YOUR COMPANY IS LOOKING FOR A/R FINANCE AS A CASH FLOW ALTERNATIVE!
ACCOUNTS RECEIVABLE FINANCING & ACCOUNTS RECEIVABLE FACTORING SOLUTIONS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the most significant 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
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Accounts receivable lending transforms outstanding invoices into immediate working capital, offering businesses a swift and efficient solution to cash flow challenges.
Unlock your business's potential with immediate cash flow through accounts receivable lending!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Accounts Receivable Funding solutions that solve the issue of cash flow and working capital – Save time, and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
A/R FINANCING IN CANADA
Accounts receivable lending in Canada as a viable alternative to debt and equity options.
You bet that’s why thousands of firms in Canada have turned to an invoice factoring and financing service as a healthy alternative to taking on long-term debt or diluting equity ownership if an equity raise is a viable alternative.
That's the factoring company solution via 7 Park Avenue Financial. Let's dig in.
HOW ACCOUNTS RECEIVABLE LENDING CAN BENEFIT YOUR BUSINESS
Accounts receivable lending is a powerful financial tool that enables businesses to leverage their outstanding invoices to secure immediate cash.
A/R Financing allows businesses to access immediate cash flow by converting unpaid invoices into upfront same-day / next-day funding. That allows your business to meet its operational funding needs, invest in growth opportunities, and maintain a healthy, positive cash flow cycle. Understanding the types and benefits of accounts receivable lending can help companies make informed decisions and strategically manage their finances.
CASH FLOW FINANCING VERSUS NEW OWNER EQUITY
We have assumed that many companies in the SME Commercial sector (small to medium enterprise) could, in fact, access debt capital or raise equity financing.
The reality is that only the smallest percentage of companies in SME could realistically be successful.
ARE BANKS THE ANSWER TO YOUR ACCOUNTS RECEIVABLE FINANCING NEEDS?
When it comes to a credit line and cash flow, your outstanding invoices to grow a business come down to a traditional bank loan/receivables loan solution or an alternative financing strategy and solution to address your working capital need.
Accounts receivable financing companies can also be considered as an alternative to traditional bank loans for covering cash flow gaps.
Our traditional ‘ go-to ‘ is our traditional bank via Canadian chartered banks. However, requirements are stiff for many business owners. From the bank's perspective, a strong financial track record and balance sheets and income statements that reflect profit and success are absolute prerequisites.
OTHER ALTERNATIVES FOR BUSINESS CAPITAL
So let us assume your firm is, in fact, eligible for debt or equity financing as a growth alternative. (We can dream, can't we?) Equity investors such as venture capital folks, private equity groups, or even much lower scale, angel investors and friends and family can rightfully demand a significant piece of ownership and board direction.
THE CHALLENGE OF BRINGING DEBT TO YOUR BALANCE SHEET
Debt solutions, such as term loans, mezzanine financing, mortgages, etc., come with fixed repayment obligations and can dramatically change the structure of your balance sheet.
LET 7 PARK AVENUE FINANCIAL SHOW YOU THE A/R FUNDING ALTERNATIVE
So, is there a viable third-party alternative?
As we have noted, financing via accounts receivable lending from factoring companies allows you to generate cash flow from sales while avoiding taking on debt. Accounts receivable financing works by using unpaid invoices as collateral for a loan. All you are doing is monetizing assets you already have.
WHAT IS THE BEST TYPE OF FACTORING COMPANY?
An invoice factoring service (Our recommended solution is CONFIDENTIAL RECEIVABLE FINANCING) involves generating cash flow as you create revenue and generate client receivables.
While this financing cost is higher than bank financing, it’s much lower than diluting equity and does not involve adding new debt on the balance sheet.
There is a fee, not an interest rate, charged on the invoice amount - typically in the 1-2 % range for asset-based a/r funding of a factored invoice. That fee is the ‘ factoring income’, not the interest earned by your factor companies.
Unlike asset-based lending and invoice factoring, an accounts receivable loan uses unpaid invoices as collateral, providing flexibility for businesses to grow revenues.
Factoring of receivables accounting should be set up with your accountant.
WHAT DOES FACTORING COST?
That factoring fee is often confused with an interest rate, which it is not. Getting your customers to pay more promptly will reduce factoring fees and help your cash flow.
Until that invoice is paid, your investment in your receivables will hinder cash flows. In the short term, factoring allows your business to properly fund day-to-day operations. For the business owner, it, becomes a type of line of credit, and this financing may become your stop-gap on day-to-day funding needs.
A FACTORING EXAMPLE! HOW DOES ACCOUNTS RECEIVABLE FINANCING WORK?
A simple example - Let’s say your firm has a 100k invoice you have just generated from a service sale or delivery.
AR financing can provide immediate cash flow by advancing a percentage of the invoice value, typically around 90%, on the same day you generate a client invoice. The balance is remitted to you directly after your client pays, less a $ 1.5 -2% finance charge.
In essence, you have generated cash of 98,500$. That immediate cash allows you to operate your business and grow more revenue.
WORK WITH 7 PARK AVENUE FINANCIAL FOR THE RIGHT FACILITY
Where businesses go wrong is aligning themselves with an invoice factoring firm that does not meet their needs.
The right financing option, such as receivable financing accounts, is crucial for managing cash flow and covering expenses. The ability to work with a credible firm with clean documentation and a strong record of client satisfaction is vital.
HOW CAN THE BUSINESS OWNER OFFSET FACTORING COSTS
Oh, and those ‘ higher costs. ‘ They can almost always be easily offset, sometimes 100%, by simply altering your pricing strategy and using your new-found immediate cash flow to take supplier discounts and negotiate better terms and pricing with vendors.
Consider receivable financing companies as options to help cover cash flow gaps and obtain quick funding.
While invoice factoring services for receivable factoring had in years gone by a certain stigma about small businesses attached to it, the reality is that some of the largest corporations in Canada use this type of financing.
The use of our recommended CONFIDENTIAL A/R FINANCING allows you to bill, collect, and cash flow your small business without the knowledge of any other party, such as a supplier or client.
You can also choose between non-recourse factoring and recourse factoring - the former transferring the credit and bad debt risk to the factoring company.
KEY TAKEAWAYS
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Invoice Factoring - Selling receivables to a third party at a discount provides immediate cash flow.
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Working Capital Financing - Securing short-term funds ensures smooth business operations.
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Asset-Based Lending - Using assets like receivables as collateral enhances borrowing capacity.
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Cash Flow Management - Effective management of cash inflow and outflow is crucial for business stability.
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Credit Management - Ensuring timely customer payments mitigates financial risks.
CONCLUSION
If you want to determine if factoring and accounts receivable financing is a healthy alternative to growth for your company call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with an accounts receivables lending and factoring financing strategy that matches your company and industry needs
FAQ
What is accounts receivable lending?
Accounts receivable lending involves using unpaid invoices as collateral to secure immediate financing, helping businesses maintain cash flow.
How does accounts receivable lending work?
Businesses sell their outstanding invoices to a lender at a discount. Upon customer payment, the lender advances a portion of the invoice value upfront and the remaining balance, minus fees.
What are the benefits of accounts receivable lending?
It provides quick access to working capital, improves cash flow management, and reduces the need for traditional loans. Businesses can meet operational needs and invest in growth opportunities.
Who can benefit from accounts receivable lending?
Businesses of all sizes facing cash flow challenges due to unpaid invoices can benefit. It is particularly useful for companies with slow-paying customers or seasonal sales cycles.
How does accounts receivable lending compare to traditional loans?
Accounts receivable lending offers faster access to funds and less stringent approval criteria compared to traditional loans, which often involve lengthy processes and credit checks.
What is the difference between invoice factoring and accounts receivable lending?
Invoice factoring involves selling invoices to a third party, while accounts receivable lending uses invoices as collateral for a loan, allowing businesses to retain control over collections. Receivable financing works by advancing a portion of the invoice value in exchange for a fee, which helps accelerate cash flow for the business.
Can accounts receivable lending affect customer relationships?
Generally, it should not affect customer relationships as the business manages its receivables. Transparent communication with customers about payment processes
How do lenders assess the value of accounts receivable?
Lenders evaluate the creditworthiness of the invoiced customers, the receivables' aging, and the client base's overall quality.
