Factoring And Receivable Financing In Canada. Lost Sight Of This Obvious Cash Flow Solution?

Feeling ‘ Unwanted ‘.

That’s How A/R Financing Must Feel Sometimes And We Know Why


OVERVIEW – .Information on factoring and receivable financing in Canada . How do these type of solutions work best when your company is looking for working capital ?



Factoring and receivable financing in Canada is growing in popularity - we feel this is for several reasons. One key reason is the current economic and financing environment in Canada - any financing strategy that is an alternative financing strategy to traditional bank financing is being assessed as an alternative by many Canadian firms.

As bank financing and traditional working capital facilities become more difficult to obtain firms look to alternative methods such as receivable financing facilities.

Only two key issues remain unknown to the Canadian business owner - how does factoring (receivable financing) work, and is it the appropriate type of financing for my firm.

Factoring is the immediate sale of your receivables. You get the cash as soon as you invoice - sounds great so far, right? The receivables you sell must be current; current is usually defined in the Canadian marketplace as any receivable less than 90 days. As your receivables approach 90 days you can be forgiven for thinking they might be uncollectible, so you might not want to sell them and be responsible to the lender for re payment of the cash advanced against that receivable.

While pricing, customer perception and some other misc issue might seem a deterrent to your consideration of a factor type facility we would quickly point out some of the benefits. The bottom line is that under a pure factor facility (more about that later) you are out of the collection business. The factor collects the receivable and notifies you accordingly. A Perfect World?

Not Necessarily!

Companies usually define working capital around their receivable and inventory investments. The freeing up of receivables for cash allows the business owner to free up capital tied up in inventories.


Many firms find it both times consuming and tedious to report to banks and other lenders on their receivable levels and margining capability. Factoring, or receivable financing is as close to instantaneous as you can get. If you need cash factoring provides you with almost same day cash.

Previously we spoke of a pure factoring facility. The type of factoring that is prevalent in Canada is based on the traditional model of U.S. and European factoring - that process is quickly summed up as follows:


You bill your customer
The Factor buys your invoice immediately
The factor collects your invoice
Your firm absorbs the financing fee on the transaction




IS THIS THE BEST SOLUTION? NOT REALLY!!


While this method of financing works it’s not optimal sometimes from an ‘ optics’ perspective ! Is there a better way? There is! Not all Canadian firms know that some factor facilities allow you to bill and collect your own receivables. This eliminates the intrusion of third party finance firms - "the factor 'calling your customer, who has never heard of them by the way, for money. That’s why Confidential A/R Financing creates a win/win when it comes to working capital and cash flow finance that puts you in control !
Canadian firms have been much slower to catch on to factoring primarily because of the customer intrusion level which they equate with their own customers perception of their viability.


In summary, we have highlighted some of the benefits, as well as some of the perceived negative aspects of factoring or receivable financing in Canada. As in all aspects of business, Caveat Emptor (buyer beware!).

Choosing a reliable and experienced factor partner will allow the business owner to maximize the benefits, and minimize the negative aspects of this solid alternative financing scenario. Factoring - it works if you make it work. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your firms working capital and receivable financing needs.



Stan Prokop - founder of 7 Park Avenue Financial


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - 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/factoring-receivable-financing-canada.html



CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Turnaround Financing Needed ? The Asset Based Line Of Credit Just Might Be The Solution

Financing The Turnaround In Canada . Here’s One Way How

OVERVIEW – Information on how the asset based line of credit can be an accelerator for turnaround financing solutions for Canadian business



Asset based line of credit? It’s an excellent strategy for any firm who is considering viable turnaround options. This finance strategy is also an excellent way to assist a firm in understand what some of its underlying problems are. An Asset based line of credit, commonly referred to as an 'ABL' arrangement can be instituted even if the company is not profitable or in fact is experiencing financial duress.



Prior to considering an ABL many firms will find they are experiencing sever cash flow pressures. Traditional working capital is shrinking, and sometimes external factors to the business simply exacerbate the financial challenge. If the business owner or financial executive do not take charge at this point a business failure in fact is likely.

Many firms gravitate towards an ABL arrangement after their bank operating line of credit. Most business owners quickly realize both the benefits and the risk of having significant bank lines in place. Traditionally these lines of credit are secured by receivables and inventory. Businesses are told they can borrow up to a certain limit based on these facilities. Every month the company submits detailed lists of a/r and inventory and can borrow certain pre agreed upon limits against those assets.

Banks typically advance 75% of those receivables that are under 90 days. In asset based lines of credit facilities that amount is 90% of receivables, creating immediate additional liquidity.


Banks have become much more cautious on inventory, that is simply because they don't, and cant be expected, to understand each firms inventory values and products. Asset based lenders tend to have much more experience in these matters and are more often than not inventory experts. Therefore advances against inventory are much higher. Again, what does that do, well it of course creates additional liquidity.


Many, if not most, oh, lets be honest, all banks , set maximum borrowing limits that are dependant on other external factors such as other collateral they hold, perceived operating risk, and the value of personal guarantees of the shareholders.
Bank operating lines are best when a firm is experience steady, but not erratic growth, and when the firm can operate comfortably within its borrowing limits as agreed upon with the bank.


When firms run into financial challenges they of course have a business that is contracting in many ways. Therefore borrowing against receivables and inventory becomes limited, and the bills that need to be paid are of course paid with less cash available and on hand.

It is at this point that many businesses realize they are starting to default on bank covenants. In many cases, for a variety of reasons, sales are falling.
It is very difficult for a business owner to both realize what is happening, and, moreso of a challenge, correct the problem. Financial losses only augment the cash flow problem. Many companies in fact aren't trouble by operating losses, but have simply over expanded. Business owners get into the mindset that if they are expanding, there can't be a problem! Most financial executives know that a company can fail not for lack of profit, but from lack of liquidity.


The time to consider an asset based line of credit is probably right now. The customers bank either has, or is reviewing its options relative to collateral and security arrangements. The bank will start to take measure to ensure it gets paid in full - this typically includes reducing operating lines of credit, formally calling a loan and setting new deadlines for the customer to 'right' the business, or exit the bank relationship.


It is at this time the customer should be focusing on alternative lending sources such as the asset based line of credit with non-bank finance firms. This facility improves liquidity, places less reliance on external guarantees and collateral, and can operate with a firm that is getting back on its track to profitability. We hasten to add that a severe financial 'death spiral' cannot be properly address by either the bank or the asset based line of credit solution.


The business owner and manager must recognize the current financial situation, and address that situation in as prompt and efficient manner as possible. The Asset Based Line Of Credit – aka ‘ ABL Lending’ can do that. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your borrowing needs.


Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - 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 :

7 Park Avenue Financial = Business Turnaround Financing Via ABL





7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


















Stan Prokop

The Finance Leasing Company . Don’t Regret Not Having Used Financing Leases For Asset Acquisition

Code Name ‘ Lease Financing ‘



OVERVIEW – .Information on the role of the finance leasing company in Canada . Financing leases play a key role in asset acquisition in Canada





The finance leasing company in Canada. While cash flow and capital conservation are prime motivators in why Canadian business owners and managers use asset finance as part of their overall business decision pretty well everyday there's a lot more to this finance tool that impacts your overall success. Code Name - LEASE FINANCING!

A lot of the history behind lease finance in Canada revolves around the taxation and off balance sheet issues that have to do with this method of financing assets. But the Canadian business owner and managers views this a lot more simplistically - it's simply a solid way to get the assets they need to run their business - on financial terms and structures that work.

We were reminded recently that you can do a great job of pre planning asset acquisitions by utilizing the concept of the lease line of credit. That process allows you to pre qualify for a lease line of credit - at which point you've got strong negotiating power with your vendors. The ability to be ' proactive ' in acquiring assets puts your firm ahead of the competition.

The benefits of lease financing can be summarized as follows:

Flexible financing
Simplified asset acquisition
Structures and rates that are commensurate with your firms credit quality

Why does the owner/manager often think that the whole issue of financing assets is complex? In talking to clients a number of reasons emerge; they can probably be boiled down to the mechanics of approval and documentation, and the accounting and tax issues that arise from a well structured lease.

While it sometimes feels to us that ' Operating Leases ' are not as popular as they once were the issue of using and not owning the asset is still a powerful one. Technology as a whole certainly lends itself to operating lease financing .Even software applications can be bundled into lease transactions.

We suppose you can think of a finance, or capital lease as a lease to own strategy, similar to a mortgage in some ways. It's the counter part of the operating lease, allowing you to own the asset at the end of the term - with your fixed payments being made along the amortization of lease, which is typically 3-5 years for most assets.

We're often somewhat amused at the amount of time that clients place on getting the ' best rate ' when it comes to lease financing. The reality is that the useful life of the asset, the residual value of the asset at end of term, and other considerations often are equally or more important as rate.


Oh, and on that ' low monthly payment ' that clients fixate on when negotiation asset finance leases. Let's just say that that payment can be structured in ten different ways to make it seem affordable. That is done by the leasing company via down payments, purchase option structures, residual investment, etc. The bottom line of rates is very simple - The finance lease company in Canada is in a very competitive environment. Your firm’s credit quality will command an acceptable rate if you have the expertise to properly communicate your firm’s financial strength to the lessor.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in financing leases for your asset acquisition needs.




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


7 Park Avenue Financial = Lease Financing Expertise






CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com









Stan Prokop

AR Financing . Your Every Question Counts When It Comes To Receivable Factoring

Lost Your Operating Manual For Receivable Financing In Canada?



OVERVIEW – .Information on AR financing in Canada . When it comes to receivable factoring what does the Canadian business owner/manager need to know with respect to operating and benefiting from a successful cash flow strategy .




AR Financing in Canada. When clients we speak to think about receivable factoring solutions they tend to have more questions on this solution than some other types of financings. Why is that we thought? We're not 100% sure but we know those questions need to be answered. So our solution, a mini ' Operations Manual ' on A/R finance in Canada.

It's those operations manuals that provide us with ' how to ‘, dangers, warnings, recommendations, so it seemed quite appropriate to adopt that type of information delivery! Let's dig in.

Canadian business owners and financial managers utilize Receivable factoring for a variety of reasons - one main one being it provides your firm with working capital and cash flow without dilution of your ownership equity in the company. It is often viewed as a short term or intermediate finance solution, avoiding long term commitments and long term debt.

It differs from bank financing from a number of perspectives. When you finance you A/R with a bank you provide an assignment of those receivables that you're financing. When you utilizing an A/R finance scenario you simply bulk up on ' Cash On Hand ' as you are in a position to constantly ' sell' your A/R on an ongoing or bulge type basis .

Both factoring and bank receivable finance advances you a per cent age of the value of your sales. In the case of Canadian chartered banks it's a 75% advance; Receivable factoring typically provides you with a 90% advance, so you have more liquidity.

Does our ' Operations Manual ' of advice recommend any one type of AR financing over another. Ours does! It recommends that you consider Confidential A/R finance
which allows you to bill and collect your own accounts - there are no notices to customers, you are completely independent of your finance partner, and at the same time you have the same or better pricing with respect to limits and credit lines.

In effect you're in control. That ability of Canadian firms to run their own businesses without any ' negative ' client reaction from their customer base. That's a good thing! , when it comes to the somewhat more conservative Canadian landscape of business ' perceptions '.

Receivable financing in Canada is a sub set, we can say, of asset based financing... So in many cases your cash flow financing for your receivables can be combined with inventory of fixed asset financing, allowing you to truly ' bulk up ' on capital needs .

The security for your A/R financing is pretty well the same as that of any Canadian chartered bank. Typically its most easily accomplished with the same type of General Security Agreement that collateralizes the financing.

So does the concept of an ' Op's Manual ' when it comes to receivable factoring make sense. If you're concerned about ' how things work '. ‘dangers’ , 'recommendations', etc consider a LIVE operations manual by seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow needs.




Stan Prokop - founder of 7 Park Avenue Financial


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - 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 :


7 Park Avenue Financial = Canadian Receivable Financing Expertise





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com



















Stan Prokop

Financing Business Growth In Canada Celebrate Funding Awareness Day Every Day Of The Year

Financing ( GROW OP ) Business Growth And Operations !



OVERVIEW – Information for financing business growth in Canada . Funding Your Company requires appropriate debt and asset monetization knowledge



Financing business growth in Canada. Are you the type of business owner/manager that feels that you're not really celebrating ' Funding Awareness ' Day that often? Here's some information and solutions around that key subject. We suppose you say that we're sharing info on financing a Grow OP... Which of course means Growth and Operations. What did you think we were talking about?! Let's dig in.

Cash and Profits are two key goals for all business, whether you're a start up or a major corporation... But how do you get a sense of what amount and type of funding you need? That question covers our growth situation we're talking about, but is equally applicable for companies are experiencing some sort of level of financial distress or challenge.

But as far as growth is concerned, unless you're in a cash business that has not cost of goods it's a certainty that as your revenues grow you must bulk up, unfortunately, on the current assets part of your balance sheet - A/R, inventories. And don’t forget those fixed assets that either run your business or allow you to maintain competitiveness.

It's an interesting point that is sometimes forgotten that the one good thing about growth financing is that as your sales grow you get automatically more finance from vendors/suppliers

When you're sourcing finance options remember that fixed assets aren't growing. One solid strategy is to consider a sale leaseback of owned assets to enhance business growth cash flow. And here's a new one for most clients we talk to - fixed assets (that are owned) can be used for revolving credit purposes if you are willing to consider a non bank Asset based line of credit.

So what does the business owner do when ‘traditional’ bank financing is either exhausted, or simply not available? Businesses that don't require new assets, i.e. they have extra capacity already are in a better position than firms which require new assets. That’s where lease financing is a solid solution. You minimize capital outlay while obtaining and using assets that will generate future revenues and profits.

Firms that are start up, generally newer, or in the overall category of the SME (Small to Medium Enterprise) always seem to have more challenges. That's when some solid assistance in knowing how you can access non traditional capital when external funding sources are ' bleak ' is key. Some of those include:

Receivable Finance
Working Capital Lines Of Credit
Monetizing tax credits owing your firm (SR&ED, etc)

These strategies maintain your debt to equity ratio constant and help you manage growth.

We hesitate to say that the alternative to growth is to simply stop growing. Here your wont need extra capital but certainly limits profits and competitiveness. Seek out a trusted, credible and experienced Canadian business financing advisor who can assist you in celebrating Funding Awareness Day! for your Grow Op - the growth operation you call your company.



Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - 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 :

7 Park Avenue Financial = Business Growth Financing
















Stan Prokop

Business Finance Problems ? An Overdose Of Funding Solutions Might Be In Order

2 ½ Solutions For Successful Business Financing

OVERVIEW – .Information on solutions for business finance problems in Canada . Funding solutions will always come down to your assessment of traditional, alternative or internal methods of fixing financing challenges



Business finance problems in Canada? It's no secret to Canadian business owners and managers that the funding they need to solve those challenges all comes down to the overall borrowing quality of the firm. Banks and commercial lenders make it their business to in effect ' predict ' failure.

But what can the owner/manager do to ensure the right access to choices for loans and working capital and can the right type and amount of financing lead to the successful turnaround of your firms’ financing fortunes. Let's dig in!

A good way to look at things it to ensure that the type of financing you seek corrects the poor performance your company might be experiencing due specifically to lack of, or wrong financing. We speak to clients in terms of 2 1/2 solutions to funding challenges in Canada.

They can be broadly grouped into:

Traditional

Alternative

And the 1/2? That comes about by better knowledge and management of existing assets. That might include refinancing assets under a sale leaseback, or just common sense basics such as better receivable and inventory turnover.

Both owner/managers are also cautioned to ensure that the financials reflect the true value of their assets and liabilities. This allows you to look at your company in 4 different ways -

Immediate liquidity challenges

Debt structure

Operating Performance

Profitability

It could probably be debated, but ' liquidity ' is in fact the best predictor of immediate financial problems. Here it's all about the ' Current Assets' part of the balance sheet -how you manage those inventory turns, receivable days outstanding, etc.

Immediate solutions in this area include bank or non bank business lines of credit that are commensurate with your overall credit quality. Other solutions include Purchase order or contract financing, future revenue stream finance, and receivable sales programs typically achieved through a receivable discounting facility. All of these fall into one of two categories we have already mentioned, traditional, or alternative!

That's a nice segue into our next point , which is that those other 3 areas - debt, operational efficiency, and profits will in fact dictate whether you're better to explore traditional or non traditional Canadian business financing solutions .

When it comes to business finance the bank or commercial lenders you're working with will take a hard look at the financial performance history. However good commercial lenders tend to pride themselves on ' failure prediction '. That’s why it's important for the owner/manager/CFO/Controller etc has to ensure all the bases are covered in our 4 different ways we've offered above to assess your historical and current financial performance.

How do the right financing solutions then fix your business finance problems? Properly executed they will show there is a turnaround solution in place, and be able to fix financing challenges within a generally specific timeframe.

If you want to ensure you have the right fixes and solutions in place to support sales growth seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in areas of traditional and alternative finance. They include:

Receivable financing
Inventory finance
Bank and Non Bank business lines of credit
Sale leasebacks
Tax Credit Monetization
Bridge Loans


P.S. Your take away? Focus on seeking expertise in the 2 1/2 ways of financing your funding needs - Traditional, Alternative, and... Internal!



Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - 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 :

7 Park Avenue Financial = Business Finance Problem Expertise













Stan Prokop

Business Finance Options. Not The Dark Secrets You Thought They Were When It Comes To Traditional Or Alternative Financing

Are Your Business Finance Options Out Of The Box .. Or In The Box ?

OVERVIEW – Information on business finance options in Canada. Business owners /managers must choose between traditional or alternative financing solutions that match their capital and growth needs



Business finance options in Canada. We constantly hear the term ' out of the box thinking ' these days, denoting some level of creativity . When it comes to alternative financing a number of solutions are available that are non traditional in nature.

However a number of these finance strategies get more and more traction every day. So yes, they are ‘out of the box ' to a certain degree, but we can guarantee you there are no 'dark secrets '. Let's dig in.

Let's take a look at some methods to finance your business that might be ' alternative ' in nature. Every successful business requires some level of owner equity. Many businesses are started by the use of personal assets which are monetized. We've said time and time again that it’s important to separate your business and personal life when it comes to finances.

So while selling or liquidating assets might be considered an ' alternative ' strategy the reality is that your personal resources become completed, they are at risk if there is a business failure and your all important personal credit history might unravel. So yes, it's important to commit equity to a business, combined with the right amount of debt. Ensure though that assets you're tapping are in the right amount and that will help attract the correct amount of debt financing you need.

Many businesses that can't be funded by banks are in fact eligible for bank financing! What do we mean by that -simply whether you consider it ' traditional' or ' alternative bank government guaranteed loans are a great way to finance fixed assets, leaseholds, technology requirements, etc. Bottom line - investigate the SBL program.

We constantly run into many businesses that are financed by credit cards. Here it's a double edged sword. Business credit is accessible - caution must be taken to use the right type of cards and to further ensure your personal credit history will not be tarnished by over use of credit.

Certain companies are great candidates for high net worth investors, many of whom are termed ' Angel' investors. They look for good opportunities with firms that have growth and profit potential. Many have experience in the industry you are in, which you benefit from via external expertise. The biggest challenge in Canada is finding Angel investors and understanding they will demand an ' equity ' or ownership role in your business.

Over the years we've worked with a number of clients who have utilized the capital pool or reverse take over option for new financing. Our own experience is that this often does not work, but done properly your firm is certainly more visible to the public and you have the opportunity to attract additional capital.

Many business owners and managers don’t realize they can bulk up on cash simply by selling accounts receivable. This process immediately monetizes A/R into cash, and although more expensive is much cheaper than giving up control and equity ownership. Receivable financing, done right is a solid alternative strategy used by thousands of corporations, large and small, everyday. Our recommended solution in this area is Confidential Receivable Financing , providing you with unlimited credit against your sales and allowing you to bill and collect from your own clients without any third part interference.

Heard of Royalty Finance? We rarely see clients use this method of financing, but it’s certainly up for consideration. It simply allows you to borrow against future sales which creates a win / win strategy for your investor/lender and allows you to avoid debt and grow your company.

Never forget that your suppliers/key vendors are great sources of capital. Just negotiating better payment terms creates business cash flow. In certain cases you might end up considering some sort of more strategic relationship which is of future benefit.

Traditional finance sources include:

Commercial bank lines
Asset based lines of Credit
Bridge Loans/ Sale Leasebacks
Tax Credit Monetization
Supply chain/PO finance

Which traditional or alternative business finance options will provide your company with the capital you need. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital 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 :



7 Park Avenue Financial = Business Financing Options













Stan Prokop