The Cost Of Factoring Shouldn’t Be A Hot Potato ? A/R Rates And Funding Receivables Is Not What You Thought!

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A New Look At Factoring Pricing In Canada

 

Does the cost of factoring finance, i.e.  AR rates for funding receivables really have to be a  ' hot potato ‘? We don't think so, and here is why.

 

THE ACTUAL COST OF ' FACTORING RECEIVABLES ' IS A FEE - NOT AN INTEREST RATE

 

The cost to finance a receivable via invoice factoring of course revolves around the ongoing sale of your A/R at a discount. That discount is essentially the core of our cost perception issue. Factoring fees are often very misunderstood and confused with interest rates.

 

 Otherwise, things are pretty much the same, meaning that in the ordinary course of business you are still responsible for collecting your accounts in a timely manner, and furthermore, in a worst-case scenario, the customer’s inability or refusal to pay your firm still incurs a bad debt for your company. So far so good, right? We should mention that you can get what is known as non- recourse AR finance, but that is obviously a bit more expensive and essentially tied to the concept of credit insurance.

 

HOW DOES A FACTORING COMPANY ASSESS YOUR TRANSACTION

 

A Finance factor firm is going to look at hopefully the same issues that you look at when you enter into extending credit into your clients - i.e. client references,  credit limits, collection history, etc. That's just Business 101 and the reason why large corporations invest hundreds of thousands/millions of dollars into credit and collection departments that will ultimately drive the company’s cash flow and operational results for sales and collections.

2 KEY BENEFITS OF AR FINANCE

Benchmarked against the costs of funding receivables are of course the benefits. The key benefit is pretty obvious; your firm receives cash essentially the same day as you make your sales. You're now in a position to do something that many of your competitors may not be able to do, and that’s to offer terms and credit limits to many of your clients that even your competition might not be able to do.

 

Second benefit. It's virtually unlimited credit to your firm - you're not going cap in hand to apply or renew Canadian chartered bank lines.

 

THE TRUE COST OF FACTORING YOUR ACCOUNTS RECEIVABLE

 

So let's get down to the nitty-gritty . The cost of receivable finance. The key point we want to make today is simply that many Canadian business owners and financial managers don't really understand the true cost of what they are paying already, even when they are not factoring. Let’s look at our key example today:

 

EXAMPLE OF THE COST TO FACTOR A RECEIVABLE

 

Let's say your firm has a made a $10,000.00 sale and has generated an invoice for your client. Let’s say the customer is very late and pays you in 100 days. If we assume your company can borrow money at today’s rates in the 6% range as an example the cost to carry that receivable, i.e. just wait! is approx. $160.00.   

 

What we have just demonstrated is what is known as the cost to carry a receivable. If your firm had a receivables funding factor facility in place a typical cost to fund that receivable for a 60 day period might be 300.00. With that new found cash that you have obtained immediately, you are in a position to take supplier discounts, buy more inventory, generate another sale, and make more profits.

 

Doing nothing and just waiting for a client to pay, carrying your clients, is obviously not a great thing.

 

FACTORS THAT DETERMINE OF OVERALL A/R FINANCING RATES

 

Generally in Canada factors that determine your AR rates and cost of factoring are your sales volumes, average invoice balances, number of clients, and general perception of creditworthiness of your clients and your industry.

 

IS CONFIDENTIAL RECEIVABLE FINANCING THE BEST AR FINANCE SOLUTION

 

At 7 Park Avenue Financial Our recommended solution is confidential factoring, which allows you to reap all the benefits we have hopefully noted, with your firm being in control of billing and collections - i.e. no third party involvement.

 

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your financial needs when it comes to receivables funding.
 

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial





Stan Prokop
7 Park Avenue Financial/Copyright/2020

Looking For User Friendly Debt Capital And Asset Based Financing Choices? Strategies For Successful Business Financing

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When corporate partners and venture capital aren't available or don't make sense the Canadian business owner/manager turns to debt capital and asset-based financing choices for working capital and asset monetization. Wouldn’t it be great to have some solid choices in that area? The reality is that you do but just might not know it. Let's explain some key things around asset based lending.

 

We suppose we can make the case that when it comes to asset based loans debt is lower risk than equity, plus we always know what’s going on vis a vis payments of principal and interest.  The potential danger is that by virtue of your covenants and the collateralization of assets they may be claimed by your lender who is primarily interested in protecting their capital.

 

We sometimes think that the above scenario is how the business owner/manager believes the lender wants to behave. That certainly is not so, as what lender would really want to be repaid from the normal operations and cash flows from your business.

 

THE ASSET BASED LOAN  IS COLLATERAL LENDING OF SALES AND ASSETS

The actual ' assets' of your business are what normally drives most of the business financing in Canada. Because these assets have specific values balance sheet accounts such as buildings, inventory, and receivables are in fact the collateral behind your borrowing when it comes to ' asset based lending '. No mystery there. It's a classic example of balance sheet finance.

 

The alternative to hard asset collateral is the cash flow monetization of assets. And, oh yes, you can actually borrow against future cash flows, sometimes even on an unsecured basis if you can prove that historical and future cash flows are real and reasonable and carry a normal element of risk.

 

CAN YOUR COMPANY MEET THE TWO KEY CRITERIA IN CASH FLOW LENDING

 

How does the lender in Canada measure the risk of cash flow and debt repayment?  This is primarily done via two rules of thumb

 

The cash flow formula is known as EBITDA 

The ratio of total debt to your total shareholder equity

 

These ratios and calculations are then typically embedded into a loan document that makes them, in essence, a condition of the loan. The bottom line, a healthier business with good cash flow and low or reasonable debt has a great chance of achieving more debt capital. If EBITDA and debt/equity are ' out of whack ' then it's safe to say that challenges in obtaining debt capital and asset financing will ensue!

CONSIDER SHORT TERM FINANCING OPTIONS VERUS LONG TERM SOLUTIONS

When accessing both debt capital and asset financing it's important to determine what category or timeframe you are looking to address. By that, we mean short term financing of one year or less, typically business credit line solutions, or long term financing that typically might be 3-5 years, and finally an ongoing line of credit financing for your daily ongoing operations. The asset based lender establishes an ongoing borrowing base certificate on which you can draw down against accounts receivable and inventory.

 

BANKS VERSUS ASSET BASED LENDERS AND NON BANK COMMERCIAL FINANCE COMPANIES

 

While debt capital in Canada primarily comes from banks, insurance companies and pension funds for medium-sized to larger corporations there are numerous independent commercial finance companies and asset-based lenders that address the start-up and SME sector in Canada. It' all about knowing who to turn to and when. The key point to remember? It's a simple one. Assets can be financed!

 

CONCLUSION

 

The bottom line today. Pretty simple - simply that asset financing and cash flow financing for debt capital is available through collateralizing your receivables, inventory, equipment, real estate, etc. The trick is knowing who, what, when, and where! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your debt capital and asset finance needs and choices.

 

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Know How To Finance A Business ? Financing Choices Are About Timing And Strategy In Funding Choices

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Properly Forecasting Your Business Finance Needs ?

Is there a right way and a wrong way to finance a business in Canada? We definitely think we can show you there is ... as well as pointing out those risks and benefits. And by the way, it is in fact possible to change horses in midstream to adapt to today’s changing times when it comes to business financing and your company.

 

WHAT TYPE OF FINANCING DO YOU NEED - SHORT TERM OR LONG TERM ?

 

As we have been prone to say lately the concept of ' term' is critical in both assessing and choosing the right business finance. By terms, we simply mean short, intermediate and long term, as all of those have a number of different implications.  And to compound the challenge for the business owner and manager both the type and  ' term ' of the financing can impact the amount of funds that flow in and out of your business.

 

FACTORS TO CONSIDER IN FINANCING

 

So what in fact are some of the things you need to consider when choosing a financing solution?  There are a number of factors, probably all as equally important. They include:

 

Cost/rates,

Amount of risk you are taking

How your overall business capital structure changes with any one particular sort of financing

What cash flow, working capital and profits that that financing will deliver... or take from your company!

 

It's easy sometimes to get confused about the timeframe when you're in the middle of searching for a finance decision. We meet and talk to many clients that are looking to solve an immediate problem and somehow miss considering the growth and future of their firm.  A simple example might be a banking arrangement - i.e. not considering whether you can live through the tough times based on covenants, guarantees and collaterals that you have either offered up or have been demanded of you.

PLAN YOUR CASH FLOW SHORTAGE !

 

One of the most proactive things the business owner/manager can do is to focus on planning to be short of cash and what solutions might be available. Why? Because cash flow shortfalls always happen, for pretty well everyone!

 

The toughest decision many business owners have to face if giving up equity and ownership of some sort in their business because debt levels are too high or the right financing is not available.

 

4 FINANCING SOLUTIONS YOU CAN ACCESS TODAY

 

So what are some of the short and intermediate financing solutions available - They include:

 

Supplier financing

Bank lines of credit

Receivable financing

Equipment leasing

 

DON'T OVERLOOK SUPPLIER FINANCING AND HOW IT AFFECTS CASH FLOW

 

Supplier financing is almost always overlooked when it comes to cash flow financing. Just negotiating better payment terms or taking supplier prompt pay discounts can save firms many thousands of dollars.

 

IS TRADITIONAL BANK FINANCING THE SOLUTION

 

Bank financing in Canada takes many forms - when you can achieve approval. Those forms include lines of credit, term loans and fixed asset financing for long-term assets.  

 

 We caution clients that the crux of the bank relationship should revolve around what you need to provide in the form of collateral, covenants, and reporting.  Many Canadian business owners simply don’t know that alternative financing for their businesses can in fact be arranged outside of Canadian chartered banks. While these solutions might be more expensive they solve problems!

CONCLUSION

What financing solution suits your business? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor today.

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial





Stan Prokop
7 Park Avenue Financial/Copyright/2020

Purchasing A Company? Buying A Business In Canada Without Overpaying With These Tools!

 




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Quality Decision Making When Financing And Buying  A business In Canada  

 

How To Not Overpay When Purchasing Company Buying Business Acquisition Finance

 

Purchasing a business in Canada, along with financing it always makes more sense when you feel you have paid the right price for an existing business purchase. One of the biggest business news stories in the world in the last couple of days was the discovery, apparently, that one of the largest technology firms in the world had (massively) overpaid for the business.

 

HOW CAN YOU ENSURE THE RIGHT PURCHASE  PRICE WITHOUT TAKING ON UNDUE RISK

 

  Accusations from both sides, surprisingly, abound. And much of those accusations are pointed at the legal and accounting firms that helped with the transaction. And we have met our share of clients who are struggling and wrestling with the financing they need based on having purchased a company at the wrong price, thereby incurring a lot of debt in the process... unnecessary debt! In some cases, the valuation of intellectual property of some sort might be the challenge.

 

As we can imagine, it's safe to say the  ' financial fur ' is flying! How then can Canadian business owners and financial managers protect themselves from these types of valuation mistakes when buying a business? Especially when they don't have access to all those high priced lawyers, accountants and valuation consultants. Those legal , tax and accounting issues around a business acqusition are important and many business owners don't have the expertise and resources in these key areas.

 

USING COMMON SENSE BASIC FINANCIAL TOOLS TO EVALUATE THE ACQUISITION

 

What to look for in financial statements when buying a business? The reality is that there are a number of common-sense financial tools that you can in fact use when buying a business and arranging acquisition finance.  And they come at almost no cost! It's all about examining some very basic relationships around how a company operates, and these techniques could save you thousands/ millions.

 

TAKE A STRONG LOOK AT THE RECEIVABLES TO SALES RATIO

 

A large part of the financing you need to purchase a business revolves around the relationship of accounts receivable and inventory to sales. When you learn to interpret these properly you are well ahead of the game, and hopefully, your valuation and financing will make a lot more sense.

 

When you have a strong handle on the size of A/R and inventory to sales the financing you may need to finance the acquisition will simply make a lot more sense.

 

Let's take a look at A/R first. Most business owners know that they can measure the general health and quality of their receivables via a calculation known as DSO - Days sales outstanding. This measurement will basically tell you two things - the quality of credit that you are extending to clients and the difficulty or mismanagement that you are experiencing in collecting that sale. Pretty important stuff from a basic calculation, and as far as we have read that’s one of the key issues in that breaking news story we talked about vis a vis out tech giant’s acquisition.

 

ARE INVENTORY TURNS MOVING IN THE RIGHT DIRECTION

 

Taking a hard look at the inventory situation simply allows you to determine if inventory is in fact being moved out of your current assets into the sales and receivables accounts.

How does the business acquirer then use this information to get a strong handle on sales, collections and inventory management? It's a lot simpler than you think, and the reality is that you can even use this simple calculation to monitor your own management effectiveness. Simply construct a basic chart that shows over any specific period of time your sales, A/R and inventory amounts. Monitor and analyze the relationships of these balances.

 

EXAMPLE OF THE A/R TO SALES RATIO

 

Example? No problem. Let's say sales go up 17% and you notice that A/R has now gone up 35%... with inventory going down by 5%. Is this bad, good, or who cares? The reality is that when you spend some time and also track the data you will see that in certain cases the numbers are out of whack, thereby identifying potential problems in A/R and inventory valuation.

 

It's up to you as the buyer to ask the right questions then. It's all about due diligence!

 

In the case of our recent major news story, the accusation seems to revolve around exactly the example we have provided - i.e. the cash conversion cycle slowing down because of sales behaviour as it relates to A/R and inventory.

 

Is our calculation the be-all and end all? Definitely not, but it also seems like it could have worked quite well for our Tech giants analysis team, as that seems to have been the problem.

 

Finally, all sorts of other issues need to be looked at also, they might include revenue recognition, expenses, accounting policy changes... and on it goes.

 

CONCLUSION

 

Entrepreneurs and current business owners look to buying an existing business for many reasons, one of which is simply that there is a general perception that it entails more risk than starting a business from the startup stage. The ability to acquire a business that is generating revenues and acceptable profits is a temptation for many business people. We looked at the a/r to sales ratio as one example of evaluating a business - you also want to make sure that those same customer generating sales revenue will keep buying after the business transition.

 

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in acquisition finance if your goal is to buy a business in the SME sector of Canada - small business acquisitions done right!

 

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Business Financing Change? Let Asset Based Change Your Outlook On The Business Credit Line

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Upgrade from an 8 Track Mindset to IPOD Via Changing Times In Canadian Business!    

 

When it comes to business financing in Canada what would you do if you could take one of your finance alternatives and take it from the days of  8 track players into the world of iPods and all the other technology we have access today.  Talk about a change in speed and features and ease of doing business, not to mention more for your buck!

 

AN ASSET BASED CREDIT LINE IS THE NON BANK ALTERNATIVE FOR A LINE OF CREDIT

 

That's the analogy we're using today for the Asset based credit line, which is a non-bank business finance alternative that provides your company with cash flow and working capital in a manner similar to a Chartered bank business line of credit. But there are significant differences in how these asset based lending lines of credit facilities are obtained and how they work. Let's examine some of those key differences as they affect account receivable, inventory and fixed asset borrowing.

Asset based lenders can also include real estate assets into the borrowing mix, providing even more liquidity.

 

CREDIT LINES FACILITIES ' REVOLVE'

 

When we compare how facilities such as this operate it's all about  ' revolving ‘. The analogy to your personal lines of credit in your own life isn’t far off here. So if the bank facility and the ABL (asset-based lending credit line ) fluctuate in the same manner, what’s the difference our clients can be forgiven for asking?

 

HOW ASSET BASED CREDIT LINES ARE MARGINED FOR BORROWING PURPOSES

 

One of those key differences simply boils down to the availability of funds, because you are in effect borrowing against the whole asset base of your company. To be clearer, most bank facilities focus on conservative margins of 75% of accounts receivable and an even more conservative margining of your inventory. The asset-based business facility typically lends at 90% of your receivable, and anywhere from   25-60% of the inventory and other assets such as equipment. Margining assets for more borrowing power is what asset based loans are about.

Borrowing approval is typically recalculated every month via what asset based lenders call a borrowing certificate.

 

THE DIFFERENCE IN BANK CREDIT FACILITIES AND THE ' ABL '

How then does the asset based lending lender take comfort in offering your firm so much more liquidity? They do that by utilizing two techniques that are typically ignored by the Canadian chartered bank credit facility. Those two asset based loan  techniques are :

 

Due diligence on the valuation of assets

More extensive monthly reporting requirement

 

   But those two techniques deliver because we have often seen clients go anywhere from 50-100% in total additional borrowing power. Talk about a potential liquidity explosion in your firm.

 

So why isn't every business borrower in Canada utilizing asset based financing? We wonder about that one a lot also! but the reality is that this method of revolving business credit is, on balance relatively new in Canada, having come to us from our good friends in the U.S. . Some estimates in the U.S. place asset-based lending at 30-40% of all borrowing activity if you can believe that.

 

4 TYPES OF BUSINESSES THAT UTILIZED ASSET BASED CREDIT LINES

 

Is the Asset Based Credit Line for your firm? It certainly covers all categories, including firms who are in the following phases of their existence:

 

Start up's

Fast Growth

Special Situations

Firms currently in Special Loans

Companies with solid credit but who are unable to access the full amount of financing they need from our Chartered banks can finance the balance sheet with asset loans.

 

CONCLUSION

 

Whether you are a small business or a larger corporation seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine the benefits of the asset based financing  ABL credit facility as they relate to your firm's cash flow needs. Let this facility, as in our analogy; take you from 8 Track to IPOD...quickly. Asset based lending works!

 

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

How To Untangle Your Business Financing Via ABL Capital

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Overcome Business Line Of Credit Finance Hurdles! It’s Changing Times In Business Finance. Here’s One Reason Why!
 

Is ABL capital a solid or maybe your ‘best choice’ when it comes to untangling the challenges your business faces when it comes to a comprehensive business line of credit?  We think it's a solid finance solution and many industry experts agree. Here is why!

 

WHAT IS  ' ABL' IN  BUSINESS FINANCING?

 

What is ABL? .... which of course stands for asset based lending. We ask that question only because it, and other terms such as ' cash flow ' mean different things to different people. In our terms, it is a total solution business line of credit that allows you to borrow against your  accounts receivable, inventory, equipment, and even real estate, all within one revolving facility. It is as simple as that.

 

THE ABL BUSINESS FINANCE SOLUTION VERSUS BUSINESS BANKING CREDIT VIA A CHARTERED BANK

 

It's really a total solution that, in effect, is an ' evolution ' in the concept of the asset-based line of credit.  For the asset based lending company, your new partner in business banking it's all about the balance sheet. That is of course compared to Canadian commercial business banking, where it’s all about the balance sheet... and your cash flow statement, and your income statement... and your personal guarantees.  In  ABL it's all about accounts receivable, inventory, fixed assets, and real estate.  Purchase order finance solutions can also be combined into a total overall financing solution for those firms taking on larger orders and contracts that otherwise might not be financeable.

 

Those of course are what drive Canadian business banking rates to be so low and so great... if you can access them! The asset based loan solution comes with a higher cost of financing via interest rates but provides you with that much more liquidity.

 

IS YOUR FIRM CURRENTLY ' UNBANKABLE' FOR YOUR BUSINESS CREDIT NEEDS?

 

If we had to line up the different companies that access ABL capital via asset based lending  it's a diverse group - its larger firms that are very bankable but can access more capital at better rates, all the way down to startups with a more limited financial history, at the same time having assets that can be financed.

 

We are pretty sure this doesn't exist in Canada, we certainly haven’t seen it yet, but in the U.S. there is a huge ABL capital market known as ' Second Lien '. Under these facilities, the asset based lender sits on top of the senior bank facility, in 2nd position, and advances even more against the total assets already being financed by the bank.  Surely that is one reason why our banking and lending practices are much more conservative in the world marketplace - we don't lend twice against the same asset!!

 

FIXED ASSETS AND EVEN REAL ESTATE CAN BE INCLUDED IN YOUR CREDIT LINE!

 

When we sit down and talk with clients about what can be financed and how its often practical to finance current asset accounts such as a/r and inventory via an asset based lending ' ABL' line of credit, while at the same time financing the equipment and other fixed assets under a separate facility with a finance partner/lender who has an appetite for those type of assets. That total combination of two facilities gives our client a lower ' blended cost ' of funds and at the same time increases borrowing power - talk about a ' double whammy '! Asset-based lending rates are higher thank bank financing but it becomes a question of access to capital versus cost of capital for funding and growing your business.

 

 

WHY IS THE ABL CREDIT FACILITY SO POPULAR

 

What made asset-based finance popular in Canada when it comes to business owners and financial managers seeking solid biz credit facilities?  A lot of it revolves around 2008/2009 when financial markets went awry and thousands of Canadian businesses started to investigate alternative methods of financing their business. And ABL sure was one of them. And let's not even talk about Pandemics.

 

And the irony in the above? Simply that companies that even theoretically qualified for more traditional financing could not get it... enter the ABL facility! It's a new kind of line of credit.

 

So is there a trend emerging in the  Canadian business line of credit offerings? We think there is. In the U.S. experts confirmed that even back to  2011 and continuing in popularity to today asset-based credit lines almost doubled. We think it did, perhaps somewhat less so, but clearly the emergence of a new trend via asset-based lending banks and independent non-bank commercial finance companies

CONCLUSION

If your company is looking to grow (or just survive) investigate the benefits of ABL capital and asset loans for working capital,  making you a more effective competitor. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision with the right type of facility.

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

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Let’s play the Match Game Of Asset Finance In Canada 

 

Growth financing in Canada.   As if keeping your business alive as a Canadian business owner or financial manager wasn't enough, what about all the growth financing challenges you have to face?!

 

There probably are thousands of businesses in Canada who are either content to stay roughly the same size, or, at the opposite end of the spectrum, want their business financial assets to grow, but just don't know how,  or where to turn to.  Businesses in the SME sector in Canada are sometimes quite happy to put those earned profits regularly back in the bank accounts of their owners. That’s ok, for course, just not complementary to a growth strategy.

 

As we said though, many firms wish to capitalize on asset finance solutions in Canada to add assets to their business open a new location, buy a competitor, even in some cases franchise their business model.

FINANCING IS THE LUBRICANT FOR BUSINESS GROWTH

So if it is true that financing is the key ' lubricant ' in that growth financing depends on, and if the business owners don't have the ability to fund their firm personally, what are in fact the options? In reality, there are more than you think!

 

Naturally, early-stage start-up firms in Canada though do in fact rely on initial owner equity. But sooner or later you need growth financing of financial assets for key investments in office space, software, computers, and other infrastructure and business model assets.

 

We never fail, or at least try not to fail at pointing out to business owners/managers that internal cash flow generated from asset turnover is a key to growth finance.  It's just that they are never enough!  And if you're not big enough to go public yet, or engineer a reverse takeover then financing financial assets is in fact going to be a key driver in your revenue and profit growth.

MATCHING ASSET TO THE RIGHT BUSINESS FINANCING SOLUTION IS KEY TO FINANCIAL SUCCESS

Here though we are at a key point in the juncture of your firm. Because here's where mistakes are made, we’re referring to the sometimes inability of the business owner/manager to match the right assets with the right type of financing.  So a very key point is in fact that you should be financing receivables, inventories, and tax credits with short term financing vehicles in Canada.

 

Those solutions include : 

 

Bank lines of credit

Receivable finance

Inventory finance

Asset-based non-bank lines of credit 

Purchase order/supply chain financing

 

 Longer-term assets should be financed with : 

 

Term loans

Equipment leases

Secured or unsecured cash flow loans (unsecured is best!), etc.

CONCLUSION

If you wish to match the right assets you have, or need, with the right type of financing seek out and speak to a trusted, credible and experienced Canadian business financing expert today.

 

P.S. That is of course only if you want to grow your business!

 

 

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

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020