Trade Receivables Financing: Getting Beneath The Surface Of The Accounts Receivable Finance Challenge

There’s No Mathematical Secret To A/R Financing In Canada

OVERVIEW – Information on trade receivables financing in Canada. Understanding the important aspects of non bank accounts receivable finance


Trade Receivables Financing is sought after more and more as a method of cash flowing accounts receivable in Canada. Is there a mathematical secret to understanding and getting... shall we say... below the surface of this method of business financing? Let's dig in.

Getting business credit in Canada (and being successful at it!) is the ongoing struggle of the business owner / financial manager, particularly in the SME sector. Term loans are not the answer. While there are good reasons to secure long term working capital for your business it’s a fundamental financial principal that the current assets of your business should be financed through short term financing.

If that ' short term financing' doesn't come from a bank, where does it come from then? The answer is commercial finance companies that finance trade receivables. These firms put paperwork in place that allows you to finance (in fact the proper term is ' sell ') your A/R, as you generate sales, to finance your business.

That's simple right? In fact the math is very simple if you understand how the finance firm calculates and advances that financing. Key factors in the whole process include:

The overall ' risk profile ' of your client base

The ongoing amount of your Receivables on a typical monthly basis

The payment history of your clients

Although receivable financing is more expensive than Canadian chartered bank credit in Canada one specific advantage is that your ' advance rate' or ' margining' is generally in the 90% area. That means more liquidity. Note also this is ' same day' financing - as you generate sales those sales are immediately monetized into cash flow - funds being wired into your operating account same day.

In general you can finance any receivable that is less than 90 days old - in some cases a special exception will be made on that timeframe- but most business owners/managers quickly realize that receivables become less collectible when they are older.

Businesses that can't obtain the full amount of financing they need gravitate to A/R financing for different reasons. That might be to leverage .monetize current assets such as A/R to free up working capital. Many clients tell us they prefer trade A/R financing through a non bank entity simply because it’s a more quick and efficient process when it comes to securing approval.

While our recommended AR financing solution is CONFIDENTIAL RECEIVABLE FINANCING ( you bill and collect your own accounts ) we do meet some clients who simple prefer ' old school’ receivable finance

which has your finance firm inserting themselves into the collection process with your accounts.







Are there times when trade receivables financing doesn't work? If your company is in a death revenue spiral no amount of financing will often fix the problem. Growing revenues can hide a lot of problems! Also, there are other complementary solutions to financing current assets - they include tax credit financing, PO/Contract financing, and full scale non bank asset based lines of credit. Bottom line - explore your options!

A/R financing is a multi Billion dollar business in Canada. Explore the options by seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who will take you below the surface of this financial offering.


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 = Trade Receivables Financing Expertise







Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

There’s No Dark Side To A SR ED Tax Credit Loan And Financing Government Film Credits

You Can Bet The Farm On SR&ED And Film Tax Credit Financing In Canada - Here’s Why




OVERVIEW – Information on the SR&ED tax credit loan in Canada. Financing SRED and film tax credits helps cash flow your company or project





When it comes to government film credits and assessing the need for a SR&ED tax credit loan we can say we're not huge risk takers . But we'll ' bet the farm' on your ability to finance those credits under a proven process. Let's dig in.

So..financing your SR&ED or film credits.. what are some key elements of the process? We're not sure whether it's coincidence or not but they way it works is that both types of credits are financed as a bridge loan , typically without payments, for a large part of the value of your claim. That amount of financing tends to be in the 70% range vis a vis loan to value.

Paperwork and application processes are somewhat similar, notwithstanding that we're talking about two types of tax credits - SR&ED for industry and Film, Animation and TV for the Entertainment/transmedia industries.

Tax credit financing works best when you're prepared, via a quality claim. In the case of Sred it’s your audit trail on your actual spend, which in Canada is typically documented by yourself and your ' SR&ED Consultant'. The quality of both your claim (it helps if you have filed before successfully - but it's not a requirement) and who prepared it is one of the underpinnings of successful tax credit financing. The role of the SRED consultant in the Scientific Research & Experimental Development program is matched, in the case of film, via a film tax credit accountant.

These folks help you maximize your claim, which, by the way, maximizes your financing.

Many clients we meet in the SR&ED environment file year after year. They also finance year after year by the way! They do that to maintain their competitive stance in their industry, and financing their claims allows them to continue to move forward in a financially successful manner - that's because R&D eats cash! and financing your claim returns that cash to your business.

The Billion dollar film, TV and animation industry in Canada is also supported by tax credits, which also can be financed as we have noted. These refundable tax credits are available to Canadian producers, as well as those they have co-ventures with approved foreign partners. We suppose that's one reason why the term Hollywood North exists!

In Canada government film credits revolve around refunding your wages and salaries paid on a project as well as being dependent on a location where your film or produce your project. The tax credits in film revolve around your choice of two different credits. Technically they are known as the 'CANADIAN FILM OR VIDEO PRODUCTION TAX CREDIT' as well as the 'FILM /VIDEO PRODUCTIONS SERVICES TAX CREDIT'.

Your tax credit accountant and legal advisor will determine which credit can maximize your claim, thereby, again, maximizing your financing. Naturally some projects don't qualify for tax credits, such as adult material, corporate productions, etc.

Actual film credit incentives vary a bit by province, and the provinces add their own provincial credit to your federal credit.

In the case of SRED and Film your tax credit is financed as a combination of both federal and province credits - thereby maximizing your financing.

No financing for a project is more difficult than putting together a budget for a film, TV or animation project. The industry has moved in cycles around themes of hedge fund participation, current CROWDFUNDING popularity, insurance gap loans, etc. But one common theme is always consistent - the tax credit part of your project is always financeable.

SR&ED and FILM are two very different genres of Canadian business. There is no ‘ Dark Side’ here … If you're a participant in either and want to maximize your claim via financing seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in cash flowing government tax credits.



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/sr-ed-tax-credit-loan-government-film-credits.html


Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?


CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653



Email = sprokop@7parkavenuefinancial.com

































Stan Prokop

Government Business Loans In Canada: Taking You Inside The Guaranteed Loan Program

Govt SBL Loan Financing Doesn’t Have To Feel Like A Contact Sport

OVERVIEW – Information on government business loans in Canada. When does The Guaranteed Loan Program Work for start up’s and SME companies





Government business loans in Canada work when you know how they are used and if your existing or new company qualifies. To some it must feel like tougher than a contact sport - but that should NOT be the case . Simple as that. Let's dig in.

To some the connotations of a ' Govt’ guaranteed loan conjures up images of ' red tape' and bureaucracy. That clearly is NOT the case by the way.

So what does the business owner/entrepreneur need to know about the SBL loan program in Canada? Let's take a look at some myth and reality around the program.

One issue that clients always want to talk to us about is the personal guarantee aspect of this loan financing. Here's the good news... here's the bad news. Yes there is a personal guarantee covenant around the program financing, but the good news

is that it’s a limited guarantee of 25% of the financing you are approved for.

While it might be true ( we're not sure) that this financing doesn't allow your business to become the largest and successful company in Canada the reality is that it finances around 7000-8000 businesses every year in all sectors of the economy - including mfg, hospitality, franchising, etc.

So who is in fact the Guaranteed Loan Program in Canada? The truth is that is simply an offering, via INDUSTRY CANADA, that is made to all Canadian banks and some misc. other institutions who wish to participate and administer the program.

So you don't have to ' visit' the government, so to speak, all you have to do is to find a qualified banker who understands the program. On occasion that is a challenge by the way, so that’s when it might be advantageous to seek out a business financing advisor who is conversant and comfortable with the program.

So what is in fact involved in getting approval for government business loans? To be eligible for the guaranteed loan program your business must have a premises lease that is available to your company for at least as long as the term of the loan.

Typical requirements are:

Business plan

Cash Flow

List of items to be financed - i.e. vendor quotes, invoices, etc (Assets that your company purchased in the last 6 months can still be refinanced)

Proof of incorporation/business registration

Premises lease

Personal net worth/credit info on business owner/owners

When you look at those requirements above they really don’t differ from any other type of business financing application.

The government guaranteed loans do not have a requirement for business owners to put up outside collateral, i.e. collateral mortgages, other assets, savings, etc - That's a good thing!

Commonly known as the SBL loan, the program finances equipment, leaseholds, real estate, and even the purchase of an existing business. Deals are structured as term loans, not lines of credit, and typical terms are 5-7 years as far as repayment. By the way, loans can be repaid without penalty, which often is not possible with other types of financing.

It's important to understand what the program is not. It is not:

A CASH LOAN

A BUSINESS LINE OF CREDIT

If you want to be an ' insider' on government business loans in Canada and have the ability to find out if this loan works for your firm seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your guaranteed 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 :

7 Park Avenue Financial = Canadian Government Loan Expertise





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?


CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Financing Franchise Opportunities In Canada: Are You On The Wrong Track With Your Franchising Loan

Understanding The Art ( Or Science?) Of Franchise Financing

OVERVIEW – Information on financing franchise opportunities In Canada. A Franchising Loan Done Right




Financing franchise opportunities in Canada may well be considered an art... or is it a Science. How does the franchisee entrepreneur get on the right track when it comes to a franchising loan? Let's dig in.

When it comes to financing your new franchise (either a new turnkey opportunity or purchasing an existing franchise) it's all about ensuring you are seeking, and have the wherewithal to complete... the right type of financing you require.

A key factor in that whole process is either the down payment or equity component that will be demanded by either your franchisor, your lender, or in some cases, both! When we talk to clients about franchising loans the down payment/equity they put up is also a sign of their individual comfort level or risk tolerance. Let's explain that one.

While we have noted that your down payment may well be a strict requirement the other two issues surrounding that are the entrepreneurs comfort level with the amount of debt they are taking on. They might view a larger down payment, if possible, as the method to reduce financial risk. It's important to note that the amount of risk around equity and debt that the franchisee is comfortable with is the same situation the largest corporations in the world struggle with also - namely capital structure and leverage.

By the way , that down payment or equity component can range anywhere from 10 to 50% based on the amount of financing you need, where you get it, and the type of loan or loans required to kick start and grow your new business.

We caution clients also that they must consider longer term financing issues, not necessarily just focusing on getting the business open. Down the road new assets may be required, and depending on the type of business you are considering it’s important to look at how you will finance inventory, receivables, equipment, and leaseholds required to keep your franchise ' up to snuff'.

Your ability to demonstrate how you will pay back financing that’s required will essentially always come out of your business plan and cash flow forecasts. They need to be tailored to your overall business model - the lender or lenders in franchise financing arent your new equity partners - they share no upside, just the downside of seeing their loans not repaid. Demonstrating proper cash flow is key!

When it comes to repaying franchise loans its all about sales, so focus properly on realistic sales and breakeven statistics.

So where does your franchising loan come from in Canada. If it is not from a select franchise specialty lender then another popular finance vehicle is the Canadian BIL loan, that’s perfectly suited to finance many franchises. It is attractive in terms of low personal guarantee, equity required, repayment, and by the way it also finances leasehold improvements and construction if that’s a key part of opening your business.

Take some time to understand what finance offerings are available that suit your particular needs, whether it be in the popular hospitality (restaurant/hotel) area or a service type of business.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your franchising loan needs. Get that right combo of ' art ' and ' science' working for your franchise opportunity.



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 Franchise Financing Expertise






Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Your Business Growth Financing And Funding Strategies Search Just Might Be Over

Looking For The Phoenix Effect When It Comes To Growing Your Business?

OVERVIEW – Information on business growth financing in Canada. What funding strategies can be employed to grow a company’s sales successfully




Business growth financing strategies in Canada, no secret here, present cash flow and capital funding challenges. The Canadian business owner and financial manager dreams of his or her firm being able to achieve the Phoenix effect. That’s the Egyptian fable that has the Phoenix Bird rising from the ashes and signifying resurrection and hope.

Let’s dig in. We're never surprised these days, in talking to our clients, that many owners/managers sometimes don't associate growth with a cash flow drain. Their logic is: ' Sales are great, we've just got those new contracts and PO's, and we’re introducing a new product ‘...etc...Etc. In their minds, and rightfully so, those expanded revenues will generate more profits. It's a perfect world, right?

Not so fast! The owner/manager has forgotten in those growth scenarios we noted that cash goes out quicker than it goes in. It's a fundamental cornerstone of business finance- Growth eats cash!

The reason is of course is that you must invest more in inventories, receivables, equipment, as well as ' beefing up ' other areas of fixed costs - i.e. people, etc.

So even if the business owner/manager recognizes the problem what then is the solution to avoiding a financial crisis of some sort? Frankly, we see things go awry quickly because when you firm is in cash crisis mode that is NOT viewed by commercial lenders and banks as a lending opportunity to your firm .

You don't want to be caught in your lenders board room explaining that you didn’t see it coming.

The most common solution for these sort of growth stories is the business line of credit. That type of financing can be achieved via a Chartered bank credit facility, or a newer solution these days, the Asset Based Line Of Credit, offered by non bank commercial lenders. These facilities of course monetize your 'current assets ' and allow you to borrow on a revolving basis.

A word to the wise, don’t let accessing either of these two facilities lull you into a false sense of security. Your focus should still be on strong asset turnover to the best of your ability, so inventory turns and collecting A/R in high growth situations should be a top priority.

Many business owners still don’t realize that they can plan effectively for cash flow needs. A simple spreadsheet tracking your sales, collections will identify the amount of your cash needs. That allows you to be proactive in planning for business growth financing. By the way, that sort of simple analysis will always be viewed positively by your cash flow lender.

Naturally there are different stages of ' GROWTH' when it comes to business funding solutions that can be all the way from start up to explosive growth scenarios. All stages of business growth come with different financing solutions.

We've referred to bank credit lines, as well as non bank ABL lines of credit. Other cash flow growth solutions include:

A/R Financing/Invoice Finance
Inventory financing
SR&ED Tax Credit monetization (If you claim SRED credits)
PO/SUPPLY Chain finance
Sale leaseback of assets owned

Which type of financing will make your growth successful? Let your firm experience the PHOENIX EFFECT... seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record who can assist you with growth 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 = Business Growth Financing Solutions





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Phone = 905 829 2653



Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Is Funding Customer Trade Receivables A Challenges? Don’t Break Up With Clients Just Yet

The Problem With Growing Your Company Is Customer Receivable Financing .. Until Now

OVERVIEW – Information on how Canadian business can achieve growth and profits and cash flow via funding customer trade receivables









Funding customer receivables , i.e. trade/commercial A/R makes many business owners and financial managers feel that the sometimes want to ' break up ' with their clients .

Naturally they can't do that because sales and customer accounts are the lifeblood of any business. That's why financing AR is a top priority Canadian business. Let's dig in.

Business owners/managers can finance their sales in a number of ways. They can utilize commercial bank lines of credit, they can use commercial non bank receivable financing, or more sophisticated larger firms can use a process called ' SECURITIZATION’ for funding receivables. When it comes to SECURITIZATION both consumer and commercial receivables can be financed and cash flowed.

When companies ' discount/factor' (they are the same thing) customer accounts they are essentially using a sub set of Asset based lending, focusing on the receivable as the asset.

Financing A/R in Canada is a huge part of the business economy. It is a good per cent age of bank lending and top experts tell us that it's constantly growing, due in no part to the 2008 world wide financial meltdown

when commercial lending failed Cdn. business. In many parts of the world it's growing at 10%+ annually we're told.

For the most part invoice discounting is handled by non bank commercial finance firms. They vary in size, types of owners, and geographic servicing.

One of the strong appeals of funding customer trade receivables through a non bank solution is that it is much easier to obtain approval. As well firms with limited equity don't need to consider putting in extra capital in their business - they simply finance their sales as they occur. It provides financing for Canadian businesses that can't meet bank criteria but still are growing their businesses.

Simply speaking it's a method by which businesses, primarily in the SME (small to medium enterprise) can fund their recovery and growth, particularly if some of those ration such as debt/equity are temporarily out of sinc. One pundit called it the solution for filling the ' credit hole' in business lending! In some cases businesses just wish to diversify their sources of capital.

How complicated is the entire process? The answer: NOT VERY! As your firm generates sales you are immediately advanced cash based on the value of the A/R.

Some level of confusion and misunderstanding exists around the different types of trade receivables funding in Canada. Our recommended solution to clients is CONFIDENTIAL A/R FINANCE, allowing you to bill and collect your own receivables.

If your financing resources simply are not performing to your satisfaction you must look to other channels of financing. One of them is funding trade A/R, providing you with the capital to run and grow your business. It is efficient, available, and will provide you with the liquidity you need.

So don’t consider breaking up with your clients; Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your working capital 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 :


7 Park Avenue Financial = Canadian Receivables Funding Expertise




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Asset Based Lending Canada. Why Financing Companies Allow You To Reboot Your Business Credit Needs

Do Not Pass Go .. Do Not Collect $ 200.00 Until You Have Looked At Asset Based Lending

Information on asset based lending in Canada. Non bank financing companies provide business credit solutions for cash flow and working capital needs


Asset based lending in Canada comes in all shapes and sizes. When it comes to looking at alternative finance strategies for your business it just might be time to ' REBOOT' your thinking.

And Canadian financing companies just might have the solution you're looking for .Let's dig in.

Many business owners and financials managers, particularly in the SME sector in Canada continue to find that all their finance needs can not always be met by traditional Chartered bank / Credit Union sources. While Canadian banks continue to have virtually unlimited capital to serve business needs in many cases the borrower can't meet the requirements needed to attain those solutions.

So while public companies and large well heeled corporations are borrowing at will the challenge is much more difficult if you're not in one of those two categories.

Enter... stage right...

Asset based lending in Canada. Through a variety of , shall we call them ' subsets' of Asset financing your company can achieve the financing structure it needs to either grow your business or in certain cases even acquire a business.

Financing companies providing these solutions don't make it complicated either. They take all, or certain of your assets (depending on the amount and type of capital you are looking for) and put them into collateral pool that you can borrow against. They can be a combination of working capital/line of credit solutions or even term loans if that makes sense.

The assets in question?

They include:

Receivables
Inventory
Equipment
Tax credits
Real estate
Large contracts/orders

And here's the good news. You can mix and match!

So who is this type of financing well suited for? Typical clients we meet tend to be:

High growth
Start Ups
Restructuring
Acquisition oriented
Management buy outs

A key attraction in Asset based lending in Canada is simply the fact that it requires less equity as the focus is all about those assets.

In business financing its not always a perfect world , so typical financing /interest rate costs offered by financing companies that are in effect non bank lenders are going to be higher , one reason being those finance firms borrow the funds they need for you from the banks!

We do point out to our clients that if they can meet typical bank borrowing criteria often an asset based line of credit will be both competitive with the banks but most importantly give you a lot more borrowing power. The simple reason for that is that assets are 'margined' or ' loaned against' more aggressively. In many cases companies that temporarily use Asset financing often migrate back to a traditional bank solution.

If you're looking for innovative solutions for business assets and sales growth for your firm consider seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor with a track record of success who can assist you in your particular needs. It's time to ' reboot ' your thinking on the financing solution 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 Asset Based Lending Solutions





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop