Working Capital Financing Cash Flow Solutions In Canada

Tweet

YOUR COMPANY IS LOOKING FOR CANADIAN WORKING CAPITAL FINANCING & CASH FLOW SOLUTIONS FOR  GROWTH!

Navigating Working Capital Financing: A Canadian Business's Roadmap

You've arrived at the right address. Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today 

                              ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com 

 

 

 

Expand Your Business: Exploring Working Capital Financing Cash Flow Solutions in Canada 

 

 

 

INTRODUCTION 

 

Working capital financing in Canada has undergone major changes with the emergence of various traditional and non-traditional lending options.

 

Businesses looking to navigate short-term obligations around their company's financial health now have diverse solutions to explore. Let's dive into the details to understand what might be the best fit for your enterprise.

 

Who Provides Working Capital Loans in Canada?

Traditional Lenders

Canadian banks and business-oriented credit unions have been the go-to solutions for owners seeking positive cash flow in business lines of credit and term loans. However, in the wake of recent years, the landscape has changed, with various non-bank commercial lenders stepping into the scene.

Non-Bank Alternative Lenders in Canada

 

These non-traditional lenders often cater to SME COMMERCIAL FINANCE needs and demonstrate a greater understanding and risk appetite for sales growth, receivable financing, inventory loans, PO Financing, and equipment leasing under the general heading of alternative financing.

 

 

Government Loans And Grants: Are They Suitable For Your Business? 

 

While many seek government grants, it is crucial to note that most grant-type programs might not serve the average Canadian business owner's needs related to working capital.

 

The Canada Small Business Financing Program

The two notable exceptions are the government-guaranteed Small Business Loan, or CSBFL, and the federal SR&ED program. SBL government small business loans provide beneficial rates, terms, and structures but primarily focus on equipment and leasehold loans. The SR&ED programs provide billions annually for firms investing in r&d.

 

Is Your Company Investing in Research and Development?

 

If your company invests in R&D, the SR&ED program might be suitable. SR&ED credits can also be financed, turning them into a great source of initial cash flow.

 

 Working Capital Term Loans and Mezzanine Finance 

 

The less-known cash flow loans or mezzanine loans cater to accounts payable needs, reaching up to $250k for small and medium-sized businesses. These loans are often termed short-term working capital loans, providing quick access to cash, albeit at higher rates.

 

 

Non-Bank Asset-Based Lines of Credit / Unsecured Loans

 

These large-scale loans (often over $1 Million) from non-bank sources provide working capital and are generally unsecured. The more you invest in current assets, the more financing and focus will be required for daily operating activities. For more information on non-bank asset-based lines of credit and asset-based loans, click here.

 

KEY TAKEAWAYS

 

1. Traditional Banks and Credit Unions are often the first options, but alternative lenders are becoming popular.

2. Non-Bank Alternative Lenders may provide more flexibility for SMEs and offer numerous asset-based and cash-flow solutions without requirements such as collateral and guarantees often demanded by Canadian banks.

3. Government Grants and Programs can assist in specific cases. Talk to 7 Park Avenue Financial about grant financing solutions.

4. Asset-Based and Unsecured Loans offer flexible options for increasing working capital and liquidity.

 

 CONCLUSION  

 

Seeking to overcome negative working capital?

 

Working capital may hold varying interpretations for different entrepreneurs, yet the core principle of genuine cash flow and funding current business assets stays constant.

 

True working capital financing encompasses the funding of immediate assets like accounts receivable, inventory, and purchase orders. Asset turnover and current asset management are critical to business success.  Some government initiatives could suit your needs, including term loans, leasehold enhancements, etc.

 

With these perspectives, Canadian entrepreneurs can arm themselves with the knowledge and self-assurance to explore many options in working capital management and funding. The choices, from conventional bank financing to exclusive government schemes and asset-backed lending, are diverse and extensive.

 

Make well-informed choices and drive your enterprise forward by selecting the apt working capital financing strategy tailored to your situation.

 

Working capital may signify diverse things to various business owners, but the underlying truth of real cash flow and capital management is unaltered.

 

Authentic working capital management is linked with financing short-term assets like accounts receivable, stock, and procurement orders. In the Canadian context, numerous opportunities are available, and pinpointing the right solution can substantially boost business advancement.

 

Prefer an  ‘expert ‘in business financing? Call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business Financing Advisor with a track record of long-term success in helping companies with finance solutions for enhancing the growth of their products and services.

 

FAQ: FREQUENTLY ASKED QUESTIONS

 

What is a cash flow loan?

A cash flow loan is a good funding tool for entrepreneurs needing financial help. These loans are helpful to new businesses or companies that want to find salespeople and invest in marketing campaigns, product research and services; they can be instrumental when an entrepreneur faces low liquidity after the decline of funds from credit lines.

 

A cash flow loan can be the perfect funding tool for many entrepreneurs. This is especially true for companies growing quickly and have significant funds invested in receivables and inventories or limited assets to offer as collateral.

 

These loans are helpful after an unforeseen liquidity shortfall has occurred, preventing growth from happening because these events cause a company's finances to become strained. Quick business decisions need to be made oftentimes without all the necessary information on hand.

 

What are the primary sources of working capital financing in Canada?

The primary sources include traditional banks and credit unions, non-bank alternative lenders, government grant programs like the Canada Small Business Financing Program, and asset-based lines of credit or unsecured loans.

 

 How do non-bank alternative lenders in Canada differ from traditional lenders?

Non-bank alternative lenders often have a greater understanding and higher risk appetite for growth areas like sales, receivable financing, and inventory loans. They offer flexibility and cater more to SMEs compared to traditional lenders.

 

Are government grants suitable for working capital needs in Canada?

 Most government grants may not serve the needs of average business owners for working capital. However, programs like the CSBFL and SR&ED offer specific grants and loans that can support business financing needs.

 

How can the SR&ED program benefit companies investing in R&D?

Canada's SR&ED program is a non-refundable grant that covers around 40% of cash spent on R&D. SR&ED credits can also be financed into an 'SRED LOAN', providing a valuable source of working capital.

 What are the benefits of non-bank asset-based lines of credit for businesses in Canada?

These loans offer flexibility in providing working capital as they are often unsecured and have higher limits. They enable financing current assets like receivables, inventory, and equipment, enhancing business growth capabilities.

 

How are working capital and cash flow related?

Cash flow and working capital are vital elements in financial analysis and business valuation, sharing similarities but also having distinct differences.

• Cash flow focuses on money movement and operational finance.
•  A Company's Working capital position assesses short-term financial health by comparing current assets to liabilities.
• Both are essential in financial analysis and business valuation, with distinct but related roles.

Cash Flow:

• Summarizes the company's cash holdings (account balances, cash and cash equivalents, cheques, etc.).
• Indicates money flowing in and out of the company and the assessment of a company's ability to meet financial obligations and helps determine how much cash or financing is needed
• Positive cash flow: income is higher than expenditure.
• Negative cash flow: expenditure is higher than income.
• Operating cash flow refers to financing day-to-day operational business, including costs, investments in new equipment, etc.
• The cash flow statement shows annual cash flow and liquidity.

Working Capital:

• The difference between current assets and current liabilities in the financial statements creates net working capital - either positive or negative,  on the balance sheet - this calculation is known as the working capital ratio.
• The amount available to pay current liabilities.
• Positive working capital: current assets are higher than current liabilities
• Negative working capital: current liabilities are higher than current assets. How to calculate working capital movement in a business is vital to financial success.

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

Asset Based Credit Line Solutions In Canada: Your Assets Make This Working Capital Facility Work

 

Tweet

YOUR COMPANY IS LOOKING FOR A  CANADIAN ASSET BASED LINE OF

CREDIT AND WORKING CAPITAL FACILITY! 

Unveil the Secret: How Asset-Based Lending Transforms Canadian Businesses!

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today

                              ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

WORKING CAPITAL FINANCE VIA ASSET-BASED LOANS

 

 

Unlocking Growth Potential: A Deep Dive into Canada's Asset-Based Credit Line Solutions 

 

 

INTRODUCTION 

 

Are you looking to give your Canadian business a boost in working capital? You might have heard of asset-based credit line solutions, for some, an unknown concept that has now become the go-to answer for many businesses.

 

Let's unpack this financial tool that could drive your sales and revenue growth with access to more capital.

 

It's a real problem. On the one hand, business owners and financial managers seem more optimistic about their future success and competitive edge. But here's the kicker: all that optimism must weigh against the practicalities of financing day-to-day operations and future growth based on the current credit worthiness of the business.

 

 

THE CHANGING LANDSCAPE OF CANADIAN BUSINESS FINANCING   

 

Remember the good old days when financial options were aplenty? At 7 Park Avenue Financial, we don't either -  The asset-based credit line was once this obscure, misunderstood entity. But guess what? Times have changed, and it's time we understand what this financing entails.

 

 

A NEW SOURCE OF CAPITAL FOR WORKING CAPITAL AND CASH FLOW 

 

 

We all know the struggle: working capital, cash flow, and managing capital expenditures while preserving business credit.

 

If you're a small or medium-sized business in Canada, it's like playing financial chess without the queens.

You're constantly strategizing but with limited pieces. Canadian banks talk a good game but leave many smaller businesses hanging for a loan or line of credit based on current financial standing and issues around growing rapidly or securing new customers or a new contract. Sound familiar?

 

  

THE ASSET BASED LINE OF CREDIT WORKING CAPITAL FACILITY SOLUTION  

 

So, what's a business to do when traditional bank loans fall through? Enter the asset-based line of credit, a.k.a; the ABL facility. It's like this handy toolbox for greater liquidity that doesn't add more debt but magically turns assets and sales revenues into a revolving line of credit. Unsurprisingly, this innovative solution is gaining traction in Canada's financial landscape as businesses focus on getting a better advance rate on current assets and other assets.

 

 THE WHAT AND HOW OF ASSET-BASED FINANCING REVOLVING CREDIT FACILITIES 

 

 

Got assets? That's all you need for asset-based lending. It's not rocket science; it's just a practical way of securing cash flow and working capital against what your company already has. Imagine a bucket that's filled depending on what you put into it—your accounts receivable, inventory, even unencumbered equipment. It's an intelligent way to leverage what you have without over-complicating things.

 

  

ASSET BASED LENDING IS FLEXIBLE  

 

 

Why choose ABL? It's not just about higher advance rates or the ability to finance various assets. It's also about the freedom and control it offers. Imagine driving on a road with fewer restrictions and more open lanes.

 

Even Canadian banks are getting on board with ABL solutions, though some critics argue they still cling to traditional banking models.

 

 THE FOCUS IS ON BUSINESS ASSETS AS COLLATERAL 

 

ABL is like a spotlight that focuses solely on the collateral. It's simple, direct, and depends on your sales and business assets. Since this is relatively new terrain, grabbing a guide is wise - Let the 7 Park Avenue Financial team be your north star in navigating this unique aspect of Canadian business financing.

 

 MAXIMIZING ASSETS AND SALES REVENUES 

 

Here's a metaphor to chew on: ABL is like squeezing the juice out of an orange—you're getting every last drop of value out of your assets. Whether it's receivables, inventory, or unencumbered equipment, the strategy is leveraging these to the fullest. Even Bob Dylan's famous lyrics might resonate with the evolving image of ABL lending - ' The times they are a changing '!

 

7 KEY TAKEAWAYS

1.  
   • Asset-Based Lending (ABL) uses collateral value and liquidity of working capital assets as primary credit considerations for lines of credit.
   • Focuses on short-term asset liquidity, not long-term stability.

2.  

   • Originally a financing source of last resort but now used by thousands of private and public companies!
   • ABL has evolved as an attractive option for well-performing companies.
   • Dominated by independent lenders 20 years ago, now mainly controlled by banks.

3.  

   • Lower cost of bank capital passed on to borrowers via competitive rates
   • ABL credit spreads are comparable to middle-market bank loans due to surplus liquidity in the markets
4.  
   • Typical commercial lending focuses on operating earnings and equity balances.
   • ABL is concerned with converting assets to cash and potential impairments to that conversion.
   • Relies on liquidated collateral for repayment, regardless of business state.

5.  

   • Advances credit against the most liquid business assets like inventory and accounts receivable under 90 days old
   • Self-liquidating through the continuous turnover of the cash cycle as companies sell on credit and collect unpaid invoices
   • Credit expands with sales growth; excess cash flow reduces the credit line.

6.  

   • No set amortization schedule.
   • Robust monitoring of asset turnover.
   • Confidence in collateral value.
   • The capture of collateral proceeds in control accounts or lock boxes.
   •  
7. • Near real-time understanding of the borrower and loan state - ABL facilities increase almost automatically.
   • Allows risk metering by adjusting advances if the borrower stumbles.
   • Credit availability is formula-driven, often customized to specific assets and situations, mainly against accounts receivable and inventory.

 

 CONCLUSION - THE POWER OF ASSET-BASED FINANCING TO UNLOCK BUSINESS POTENTIAL 

 

Could ABL be the missing puzzle piece for your Canadian business? Why not explore and take advantage of the cash flow and working capital that can propel your growth? Call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor for business credit line solutions.

So, are you ready to step into the future of financing? Your growth path might be just an asset-based loan away!

 

 

FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION

 

What is asset based lending? How ABL works

Asset based lending facilities are a type of business loan where the credit considerations are based on the value and liquidity of assets. Asset-based lending is a business loan focusing on working capital assets' collateral value and liquidity.

ABL credit via asset-based funding is more concerned with asset liquidity and factors that may impair the conversion.

 

The ABL lender differs from normal commercial banking/lending because it relies on the asset being able to be converted into cash rather than the business's long-term stability. 

 

Understanding asset based lending is ensuring the borrower under how a  borrowing base is determined based on a business's ongoing sales and asset values, providing constant credit availability. Liquid assets such as a/r and inventory have higher values based on loan-to-value calculations.

 

Loans based on assets via ABL lenders are considered less risky, so the maximum loan will be considerably more than the assets' book value/face value. Interest rates charged vary widely, depending on the applicant's credit history, cash flow, and length of time doing business.

 

How does asset-based lending differ from traditional loans?

Unlike traditional loans, ABL doesn't add debt to the balance sheet, and the overall business credit rating and credit quality are less important than business assets as eligible collateral. It's a revolving facility that monetizes assets, offering greater flexibility and often faster access to funds.

 

Traditional loans often come with more rigid terms and covenants around creditworthiness, while ABL focuses mainly on the value of the collateral.

 

 Can small and medium-sized businesses benefit from asset-based lending in Canada? 

 

Absolutely! ABL appeals to small and medium-sized businesses that may have difficulty securing traditional bank loans. By leveraging existing assets, these businesses can access vital working capital to fuel growth, manage operations, and navigate financial challenges.

 

Are there any special requirements for securing an asset-based line of credit?

The main requirement from asset based lenders is for a company to have tangible assets that can be used as collateral. These might include accounts receivable, inventory, unencumbered equipment, and sometimes physical assets such as commercial real estate. The quality and liquidity of these assets, along with the overall risk profile of the business, will typically determine eligibility and terms.

 

 What makes asset-based lending an attractive alternative to other financing methods? 

The asset based lender offers an asset based credit line working capital facility with higher typical advance rates compared to banks and other types of loans, flexible terms, and often a quicker approval process.

Its "covenant light structure" and a minor emphasis on personal guarantees make it appealing to many business owners. Additionally, ABL can accommodate a broader range of financial situations based on a company's assets, making it a versatile tool for various business needs and growth stages.

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

Equipment Leasing and Lease Finance Loans in Canada

 

Tweet

YOUR COMPANY IS LOOKING FOR CANADIAN LEASE FINANCING! 

EQUIPMENT LEASING SOLUTIONS IN CANADA

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today 

                              ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

  

Leasing Equipment and Lease Finance in Canada: The Key to Unlocking Growth and Profitability

  

 

INTRODUCTION

 

In the world of equipment lease finance and asset loan solutions in Canada, businesses often face a critical question: Should they pay with cash or opt for lease finance?

 

Leasing companies offer a compelling option to finance asset acquisitions, and thousands of firms of all sizes in Canada continue to embrace this method to fuel their growth, boost profits, and stay competitive. In this article, we will explore the reasons behind the popularity of equipment leasing, the different types of leases available, and the advantages that lease finance offers Canadian businesses.

 

 

  

THE CHALLENGES OF ACQUIRING EQUIPMENT AND TECHNOLOGY FOR YOUR  BUSINESS   

 

Acquiring new equipment comes with a significant cost, which can strain a company's cash flow and working capital needs. Regardless of the firm's size, the capital budgets required for purchasing equipment can drain the resources that businesses would instead use to fund daily operations and growth. This challenge has led many companies to consider alternative financing options, and equipment leasing is a viable solution.

 

BENEFITS OF LEASING EQUIPMENT IN CANADA

1. Improved Cash Flow Conservation and Working Capital Management: When a business opts for equipment leasing, the leasing company pays the equipment supplier directly. This eliminates the need for a significant upfront cash outlay, preserving the company's cash flow and working capital for other critical expenses and investments.

2. Simplified Purchasing Process: Leasing streamlines the equipment acquisition process by allowing the leasing company to handle payments directly to the supplier. This reduces administrative burdens for the business and ensures a smooth and efficient transaction.

3. Effortless Budgeting: Lease payments are fixed and predictable, making it easier for companies to budget their finances accurately. This stability helps businesses plan their expenses more effectively, avoiding unforeseen financial challenges.

4. Access to Larger and More Expensive Assets: Lease financing enables businesses to consider acquiring higher-cost assets beyond their immediate purchasing capabilities. This includes advanced technology and software that can significantly enhance the company's operations and competitiveness.

5. Flexibility for Business Growth: Leasing allows companies to upgrade to newer equipment or technology as needed, ensuring they stay up-to-date with industry advancements. This adaptability helps businesses maintain their competitive edge and respond to changing market demands.

6. Preservation of Credit Lines: Leasing finance allows businesses to conserve their credit lines. This is especially beneficial for small and medium-sized enterprises (SMEs) that may need credit facilities for other critical business needs.

7. Tax Benefits: Lease payments may be treated as operating expenses, potentially providing businesses with tax advantages. Consulting with a tax professional can help companies fully understand the tax implications of equipment leasing.

8. Reduced Risk of Equipment Obsolescence: In rapidly evolving industries, technology and equipment can quickly become outdated. Leasing allows businesses to avoid owning obsolete equipment, as they can upgrade or return the leased assets at the end of the term.

9. Enhanced Asset Management: Lease financing often includes options for bundling services such as insurance, maintenance, and training into the lease agreement. This comprehensive package simplifies asset management and maintenance responsibilities.

10. Speed and Convenience: The leasing process is generally faster and more straightforward than securing traditional financing options. Quick credit approvals and minimal documentation requirements enable businesses to acquire the necessary equipment promptly.

 

 

 

  

UNDERSTANDING FINANCE LEASES/CAPITAL LEASES AND OPERATING LEASES   

 

 

In Canada, there are two primary types of equipment leases: operating lease and finance leases (also known as capital leases).

 

Operating leases, often called fair market value leases, offer lessees significant flexibility at the end of the lease term, allowing them to choose whether to buy, upgrade, or extend the lease. On the other hand, finance leases are an attractive option for those who wish to own the asset at the end of the term. The choice between the two types of leases in equipment lease financing in Canada depends on the business owner's specific needs and preferences.

 

UNLOCKING BUSINESS CAPITAL FOR ASSET ACQUISITIONS

 

Different industries have varying levels of capital intensity, and businesses with high capital needs may constantly struggle to raise additional equity. Equipment leases and lease finance provide a solution by enabling companies to conserve cash and equity. In a competitive environment, staying up to date with equipment, software, and other assets becomes crucial, and leasing offers an effective way to achieve this without exhausting financial resources.

 

  

LEASE FINANCING IS VERSATILE - HERE'S WHY!  

 

Lease financing extends beyond traditional equipment purchases. Including the absence of a small or no down payment, this business financing solution also covers miscellaneous costs, such as insurance, maintenance, services, and training, which can be easily bundled into the lease transaction. This flexibility makes lease financing appealing for businesses seeking a comprehensive solution to their asset acquisition challenges.

 

  

LEASE FINANCE VERSUS OTHER OPTIONS   

 

Canadian business owners and financial managers have several options when acquiring equipment. They can pay with cash, draw down on the company's line of credit, explore equipment loan solutions from Canadian chartered banks, or lease the equipment. While traditional financing options may have their merits, lease financing for the business owner often emerges as the most favourable choice due to its speed, simplicity, and competitive interest rates on monthly payments structured to cash flow.

 

  

  

KEY ADVANTAGES OF LEASE FINANCE    

 

Interest rates in the leasing industry in Canada are currently at all-time lows, making lease capital accessible to businesses with varying credit qualities for lease equipment needs.

Lease rates may vary based on credit quality, transaction size, and asset quality. Additionally, the ease of application and simple documentation in the leasing industry ensures quick funding, with some transactions even being processed without financial statements. This speed and efficiency in lease finance approval provide a significant advantage over traditional financing methods.

Leased equipment that is now owned by the company can also be refinanced.

 

  

  

 7 PARK AVENUE FINANCIAL LEASE SOLUTIONS    

 

For every small business in Canada facing asset acquisition challenges, equipment financing can play a crucial role in unlocking growth and success. Companies can benefit from partnering with a reliable, experienced lease financing advisor like 7 Park Avenue Financial. We can offer customized financing options that align with the unique needs of each business, providing a valuable proposition that fosters growth and profitability.

 

 

CONCLUSION

 

In conclusion, leasing equipment and utilizing lease finance in Canada present a compelling approach to address the challenges of equipment acquisition and capital management.

 

By opting for lease financing, businesses can conserve cash, access the latest technology, and stay competitive in their respective industries. The versatility, simplicity, and efficiency of equipment leasing agreements make it an attractive choice for businesses of all sizes seeking sustainable growth and long-term success.

 

If your business needs equipment financing, consider the benefits of lease finance and explore the expertise of  7 Park Avenue Financial,  a trusted, reputable lease financing advisor and business funding provider,  helping your company make the most informed decision on business financing needs.

 

    

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION    

 

1. Q: What is equipment leasing, and how does it differ from traditional equipment purchasing?  Equipment leasing from lease providers involves renting/using equipment for a specific period, while traditional purchasing entails buying the equipment outright. Leasing offers more flexibility and cost-saving benefits.

2. Q: Why do Canadian businesses prefer equipment leasing over other financing options? Leasing conserves cash flow, enhances working capital management when companies consider an equipment purchase and allow for easier budgeting. It also provides access to the latest technology and helps businesses stay competitive.

3. Q: What are the two kinds of equipment leases available in Canada? A: The two types are operating and finance (capital leases). Operating leases offer flexibility at the end of the term, while finance leases provide an option to own the asset after the final lease payment is made.

4. Q: How does lease financing speed up the acquisition process compared to traditional bank loans?  Lease financing via a lease broker offers quicker approval times and simplified documentation, and, in some cases, it does not require financial statements, making it a faster and more efficient option.

5. Q: How can a lease financing advisor assist my business in making equipment acquisition decisions?  A lease financing advisor can offer tailored financing options for purchasing the equipment a company requires based on the business's needs, credit quality, and asset requirements, ensuring the most suitable solution for your growth and profitability.

 

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

Asset Based Lines of Credit – Canadian Financing Solutions

Tweet

YOUR COMPANY IS LOOKING FOR CANADIAN ASSET-BASED LINES OF CREDIT FINANCING! 

Breaking Boundaries: How Asset-Based Lines of Credit Revolutionize Financing

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today 

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

Maximize Your Assets, Minimize Your Risks: The Advantages of Asset-Based Lines of Credit

 

 

  

  

Alternative Financing Solutions: Asset-Based Credit Lines in Canada    

 

Asset-Based Credit Lines, or " (ABL) " credit facilities, offer a viable alternative to traditional financing through chartered banks in Canada.

 

The Canadian market, encompassing small, medium, and large enterprises, "SMEs", has witnessed a notable tightening of credit accessibility from chartered banks. Given these constraints, business owners and their financial managers have been compelled to contemplate alternative funding options. Let's dig in!

 

  

The Potential of Asset-Based Credit Lines  

 

What would happen if your company had unrestricted access to business credit sufficient to fuel sales expansion and cash flows?

 

Asset-Based Credit Lines can undoubtedly provide that solution to your financing needs. Strangely, new clients at 7 Park Avenue Financial are unfamiliar with this financing mechanism or its potential benefits via financing the company's assets at their net realizable value.

 

Asset lending values are always higher than banks and traditional financing facility advances. These credit lines are also sometimes used to refinance existing debt when conventional lending criteria can't provide financing for business needs.

 

Several businesses are impelled to consider asset-based lending due to apprehensions among their owners, lenders, and suppliers regarding their financial viability. Complications inevitably arise when suppliers and other lenders become aggressive, including placing accounts into a 'special loans ' category if an unsecured loan has breached ratios of covenants.

 

The Importance of Understanding Your Financing Options

 

We consistently advise our clients, and it is advice we extend to all, to familiarize themselves with alternative financing options before they become a necessity.

 

In layman's terms, it pays to comprehend Asset-Based  Lending. Though 'ABL' has existed for many years, some people link it with distressed lending, which is not entirely accurate. Also, an asset based line isn't about taking on additional debt either!

 

  

Defining Asset-Based Credit Lines  

So, what is the ABL credit line? Simply put, it uses all your current (and sometimes fixed) assets as total collateral for borrowing. Predominantly, this type of financing is facilitated through accounts receivable and inventory - but it also can easily extend to fixed assets and commercial real estate.

 

As you borrow more than conventional financing arrangements permit, additional reporting requirements with an asset-based credit line are required. However, our clients often find that this supplementary reporting enhances their understanding of their business - that's good.

 

The Practical Use of Asset-Based Credit Lines

 

Interestingly, many businesses employ this type of financing for extended periods, viewing it as a stellar funding source. Conversely, some owners and financial managers perceive it as a bridge to overcome the always challenging working capital and financial access to credit hurdles.

 

Businesses contemplating asset-based credit lines often cannot fulfil the financial ratios and restrictive covenants required for traditional banking and debt service. But simultaneously, they must acquire new contracts and business assets or expand their sales and workforce. Asset-based financing provides a sturdy solution to facilitate this additional capital.

 

Conclusion: Asset-Based Credit Lines

 

Asset-based credit lines are a viable and commonly used option for business financing. Hundreds, even thousands of medium and large firms in Canada use these secured facilities; This non-traditional lending method is fast becoming a mainstream solution.

 

Asset-Based Credit Lines offer the maximum working capital against your operating assets, such as accounts receivables, inventory, and equipment.

 

Talk to 7 Park Avenue Financial, a trusted, credible business financing advisor experienced in this specific facet of Canadian business financing and executing ABL transactions for existing clients.

 

  

 

FAQ: FREQUENTLY ASKED QUESTIONS  / PEOPLE ALSO ASK /  MORE INFORMATION 

  

 

Q1: What are Asset-Based Credit Lines? 

Asset-Based Credit Lines, or ABL, is a type of financing that uses a business's current and sometimes fixed assets as collateral for borrowing. This financing is typically done through receivables and inventory, providing growth financing funding for a business.

 

Q2: How does an Asset-Based Credit Line differ from traditional bank financing? 

Unlike traditional bank financing, where borrowing limits are often based on a company's creditworthiness and past performance, asset-based credit lines are determined by the value of the company's current assets and fixed assets, with facility limits allowing potentially higher borrowing limits via these asset based loans.

 

Q3: Who can benefit from Asset-Based Credit Lines? 

Businesses of all sizes can benefit from asset-based credit lines or an asset based loan, especially those unable to meet the ratios required for traditional bank financing or those needing additional capital for expansion, new contracts, or increased workforce.

 

Q4: Are there any additional requirements for Asset-Based Credit Lines?

Yes, businesses that use asset-based credit lines from asset based lenders often have additional reporting requirements ( although with fewer financial covenants), which some enterprises find helpful in better understanding their financial position.

 

 

Q5: Is an Asset-Based Credit Line considered distressed lending?

  

While some associate Abl lines of credit and term loans with distressed lending, it's not just for distressed businesses. It's a viable alternative financing solution for companies seeking to maximize their borrowing power based on the value of their assets when conventional lenders can't deliver on such business needs.  

 

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

SR&ED Tax Credit Loans: A Game Changer for Canadian R&D Financing

 

Tweet

YOUR COMPANY IS LOOKING FOR INFO ON SR&ED TAX CREDIT FINANCING

Unlocking Cash Flow: The Power of SR&ED Financing in Canadian R&D

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

Let us help your firm just like our hundreds of other satisfied clients.

        Financing & Cash flow are the biggest issues facing business today

 ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Or Email us with any questions on Canadian Business Financing

     EMAIL - sprokop@7parkavenuefinancial.com

 

 

Exploring SR&ED Tax Credit Loan Financing: A Boon for Canadian Businesses 

 

How would your company like to tap into the benefits offered by the Scientific Research and Experimental Development (SR&ED) sr ed credit loan financing in Canada? If your company is involved in the SR&ED program, you can immediately leverage and cash flow your claim's financial value with effective cash management and financing.

 

Let the 7 Park Avenue FInancial team explain why this sr ed  financing works for Canadian companies, allowing you to explore the advantages of unlocking your SR&ED funds before waiting to receive your refund from CRA, ... or..... even before you file your claim!

 

INTRODUCTION

 

Unlocking innovation potential is a driving force for businesses striving to stay ahead in today's competitive landscape.

SR ED Financing is a  game-changing solution -

Introducing the SR&ED Tax Credit Loan, a powerful business financing solution to maximize your innovation potential.

This revolutionary loan program allows businesses to access the funds they need to fuel their research and development activities while benefiting from the generous incentives provided by the Scientific Research and Experimental Development (SR&ED) tax credit program.

 

By leveraging this innovative financing option, you can:

Supercharge your R&D efforts,

Accelerate product development

Gain a crucial edge in your industry

 

Don't let financial constraints hold back your innovation ambitions – embrace the SR&ED Tax Credit Loan and unlock a world of possibilities for your business.

 

 

 Canada's SR&ED Program: An Overview  

 

Every company that has filed an SR&ED claim, either independently, through an SR&ED consultant, or via their accounting firm, has probably grasped this program's tremendous potential. The SR&ED program sees billions of dollars allocated annually... That program advances over 3 Billions dollars annually to companies like yours - those firms committing to Canadian r&d capital investments.

When your company participates in the program, it becomes eligible for the non-repayable investment tax credit, the cornerstone of this initiative.

 

After filing a claim, it's a waiting game for your application to be acknowledged, audited, and processed for a refund. Conversations with clients reveal many plans for the funds, ranging from hiring additional staff to reinvesting in the R&D process to bolster their competitive standing.

 

Reinforcing the Program's Benefits and Your Eligibility

 

We're presuming that your company is well-informed about the SR&ED program and is optimizing its utilization. As an SR&ED claimant, your company undertakes product development or enhancements, explores new product inventions, or invests in process improvements through experimental methodologies.

 

Your company, recognizing the program's value, participates and maximizes its eligibility for the highest refund possible through the guidance of an SR&ED consultant or an accountant.

 

  

Financing SR&ED Tax Credit: Understanding the Basics  

 

Finances are crucial, and your company likely expended a considerable portion of its funds on the actual R&D involved in the program. Financing your credit as soon as it's filed presents a viable option. Talk to 7 Park Avenue Financial, offering the lowest-cost financing in Canada - and how this financing brings no debt to the balance sheet, no equity dilution - you are simply monetizing or ' factoring ' your sred claim.

 

A Deeper Dive into SR&ED Tax Credit Financing

 

Financing an SR&ED tax credit falls into a niche finance category in Canada. Banks rarely offer financing for such claims.- that's always surprised us, but we're not complaining!

Nonetheless, this type of financing is best and more swiftly accomplished through an SR&ED financing specialist.

Rates for SR&ED financing can fluctuate, influenced by the claim's size, your company's financial health (often, SR&ED claimants are in the early-stage or pre-revenue phase), and the perceived strength of your claim. Currently, rates for sred loans are the lowest they have ever been in Canada.

 

An SR&ED loan is not debt; instead, it's a method to expedite the cash flow from your receivables—in this case, the SR&ED. SR&ED loans are designed as loans that have no monthly payment during the duration of the loan ... Final financing charges are subtracted from the final amount you receive from the government.

 

The financing process for SR&ED claims can be completed and funded in as little as two weeks, requiring standard application paperwork, with the primary collateral being the SR&ED claim itself.

 

KEY TAKEAWAYS

 

• The Scientific Research and Experimental Development (SR&ED) tax incentive program promotes research and development (R&D) within Canada.

 

• It's the largest source of government-funded support for R&D, offering over $3 billion in tax incentives to approximately 20,000 claimants yearly, with 75% being small businesses.

 

• SR&ED refunds can be obtained from the Canada Revenue Agency (CRA) for all eligible R&D expenditures, including salaries, subcontractor fees, and consumables.

 

• Qualified SR&ED projects receive tax reductions and refunds regardless of their outcomes, supporting R&D activities in Canada.

 

• SR&ED Tax Credit Loans allow companies to use future tax refunds and grant disbursements for non-dilutive funding throughout the year, providing crucial support for operations and growth.

 

• Funding from such loans is usually made available within 48 hours after approval, smoothing the company's cash flow.

 

• Early access to funds from SR&ED loans helps avoid the need for equity sales or high-interest loans, preserving the company's value and control.

 

• Companies eligible for SR&ED tax benefits include Canadian-controlled private corporations (CCPCs), other corporations, individual proprietorships, partnerships, and trusts, that engage in eligible R&D efforts within Canada.

 

Case Study: Boosting Cash Flow with SR&ED Tax Credit Financing

 

 

Let's look at a hypothetical company, InnovationTech Inc., an early-stage tech company that invested heavily in R&D but has yet to generate revenue. InnovTech applied for the SR&ED program after developing a new machine learning algorithm, a considerable financial undertaking.

After filing their SR&ED claim, Innovation Tech faced a waiting period for their claim to be processed and approved by the Canada Revenue Agency (CRA). With ongoing R&D projects, InnovationTech needed immediate access to funds.

Realizing the potential of SR&ED financing, InnovTech decided to monetize its claim as soon as it was filed. The company engaged an SR&ED financing specialist who guided them through the process. They received a 75% advance on their filed claim within a fortnight, providing them with much-needed capital.

By opting for SR&ED tax credit financing, InnovationTech didn't have to wait for the CRA's approval and refund. Instead, they were able to reinvest the funds into their R&D, giving them a significant cash flow boost and enabling continuous innovation. This strategic decision underscored how SR&ED financing could serve as a lifeline for pre-revenue companies investing heavily in R&D.

 

 

  

CONCLUSION  

 

We recommend that firms have their sr&ed claims prepared by a skilled professional—SR&ED consultants specialize in this area and can be incredibly beneficial. You can anticipate receiving at least a 75% advance on your claim. And did you know that your SR&ED can be financed even prior to filing under specific conditions? Think of it as a sr&ed line of credit!

 

Ready to finance your claim?  If boosting cash flow and enhancing working capital is paramount for your business, talk to 7 Park Avenue Financial,  a trusted, credible, and experienced business financing advisor to confirm your SR&ED loan alternatives.

 

FAQ:FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

 

1. Q: What is the SR&ED tax credit loan program in Canada? The SR&ED tax credit loan program in Canada is a government initiative that rewards companies for undertaking research and development. Companies can finance their SR&ED tax credit as soon as it's filed, helping them monetize their claims faster.

2. Q: What are the benefits of SR&ED financing? SR&ED financing allows companies to access their SR&ED tax credit funds before their claim is approved, providing them with crucial capital to reinvest in R&D, hire additional staff, or access capital to improve cash flow.

3. Benefits of the SR&ED Tax Credit:

   1. Financial Support: The SR&ED tax credit provides financial support for R&D activities and applied research, making innovative projects more affordable for businesses by offsetting eligible expenditures with tax credits for your sr ed project

   2. Cash Flow Improvement: The SR&ED tax credit offers a unique feature of providing a refundable portion of the credit. Even if a business's tax liability is lower than the credit amount, it can still receive a cash refund, leading to improved cash flow for further R&D initiatives.

   3. Competitive Advantage: Leveraging the SR&ED tax credit allows businesses to allocate more resources to innovation, accelerating product development and gaining a competitive edge in their industry. It enables investments in cutting-edge technologies, new products, and improved business capabilities.

   4. Encourages Collaboration: The SR&ED tax credit fosters collaboration between businesses and research institutions. By partnering with universities and research organizations, businesses can access valuable expertise and facilities, leading to groundbreaking discoveries, new patents, and innovative solutions that can revolutionize their industry.

4. Q: How does the SR&ED loan process work? The SR&ED loan process involves filing a claim, being acknowledged and audited, and then waiting for a refund. Alternatively, companies can finance the claim as soon as it's filed, providing quicker access to funds.

5. Q: Who can help prepare an SR&ED claim?  The company, an SR&ED consultant, or an accountant can prepare SR&ED claims. However, it's often beneficial to use a specialized SR&ED consultant that will typically allow the company to maximize claim potential under Canada Revenue Agency / CRA guidelines

6. Q: How much can a company expect to receive when financing their SR&ED claim?  A company typically anticipates receiving at least a 70% advance on its SR&ED claim through financing. The balance of the claim is remitted to the company, less financing costs, when the claim is approved and funded by CRA.

7.  What are the eligibility criteria for the SR&ED Tax Credit :

   1. Technological Advancement: Projects must involve technological advancements or scientific discoveries to create or improve products, processes, or technologies.
   2. Scientific or Technological Uncertainty: Eligible projects must address scientific or technological uncertainties, meaning the outcome cannot be predetermined.
   3. Systematic Investigation: R&D activities should follow a planned approach with clear objectives and documented methodologies, and the results must be analyzed and evaluated.
   4. Qualified Personnel: Qualified individuals with scientific or technical expertise must be involved in R&D activities.
   5. Record-Keeping: Detailed records, including project plans, progress reports, lab notebooks, and supporting documentation, must be maintained to keep the SR&ED tax credit claim.

   Complying with these criteria is essential for businesses benefiting from the SR&ED tax credit. Consulting tax professionals or SR&ED consultants can help ensure alignment with program requirements and increase the likelihood of a successful claim.

8. How Does  the SR&ED Tax Credit Loan Work:

   1. Access to Capital: The SR&ED Tax Credit Loan provides businesses with immediate access to the funds in their SR&ED tax credits, offering a unique financing option to support their R&D activities.

   2. Claim Approval: After filing the SR&ED tax credit claim with the Canada Revenue Agency (CRA) and obtaining approval, businesses can apply for the loan with firms such as 7 Park Avenue Financial

   3. Loan Evaluation: Industry underwriters will assess the approved tax credit amount and offer a loan based on a percentage of the tax credit, allowing businesses to access a portion of the funds before their tax return is processed.

   4. Repayment: Repaying the loan is simple. When the tax refund is received from the CRA, businesses use it to repay the loan. The loan provider deducts the loan amount and any applicable fees or interest and transfers the remaining balance to the business.

   5. Flexible Capital Use: The SR&ED Tax Credit Loan allows businesses to utilize their tax credits when needed, eliminating the wait time associated with tax return processing. This enables immediate reinvestment into R&D activities, significantly enhancing the business's innovation potential and overall growth.

   The SR&ED Tax Credit Loan empowers businesses to maximize their R&D efforts and propel their growth in the competitive landscape by offering accelerated access to capital.

   8. How can a business maximize innovation potential via sr&ed tax credits -

   1. Plan Ahead: Develop a comprehensive R&D strategy aligned with your business goals and SR&ED eligibility criteria to improve the chances of a successful claim when filing your income tax return

   2. Engage SR&ED Consultants: Seek expert guidance to optimize your claim, identify eligible activities, and ensure compliance, enhancing your tax credit benefits.

   3. Leverage Collaboration: Partner with research institutions to enhance R&D activities and increase the potential for groundbreaking discoveries.

   4. Foster Continuous Innovation: Cultivate a culture of continuous improvement, creativity, and experimentation within your team to fuel innovation efforts.

   5. Stay Informed: Keep abreast of changes in basic research under the SR&ED program to maximize tax credit benefits and maintain compliance with program requirements.

   Applying these tips can unlock your business's innovation potential and make the most of the SR&ED tax credit program and your sr ed refund as you invest and conduct research.

   
   

    

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

Factoring Is The Secret Weapon In Canadian Receivables Financing - Here's Why!

Tweet

 

YOUR COMPANY IS LOOKING FOR FACTORING AND CANADIAN RECEIVABLES

 FINANCING! 

Transform Your Cash Flow with Receivables Financing: A Guide to Solutions by 7 Park Avenue Financial

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today 

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

Exploring Receivables Financing as a Funding Alternative 

 

Bridging the Cash Flow Gap: Explore Receivables Financing with 7 Park Avenue Financial

 

Canadian business owners and financial managers can find an alternate route for financing working capital and cash flow needs in factoring, also known as accounts receivables financing of outstanding invoices.

 

This method can be particularly beneficial when your company experiences rapid growth or struggles to finance day-to-day working capital needs due to significantly larger orders or contracts. Fundamentally, factoring in Canada involves financing through good accounts receivables on the company's balance sheet. Choosing the best technical method of factoring necessitates due diligence on your part.

 

 

 

 

INTRODUCTION

  

 

In Canada's fast-paced business world, keeping cash flowing is critical to staying in the game in your industry. That's where receivables finance comes in; you might also hear it called invoice financing or factoring. It's like a life preserver for businesses, giving them quick cash from unpaid invoices when traditional bank loan financing is unavailable.

 

It's a way for businesses to keep the money rolling between when they deliver a product or service and when they get paid. But that's not all. Besides boosting your cash flow, receivable financing can give you more flexibility, less risk, and more chances to grow your business.

 

The cash flow challenge

 

 

Cash flow issues can hit any business, big or small, and managing it well is vital for survival and growth. If cash is short, a company might have trouble meeting financial needs, paying suppliers, investing in growth, or even covering everyday costs. Slow-paying customers, seasonal ups and downs, unexpected expenses, and late payments can all create cash flow gaps that disrupt business.

 

Receivables financing is a solution here. It allows businesses to turn their unpaid invoices into immediate cash. Businesses can sell their invoices to a financing company, or "factor," giving them around 80-90% of the invoice value upfront.

 

This provides the business with the cash to keep running and growing. Once the customer pays the invoice, the factor takes their fee and gives the rest to the business, ensuring a regular cash flow. This way, companies can deal with cash flow problems and concentrate on their main activities.

 

  What is receivables financing or factoring? 

 

Receivables financing, also known as factoring, is a method where a business uses its receivables (money owed by customers) as collateral in a financing agreement. In this process, a business sells its accounts receivable to a factoring company to receive immediate cash flow rather than waiting for the payment period.

 

  

  

Diving Deep into Non-notification Factoring - aka ' Confidential Receivable Financing "!   

 

One such method recommended is non-notification factoring, which puts you in complete control of your receivables and working capital.

Under this method, while you bill and collect your receivables, as always, you receive immediate cash flow and operating capital when a valid invoice is issued to your customer. This innovative approach enhances the fluidity of your business operations, contributing to seamless growth and financial stability.

 

 Balancing the Costs and Benefits of Factoring 

 

Though factoring can carry higher costs, more intelligent purchases and leveraging discounts can offset these. Traditional payment habits often stretch to 30, 60, or even 90 days. Factoring enables cash generation from these sales 2-3 times quicker, providing much-needed liquidity.

 

1. Flexibility: This type of financing is based on the value of your invoices, not your credit score or collateral. It focuses on the creditworthiness of your customers, who are responsible for paying the invoices.

2. Revolving Financing: As your business produces new invoices, you can continue to get financing. This adaptability allows companies to constantly cope with cash flow changes and grab growth opportunities without needing new loans or credit lines.

3. Reduced Risk: The risk of non-payment or late payment from customers is transferred to the factor in receivables financing. This protective layer allows businesses to focus on their core operations rather than credit and collection responsibilities.

4. Supports Growth: Immediate cash access via receivables financing allows businesses to capitalize on growth opportunities. This could involve investing in new equipment, expanding the team, entering new markets, or introducing new products.

5. Better Supplier Negotiations: Regular cash flow can improve supplier relations, potentially leading to discounts, extended payment terms, or better pricing.

6. Capability to Take on Larger Projects: With instant access to cash, businesses can confidently accept more significant contracts, knowing they have enough working capital to cover costs such as materials, labour, and overheads. This can open new revenue streams and support long-term growth.

 

Factoring as a Bridge to Growth

 

Factoring, in essence, is about working capital turnover. It may not be the ultimate solution for your firm, but it serves as an excellent bridge to your next growth level. Whether your firm is new, faces financial challenges, or grows too quickly for traditional bank financing, factoring offers a solution.

 

Factoring versus Traditional Bank Lines of Credit

 

Factoring and receivable financing (also referred to as invoice discounting) contrast with traditional bank lines of credit.

 

Factoring focuses on your business assets rather than your balance sheet or income statement. Bank lines of credit, conversely, focus on you as the owner, your balance sheet, income statement, industry, and years in business.

 

Choosing the Right Factoring Facility

 

When considering factoring, the focus should be on having financeable assets (receivables) that can be turned into immediate cash flow.

 

The challenge lies in understanding the differences among various factoring facilities, their operation, pricing, whether you prefer a contract or an open-ended arrangement, and your comfort level with the factoring business model. Ensure to engage with a trusted, experienced business advisor in this area to harness the full potential of this financing method for your Canadian firm.

 

Key Takeaways 

 

1. Problem: Cash flow issues can hamper business growth.

2. Solution: Receivables financing converts unpaid invoices into instant cash, improving cash flow.

3. Additional Benefits: Enhances flexibility, reduces risk, and enables businesses to seize growth opportunities.

4. Choosing the Right Provider: Factors to consider include reputation, terms, and fees.

5. Evidence of Success: Many businesses across different sectors and sizes have used this tool to overcome cash flow issues and fuel growth.

6. Action: Don't let cash flow challenges hold your business back. Use receivables financing to achieve long-term success.

 

 

Receivables financing, or factoring, offers an alternative method for financing working capital and cash flow needs in Canada.

 

It allows companies experiencing rapid growth or with large orders or contracts to finance their operations more effectively.

 

One method, non-notification factoring, provides companies with complete control over their receivables and immediate cash flow upon issuing a valid invoice. Factoring, while more costly than traditional methods, can speed up cash generation and serve as an excellent 'bridge' to the next level of growth.

 

The selection of a  receivable financing/factoring facility should be carefully considered, considering factors such as its type, operation, pricing, and the company's comfort level with this model. It's crucial to consult with a credible, trusted, and experienced business advisor to make the most of this financing opportunity.

 

CONCLUSION

 

So, in summary, is it that easy? Yes. And no. We say no because the challenge in setting up a proper factoring facility in Canada is simply understanding the differences in the types of facilities that are set up on your behalf, how they work, how they are priced, determining if you wish to lock into a contract or leave it open-ended, and your overall comfort level with the day to day business model of factoring receivables as you generate sales.

 

Speak to 7 Park Avenue Financial,  a credible, trusted and experienced business advisor in this area and ensure you understand how the benefits of this type of financing can be crafted into a facility that works for your Canadian firm.

 

  

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION

 

  When might a company consider using receivables financing?

    

Companies often consider receivables financing when they need immediate cash flow for day-to-day operations or growth. It benefits companies with large orders or contracts or those experiencing rapid growth that traditional bank financing cannot support.  

 

  

What is non-notification factoring?

 

Non-notification factoring is a method of receivables financing where the company retains control of its receivables and working capital. The company continues to bill and collect its receivables as normal but receives instant cash flow and working capital as soon as a valid invoice is issued to a customer.

 

How does receivables financing compare to traditional bank lines of credit?

 

Receivables financing differs from traditional bank lines of credit in several ways. While bank credit lines focus on the business owner, the balance sheet, income statement, and years in business, factoring concentrates solely on the company's assets. This allows businesses to have unlimited access to working capital potentially.

 

What should a business consider when choosing a factoring facility?

Businesses should consider the different types of factoring facilities available, their operations, pricing, and whether a contract or an open-ended arrangement suits their needs. Considering the comfort level with the business model of factoring receivables is also essential. Consulting with a trusted, experienced business advisor can help make these decisions.

 

What are the different types of factoring?

 

A/R financing makes sense when a company has structural cash flow gaps - numerous solutions are available

 

Types of Receivables Financing Options:

1. Invoice Factoring: Businesses sell unpaid invoices to a factor at a discounted price. The factor then handles the collection, and the factoring company pays and returns the remaining balance to the business after deducting its fee.

2. Invoice Discounting: Businesses use their invoices as collateral for a loan or credit line but keep control over collections. They get upfront cash and pay back as customers clear their invoices.

3. Spot Factoring: Businesses can choose to finance specific invoices on the company's accounts receivable, giving them more control and flexibility. It's great for businesses with large invoices or occasional cash flow gaps.

4. Recourse vs. Non-Recourse Factoring: Recourse factoring means businesses are responsible for any unpaid invoices. In non-recourse factoring, the factor takes on the risk of non-payment / collect payment, giving an extra safety net for businesses.

 

 

 

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