Receivable Finance & Cash Flow Factoring – 8 Questions 8 Answers On Receivables Finance Solutions In Canada

Your Questions Finally Answered On A/R Finance In Canada

Information on receivable finance and cash flow factoring in Canada . Answers to questions you need to ask before entering into the right receivables finance strategy .


Receivable finance in Canada. Boy do we get a lot of questions around this single method of financing receivables in Canada. Another term for the same subject is of course ' cash flow factoring’

So let’s take some of those often asked questions, 8 in total and... You guessed it, answer them!

Question # 1- Does a Canadian start up or early stage company utilize receivable finance? The answer is a resounding yes. The reality is of course that same business is often ineligible to obtain most other methods of Canadian business financing by the very nature of the start up. Since cash flow factoring focuses on the asset of receivables it makes sense it’s a good solution for a start up firm

Question # 2 - Can you set this type of facility up on your own without the assistance of anyone? Again, it’s a resounding yes. However, due to the fragmented and generally misunderstood issues around the subject it would make often more sense to use a Canadian business financing advisor who is aware of the issues, pitfalls, and pricing around A/R finance. Another point is that this method of financing is clearly not all about price after you get into how it works daily mechanics, etc.

Questions # 3 - another great one. Does all of your A/R investment need to be financed at all times? The answer is no... This is clearly one method of financing your business that is essentially ‘pay for only what you use '. Although some facilities might require a minimum usage essentially it’s your call as to what A/R and when to finance.

Question # 4 - Are there contacts involved with respect to committing to such a facility. The answer is that certain facilities require no contract how most cash flow factoring firms do often require a commitment from your firm. That can often be negotiated and allow you to have some flexibility built into it. The reality here though is that you typically will use this type of finance for a year anyway as you move towards a more traditional bank borrowing.

Question # 5 - Does a firm have to have good financials to qualify. In general the answer is no. Unless your firm is in a death spiral past financial challenges your firm faces do not preclude you from obtaining receivable finance. As a rule if your sales are stable or growing you're an excellent candidate for cash flow factoring.

Question # 6 - Who exactly provides cash flow finance in Canada. For a starter it’s not the banks when it comes to invoice financing. There are firms that are very small in nature, some are subsidiaries of U.S. firms, and some are substantial on their own, and Canadian owned. Pricing, qualification, deal size, etc all vary so here again it makes sense to work with someone who is knowledgeable about industry players, their offering, and reputation. Again, beware of the ' low price ' carrot - it’s often, if not always, what it seems.

Question # 7- Pricing. Ah, we though you would never ask. As a general rule factoring in Canada is sin the 2% range, sometimes more, sometimes less. The industry views this monthly rate as a discount, i.e. it buys your A/R at a 2% discount to its value. You can offset this cost by purchasing smarter, taking discounts from suppliers, and selling and collecting more, thereby increasing your profits. And don’t forget, you're simply not carrying receivables for 60 or 90 days anymore, but it makes total sense still to stay on top of your collections to reduce costs to finance.

Last question, Question # 8 - what is the actual difference between A/R finance and a bank facility. As a joke we could say ' the ability to get one ‘! But the reality is that we've partially answered that one already. Receivables finance is the purchase of your sales and receivables as you make that sale and invoice. Banking is simply offering financing that takes your receivables as a back up collateral. That's a simplistic answer, but it’s a basic one.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your receivable finance and cash flow factoring needs.







Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/receivable_finance_cash_flow_factoring_receivables.html

Restaurant Financing In Canada - Your Hospitality Loan Finance Primer . Now You Know How!

How To Address The Financing Of A Restaurant In Canada

Information on restaurant financing in Canada . Putting the right hospitality loan in place might not be as difficult a finance challenge as you think !

Restaurant financing in Canada. Let's talk about some common sense financial approaches to getting the right hospitality loan finance in place for your chosen restaurant business. Oh, and by the way, that might be a franchise business, or it might be your own unique concept; there are advantages to both.

We use the term ' financial approach ‘. We can almost see our clients grimace when we use the term as it conjures up things like accounting, financial statements, etc. The reality is though that many entrepreneurs we meet in the hospitality industry are running on a bit too much emotion and ego and a need a little more of a financial approach to simple basics around a restaurant such as cash flow, profits, return on investment, etc.

It's really the cash flow potential of a restaurant that will determine a common sense price for you, and down the road that same metric will be a key driver in the valuation when you want to sell the business .

Getting a solid handle on the cash flow around your business allows you to be successful in several areas. Those areas include refinancing, selling your businesses, and, as we said determining if your initial investment in the business is reasonable when it comes to total return to yourself. That total return is usually viewed by the entrepreneur in two ways, the salary that he or she can take from the business, as well as the equity that the restaurant is hopefully building up in terms of valuation.

Quite frankly getting a good handle on the cash flow of the restaurant, independent or franchise... allows you to make a proper choice when it comes down to several businesses that you might be looking at .

When a lender, or yourself looks at the financial projection, or the actual financials of the restaurant they are looking to get a sense around normalizing the cash flows, as many restaurant owners take out a salary that might be higher, or lower, than the industry norm.

Be carefull in your projections, or analysis of an existing restaurant that items such as personal vehicles, salaries to family members, and advances to owner’s dont distort the true profit and loss of the business.

The ability to service lease and loan debt is critical in restaurant financing. Real care must be taken to ensure you are capturing all the debt of the business and that you feel comfortable with the overall cash flow.

The amount you are required to finance a restaurant in Canada varies, and typically it’s anywhere from 10-50% from a viewpoint of owner equity.

Due to the higher risk surrounding perceptions of hospitality loan finance care must be taken to source the proper financing. Typical financing programs that best suit Canadian restaurant finance are the SBL Government business loan, aka the 'CSBF' loan, as well as lease and equpment financing that can be easily accomplished via an independent lease finance firm.

Typical payback scenarios are 3-5 years, sometimes longer, depending on the size of the business and the loan. Leaseholds are best financed under our aforementioned SBL program.

Take a practical, not an emotional approach to your restaurant financing challenge - it will pay off in the long run. For specialized assistance speak to a trusted, credible and experienced Canadian business financing advisor for your hospitality loan finance needs.



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact details:

http://www.7parkavenuefinancial.com/restaurant_financing_finance_hospitality_loan.html

Damn You SBL Canadian Government Loans ! Secrets To Unlock Federal CSBF Loan Success

Solid Tips and Info On The Canada Small Business Loan –
P.S. – It’s Not That Small


Information on the SBL loan program in Canada . Can Canadian government federal loan guarantees help finance your business . Here’s how! CSBF loans work.



Damn you SBL Canadian government loans !That's one battle cry of Canadian business owners who we meet that are either desperately seeking knowledge in the area of the federal Small business loan or who feel frustrated around what they feel the process is to successfully secure such a loan.

A better cry they w would prefer would probably be ' Release the coffers ‘. They would of course prefer to be among the many thousands (approximately 8000) of businesses in Canada that annually are successful in complete the gov't small business loan.

So whets the difference between winning and losing when it comes to securing a government SBL loan? Several factors come into play... let’s discuss some of the important ones.

It's no secret of course why business owner seek this loan. it has strong rates, terms and structures that quite frankly even large corporate borrowers can secure. What do we mean by that? For one thing, the majority of private businesses in Canada have to ensure the owners are prepared t personally guarantee their loans and credit lines. That’s the same Canadian government loans, except, and it’s a big except, your guarantee is limited to 25% of the loan. Talk about a good thing!

Another point in the SBL scenario is that the majority of loans and leases in Canada cannot be prepaid without penalty. By utilizing federal government loans for your business you can prepay with penalty, if you're fortunate enough to be able to. While many Canadian business owners and financial managers would like to be in a position to do this, quite frankly if you are financing assets and leaseholds at good rates and terms why wouldn’t you want to use valuable cash flow elsewhere, such as growing your business .

Many Canadian businesses do not feel the banks are pro lending when it comes to smaller and medium sized businesses. By the way, the actual revenue cap for the federal SBL loan is 5 million dollars, so we do acknowledge that that eliminate many larger firms who certainly wish they could secure the SBL loan.

Whether or not you have confidence in the banking system when it comes to corporate lending is a whole different discussion , the reality is that that lack of confidence should go away when you're applying for a govt small business loan .

Critical to successfully securing the amount of financing you need under this great loan product is the ability to find and work with a banker who understands the program. This unfortunately is a problem businesses should have to deal with, but are faced with when it comes to the SBL program. In our opinion many bankers simply don’t understand or want to bother with the program. It's important to secure the services of a great SBL banker who recognizes you as a client the bank wants to have, and keep.

Some other great secrets around being 100% successful in SBL loans? Not as complicated as you think.

Understand the nature of the program and what it can and can’t do

Prepare a solid proposal that provides ALL of info required on an SBL
Application - there are 6 or 7 key basic criteria

Anticipate questions and any worst case scenario

You may wish to increase the chances of your SBL Canadian government loans process by doing something very simple - secure the services of an expert - Typically a trusted , credible and experienced Canadian business advisor who can fast track your transaction, and , by the way, one who probably knows the best banker in town anyway!








Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/sbl_canadian_government_loans_federal_loan.html

Looking For Franchise Business Funding ? Stay In The Loop On What’s Important For Canadian Business Lenders When It Comes To Franchising Loans

What You Need To Know Franchise Loan Financing In Canada

Information on franchise business funding in Canada . What take aways you need for business lenders around your franchising loan .




‘In the loop’ ... it’s of course being informed and up to date on a subject. So when it comes to a decision such around franchise business funding and staying in the loop on issue surrounding franchising loans, lenders, and other related issues what could be more important ? !

The whole issue of purchasing a franchise and then sourcing franchising loans to complete that purchase is clearly a journey these days... we like to think about it as simply basic steps you can implement in an orderly fashion.

It should be no secret that the franchise you ultimately choose, whether it be in hospitability or service business has to match and complement your financial resources. Naturally related to those decisions are key areas such as suitability of the business when it comes to work experience, fields of interest, etc.

What many franchisees may not realize is that your actual experience in the business is certainly one key factor that a franchise lender considers with respect to a final approval of your transaction. This is probably most evident in the hospitality area, when it comes to a restaurant as an example.

While we personally believe a solid mix of business and marketing skills should make a strong case for a positive supplement to your franchise loan approval the hard reality is that in many cases no experience in an industry often raises a red flag with lenders when it comes to probability of financial success in the business. In any business management experience, rather mis - management is cited as a case for business failure, and this is equally so in franchising in Canada.

Your own investment in the business, i.e. your equity or down payment is of course a strong motivator for you to make the right decision. Although we see some franchisors providing what we could call at best ' guidance ' to your financing needs it should be clearly understood that you're on your own when it comes to franchise business funding in Canada . The one caveat is that in some cases franchisors have a program established with a financial institution of some type, but this is absolutely certainly no guarantee of final approval.

Doing the right due diligence around the financial aspects of your purchase is critical. Understanding revenue potential, profits after your salary that would define a reasonable return on investment, and the ability to finance the business on an ongoing basis are key to being ' in the loop. This can be accomplished through research, talking to current franchisees in the system, and getting some solid advice or mentoring from your accountant, lawyers, or business peers.

Franchising sales account for a huge part of the Canadian economy. Financing your franchise via a specialized loan program such as the Government SBL/BIL program allows you to limit your liability while at the same time having access to solid rates, terms and structures. It quite frankly the ' proper ' financing for your franchising business loan.

Speak to a trusted, credible and experienced Canadian business financing advisor on which type of financing best suits your needs... and , as we said, you'll be ' in the loop '!






Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/franchise_business_funding_lenders_franchising.html

Does An ABL Loan Deserve A Full Chapter In ‘ The Book Of Awesome’? Asset Revolving Line Of Credit Facts For Canada !

Here’s What You Get With An Asset Based Line of Credit


Information on why the ABL asset loan and revolving line of credit in Canada is a perfect solution for interim and long term financing needs .


Is an ABL loan, i.e. an asset revolving line of credit really a candidate for a position in the business Book of ' Awesome '? We think so. Here's why.

While many forms of Canadian business financing have been around for, well... almost ever... an asset based line of credit is somewhat of the new kid on the block in the context of financing vehicles for business owners and financial managers in Canada.

A key emphasis in various forms of business financing is the concept of ' cash flow' when it comes to repayment of your loans and borrowing facilities. That’s where the ‘asset crowd ' differs; the asset based line of credit focuses on assets not necessarily cash flow.

So why are more and more Canadian firms, start up, small, and large in size using this method of business lines of credit? Simply because if your business has solid assets in receivables and inventory it immediately qualifies for ABL loan finance. While we do use the term ' loan ' often in the context of our description of this method of finance in reality its not a loan per se, its a monetization of the asset on the left hand side of your balance sheet .

And by the way, although we specifically mentioned A/R and inventory it can include fixed assets and real estate, even tax credits as part of the mix. But truth is told receivables and inventory make up the majority of the asset based line of credit.

So who in fact uses, and considers this type of finance. It certainly runs the gamut, from wholesalers and distributors, major retailers (here the focus is on inventory), manufacturers, etc. If there is a bottom line, whether you are a service or product oriented company ....it’s simply that if you have A/R and or inventory you qualify.

A quick note that some of the largest and most recognized companies in Canada (and the world) utilize ABL.

Several types of Canadian business financing in Canada are considered somewhat ' alternative ' when they are bench'marked against traditional business lines of credit. However our perception is that the ABL loan becomes a bit more popular everyday - it's absolutely positively not the ' last resort ' scenario that some seem to make out.

Pricing on the asset revolving line of credit differs. While it absolutely can be competitive with bank pricing for firms of that quality quite often it comes at a higher cost , but, and its a but but ( so to speak!) it provides you with significantly more liquidity. That's because margining of a/r tends to be in the 90% range, even higher on occasion, and inventory financing within you facility can range anywhere from 30- 70%... which in some cases is 30-70% more than you are getting today !

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining if ABL is right for you. You just might now understand why an ABL loan seems to definitely qualify for its chapter in the Book of Awesome.







Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/abl_loan_asset_revolving_line_of_credit.html

Discovered ! The Cheapest Cash Flow Financing And Business Liquidity Solutions In Canada !

Working Capital Financing Cost – Not What You Thought


Information on the cost of cash flow financing in Canada and what business liquidity solutions are available as Canadian business financing alternatives .


So, are you ready? What in fact is he lowest cost (we kind of hate to use the word ' cheapest ‘) when it comes to working capital needs.

The answer? The best source of financing is actually ‘Reducing the need to finance operating needs'!

Changes that you can make in your business today can actually significantly reduce the need for sourcing traditional and alternative methods of finance.

Is your firm in fact limping along in today’s somewhat turbulent times - there doesnt seem to be a day when bad news externally seems to affect our businesses. There has probably never been more of a focus on cash and the ability to get capital for and into your business. Naturally one option is to stop spending or growing, but that’s the least desired solution by the average Canadian business owner and financial manager.

What's more difficult for you? In many cases it's simply managing it, and that gets more complex every day. When you think of it, if you had the ability to borrow or finance less and you were able to manage your current assets more effectively you have simply made yourself more competitive out there in your industry.

So the essence of our theme today is simply managing current assets - cash, receivables, inventory, prepaid more effectively.

Talking to our clients makes the situation even clearer. Why ? Because they profitability with liquidity when it comes to assets and asset management. You must be able to convert current assets into cash.

So how do you accelerate those cash flows? You do that by monetizing current assets when you need to, and focusing on faster collections. Monetizing those inventories and receivables can be done via traditional bank lines of credit, or the alternative: A/R and inventory credit lines from non-banks in Canada.

The best way to think of this is to focus on the fact that as your current asset accounts grow cash generally goes down. Increasing your payables is a nice offset to that, but it’s a tender balancing act when it comes to suppliers, employees and government remittances being paid on time!

Since your profits are embedded in your accounts receivable collecting them more quickly simply enhances your self cash flow financing.

Business liquidity solutions in Canada come in many forms. They include bank operating lines, asset based credit facilities, and working capital term loans. More costly solutions , but equally or even more effective sometimes are receivable financing strategies, inventory and supply chain finance, or even monetizing longer term receivables such as a SR&ED credit that may be due your firm .

If you want to explore the best cash flow financing and liquidity solutions speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with advice on internal and external strategies to enhance cash.








Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/cash_flow_financing_business_liquidity_solutions.html

The secret of cash flow financing and business liquidity solutoins . What if you had both the knowledge and access to low cost Canadian business financing solutions in Canada .

Canadian Business Financing: Are You Making Best Use Of Equipment Leasing And Canadian Asset Finance ?

Canadian Business Financing: Are You Making Best Use Of Equipment Leasing And Canadian Asset Finance ?