YOUR COMPANY IS LOOKING FOR THE RIGHT ACCOUNTS RECEIVABLE FINANCE SOLUTION!
LET ACCOUNTS RECEIVABLE FACTORING DELIVER CASH FLOW
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
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Accounts Receivable Financing and 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 FINANCE - CANADA
Recent studies in the United States, ( and we believe the Canadian business landscape is very similar ) suggest that one of the most viable ways for businesses to grow and continue growing in the current economic and somewhat difficult credit environment is to consider a factoring working capital facility for their business.
This type of financing facility is also known as accounts receivable financing or ' factoring facilities '.
What is Accounts Receivable Financing: A Factoring Facility Guide
Factoring, also known as accounts receivable AR financing, goes by many terminologies, including invoice discounting, invoice factoring, debtor finance, etc.
It is the purchase by an accounts receivable factoring company for a ‘factoring fee’ (not an interest rate) of your accounts receivable in whole or in part.
Businesses can receive cash from a finance company as they generate invoices and sales. Companies can choose from recourse or non-recourse factoring, depending on how they want to assume normal bad debt risk.
This financing is a potential solution to a line of credit and is a solid way to finance a balance sheet. Factoring is a subset of ‘asset-based lending’. Using a third party, such as 7 Park Avenue Financial, to fund receivables allows companies to improve their cash position.
CAN YOUR COMPANY ACCESS ALL THE BANK FINANCING YOU NEED?
If your company is doing reasonably well, and the general economic and business and credit environment are pretty positive.
Naturally, more traditional financing is considered – as a Canadian business owner, you know the drill - prepare an executive summary or business plan (7 Park Avenue Financial prepares business plans that meet and exceed lender requirements), produce several years of financial statements, and meet with your Canadian chartered bank to discuss receivable or term financing.
In today’s economic environment, many businesses are unable to pursue traditional financing and must, therefore, consider alternative options.
In such cases, businesses can explore accounts receivable financing companies as potential solutions to bridge cash flow gaps and obtain quick funding.
THE KEY BENEFIT OF ACCOUNTS RECEIVABLE FINANCING? CASH!
One of the appeals of factoring/accounts receivable financing is that your business is generating positive cash flow right out of the gate. Various accounts receivable financing offers allow companies to leverage their outstanding invoices to secure immediate cash flow.
One of the other main benefits of such a facility is that business owners and financial managers can focus on running their businesses and not spend all their time on cash flow problems and working capital challenges.
We would point out that the time saved on collections, of course, refers to the factor that the finance or factor firm is collecting your accounts receivable.
Many business owners do not like this direct contact with the customer, which is one of the reasons the Canadian business environment has, relatively speaking, been ‘ slow ‘ to catch on to factoring.
THE HISTORY OF FACTORING - HOW DOES ACCOUNTS RECEIVABLE FINANCING WORK?
This necessitates a brief discussion around the notification concept and how factoring has traditionally been done in the U.S. and elsewhere.
Factoring started hundreds, some say thousands of years ago in Europe and Asia. Traditionally, it involved the total ‘sale ‘of your receivables; your firm got the cash, but you didn’t own or collect the receivables.
In recent years, due to the creativity of the North American financing markets, numerous other product offerings related to factoring have been made, one of which is ‘non-notification ‘.
CHOOSING THE RIGHT FACTORING COMPANY
WHAT IS THE BEST FACTORING SOLUTION FOR OUTSTANDING INVOICES?
At 7 Park Avenue Financial, we believe non-notification factoring is the absolute best solution for Canadian business owners considering alternative financing.
This type of financing allows businesses to access funds before the customer pays, providing immediate cash flow and supporting business operations.
Under non-notification type facilities, you bill and collect your receivables while receiving cash for them as soon as you generate your invoices. This provides a double whammy!
1. You bill and collect your receivables and get cash ASAP
2. You maintain the relationship with your customer, which is key to most Canadian business owners
At 7 Park Avenue Financial, we feel that the financing above, which we call CONFIDENTIAL RECEIVABLE FINANCING, is the best form of a/r funding for a business. It’s a factoring company solution that works .. finally!
BENEFITS OF CONFIDENTIAL A/R FINANCING
As we have noted in the past, factoring is more expensive than traditional financing.
Still, that paid premium, called the ‘factoring discount’, provides your company with all the cash you need to grow your business.
Savvy Canadian business owners can use that cash to improve supplier relationships, take prompt payment discounts, and purchase more inventories for sale to their customers. In some instances, yes, we repeat all. Yes, good gross margins and solid operating efficiencies can offset all of the costs of a factoring finance facility.
Two uncommon takes on Accounts Receivable Financing:
- Accounts Receivable Financing as a customer retention strategy
- Using Accounts Receivable Financing to negotiate better supplier terms
KEY TAKEAWAYS
-
Factoring: Selling invoices at a discount for immediate cash
-
Advance rates: Percentage of invoice value provided upfront
-
Recourse vs. non-recourse: Responsibility for unpaid invoices
-
Fees: Factoring costs, including discount rates and service charges
-
Eligibility criteria: Requirements for qualifying invoices and customers
-
Outstanding invoices: Leveraging unpaid invoices to obtain immediate cash flow
CONCLUSION
Is it any wonder why receivable factoring, accounts receivables financing, and non-traditional working capital facilities are becoming more popular in Canada?
We don’t think so! Receivables finance offers various types of accounts receivable financing, highlighting its advantages, flexibility, and applicability to different business stages.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow needs.
FAQ
How does Accounts Receivable A/R Financing improve cash flow?
Accounts Receivable Financing converts unpaid invoices into immediate cash, allowing businesses to access funds tied up in outstanding receivables and improve overall liquidity.
What advantages does Accounts Receivable Financing offer over traditional loans?
Unlike traditional loans, Accounts Receivable Financing doesn’t create debt, offers faster access to funds, and scales with your business growth without requiring additional collateral.
Can AR Financing help my business expand?
Yes, by providing quick access to working capital, Accounts Receivable Financing enables businesses to take on new projects, invest in growth opportunities, and expand operations without waiting for customer payments.
How does A/R Invoice Financing affect my relationship with customers?
An accounts receivable loan system typically maintains your existing customer relationships as you manage customer communications while the financing company handles collections professionally and discreetly.
Are Receivable Loans via a factoring facility suitable for seasonal businesses?
Absolutely. Accounts Receivable Financing is particularly beneficial for seasonal businesses, providing flexible funding that adapts to fluctuating sales cycles and helps maintain steady cash flow throughout the year.
What types of businesses can benefit from Accounts Receivable Financing?
Accounts Receivable Financing can benefit various businesses, including manufacturing, wholesale, distribution, service providers, and any company that invoices other businesses with payment terms.
How quickly can I receive funds through Accounts Receivable Financing?
Typically, businesses can receive funds from a company's accounts receivable within 24-48 hours after submitting eligible invoices, making it one of the fastest financing options.
Does my business need to be a specific size to qualify for Accounts Receivable Financing?
While requirements vary among providers, Accounts Receivable Financing is available to businesses of all sizes, from startups to large corporations, as long as they have qualifying business-to-business or government invoices on the company's balance sheet.
Will using Accounts Receivable Financing affect my business’s credit score?
Generally, Accounts Receivable Financing does not impact your business credit score, as it’s not a loan and doesn’t appear on your credit report. However, some factors may indirectly affect your creditworthiness.
How does the cost of Accounts Receivable Financing compare to other financing options?
While Accounts Receivable Financing may have higher apparent costs than traditional loans, it often proves more cost-effective when considering the benefits of improved cash flow, reduced administrative burdens, and potential for increased sales.
What factors should I consider when choosing an Accounts Receivable Financing provider?
Consider the provider’s industry experience, fee structure, advance rates, funding speed, technology platform, and customer service quality. Also, evaluate their flexibility regarding any additional services they offer.
How can Accounts Receivable Financing help my business during economic downturns?
During economic downturns, Accounts Receivable Financing can provide a reliable source of working capital, helping businesses maintain operations, meet payroll, and seize opportunities even when traditional lending sources tighten.
What steps can I take to maximize the benefits of Accounts Receivable Financing for my business?
To maximize benefits, maintain thorough invoice documentation, communicate clearly with your financing provider, strategically select which invoices to finance, and use the freed-up cash to invest in growth opportunities or negotiate better terms with suppliers.
