YOUR COMPANY IS LOOKING FOR AN A/R FINANCE
SOLUTION TO COMBAT TIGHT CASH FLOW!
ACCOUNTS RECEIVABLE FACTORING 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?
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
Companies such as 7 Park Avenue Financial offer a strategic solution for businesses seeking to enhance cash flow and financial stability.
Unlock immediate cash for your business by converting unpaid invoices into working capital.
Maximize Your Working Capital
Accounts receivable factoring companies offer a strategic solution for businesses seeking to enhance cash flow and financial stability by assessing various factors to determine how much to pay for an invoice and offering advance rates up to 90% of the invoice's value, typically charging a small fee for their factoring services.
RECEIVABLE FINANCING
Receivable Finance…aka Factor Funding In Canada.
Quite frankly, we couldn’t count the number of times that a client has opened up to us with the line ‘ Cash flow is is tight ‘. That challenge appears sometimes, or in the case of some clients… all the time.
Is there a way to combat that problem? Accounts receivable financing provides working capital solutions to businesses by using unpaid invoices as collateral to offer financing. Let’s dig in.
STREAMLINE YOUR FINANCES WITH RECEIVABLE FINANCING
Cash flow management is crucial for companies' survival and growth in today's competitive business landscape. Companies that factor receivables provide a vital financial service by converting outstanding invoices into immediate cash, helping businesses maintain steady operations and seize growth opportunities.
This practice, known as 'factoring", offers a lifeline to companies struggling with liquidity issues, ensuring they can meet their financial obligations and invest in their future.
A/R FINANCING IS ONE TYPE OF WORKING CAPITAL SOLUTION
Numerous types of financing can combat small business cash flow and working capital issues your company faces. We're focusing on some solid external solutions. Still, we'd be remiss to remind business owners and managers that a lot of cash flow challenges can be addressed internally through faster asset turnover and simply hard focus on quality, reporting, of current assets and liabilities such as inventories, payables, and of course our focus today, A/R.
How does a business owner know when external financing solutions such as A/R Financing are needed? We suppose we are talking about those ' symptoms' of tight cash flow.
WILL THE BANK FINANCE ALL YOUR RECEIVABLES
When most business owners/managers think of external financing in Canada, they think of ‘ the bank’. They go to ‘ the bank’. Traditional lending is excellent because it’s low-cost and plentiful if your firm qualifies. But more often than you think, issues of financials, collateral, credit history of owners, etc., prohibit many firms from accessing that plentiful ‘ low-cost’ bank financing.
Invoice factoring is an alternative to traditional bank financing. It provides unlimited funding based on accounts receivable and offers both recourse and non-recourse factoring.
We also meet many clients who have low-cost, flexible Canadian chartered bank financing, but it’s a case of ‘ not enough. ‘ Not enough is due to some of the issues we will now address that are often solved by a factoring company.
WILL THE BANK FINANCE ALL YOUR RECEIVABLES?
HIGH GROWTH REQUIRES HIGHER INVESTMENTS IN YOUR WORKING CAPITAL ACCOUNTS
At night, business owners dream. Those dreams often include the concept of high growth. While the future financials might look bright regarding profits and sales revenues, quite often, the investment you need to make in people, materials, inventory and receivables is improperly overlooked. Invoice factoring services can help businesses manage high growth by providing immediate cash flow and capital growth. Receivable financing is simply one way to get profit and growth into your financials.
THESE BUSINESS CHALLENGES OFTEN REQUIRE ADDITIONAL FINANCING
Many clients we meet are embarking on -
The big project
The new product line
Entry into U.S. and foreign markets
Major R&D projects
Major fixed asset upgrades
ACCOUNTS RECEIVABLE FINANCING IS A SUBSET OF ASSET BASED LENDING SOLUTIONS IN CANADA
While equipment financing and SR&ED tax credits can help finance some or almost all of that expansion, they still take funding out of business credit lines. An invoice factoring company provides invoice factoring services, including eligibility requirements, advance rates, and factor fees, as part of asset-based lending solutions in Canada. Cash flow derived from this method of financing helps fund your expansion, which is as simple as that.
TEMPORARY CASH CRUNCHES CAN HAPPEN!
While cash flow may not be tight today, it often is ‘ tomorrow ‘. In financing, that is known as ‘ the bulge ‘. So while a traditional bank business line is a fixed credit limit, Receivable financing via confidential factor funding allows you to address ‘ the bulge ‘.
That bulge is much easier than the one we’re trying to eliminate at the gym! The bulge is when you get a big order, have a temporary buildup in receivables, or require products and services that necessitate major cash outflows.
In non-recourse factoring, the factoring company assumes the risk of customer non-payment, providing additional security for your business.
FUNDING PAYROLL CHALLENGES
Payroll financing is another aspect of A/R financing. For some reason, we have never quite figured out that employees and contractors want their paycheques, and they want them on time! A 7 Park Avenue Financial Factor financing allows you to pay employees before clients pay you. Factoring companies provide different types of AR financing - our recommended solution is Confidential Receivable financing, allowing you to bill and collect your receivables without any notification to clients and suppliers.
An accounts receivable factoring company can help businesses with timely payments and financial struggles, ensuring that payroll and other expenses are covered even when client payments are delayed.
Account receivables can be financed on a non-recourse or recourse basis. As this is a short-term method of funding daily operations, factoring companies charge a fee, often confused as an interest rate, which it is not. Receivables factoring allows your company to fund sales within 24 hours and can be done selectively as you need to draw down funds.
KEY TAKEAWAYS
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Factoring Definition: Factoring involves selling invoices to a third party to obtain immediate cash.
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Benefits: Provides instant liquidity, improves cash flow, and eliminates the wait for customer payments.
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Process: Submit invoices to a factoring company, which advances a percentage of the invoice value upfront.
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Costs: Factoring fees are based on the invoice amount and the risk associated with the receivables.
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Non-recourse vs. Recourse: Non-recourse factoring offers protection against customer non-payment, while recourse factoring requires the seller to buy back unpaid invoices.
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Role of Invoice Factoring Companies: Invoice factoring companies connect businesses with the cash they need by purchasing their outstanding invoices and assuming responsibility for collections.
CONCLUSION
If you want to understand how confidential factor funding works (you bill and collect your own accounts receivable while getting funded daily) seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.
FAQ
How do companies that factor in receivables work?
Factoring companies purchase your outstanding invoices, providing immediate cash while waiting for customer payments.
What are the main benefits of factoring receivables?
Factoring offers immediate cash flow, reduces the wait for customer payments, and helps businesses manage financial stability.
Is factoring receivables suitable for small businesses?
Yes, small businesses can greatly benefit from factoring as it provides quick access to working capital without additional debt.
What costs are associated with factoring receivables?
Factoring fees are usually a percentage of the invoice value, based on the risk and terms of the agreement with the factoring company.
Can factoring help my business grow?
Yes, by improving cash flow, factoring allows companies to reinvest in operations, take advantage of growth opportunities, and avoid financial strain.
How does non-recourse factoring differ from recourse factoring?
Non-recourse factoring protects your business from customer non-payment, while recourse factoring requires repurchasing unpaid invoices.
What industries commonly use factoring receivables?
Factoring is widely used in manufacturing, transportation, staffing, and retail, where cash flow management is critical.
How does factoring impact my customer relationships?
Factoring companies often handle invoice collections professionally, allowing you to maintain positive customer relationships. If a company chooses Confidential receivable financing, the company can bill and collect its receivables while achieving all the benefits of a/r financing/
Can startups use factoring services?
Yes, startups can use factoring to manage cash flow and avoid the challenges of limited credit history or insufficient collateral. Many industries, such as the transportation industry such as trucking companies and freight companies and the staffing industry, often utilize a/r financing services.
What should I consider when we research factoring companies for cash flow needs?
Evaluate the factoring company’s reputation, fees, contract terms, and expertise in your industry to ensure they meet your business needs around cash flow problems and liquidity challenges.
What is the factoring process step-by-step?
Submit your invoices to the factoring company. They advance a portion of the invoice value, usually within 24 hours. The factoring company then collects payment from your customers. Once collected, the factoring company pays you the remaining balance minus their fee.
How does factoring differ from traditional loans?
Unlike small business loans, factoring is not a debt; it involves selling your receivables for immediate cash. When it comes to accounts receivable factoring companies, there is no repayment schedule or interest rates for the small business owner; there is just a fee based on the invoice amount.
What are the risks involved with factoring receivables?
Potential risks include high fees, long-term contracts, and reliance on the factoring company for collections. Choosing a reputable factoring company can mitigate these risks. Some companies might be hesitant to use online factoring services.
What is invoice financing and how does it differ from invoice factoring?
Invoice financing via an accounts receivable factoring company allows businesses to borrow money secured by the value of their outstanding invoices while remaining responsible for collecting the invoice balance.
Unlike invoice factoring, where the factoring company purchases the invoices and handles collections, invoice financing lenders consider the borrowing business' credit, making it suitable for established businesses with good credit.
