YOUR COMPANY IS LOOKING FOR FACTORING ACCOUNTS RECEIVABLE SOLUTIONS!
FUNDING ACCOUNTS RECEIVABLE VIA ACCOUNTS RECEIVABLE FACTORING
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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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Financing Cash flows in Canada. Are there some key ingredients to factoring accounts receivable that can help your firm achieve financial success? We think so, here why... and how.
THOSE ' CASH FLOW DRIVERS'
It's important to understand what the finance folks call your ' cash flow drivers '. A tool such as factoring accounts receivable literally forces you to manage and maximize working capital success.
Most business owners and financial managers know that cash flow becomes somewhat of an ' up and down ' business. That’s the true fact that many find it difficult to challenge.
DAYS SALES OUTSTANDING IS A KEY METRIC TO CASH FLOW MANAGEMENT
Receivables finance in Canada isn't cheap (we also believe it’s not that expensive by the way ' and when your firm utilizes this financing mechanism you will do much better if you focus very daily attention on your use of this finance tool. We point out by the way that many senior executives in some of the largest corporations in the world have Days Sales Outstanding as a key metric on which they are both measured and compensated. Surely that says something about how shareholders view the importance of business working capital. We find it very interesting that small and medium-sized business owners are constantly challenged to receive payment from their larger, well known, can we call them ' blue-chip ' clients. These same accounts provide a lot of businesses with the majority of their revenue, but at the same time, they pose great challenges in collection. They are also the perfect accounts for factoring accounts receivable, as they are both larger in dollar size and creditworthy. Factoring companies provide the key to the a/r challenge.
INVENTORY MANAGEMENT IS KEY ALSO
Inventory. Inventory? Why are we talking about inventory when our subject is financing cash flows? Simply because inventory management is a key ingredient in the cash flow cycle, and that inventory flows into accounts receivable, which are in turn financed by factoring. Managing current assets in a small business brings financial success.
FACTORING VERSUS BANK CREDIT - WHAT'S THE DIFFERENCE
We're always debating, with our peers or clients, whether we're in a credit crunch. Whether that’s the case or not every business typically runs into what can only be described as uncertain financial times. And financing cash flows via factoring allows you to pay vendors, grow your business, and meet daily obligations to your other lenders. It's different from bank financing if only for the simple fact that the bank is lending your firm money directly, while your factoring partner is simply financing your sales on a daily basis, with a focus on your accounts receivable as the asset financed. They in fact purchase that asset by virtue of their agreement with you.
Yes, bank financing is in fact ' cheaper ' but in many ways, it’s a poor comparison because you have more operating freedom when you're financing cash flows via factoring. A larger more financeable firm might search out more equity or working capital term debt to grow, but the SME business owner in Canada has the option to utilize factoring accounts receivable. Oh, and by the way, financing cash flows is always cheaper than equity!!!!
YOU MUST HAVE GOOD GROSS MARGINS TO FACTOR RECEIVABLES
A key ingredient in receivable finance success is good gross margins. Simply speaking, you need them and factoring works best when you're well above the ' BREAKEVEN' sales level where sales minus cost of sales plus the cost of factoring accounts receivable is in fact a positive number. That's a key ingredient to a successful working capital solution.
It's no secret that factoring accounts receivable is almost never a long term multi-year solution. It can be... but usually isn’t. View a factoring company solution as your bridge to financial success.
CONCLUSION
Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in identifying your ' key ingredients ' to factoring success.
