YOUR COMPANY IS LOOKING FOR A/R FINANCING – YOUR WAY!
ACCOUNTS RECEIVABLE FINANCING SOLUTIONS FOR CANADIAN BUSINESS
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Account Receivable Financing offers businesses a strategic way to improve cash flow and manage operational expenses effectively.
Struggling with cash flow issues? Unlock immediate funds with Account Receivable Financing!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ACCOUNT RECEIVABLE FINANCING & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Canadian Business Financing with the intelligent use of experience
Account Receivable loans in Canada are rightfully positioned as providing a ' big bounce ' to business cash flow challenges. But what if we could turn that ' bounce' into a ' big bang '? Here's our theory—no pun intended, so let's dig in.
Account Receivable Financing: A Smart Cash Flow Solution
Canadian business owners can unlock their business's cash flow with Account Receivable Financing, a powerful financial solution designed to bridge the gap between invoicing and the time it takes for customers to pay. Leveraging outstanding invoices allows you to access immediate funds, ensuring steady cash flow without the burden of traditional loans or your firm's inability to achieve traditional bank financing.
Can You Survive The Cash Flow & Working Capital Squeeze? Understanding Account Receivable Financing
There is no more considerable constraint to a business than feeling the cash flow and working capital squeeze. While the business owner and financial manager often hear otherwise, accounts receivable financing companies provide solutions to these challenges by offering quick funding and specialized services. Yet, access to capital and credit in the SME Commercial sector still feels quite challenging.
FACTORING LENDING IS BECOMING MORE POPULAR
That then forces owners and management to consider new ways to address the Canadian financing challenge, one of which is ‘ factoring lending.'
AR financing, another term for factoring lending, helps businesses manage cash flow by using unpaid invoices as collateral for borrowing. It’s one of those solutions that fills the gap, allowing companies to allow cash flow to move ‘lockstep ‘ with sales.
IS YOUR FIRM UNABLE TO ACCESS BANK CREDIT?
An accounts receivable loan is often the solution for companies that can’t access bank credit. It allows them to be on an equal footing with their competitors, who, for some reason, seem to have all the financing they need (more often than not, they don’t—it just seems that way).
SEARCHING FOR NEW SOURCES OF FINANCE
It’s that gap in the SME sector that is constantly looking for a new source of finance.
Accounts receivable financing works by using unpaid invoices as collateral for a loan, where the lender advances a portion of the invoice value, providing quick and easy cash flow for businesses. Besides financing costs, the difference between bank and A/R financing is not as big as most people think. When the bank finances sales, the A/R is taken as collateral and assessed in your business’s overall creditworthiness.
Factoring lending is secured differently, as the paperwork around the facility has the receivable being constantly sold to the lender, and cash flowed, typically on the same day. In fact, as a surprise to some, A/R financing from a commercial finance firm/factor company advances your receivables more than a bank would. Usually 15% more!
FACTORING OF RECEIVABLES IS PERFECT FOR A HIGH-GROWTH ENVIRONMENT
Generally speaking, a bank prefers slow, steady growth; factoring lending typically works optimally when a company grows sales.
Invoice financing, also known as accounts receivable financing, is another viable option for high-growth companies as it provides flexible working capital without requiring a personal credit check. When sales are in decline, it’s not recommended that the owner/manager consider a commercial AR finance facility, as things tend to backfire somewhat.
WHAT IS THE BEST TYPE OF FACTORING FINANCE? TALK TO 7 PARK AVENUE FINANCIAL ABOUT CONFIDENTIAL RECEIVABLE FINANCING
So what about that ‘annoying‘ part of factoring financing in Canada? We’re referring to this because, for traditional factor financing done in this manner, your clients receive a notification about the process and payment under this type of facility.
Accounts receivable financing can also be compared to obtaining a line of credit using unpaid invoices as collateral. Our recommended solution? It’s having your facility run on a ‘CONFIDENTIAL‘ basis, allowing you to bill and collect your accounts receivables without any other party's notification.
5 KEY BENEFITS OF ACCOUNTS RECEIVABLE FACTORING
If you aren't aware of the key benefits of financing sales growth through factoring, they include:
Short-term bulge cash flow solutions
Increased flexibility
Fast approval - typically a week or two - bring immediate cash for the invoice amount you wish to fund
Accounting of factoring of receivables is straightforward - financing receivable accounting should be discussed with your accountant.
Asset-based a/r funding can be implemented on a recourse or non-recourse basis
CONCLUSION
Reasons business owners don't use invoice factoring via factoring finance include the cost or simply that they weren’t aware that financing of this type was available via a factoring company. Those living in the past (that’s a dangerous thing to do in business, by the way) even think alternative financing has some negative connotation.
They are wrong, by the way, as some of the largest, most successful firms in Canada utilize accounts receivable financing and securitizing receivables with factoring companies and other financial institutions.
A large firm sells its account to achieve off-balance sheet funding. Small businesses, of course, have to wait until their invoice is paid unless they choose to fund a/r in some manner. As a business sells a/r via factoring, companies can maintain optimum working capital.
Third-party receivable factoring comes with factoring fees, which are expressed as a fee and not an interest rate. That factoring fee is often confused with bank loan pricing, which is an incorrect comparison.
Small businesses should ensure they have access to asset-based lending solutions that might allow the company to operate and grow revenues for its goods or services. So, if you want to accelerate the ' bounce ' in A/R financing into a ' bang, 'consider solutions in financing receivables, such as Confidential Receivable finance, as one solution to the finance challenge.
KEY TAKEAWAYS
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Invoice Factoring: This concept involves selling accounts receivable to a third party at a discount to obtain immediate funds. It provides quick access to cash without waiting for invoice payment cycles.
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Cash Flow Management: Effective management of the timing and amount of cash inflows and outflows. This ensures the business has sufficient funds to cover operating expenses and growth opportunities.
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Credit Terms and Conditions: It is crucial to understand the terms set by lenders when financing based on receivables. These terms affect the cost and availability of financing.
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Receivables Turnover Ratio: A key metric to measure how efficiently a company collects its receivables. Higher turnover indicates better performance in managing collections.
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Working Capital Loans: These loans are essential for financing daily operations and managing short-term financial obligations, ensuring smooth business operations.
CONCLUSION
Call 7 Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor with a track record of success who can assist you with accounts receivable loans and facilities that make sense. The benefits of factoring and financing accounts receivable should no longer be a mystery! It's an effectie way to finance the balance sheet and is used by thousands of firms in Canada.
FAQ
How does Accounts Receivable Financing work?
Account Receivable Financing allows businesses to receive immediate cash by selling their outstanding invoices to a financing company at a discount.
What are the benefits of Account Receivable Financing?
It improves cash flow, provides immediate access to funds, and reduces the wait time for invoice payments, enabling better financial management.
Is Account Receivable Financing suitable for all businesses?
Yes, it is particularly beneficial for businesses with long invoice payment cycles or those needing quick access to cash to cover operational expenses.
What is the difference between recourse and non-recourse factoring?
In recourse factoring, the business must repurchase any unpaid invoices. In non-recourse factoring, the financing company assumes the risk of unpaid invoices.
How does Account Receivable Financing impact a company's balance sheet?
It converts accounts receivable into immediate cash, improving liquidity and reducing the need for short-term loans.
Can Account Receivable Financing be used for small businesses?
Yes, small businesses can greatly benefit from It, as it provides quick access to cash and helps manage cash flow effectively.
How does invoice discounting differ from invoice factoring?
Invoice discounting involves borrowing against unpaid invoices, while invoice factoring consists in selling the invoices to a third party at a discount.
What are the costs associated with Account Receivable Financing?
Costs typically include a fee of a percentage of the invoice value, which can vary depending on the financing company and terms.
Can businesses with poor credit use Account Receivable Financing?
Yes, since the financing is based on the creditworthiness of the business's customers, not the company itself.
What industries commonly use Accounts Receivables Financing?
Industries with long payment cycles, such as manufacturing, wholesale, and service providers, commonly use Account Receivable Financing.
How does AR Funding improve cash flow?
It provides immediate cash by converting outstanding invoices into funds, allowing businesses to cover operational expenses and invest in growth.
What is the process of obtaining Accounts Receivable Financing?
Businesses submit their invoices to a financing company, which advances a percentage of the invoice value. The remaining amount is paid after the customer settles the invoice, minus fees.
What are the risks associated with Receivable Financing?
Risks include fees, potential impact on customer relationships, and the obligation to repurchase unpaid invoices in recourse factoring arrangements.
