Accounts Receivable Financing In Canada : Winning The Receivables Loan Game!

Is A/R Financing A World Of Pain? Not Anymore!

OVERVIEW – Information on accounts receivable financing in Canada. Does a receivables loan make sense for your firm . A/R Finance via a factoring or a Confidential AR funding solution

Tweet









Accounts receivable financing needs often can bring a ' world of pain ' into the life of your business. How does the owner/financial mgr overcome that challenge of receivables loan funding? We think we've got it down pat.

Part of the challenge in this critical area of business is knowing who in fact carries the solution to your business financing, working capital and cash flow needs. The reality? It's one of three possible finance providers in this area of Canadian business financing.

The players? They are:

Canadian chartered banks

Commercial finance companies

Insurance companies (Larger deals - often labeled ' securitization’

In many instances ' size matters' and the actual size of your facility will dictate a more probable solution,


One of those three entities has the solution for your needs, at a cost and structure that make sense given the financial health of your business. The concept? It could not be simpler - a continuous advance against a per cent age of your A/R.

Want to feel relaxed? That relaxing feeling, when it comes to A/R finance revolves around the owner/mgrs wish to bill and collect their own receivables. Banks and insurance firms will of course let you do that, but many commercial finance companies will insist on some sort of lock box or notification to your clients of their financing process.

The solution? Confidential receivable financing, allowing you to bill and collect your own accounts while funding your sales on an ongoing basis.
Naturally the overall financial strength of your firm will dictate which solution is most attainable

Companies with stable or growing sales and reasonable A/R quality are the best candidates for business credit lines and factoring solutions.

What issues should the business owner/financial mgr be prepared to investigate, address and discuss when contemplating a financial solution. They include:

What formula will be used to calculate monthly borrowing capability?

Interest rate or financing cost

Miscellaneous fees

Collateral

Ratios or covenants


There's no question that if your sales revenues are growing your need for a business credit line via accounts receivable financing will strongly emerge. The positive cash flow generated from these funding solutions will help you grow future sales and hopefully profits.

Looking to win at the receivables loan game? Choose to eliminate that world of pain we talked about and seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you with your A/R finance needs.


Stan Prokop - founder of 7 Park Avenue Financial –
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Business Cash Flow Financing : Which Commercial Loans & Which Lenders?

Does Your Firm's Cash Flow Support Additional Borrowing? 1 Is The Magic Number!

OVERVIEW – Information on business cash flow financing in Canada . Commercial loans come from a variety of lenders. Does your firm have what it takes?

When business owners and financial managers contemplate additional borrowing for their firm they must think it terms of whether the business does, or will have, enough cash flow to make the debt repayments. We can further assure business owners that the bank or lending institution is thinking the same way!


When businesses enter into bank loans or other institutional loans the payments are, 99% of the time fixed and specified. The business owner and financial manager must ensure those payments can be made. If the company has over relied on debt it is viewed as highly leverage by the lender.
So how can a business owner determine if the company has the cash flow to support the debt? More importantly how does the lender do that calculation?
The calculation that banks and other term lenders focus on is called 'Times Interest Earned '. The business owner (and the banker) can calculate that formula very simply.

The Times Interest formula is calculated as follows:

Net profit before taxes, plus interest expense / divided by interest expense


The calculation becomes an absolute number. If the number is in fact '1 'that means that the company has in fact made just enough to pay the exact interest expense for the year. We would point out that this calculation is always usually done on an annual basis.
So is '1' the magic number? The answer is no, and the answer should be intuitive to the business owner. That is because a times interest of 1 means there is absolutely no cushion for anything going wrong, and all business owners no about Murphy's Law!

So if earning decline or if the company takes on additional debt our ' times interest earned ' number become unsatisfactory - that is to say that we have determined there is not sufficient cash flow to service the debt.


We have determined '1' is not a great number then, well what is? The answer, as in many facets of business, is of course 'that depends '. Many industries differ and there is not really any specific number that is viewed as the Holy Grail by lenders. What we have found though that higher is better than lower. When the number is hovering around 1 both the business owner and the lender, should and will, respectively, have some concern.
We point out also that income, as a key component in our calculation varies between companies in final calculation re tax rate and other accounting adjustments. Some lenders and business owners also add deprecation to the profit because it is not a real cash expense.


Another quick calculation business people can perform is to calculate the cash flow number as a per cent age of debt. This calculation is often done by lenders to ensure long term debt is not being miss-used. If a company has a high percentage of total debt to cash flow it should be a strong indicator to the company owners that growth will be constrained, as all cash is going to debt, not growth. Therefore new equipment, inventory, receivables, etc will suffer in terms of growth.


In summary, business owners, by doing actual current calculations, as well as projections, can easily calculate their 'times interest earned' and cash flow as % of debt. This will allow the business to position loan repayments positively with their lenders, at the same time providing them with insights into how the bank or other lender will view payment capability.


Seek out and speak to a trusted , credible and experienced Canadian business financing advisor who can assist you with your business loan , cash flow financing and asset monetization 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 - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com

7 Park Avenue Financial

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

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com







' Canadian Business Financing with the intelligent use of experience '


ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Business Financing In Canada: Your Search For Revolving Loans & The Right Credit Facility Just Ended

Here’s The Good Stuff On Revolving Loans

OVERVIEW – Information on revolving loans in Canada. Business financing often requires need for a credit facility. How do these work , what are your options for this type of solution ?

Business financing in Canada often ' revolves ' around the need to include revolving loans in your business finance mix. How does this type of credit facility work?

The key aspect of revolving business lines of credit is clearly ' flexibility'. The continual drawdown and repaying of the facility creates a ' pay as you go ' scenario as businesses both use and consume cash as they run and grow their business. That's the good news!

The key differentiator in business credit facilities that revolve is that it's not a term loan, via that continual drawing down and repayment we just referenced. However like term loans they do often come with ' limits’, but more importantly they vary with your assets.

Here an important distinction occurs. When it comes to bank credit lines these pre-imposed limits are often fixed and relate directly to typically receivables and inventory. However, if you chose an asset based non bank line of credit via a commercial finance firm that borrowing base typically has no upward limit if you in fact have growing sales and commensurate assets.

That monthly ' borrowing base' that banks and asset finance companies utilize comes with some pretty basic formulas. In the case of banks, utilizing receivables as an example the borrowing base is 75% of your A/R; asset based lenders typically lend against 90%. (In both cases receivables must be under 90 days old)

Various nuances might exist in your A/R margining relating typical to issues such as government receivables, high balance concentrations with one customer, etc.

Revolving loans from banks come with various covenants and restrictions. In general we can make the statement there is a lot less restriction from non bank asset lenders on this issue.

What then are some of the key issues around pricing revolving loan credit facilities? No one disputes the fact that Cdn chartered banks offer the lowest cost business financing rates - if you can satisfy the risk profile desired by the banks. That risk profile typically includes growing sales, profits, clean balance sheets and demonstrable cash flows.

Interest rate pricing on non bank asset financings varies proportionately to credit risk. The good news here is simply that almost any firm with sales and assets is eligible for asset based credit lines. So it’s overall credit risk and the amount and type of debt a company has is the driver behind asset based revolving loans.

If you're on the search for the right type of credit facility for your firm your search will almost always end well by seeking out a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your credit facility 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 - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com


7 Park Avenue Financial

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Asset Based ABL Financing : What’s Keeping You From This Innovative Business Credit Line

We’re Pounding The Table On Asset Based Lending Business Credit Lines ! Here’s Why

OVERVIEW – Information on why the asset based ABL credit facility just might be the sort of business credit line that your business needs

Business credit line solutions can come from a method of asset based financing called ' ABL '. We think we might know why business owners/financial mgrs haven’t considered this form revolving credit facility. The reason? They haven't even heard of it, much less considered it as an alternative. That's why we're ' pounding the table' for some more understanding for this method of financing.

‘ABL ' (‘asset based loan’) is essentially a form of ' secured loan'. The simplest way to look at it is that it relates directly to the amount of borrowing power you have in all your assets. That borrowing power translates into a revolving credit facility.

The majority of assets that fit into the ABL credit line are your current assets - that typically includes your receivables and inventory. Over time the assets you generate in your receivables and inventory functions will of course fluctuate - so does, of course the credit line that supports these two assets.

Naturally the % that you can borrow against these two asset categories is critical. Here's where the good news comes in as typically you can borrow up to 90% of all A/R, as well as a negotiated per cent age of your inventory.

Safe to say that some items will not always be leveraged in that credit line - for example receivables over 90 days as they are deemed potentially uncollectible. When it comes to inventory it’s a question of a careful understanding of the liquidity in the inventory - as it might be in various forms of raw materials, work in process, or finished goods. In general it's relatively easy for your asset based lender to determine those values based on information such as inventory turns, aged receivables listings, etc.

Many firms in Canada utilize A/R factoring, which in some ways could be called a ' subset ' of asset based abl lending. However a true ABL facility is more desirable - it leverages more assets and allows you to bill and collect your own receivables. Typically Purchase Orders are not financed under a true ABL - that is a separate form of specialized finance though, and sometimes worth consideration.

True ABL's can also easily include your fixed assets and / or real estate in your financing mix. More sophisticated transactions can potentially include a term loan as a part of the whole financing.

Asset based business credit line options compete with Canadian chartered bank finance. While often more costly they can provide all the financing a company needs to grow - thereby solving the Canadian business financing conundrum - Access to Capital! . To learn more about this solution and to determine if it fits your firm seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of 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 - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Small Business Government Loans In Canada : The Financing & Funding Option You Should Consider

When Do Gov’t Guaranteed Small Business Loans Make Sense ? Probably Right About Now!

OVERVIEW – Information on small business government loans in Canada . A financing and funding option for your consideration

Small business government loans in Canada are a solid consideration for business owners/entrepreneurs. They typically best suit start ups, new firms, small firms, and growing firms in the SME (small to medium enterprise) sector. Why and, more importantly how does the government provide this financing, and are you eligible?

Although understood by some, but not all it's Canadian banks that actually are the delivery vehicle for small business loan financing. How then is the government involved, ask our clients? The answer - they guarantee a large part of the loan on your behalf, to the banks. A solid idea!

What we have observed over the years is that while the program is cast in stone as far as the govt is concerned the ' real world ' (that’s the one we toil in daily!) tells us that some practices and requirements certainly vary between our different chartered banks.

That's a hint by the way that you might benefit from an experienced advisor in this program!








So how do you receive the actual funds and what can they be used for? In Canada the program covers equipment, leasehold improvements, and even real estate. Note therefore - this is not a cash flow loan or working capital facility. The loan cannot be used for inventory purchases or consolidation of existing debt. That's important to know.

The loan is always structured as a term loan with fixed monthly payments, and by the way loan prepayment privileges are very generous.

Now that we have established who you are in fact approaching for govt loan financing it's critical to understand the information that will satisfy the criteria of the loan, often called the ' SBL ' loans. You're well armed if you can deliver on the following:

Business plan

Cash Flow forecast

Information on owner business background and personal financial credit history

Information on what you wish to finance - typically in the form of quotes from equipment suppliers or contractors in the case of leaseholds

Larger businesses unfortunately cannot apply, but the current threshold is 10M and under in annual revenue. We're quite sure that covers thousands of firms looking for funding... Typical loan terms are between 3 and 7 years. (The program actually specifies an amortization term of ten years to qualified candidates)

Cost ? Rates are very competitive and can be fixed or floating based upon the needs of the borrower.
If this type of business funding makes sense for your business seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can make the funding under the Govt guaranteed business loan possible .


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 - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Management Buyout Funding In Canada : How To Properly Address Your Buy Out Finance Opportunity

Smart Ways To Finance A Management Or Leveraged Buy Out - SME LBO 101!

OVERVIEW – Information on best strategies for a management buyout funding transaction. Buy out finance leverages assets and allows mgrs or entrepreneurs the ability to finance a business purchase creatively

Buy out finance interestingly enough used to be known (in the old days) as bootstrap acquisition financing. While ' bootstrap' is a commonly used term today management buyout funding has upgraded its name to ' lbo ' - aka ' leveraged buyout '.

Enough with the terms, right?! We're examining how business owners, mgrs, and entrepreneurs in general can utilize the financing to acquire a business. Let's dig in.

While it's a common belief that in general a company would prefer to avoid ' debt ‘, used properly, and using the assets of an existing business a solid acquisition opportunity emerges that otherwise might not be possible.

Even more interesting is your ability to maximize the true value of the assets you are acquiring, in effect ' leveraging' them to finalize your acquisition. While we see a lot of movies around Hollywood’s take on LBO's and the corporate raider the true reality is that such financing is a solid tool in the Canadian SME marketplace, providing an alternative to acquire and grow businesses.

Why do business people consider management buyout funding? Clearly it's to maximize on opportunity. Current low interest rates, available credit from banks and especially non bank lenders, and the ability of the new owners/mgrs to grow businesses and profits.

The essence of this type of financing is all about the assets in the business being acquired, as well as the new owner’s ability to generate cash flow from those assets. In effect the acquisition is paying for itself!

Naturally a fine balancing act occurs given that the amount of new debt taken on also has the ability to bring on financial distress if not managed properly. New owners of the business also have to ensure they have the ability of course to acquire new assets or technology that might be required.

What do you need to cover off when it comes down to the basics of buy out finance? Issues include the fees involved that come from financiers or advisors, the amount of interest you'll be paying, and the types of debt that will reside on the balance sheet when the transaction is completed. Almost all businesses need revolving credit lines, and they must be able to meet the needs of the business.

Who can assist you in financing a mgmt buyout? Typically its Canadian banks, non bank commercial finance firms, Asset based lenders, and mezzanine finance companies. Naturally all of these will have different rates, terms and structures. Consider seeking out a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in making management buyout funding a success around your business acquisition.

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 - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


7 Park Avenue Financial

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

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing with the intelligent use of experience '


ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop