Canadian Business Financing - 7 Park Avenue Financial

WELCOME !

Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.

Friday, April 17, 2020

What Are Short & Long Term Financing Options For My Business

The Best Canadian Financing Options For Your Business

Short and long term financing options are not always comparable to the U.S. borrowing options we read and hear about in the business news. That is a double-edged sword when it comes to financing your company with the right loans, debt and cash flow options that allow the business owner and financial mgr to fund the company.

At 7 Park Avenue Financial new clients tell us they feel strongly that there is a lack of proper business funding options for small and medium enterprise firms in the Canadian business landscape.

For those companies that are clearly a ' barrier to growth', let alone survival in economic turbulence! Primarily we're talking about debt financing as well as ' asset monetization' to grow cash flow and working capital without taking on debt. Solutions such as business credit lines, either via the bank or a non bank lender, are critical to operating any business.

Businesses are funded in different manners, whether they are new and ' out of the gate ', often funded by owner personal investment and the proverbial ' friends and family '. Debt financing for the SME sector in Canada has historically been difficult to achieve.

Many new businesses, franchises included, are funded by the Canadian Govt Small Business Loan progra,m which offers significant capital to new and growing businesses. A combination of generous limits, low rates, and government guarantees and low personal guarantee makes this program very appealing to thousands of businesses every year.

We spoke of the business finance options in the U.S. It is important to note that there is probably a lot wider variety of options and lenders in the United States.

EXAMPLE : Canada set up its own version of the U.S. ‘SBA ' program. In Canada we call it the ' SBL ' - It's a govt guaranteed loan with the federal govt guaranteeing 85 % of your loan to the bank. In Canada, the program only finances equipment, leaseholds and real estate. In the U.S., numerous other options are available under the same program.

A different banking and financial system create the perception that there are more banks and lenders in the U.S., offering a larger variety of funding. But Canadian businesses should realize that a combination of traditional, as well as Alternative Financing solutions, do exist for borrowing needs.

Our Canadian chartered banks are significant ' deposit takers', as a result they are understandably risk averse, leading of course to a stronger banking and financial system ( that's a good thing ), but on the other hand limited business lending options to a certain degree.

The good news is that Alternative Lenders are providing more choices every day to thousands of Canadian firms, due somewhat in part to U.S. business financing models becoming more popular in Canada. Short term working capital loans, asset based lending ( ' ABL ' ), and numerous A/R and Sales financing solutions are now readily available to the Canadian business borrower.

The traditional financiers in Canada are:

Banks

Business Oriented Credit Unions

Insurance companies

Leasing Companies

Mortgage Institutions

Traditional financiers in Canada use the same approach for almost all borrowers, which of course has a tendency to restrict financing. In Canada companies seeking SME COMMERCIAL FINANCE (small to medium sized firms) constantly are challenged to finance sales and assets. Access to business lines of credit is always a challenge; Our previously mentioned Asset based lines of credit in Canada have exploded in popularity.

WHAT FINANCING OPTIONS ARE AVAILABLE TO ENTREPRENEURS & BUSINESS OWNERS?

Offerings Business owners should consider include:

A/R Financing

Non Bank Asset Based lines of credit

Equipment financing

Sale leasebacks

Bridge Loans - asset based

Tax Credit Financing (film and SR&ED)

Franchise Loans

Govt Guaranteed Loans

Working capital term loans

Merchant advances

To borrow with a full understanding of your business finance options seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success who can assist you with loans, funding and growth finance and survival options specifically suited to your business needs.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' 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

Wednesday, April 15, 2020

What's Alternative Financing In Canada ? Capital & Cash Flow Sources

Alternative Financing Options For SME Commercial Finance Needs

Alternative financing options and sources is all about the right capital and cash flow from sources you can depend on to grow your company's sales and profits.These lending options tend to come with fast approvals although non bank lenders demand a higher rate of return based on the flexibility of their capital and the eligibility requirements .

Any current economic upheaval notwithstanding, it's safe to say that after the 2008-2009 recession businesses in the SME ( small to medium enterprise ) sector in Canada had greater difficulty in obtaining proper traditional bank financing . The ability do do business and raise business credit had many firms wondering what the commitment was to this key segment of Canada's economy.

Bank lending guidelines focus on key elements such as accountant prepared financial statements, personal guarantees, outside collateral, and performance ratios / covenants your company must abide by . That can be a challenge.

Alternative Financing Canada

The business line of credit is typically a major necessity for any company . when access to credit lines dry up your company is more often than not able to support ongoing sales and daily operations.

So what can small and medium sized businesses do ? Whether its start up funding, or growing a business the landscape of Canadian business financing has changed. Experts tell us that the reasons alternate capital sources are growing is a combination of regulations in commercial lending and technology. Many new lenders can provide access to financing previously only offered by Canadian chartered banks.

While in some cases banks are pulling back to certain types of lending new technologies and many new commercial finance companies are providing complementary financing to run and grow business.

At 7 Park Avenue Financial we talk to new clients about the differences and benefits of traditional versus alternative finance solutions . Many firms have to utilize non-traditional business credit and business loans.

Though these sources of credit may not be perfect for every business, they are at least options to keep your company going through rougher economic times when you have been, as the saying goes ' de-banked'

Alternative Sources of Business Loans

Asset based loans - These facilities rely heavily on the hard collateral in your business, typically equipment, rolling stock, real estate, etc.

Non bank revolving credit lines - These business credit lines, often called ' ABL's " are used to manage the cash flow gaps that arise out of the need to carry inventory, collect receivables, pay employees and suppliers, etc. Similar to bank lines the carrying cost is calculated on the ongoing balance . The best way to operate these type of facilities is to make sure they ' revolve ' - hence the term ' revolving line '.

Another key benefit of the non bank asset based line of credit is that they can easily be increased as your sales and working capital needs grow.

Inventory Loans - Using inventory as collateral is often best facilitated in the context of the asset based credit line . The facility combines inventory and a/r financing to create an important source of ongoing cash flow.

Sale Leasebacks - Equipment your firm owns can be leased back to create valuable working capital,with your firm still maintaining full use of the equipment.

Equipment Financing - 80% of all North American businesses ( that includes Canada !! ) utilize lease financing to minimize capital outflows for new and used assets. Yes, used equipment can be financed !

SR&ED / Film Tax Credit Financing - Tax credits for the Government Scientific Research and Experimental Development program can easily be monetized to recoup valuable investments your company makes in R&D

Receivables Financing / Factoring - The ability to cash flow your receivables on an ongoing basis is one of the fastest growing parts of the alternative finance area . Our recommended solutions to clients of 7 Park Avenue Financial is Confidential Receivable Financing, allowing your firm to bill and collect your own a/r and be able at the same time to cash flow sales immediately as you generate revenues.

Royalty Finance - Royalty finance is quasi form of equity financing and allows your firm to raise funding based on sales

Purchase order financing - P O Finance is similar in many respects to a/r financing, but takes the whole process one step further , allowing the P O lender to pay your supplier for products related to legitimate purchase orders / contracts.

Working Capital Loans/Cash Flow Loans - Technology has allowed many firms to apply to short term working capital lenders who offer loans, typically 12 months in duration based on only your sales volumes. This type of financing is a key part of the whole wave of what the experts call ' FINTECH '. These loans fill a short term void and are typically based on loan amts equivalent to 10-15% of your annual sales volume. Other names for this type of loan is ' peer to peer / B2B ' financing.

These shorter term working capital loans/advances arose out of Merchant Advance industry in the U.S. , having spilled over into Canada . Those loans, called " MCA's " typically work best for retailers . In effect this area is a ' shake up ' of ' old school ' traditional financing. While these solutions are available to both public and private companies the majority of these types of financing revolve around private firms who want to both survive and grow their business.

We're not 100% sure that banks are abandoning small and medium sized lending - although many of our clients certainly feel so! But post the 2008 global recession it's safe to say business financing in Canada has changed. That's why the amount of capital available via private alternative finance firms should be often appealing to business owners and financial managers.

To explore the numerous capital and cash flow sources available via commercial alternate finance sources seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success, who can assist you with business loans that makes sense for your company / industry.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Monday, April 13, 2020

What Is Alternative Financing For Business In Canada ?

Alternative Financing Options From Non Bank Business Lenders In Canada

Alternative financing isn't something that most business owners and their financial mgrs equate with ' shopping ' , but the reality in today's environment is that it's a requirement for your company to know what traditional, and non traditional business financing solutions are available to your company . More and more companies everyday are looking at ' non bank ' solutions from credible lenders who can assist their business with cash flow, debt and working capital financing .

In some cases it's somewhat of a ' forced ' situation as some companies find themselves in what the banks term as ' special loan ' situations due to any number of events that have triggered a default in bank covenants, loan payments, etc. There is one immediate bottom line :

Turnaround Financing Is Required !

We'll take a look at different aspects of alternative finance solutions in Canada, as well as a re-focus on key issues within that damaged bank relationship that sometimes happens in the world of banks and traditional financing.

It's no real secret that interest rates for commercial business financing are at all time lows . Even bank fees associated with business lines of credits are not all that unreasonable. Nevertheless damaged relationships with your bank can exist, in certain scenarios that might even be about ' personalities ‘, i.e. the human side of business.

Clients sometimes feel that Canadian banks or their own banker specifically does not ' understand ' their business. In fairness to Canadian bankers they are sometimes just challenging a client and should often be viewed as a ' sounding board ‘for challenges your business might face

The limited amount of choice that owners/financial mgrs have when it comes to banks in Canada is of course a limited number of banks in a highly regulated environment . That's a good thing for banks and the health of Canada as a whole, but not so good when it comes to your business or your industry being able to achieve it's financial and sales goals with the right amount of financing.

That is of course unlike the U.S. which has different tiers of commercial and business banking, with hundreds if not thousands of individual bank lenders.

In certain cases your industry might be ' out of favor ' and traditional lenders are looking for ways to end relationships in certain economic sectors. With all due fairness to there being two sides of the story, we at 7 Park Avenue Financial can commiserate with the Canadian firms who suddenly find their total future and destiny in the hands of a third party.

As a short aside, probably the best advice we can give a client is to choose a banker that is relationship oriented and had internal credibility within her or his bank. Our belief - all banks are the same; all bankers are not the same.

What Then Are The Alternatives For Canadian Business Finance Solutions From Alternative Finance Lenders ?

Using our ' shopping analogy ' there's some solid choices when it comes to business funding .

Alternative Financing For SME'S In Canada:

Solutions include:

Asset Based Finance Firms

Equipment Lessors - Sale Leaseback Specialists

Accounts Receivable Financing

Inventory Financing

Purchase Order Financing / Alternative Sales Financing For Procurement

Royalty Financing

Tax Credit Loans ( Primarily SR&ED )

Key Point: Any of these alternative finance solutions can be combined in a variety of manners to allow for full scale financing of your sales revenues.

Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business financing success, who can assist you with achieve refinancing needs.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Friday, April 10, 2020

Business Cash Flow A Problem? Here’s 6 Working Capital Financing Methods

How To Manage / Increase Business Cash Flow

Business cash flow! In times of economic or industry turmoil most business owners and their financial mgrs would probably be happy with 1 solid working capital financing solution for cash flow business needs. We'll beat that and give you 6 ways to improve your business finances going forward . All of these solutions are accessible immediately if you have the right help . How is that for alternative solutions to your working capital and cash flow needs? Let's get started.

The funding of working capital continues to be a large challenge for Canadian businesses of all size - The business owner/financial mgr wants to be able to comfortably run the company on a daily basis, as well as growing the company.

That requires funding of potentially different types, and along the way those suppliers and employees want to be paid on time also! That's called running a business.

What's Your 2nd Most Valuable Liquid Asset In The Business ?

The most liquid asset any business always has, (next to cash) is your receivables. Working capital financing is best generated by the collection, or financing of your receivables. This can be done by:

1. Faster collections - Many companies should consider offering a discount for prompt payment - a typical offer might be 1-2 % for payment on delivery or withing 10 days for example

2.Financing / selling your receivables as you generate sales revenues

This type of financing is called receivable discounting or factoring, and is becoming increasing popular every day. If your company qualified for bank credit, i.e. traditional bank financing, then setting up a business line of credit is optimal . When this type of facility revolves up and down based on your selling products and services and getting paid the facility is operating well

3.You've spent your valuable business capital - would you like to get it back ? Clients of 7 Park Avenue Financial

always ask what we mean by that. Any equipment you have already paid for can often be refinanced, the technical term is

Sale Leaseback

That strategy, or a short term bridge loan with the equipment as security is exactly what our clients need to bridge the cash flow gap.

4. We spoke above about receivable financing - one of the best facilities for Canadian business is a combo working capital facility that finances, or ' margins ' both your A/R and your inventory. Since many firms previously couldn't finance their inventory either elsewhere, or via banks, the combined liquidity of borrowing against your A/R and inventory is a true power punch! Typical this type of financing is known as an:

Asset Based Lending Facility

This makes most sense when the facility is at least in the 250k range, and business owners/mgrs will be please to know there is virtually no upper limit in this type of business credit . The facility will grow as your sales and assets grow . Unlike bank lines of credit these are more flexible when it comes to growth business owners will probably recognize the most bank lines of credit are reviewed annually and place a heavy emphasis on issues such as personal guarantees, covenants, financial ratios, and outside collateral . Those issues are NOT the underpinnings of asset based business lines of credit.

5. Many clients are totally unaware the Purchase Order Financing is available in Canada. This is a strong potential cash flow saver, and generator, since your suppliers are paid for product when you order it, once you have received the P O. and entered into a P O finance facility agreement . The Purchase Order financier takes the inventory and receivable as security, but in effect finances your whole sale. While it is an expensive form of financing - typically 2-3 % per month companies that have good gross margins and could otherwise not facilitate the sale of large new orders and contracts it is a most welcome solution for large contracts, orders, etc.

Short Term Working Capital Loans - Where Did All These Loans Come From?

6. Canadian business owners are somewhat bombarded by potential short term loans that appear via online firms as well as some ' bricks and mortar ' companies.

Where did this type of loan come from ? The answer is ' from the United States . It originated via a "new" type credit card borrowing in 1995, which has morphed into what is know known as a working capital loan, aka a ' Merchant Advance '.

These loans were for mostly small businesses who could not get bank credit or had no personal ability to borrow money for purchasing assets, supplies, etc.

The loans were based on advances against future sales, and were originally focused on the credit card sales of the business . The industry grew and now services small and medium size companies , including having become very popular in Canada . A typical loan is paid back in 1 year in fixed installments, and the most common requirement is for loans to be approx 10-15% of your firms annual sales. This was a novel new way of lending and has become popular with many businesses.

SUMMARY/BOTTOM LINE :

Ensure you are aware of your Canadian business financing options. Working capital and cash flow are available if you have assets and orders. We have demonstrated that clearly to you via 6 separate solutions. Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success to to determine what works for your firm.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Wednesday, April 8, 2020

What Is A Cash Flow Loan ? Invoice To Cash Financing Alternatives

Cash Flow Loans For Business - Here Are Your Alternatives

Invoice To Cash Financing should always be a top priority for Canadian business owners and their financial mgrs. Whether it is a cash flow loan, factoring your receivables, or utilizing a combination of asset based lending solutions available to your firm it's always about ensuring you have the best strategy to convert sales revenues into much needed working capital and cash flow .

No secret that even the largest corporations in Canada place a significant emphasis on ensuring the right strategies and people are in place to monetize sales revenues. Accounts receivable financing solutions such as factoring ( those Bay St boys have a fancier name - ' Securitization ' but it's pretty well the same ) are gaining tremendous popularity with Canadian business.

So business wants to know more - what those solutions are, why they work and how to ensure your company has the best strategy in place . These solutions are particularly applicable to those looking for SME COMMERCIAL FINANCE solutions - that small and medium sized sector of Canada that powers a huge portion of the economy . Interestingly definitions of SME always vary, depending on who you are talking to - with governments usually using under 100 employees as the benchmark ! We wish !

For those that buy into the concept of looking at 'alternative financing solutions' it should be a priority and focus to ensure they are entering into the right facility - it's all about avoiding financial pitfalls .

The Canadian alternative financing marketplace is significantly different from the U.S. and European markets where these forms of financing such as factoring and asset based lending and working capital loans originated. It is therefore important for Canadian business to consider which type of receivable financing , sales financing and inventory finance solutions come with what options and benefits and how they work on a daily and long term basis.

NOTE - Many non traditional financing services often simply act as a bridge to bring the client back to solutions offered by banks, etc.

That is because Canadian non bank business financing companies - we can group them together as ' Asset Based Lenders ' , fill the gap when a firm cannot obtain satisfactory receivable financing from their Canadian chartered bank. That also will often include the challenges of inventory finance, purchase order finance, and equipment financing and leasebacks .

Many clients of 7 Park Avenue Financial tell us they do have some for of bank financing in place, but it essentially does not meet their needs re growth and facility size. In many cases clients had a challenging 2008-2009 , or have been impacted by ' COVID ' and have no financing facilities in place , resorting to self financing or looking at our alternate solutions we have mentioned.

Many firms are start up, early stage revenue, and virtually have no ability to qualify for standard Canadian operating facilities that are enjoyed by more larger and established firms, via Canadian chartered banks and insurance companies.

As an example ,factoring works for your firm when you have decent receivables but there are issues on your balance sheet and income statement that prohibit you from obtaining the amount of financing you need on an ongoing basis . This working challenge is further exacerbated when you have large new contracts or volatile growth spurts based on the uniqueness of your industry. At 7 Park Avenue Financial we will often focus on a combination of a/r financing and purchase order financing to ensure our client can successfully monetize sales, enter into new contracts, explore new markets, etc.

BUYER BEWARE ?

We have spoken about the importance of ensuring you enter into the 'right' finance strategy . Example : There are two types of factoring in Canada, ‘notification factoring ‘, and non- notification factoring. Both work well if you understand how they are structured and priced, however we favor non notification factoring in our recommendations since we feel it more closely suites the Canadian way of doing business. At 7 Park Avenue Financial we are a huge fan of Confidential Receivable Financing .

HOW DOES A/R FINANCING WORK

In ' old school ' notification type factoring the process is very simple and mechanical:

Your firm invoices your customer

You generate an invoice

You receive a large, almost same day cash advance against that invoice (typically 90%)

Your factor firm verifies the invoice with the customer prior to disbursing funds

The factor firm more often than not collects the invoice, an remits to your firm the remaining balance due yourself, less their financing fee - typically 1-2%

WHY CONFIDENTIAL RECEIVABLE FINANCE ?

Non notification factoring is dramatically different - with this type of facility more due diligence is spent on your firm and its way of doing business, invoicing, creating proper financial records, etc. Your company bills and collects all its invoices, and you receive funds immediately after you ship and provide proof of delivery.

Factoring pricing in Canada has dramatic price swings. Factoring rates range from 10% per annum and for some firms 1-2 % per month.

WHAT FACTORS CONTRIBUTE TO HOW A/R FINANCING IS PRICED ?

Factors that determine your price are the over all facility size, your usage of the facility, the overall quality of your customer based, and ,unbeknownst to your firm, how the factor firm itself is funded, usually either privately or institutionally .

In summary , alternative financing does work, and is working in Canada. Choosing the right facility shouldn't be a leap of faith of having to guess at how these concepts work . Take a hard look at solutions such as a/r financing, sale leasebacks, purchase order finance, short term working capital loans, and larger non bank business lines of credit - They work, and are working every in Canada.

Speak to a trusted, credible and experienced Canadian business financing with a track record of business financing success . Ensure you understand the benefits of this valuable and popular method of Canadian business financing.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

Sunday, April 5, 2020

How Does A/R Factoring Work ? Here's The Best Solution

A/R Factoring Companies In Canada

A/R factoring in Canada is a proven method of business financing in Canada. There probably isn't a time these days when business owners and their financial mgrs have not heard of ' alternative finance ', and many firms are considering business financing in every manner available. One of those is ' Confidential Receivable Financing ' and not all businesses understand the power , value, and real availability of this method of financing your valuable current asset on the balance sheet - A/R!

What information does your company need to know in order to asset if an a/r finance solution is viable for your business. More importantly, are there mistakes and pitfalls you can make when considering this type of working capital solution? Spoiler Alert - there are !

While you may not have heard of the different types of ' factoring ' in Canada we at 7 Park Avenue Financial forgive new clients who are trying to figure out why this method of Canadian Business Financing has become so prominent for thousands of businesses.

The answer is more simple than you might think - simply that Canadian chartered banks are finding it increasing more difficult to funds a/r , and of course inventory for many companies in the SME COMMERCIAL FINANCE sector. Many firms cannot meet the regulated criteria that banks mandate for financial stability, external collateral, personal guarantees, and covenants .

Accounts Receivable Securitization VS. Factoring

As as aside companies in the small and medium sized sector of Canada will be interested to not that even some of the largest and well known companies in Canada consider this type of financing - in effect they use ' securitizing' as a financing strategy similar to factoring . So you're in good company! So whether your firm is large or small,when you have a situation where the actual need for financing is acute, and the benefits and flexibility seems significant it is not hard to see the rise in popularity of such a financing mechanisms.

Factoring A/R

In our experience here at 7 Park Avenue Financial almost 99% of the time factoring can provide your firm with a greater level of borrowing based on your accounts receivable levels. Typically 90% of your a/r under 90 days old can be financed.

So is it all good news? Not necessarily, as we are always meeting with clients that have chosen the wrong type of funding or factoring, and, even worse, find them locked into contracts they cannot get out of. That is uncomfortable for any size firm as you can imagine.

As with any newer type of financing the playing field is complex. You can be forgiven for not knowing how many factor firms are out there, how they run, what their own limitations are, and , even to a certain extent, do they in fact themselves have the funding to survive, let along finance your firm .

For that reason we cannot over emphasize the need to work with a credible, experienced and trusted professional in this area, ensuring you have the best a/r and sales financing solution available.

Danger of Entering Into The Wrong Type Of Factoring

Lets talk about some of the nuances, we can call them potential ‘pitfalls ‘ also, of picking the wrong factoring partner. For a starter if you choose a firm who itself is not well capitalized, as we said, you might find that the financing commitments made to you cannot be honored. Canadian business has never had to think that the Canadian chartered banks could be ‘out of money ‘but the Canadian landscape is somewhat littered with small and medium sized factor firms that do not have the financial wherewithal to support their funding commitments in all places. That just re – enforces our idea that a trusted industry expert will guide you to the best partner for your firm.

Other issues, again, we can call them pitfalls, to look for include:

- Being Locked Into A Contract

- Poorly explained costs/fees

- Funding rates and credit line limits that don't reflect your business needs being locked into a contract

If we had in our experience to name one pitfall of a/r financing that many firms encounter it's the excessive notification and intrusion with your customers - which is very prevalent in the U.S. model of factoring .

Key Point - Many Canadian A/R Financing firms are branches of U.S. firms )

What Is The Best Type Of A/R Factoring In Canada?

In our opinion it's what we at 7 Park Avenue Financial call ' Confidential Receivable Financing '. This solution allows you to bill and collect your own receivables , without any intrusion or notification to your clients, suppliers, etc. Also this type of facility can easily be bundled into a non bank business line of credit - which is a subset of the broadly used term - Asset Based Lending.

So let’s recap. It’s simply that receivable financing and a/r factoring is growing in popularity. It works because it is providing funding where banks often cannot. If you don’t understand who you are dealing with and the various nuances of this type of financing it becomes a burden, not a solution.

Investigate this great financing mechanism, but ensure you know what you are getting into. Talking to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success always helps – that’s just common sense.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

WELCOME !

Friday, April 17, 2020

What Are Short & Long Term Financing Options For My Business

The Best Canadian Financing Options For Your Business

Wednesday, April 15, 2020

What's Alternative Financing In Canada ? Capital & Cash Flow Sources