YOUR COMPANY IS LOOKING FOR A/R FINANCING SOLUTIONS!
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?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer accounts receivable financing and other working capital solutions – Save time, and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Accounts Receivable Financing Company Solutions
What is Accounts Receivable Financing?
Accounts receivable financing, also known as invoice financing or receivable financing, is a financial solution that allows businesses to access working capital by leveraging their outstanding invoices.
Canadian businesses are discovering that their most significant untapped asset is their accounts receivable.
How does Accounts Receivable Financing Work?
Unlike traditional loans, accounts receivable financing provides an advance on the value of unpaid invoices, offering businesses immediate cash.
This approach helps companies convert their outstanding invoices into immediate cash, significantly improving their cash flow. By using accounts receivable financing, businesses can meet their financial obligations more efficiently, ensuring smooth operations and fostering growth.
Understanding Receivable Financing
Receivable financing is a financial arrangement where a business uses its outstanding customer invoices as collateral to receive immediate cash from a financial institution or a receivable financing company.
This type of financing is particularly beneficial for businesses needing to enhance their cash flow quickly or invest in growth opportunities.
Receivable financing can be structured in various ways, including asset sales or loans, providing businesses with the necessary funds to meet their financial obligations.
By leveraging receivable financing, companies can maintain a steady cash flow, enabling them to seize new opportunities and manage their operations more effectively.
CASH FLOW CRUNCH
Is your business growth trapped by slow-paying customers? Waiting 30, 60, or 90 days for payment can strangle your operations, prevent inventory purchases, and miss growth opportunities.
Let the 7 Park Avenue Financial team show you how an accounts receivable financing company can convert outstanding invoices into immediate cash, typically within 24-48 hours.
Understanding the Importance of Cash Flow Financing in Canada
Cash flow financing in Canada requires business owners and financial managers to be positive about funding and managing their ongoing accounts receivable investment.
Accounts receivable factoring is a financial solution that provides immediate cash flow for businesses, particularly during times of tight credit. Many aspects of this subject are somewhat misunderstood, so welcome to our ‘gabfest’ on this business financing area.
Why Positive Cash Flow is Essential for Your Business
It’s commonly accepted that a positive cash flow is king (or queen) in a business. Accounts receivable finance can be a solution for businesses facing cash flow issues by leveraging outstanding invoices as collateral.
Your firm’s ability to acquire and pay for assets, meet payrolls, and reduce outstanding debt levels is of prime focus to your company.
Balancing Day-to-Day Operations and Long-Term Growth
While there is a significant distinction between running your business day-to-day versus growing your company on a long-term basis, different types of financing are required for each of those two categories of a company's maturity.
The Happiness Factor in Business Ownership
While happiness means different things to business owners, most agree that the happiness factor in owning or running a business can be measured by positive cash flow.
The Risks of Negative Cash Flow
Of course, your company could adopt a 'not-for-profit' and negative cash flow stance, but that will only lead to insolvency, highlighting the importance of properly running and financing your business.
Demystifying Cash Flow in Business
Cash flow is a broad business term that it is often misunderstood. Businesses can leverage their accounts receivables to secure immediate funding, improving liquidity and supporting growth. Financial analysts and textbooks define it as ‘net income plus depreciation.’
The Role of Depreciation in Cash Flow
Depending on the depreciation of your assets, a company losing money or trending downward can have positive cash flow. However, we don't recommend that as a strategy!
The Mystery of Paper Profits vs. Cash Flow Crises
Many owners wonder why 'paper profits' look great but cause a daily cash flow crisis. Often, the reason lies in their investment in accounts receivable.
The Impact of Client Payment Habits
The 'cash poor' feeling relates to your client's payment habits and your ability to manage that process and function.
Cash Flow-Intensive Businesses and Their Needs
If your company is cash-flow-intensive, it requires funds to purchase inventories, equipment, and other items.
Benefits of Accounts Receivable Financing
Accounts receivable financing offers several benefits to businesses, including:
-
Improved Cash Flow: By converting outstanding invoices into immediate cash, businesses can enhance their liquidity and meet their financial obligations promptly.
-
Enhanced Financial Stability: Accounts receivable financing provides a stable funding source, allowing businesses to manage their finances more effectively.
-
Debt Management: This type of financing does not create traditional debt, as it is an advance on the value of unpaid invoices.
-
Credit Risk Management: Some forms of accounts receivable financing transfer credit risk to the financier, reducing non-payment risk.
-
Operational Efficiency: Outsourcing receivables management to a financing company can improve operational efficiency and reduce administrative costs.
-
Risk Mitigation: Accounts receivable financing can include options for credit protection, reducing the risk of non-payment.
-
Flexible Financing: This financing solution is scalable and is growing with the company’s sales.
-
Competitive Advantage: Quick access to funds can provide a competitive edge, enabling businesses to invest in growth opportunities and stay ahead of the competition.
-
Financing Your Accounts Receivable Investment
How do owners and financial managers finance their accounts receivable investments? Asset-based lending is a type of financing in which loans are secured by a company's collateral, such as equipment or accounts receivable.
Solutions include:
Bank Credit Lines
Bank credit lines are a standard option for financing accounts receivable.
Accounts Receivable Non-Bank Financing
Accounts receivable non-bank financing solutions, such as factoring, are another viable option.
Factoring companies provide businesses with immediate cash flow by purchasing their accounts receivable, offering flexibility and additional services in managing the receivables.
Confidential Receivable Financing
Our recommended solution in this area is Confidential Receivable Financing, which allows you to bill, collect, and finance your accounts receivable investment without notifying clients, suppliers, or others.
By selling your invoices to a finance company, you can transfer the responsibility of collecting payment on those unpaid invoices. This allows you to receive cash upfront and streamline your cash flow management.
Asset-Based Non-Bank Business Lines of Credit
Asset-based non-bank business lines allow you to create a credit facility based on accounts receivable, inventory, and even owned equipment. A line of credit is a flexible funding option for companies experiencing cash flow challenges, providing immediate access to funds to manage daily operations.
Choosing the Right Financing Company
When choosing a financing company for accounts receivable financing, businesses should consider the following factors:
-
Experience: Look for a financing company with extensive experience in accounts receivable financing and a proven track record of success.
-
Reputation: Research the financing company’s reputation online and check for reviews from other businesses to ensure reliability.
-
Rates and Fees: Compare the rates and fees offered by different financing companies to secure the best deal.
-
Flexibility: Opt for a financing company that offers flexible financing options that can adapt to your business needs.
-
Customer Service: Choose a financing company with excellent customer service and a dedicated account manager to ensure smooth communication and support.
Accounts Receivable Financing for Business Growth
Accounts receivable financing can be a powerful tool for business growth, providing businesses with the necessary funds to invest in new opportunities and stay ahead of the competition. By using accounts receivable financing, businesses can:
-
Invest in New Equipment or Technology: Improve operational efficiency and productivity.
-
Hire New Staff: Support business growth and expand capabilities.
-
Expand into New Markets or Territories: Explore new business opportunities and increase market reach.
-
Develop New Products or Services: Stay competitive and meet evolving customer demands.
-
Improve Cash Flow: Reduce non-payment risk and ensure smooth financial operations.
By understanding the benefits and options available, businesses can use accounts receivable financing to drive growth and success and remain competitive in their respective industries.
The Goal: Achieving Positive Business Cash Flow
These solutions aim to generate more—or at least as much—business cash flow as you spend. Receivable loans are a flexible and accessible financing option for businesses facing cash flow challenges due to delayed invoices.
Evaluating Your Cash Flow Performance
Looking for a clue as to whether you are winning or losing this battle? Take a good look at your cash flow statement provided by your accountants.
Key Takeaways
-
Invoice assessment and verification form the foundation of successful AR financing.
-
Credit checks on your customers matter more than your credit score
-
Advance rates typically range from 80-90% of the invoice value
-
Most companies receive funding within 24-48 hours after approval
-
Understanding recourse vs. non-recourse factoring impacts risk management
-
Understanding receivable financing rates is crucial for improving cash flow and accessing immediate funds for operational needs
Case Study:
A Toronto manufacturer faced a critical expansion opportunity but lacked immediate capital due to $500,000 in outstanding receivables. Through accounts receivable financing, they accessed $450,000 within 48 hours, enabling them to fund new orders and purchase inventory to increase production capacity by 40%. The company grew revenue by 65% within six months while maintaining a healthy cash flow.
Conclusion
That's our 'gabfest' on the importance of accounts receivable and cash flow financing.
Looking for financing solutions and tools for your business? Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist you with your needs.
FAQ
How does accounts receivable financing improve business growth?
-
Provides immediate access to working capital
-
Enables bulk inventory purchases
-
Supports payroll management
-
Allows for equipment upgrades
-
Facilitates business expansion
What makes AR financing better than traditional loans?
-
No fixed monthly payments
-
Funding grows with your sales
-
Faster approval process
-
No personal collateral is required
-
Better approval for accounts receivable financing rates
How flexible is accounts receivable loans financing?
-
Scale funding up or down as needed
-
Choose which invoices to finance
-
No long-term contracts required for receivable financing services with the right partner firm
-
Customizable payment terms
-
Multiple financing options are available
What industries benefit most from AR financing / Invoice factoring?
-
Manufacturing companies
-
Staffing agencies
-
Transportation firms
-
Construction companies
-
Wholesale distributors
How does the application process work for accounts receivable loan financing?
-
Submit basic company information
-
Provide aging report on the company's accounts receivable
-
Share customer details
-
Complete credit check
-
Receive same-day decision
What happens if my customer doesn't pay?
-
Protection options available through non-recourse factoring
-
Collection services included
-
Credit insurance coverage
-
Professional dispute resolution
-
Risk management support
Is my business too small for AR financing?
-
Solutions available for various sizes
-
Minimum requirements flexible
-
Startup programs available
-
Growth-focused options
-
Customized solutions offered
How does AR financing affect customer relationships?
-
Professional collection practices
-
Transparent communication
-
Enhanced payment terms
-
Improved service capability
-
Strengthened partnerships
