in Canada



Financing Receivables in Canada . A large majority of business owners, financial managers, CFO's, Controllers, etc have heard of this stand alone (it doesnt have to be the case) method of Canadian business financing. But do they understand it? Let's dig in.

We maintain, when talking to our clients, that you simply need to know a few key basics to effectively master this finance solution. And by the way, you don't have to be a rocket scientist to master those. We suppose it's our version of ' Technically Speaking '!

however if you don't we can clearly say you' re under advantaged when it comes to understanding benefits and risks re: who you're dealing with and how you're dealing with them . Bottom line, we're talking about what can go write and what can go wrong.


At the end of the day, financing receivables is simply one method to generate cash out of your sales and receivables. All you are doing is shortening what is known as the operating cycle - you’re no longer in the ' waiting room ' when it comes to waiting for customers to pay.

In Canada you have two methods of addressing factoring. You can let a third party take over the whole process, or alternatively you can become the manager of the whole process yourself. We call that second method Confidential A/R Financing. We'll call the other method ' Traditional Factoring ‘, and it’s been used for hundreds of years by thousands of companies all over the world. This ain't new!

If you go the traditional route your billing and collecting process is somewhat taken over - in effect your credit and collection process is outsourced and managed. Under a confidential scenario you maintain total control over all your billing and collections, with both methods essentially costing the same. They should cost the same - if they don't you’re not dealing with the right party.

The basic finance charge around this whole process is what is known as the discount rate. That discount rate, which many people understandably, but mistakenly call an ' interest rate ‘is a key element in the overall pricing of this finance solution.

A lot of clients we speak to seem to wrestle with the issue of understanding how this method of growth financing differs from bank finance. It really comes down to how the bank, vs. the receivable finance firm ‘papers ' your transaction. That technical aspect involves two key terms, 'Assigning' your A/R to the bank, or ' Selling ' your A/R to your A/R Finance firm. So that's just the paperwork on the deal, and it's not as complicated as you think.

What You Need To Know: Financing receivables is a method of financing trade commercial receivables. Benefits are fast access to business cash and easier qualification. Who you deal with and how you manage this method of growth/sales financing becomes the risk.

Seek out and speak to a trusted, credible and experienced Canadian business advisor with a track record in financing companies for growth and success.



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 = Financing Receivables Experts





CONTACT:
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

Lease Financing Canada Is Probably Longer Lasting Than Bitcoin

You’d Be Surprised How Much Power Does Lease Financing Has In Canada.


OVERVIEW – Information on lease financing in Canada . How this one financial solution has remained one of Canadian businesses best asset finance mechanisms



Lease Financing in Canada .Financial Managers and business owners in Canada continuously find they are competing in a difficult and challenging economic environment. Equipment Financing and Capital expenditure issues are top of mind when Canadian firms are looking to grow and prosper. Revenue generating assets are important to any business.

When large corporations report their financial the analysts out there focus on Free Cash Flow. This is the cash flow that is left after a company totals their net income and depreciations and subtracts what they have spent on ‘capex’, or capital expenditures.

That free cash flow is of course what’s left to pay shareholders and run the business. But small and medium size firms have a huge challenge in generating free cash flow per our formula above. They more often than not don’t have the luxury of paying cash for much need new and revenue producing assets.

That is why Canadian firms should be looking at Lease financing as an essential asset acquisition and cash flow tool. Let’s do a quick recap on the major benefits of lease financing:

• CASH FLOW - Canadian businesses can conserve working capital and invest those funds instead in receivables and inventory for additional growth – Also firms want to achieve the benefits of these newly acquired assets over time without having to pay for them all at once on day one

• TAX BENEFITS – Lease payments of course can be expensed and are generally more advantageous from an accounting viewpoint than a loan

• BETTER ASSET MANAGEMENT - Every firm wants to stay ‘leading edge ‘on asset acquisition, with respect to items such as computers or plant assets. At the end of the term of the lease the Canadian business owner or financial manager has a number of options available with respect to asset disposition

• OFF BALANCE SHEET FINANCING - Depending on the final structure of the lease a transaction can be recorded off your balance sheet – you are in effect using the equipment, gaining the benefits, but not owning the equipment.

Those are some of the more ‘technical ‘reasons for lease financing in Canada. Do the overall benefits of this financing alternative end there? They don’t! On balance the lease financing process is one of the simpler and easy ways to acquire assets – it also requires not large cash outlay, and your bank lines stay intact. Canadian business owners have huge challenges in maintaining bank lines that are adequate for their business – leasing alleviates part of that challenge.

What can be financed ? the better questions are of course a shorter answer – what can’t be financed. Almost any asset can be financing in Canada if its core to your business needs – That includes of course technology, vehicles, machinery, production equipment, tooling, telecom assets, agricultural assets, and construction assets. Again, to be clear, if it’s a hard asset it can be considered for lease financing!

As business owners in Canada we want the right equipment at the right time in order to stay competitive and profitable.

So, longer lasting a business concept than BITCOIN – The worlds newest internet currency . Time will be the judge, but we sure think so . And is leasing the only financing alternative available to the Canadian business owner or financial manager – definitely not. Should it be understood and considered? Definitely so! Seek out and speak to a trusted, credible and experienced Canadian business financing manager with a successful track record of asset finance solutions.


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 Lease Financing Expertise




CONTACT:
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

Acquisition Finance. The Heart Of The Matter When It Comes To Mergers Acquisitions Financing In Canada

Avoiding The Canadian Tragedy Of Poorly Executed Acquisition Financing


OVERVIEW – Information on acquisition finance in Canada . Mergers and Acquisitions financing .. done right !





Acquisition finance in Canada. Whether the business environment is turbulent or going smoothly savvy business owners and managers are always looking for successful mergers and acquisitions opportunities that... you guess it... require financing. Let's dig in.

In Canada both traditional and alternative financing solutions lend themselves to a business or merger opportunity, therefore posing the question - ' How is this opportunity to be financed to ensure success '?

In small to medium sized acquisitions a tremendous amount of creativity on a transaction can come from innovative methods of seller financing. Any form of seller financing obviously lowers the amount of external debt - traditional or alternative, that you are forced to take on.

Here on common challenge we see all the time is that the seller has serious tax ramifications depending on the type of sale that is in motion. Only two real types of sale exist by the way - ' ASSET ' or ' SHARE '. Share sales in Canada are typically very impossible to finance, in that private companies offer no real liquidity event for the financier. Naturally with public companies that’s a bit of a different story. The seller, unfortunately, is usually very ' tax conscious ' on the outcome of the deal, which many times makes the going difficult to close successfully and properly.

We point out also that when a motivated seller is open to some sort of Vendor Take Back scenario that also can become a potentially good source of income for the seller based on the interest charged on the VTB.

Smaller transactions in Canada require a commitment from the purchaser in the form of some sort of buyer equity, down payment, etc. Anywhere in the range of 10- 50% is required... and that's quite a range! Business owners who have to invest their own capital in a deal source those funds from personal funds, savings, investments, etc.

Less money down on any deal is the ultimate double edged sword on any acquisition finance deal. Leverage works for and against you, either propelling greater return on investment or significantly higher risk of failure based on too much debt - or the wrong debt. Talk about a real double edged sword! We point out also that lenders and other investors you may have lined up are generally ' impressed ' with an owner’s equity commitment to any deal. To paraphrase in the language of the people - you've got SKIN IN THE GAME!
While many clients we talk to in the Small business and SME sector think they can approach ' VC's' and Private Equity groups for assistance they rarely can meet the rigorous demands of those two types of external finance. Suffice to say you'll be giving up significant equity also, which in general is highly undesirable at a point when you haven’t realized the true financial benefits and returns of a good merger or acquisition.

In the small and SME sectors of business in Canada a great way to finance a business purchase is the government Small Business Loan - aka the ' SBL '. It offers tremendously attractive terms relative to what you are trying to accomplished, and allows you to retain tremendous upside re your projected financial performance.

Two final very typical ways to accomplish mergers acquisitions financing are to consider traditional bank financing and ABL (Asset based lending). If you can meet some basic cash flow coverage and debt to equity ratios you're a solid potential candidate for well priced acquisition finance. Asset based lenders will throw those ratios , generally speaking, out the window and simply focus on the assets you're acquiring and how they can be margined via term or operating solutions .

Avoid the tragedy of poorly executed financing when contemplating a merger of acquisition .Strive for a good grasp of acquisition financing basics, which can be sought via your accountant, lawyer, or a trusted, credible and respected Canadian business financing advisor with a track record.




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 :

http://www.7parkavenuefinancial.com/acquisition-finance-mergers-acquisitions-financing.html







CONTACT:
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

Inventory Financing In Canada. Exploring How Canadian Companies Finance Inventories

Why Used Submarines Can’t Be Financed




OVERVIEW – Information on inventory financing methods in Canada . How does the Canadian business owner/manager finance inventories in a manner that enhances working capital and cash flow







Inventory financing in Canada. What are the methods that Canadian business uses to ensure that working capital investment is maximized? Let's dig in.

When business owners/financial managers are challenged on how to finance inventories it's important to focus on two areas - we'll call them ' tips' and ' traps'!

Financing inventory typically revolves around either retail or commercial concerns. Smaller retail businesses have a huge challenge as banks and other commercial lenders are reluctant to lend against inventory. Compounding the problem is the fact they view that type of business as an ' all cash ' business - so why would it need financing?

Typically when inventory is financed by a bank or commercial concern it's important to realize that it's always financed at cost. Another good thing to know is that in certain types of financing actual physical counts, inspections, or appraisals will be required by your lender - again typically a bank or non bank commercial lender . That won't always be required, but on occasion it’s an absolute must. The lender needs to determine the ' margin formula ' that they will lend against on an ongoing basis.

Margin formulas vary significantly based on several key factors. They include an analysis of which one of the three stages your inventory is in (raw materials, work in process, and finished goods). Businesses that are able to demonstrate they have perpetual inventory systems in place stand a much better chance of ' borrowing power ' when it comes to financing inventories as part of your overall ' current assets'.

Your overall gross profit also plays a key point in financing. Ultimately important is the lenders / banks opinion on how marketable your goods are under a worst case ' forced sale ' scenario.

Many business owners consider the Canadian Small Business Loan program for the financing of their business. They wrongly assume that the program covers some sort of working capital, cash and inventory components. That is not the case! In that program only 3 classes of assets can be financed - equipment, leaseholds, and real estate.

Is there a winning way that we constantly recommend and implement for clients looking for inventory finance? The answer is that most successful financing in this area is in the context of a combined credit facility that also financed receivables. Two sources of financing exist here - The Canadian Chartered bank, and, in some cases even better: Non bank asset based lines of credit.

While the bank or commercial non bank lender places a higher emphasis on receivables due to their more immediate liquidity they also fully realize those sales are generated from inventory turnover. While banks differ in Canada on inventory margins it is non unusual in ' ABL ' (asset based credit revolvers) to achieve anywhere from 30 - 75% borrowing power.

Oh, we almost forgot. Why can't used submarines be financed? We would offer up that they can't be readily liquidated, and valuation is extremely hard to determine. Although we suppose the lender could utilize a ' FLOATING DEBENTURE '!

If you want to beat the challenge of inventory finance in Canada seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record , allowing you to achieve the business finance you require.




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 Inventory Financing Expertise





CONTACT:
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 . Avoiding What Can Go Wrong When Funding Canadian Businesses

Here’s Why Your Business Financing Just Isn't Bullet Proof Sometimes!


OVERVIEW – Information on the perils of business financing in Canada. What does the business owner and financial mgr. need to know when sourcing , evaluating and discovering funding Canadian businesses



Business financing . When it comes to funding Canadian businesses there are a tremendous amount of ... mistakes you can make! Almost anything can go wrong, so lets looks at how you can ' bullet proof ' some of that financing. Let's dig in.

Why do many clients we meet, talk to and help advise us that they have in essence failed at getting the financing they need? That failure can come from a variety of different reasons - however at the end of the day it all really comes down to problems caused by management of the company, the peculiarities of the lending landscape in Canada , and third part events that range from cataclysmic to simply annoying and time wasting from a management view point .

How then can the business owner and manager focus on successfully completing any form of Canadian business financing? That might include, for a starter the willingness to see the view point of the lender in negotiations re terms, rate, and structure.

Many owners / managers see failure in financing more often than success because they are unable to appreciate the time and work that goes into a proper financing process. On the other hand we also see clients that have taken on improper or too costly financing at almost any price and terms. That of course, if you’re properly prepared, doesn't have to also be the case.

Realism. In Canada, whether you're a start up, SME sector, mid market or large corporation you eventually have to face the fact that you're more of a candidate for either traditional or alternative financing. While many forms of alternative finance are becoming more ' traditional' and time worn every day the business owner/mgr we meet often is barking up the wrong tree relative to what can be realistically achieved.

Your ability to present positively and properly your current financial status and need is key to successful finance. At a simple level it means being able to provide year end financials, interim statements, and the ability to address any issues that arise out of the analysis of those documents.

While many larger financings absolutely require your lawyer or your accountant business owners can often complete a large if not all of the process themselves, saving significant time and expense, delay, etc.

Businesses that are self financing have a larger challenge in obtaining traditional bank and term type financing. Many alternative finance methods such as:

A/R FINANCING
SALE LEASEBACKS
TAX CREDIT FINANCING
ASSET BASED LINES OF CREDIT

Can readily supply working capital and cash flow needs.

Unrealistic expectations are a large part of business financing. If you have assets they can be monetized, if you have orders and contracts they can be funded via PO / SUPPLY chain financing. If there is a bottom line it's simply that you require assistance in educating yourself on financial solutions that are available and applicable to your particular situation.

Seek out and speak to a trusted, credible and experienced advisor with a track record of assisting funding Canadian businesses. You'll be more bullet proof when it comes to making capital decisions that work 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 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 Funding





CONTACT:
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 Line? Here’s 2 Solutions for Operating Capital Success

Getting Business Credit Lines Doesn’t Have To Be Like Taking A Bet

OVERVIEW - Information on the business credit line in Canada . Does the business owner/financial manager have a choice when it comes to operating capital requirements for short term day to day needs ?



The Business credit line in Canada . Most clients we initially meet tend to say 'what are our chances ' when in fact we maintain they should be asking ' what are our choices ‘! Let's dig in.

The essence of what we're talking about is the type of borrowing that's associated with the monetization of assets via line of credit. That's current assets by the way, which typically are essentially your A/R and inventory.

Business credit lines should be focused on short term borrowing. Longer terms are associated with term loans for equipment, mortgages on the business property, etc. Naturally while a term loan expires when you make that final payment business credit facilities are there and available to your firm based on your ongoing level of receivables and inventory.

You will of course want to match the amortization of term loan with the useful life of the asset. Let's use computers as an example - A typical lease term might be 3 years, and you would want to retire the lease or loan by that time as it is typically time to upgrade technology. But we digress..!

And what about those ' CHOICES ' we talked about. It comes down to essentially two solutions for the business revolving line of credit:

1. The Canadian chartered bank solution

2. The non-bank asset based business credit line - it’s typically called an ' ABL ' by the industry

Years ago any non bank financing was viewed as ' alternative ‘, in some cases there was a perception it was financing of last resort. Absolutely not the case today as the world of business credit changed dramatically, moreso after the 2008 world wide recession, where many firms, including banks , went under . That new form of financing, the ABL business credit line all of a sudden seems available and cost effective in most cases.

Bank business credit agreements tend to be what is known as ' covenant based '. Even if the business owner and financial managers considers the company to be in growth mode it might in many cases not be able to meet some basic debt to equity and cash flow rations that are required by Canadian chartered banks.

Bank credit lines typically margin just A/R and receivables. In the case of an Asset based business credit facility the borrowing allows you to borrow the market value of the lump sum of all your assets - so that might be a/r, inventory, tax credits , and equipment . Any unpledged asset becomes financeable.

Recently we were at a clients and the CEO asked a very basic question - ' What then is the downside of ABL ‘. The answer? Other than a typically higher cost the benefits are no outside collateral, higher borrowing power, and unlimited growth - it’s not a capped credit line per se. In truth if we had to state one ' downside ' it might be the fact that you are required to report more regularly on your asset lists. In many cases that made most of our clients better managers of their business.

Bank business credit is always going to be low cost and flexible if your firm meets traditional criteria. When it doesn’t know that you have another choices, the ABL line. And by the way, many clients often try ABL for a year or so and then are faced with the decision that they are eligible to be ' bankable ' in the traditional sense.

Bottom line. They had a choice, so seek out and speak to a trusted, credible, experienced Canadian business financing advisor with a credible track record who can help you facilitate the business credit line you need.


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 = Business Credit Line Expertise


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

Working Capital Finance. Untying Funding For Business Cash Flow Needs In Canada

Abandon All Hope Ye Who Enter World Of Canadian Business Financing . Not So Fast Though





OVERVIEW : Information on working capital financing in Canada . Funding for business cash flow solutions can be achieved in a number of ways via asset monetization


Working capital finance in Canada . Talking to clients some days feels like they have entered the world of Dante's Inferno, via his famous quote ' Abandon All Hope Ye Who Enter '!

So when it comes to funding for business in Canada does it seem to you that you’ve got that ' tied up ' feeling when it comes to unlocking sales and assets and turning them into cash flow? That doesn’t have to be the case, so let's dig in.

The concept of assets ' tied up ' is key to understanding working capital financial solutions. Ultimately you want to monetize current assets and allow those funds to flow through your business - growing your company.

Two types of what we can call ' instant cash ' immediately come to mind. The first is of course assigning your receivables to a bank via a Commercial business line of credit. If your firm qualifies rates are low and you're typically allowed to borrow 75% of month end margined receivables. The margining formulas pretty simple - you can draw down on your line of credit on any accounts under 90 days old. A/R over 90 days is typically viewed as ' uncollectible, as a result your bank is reluctant to finance those specific accounts.

Another solution, which gains traction everyday in Canada, is the RECEIVABLE DISCOUNTING financing that uses another method of financing your 2ND most liquid current asset - Your receivables. (Cash is most liquid ... inventory is 3rd!)

This method of working capital finance differs from the bank solution in Canada. Instead of pledging your receivables essentially the same security agreement is used to denote the sale of your receivables on a one of or ongoing basis. While this method has a different pricing model, (it’s higher!) It allows you to borrow 90% of your A/R value, which is significantly better than bank limits.

The A/R Discounting model can also be combined with inventory and equipment financing, allowing you to maximize borrowing power on all you unencumbered assets. When combined in this manner it becomes what is known as an ' ABL ‘; an asset based line of credit working capital facility .

Both receivable discounting and asset based credit lines, or traditional bank credit allows you to reverse your ' slow growth ' policy if that’s because of a lack of funding for business.

All of these types of facilities do one thing - they reduce the time gap between building or selling something, and collecting your cash from clients. It is important to note that in all these facilities described you are only paying what you are using, so the ability to draw down on working capital is always there.

In summary, it’s quite easy to feel ' tied up ' when it comes to cash flow financing. You have orders, projects, contracts... the only thing lacking is the capital to move forward. Get the breathing room you need in cash flow financing - seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of solving funding for business success.



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 = Working Capital Finance Solutions





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