YOUR COMPANY IS LOOKING FOR FACTORING FOR SHORT-TERM CASH NEEDS!
Accounts Receivable FactoringCompany Solutions / Asset-Based Lending
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
FINANCING ACCOUNTS RECEIVABLE
AR Factoring Facilities provide businesses with immediate cash flow by converting outstanding invoices into working capital.
Struggling with cash flow gaps? Discover how AR Factoring Facilities can inject immediate capital into your business.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer AR FACTORING FACILITIES & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Canadian Business Financing with the intelligent use of experience
Our goal is simple: surgically remove the word ' ouch ' from factoring and dealing with a receivables factor company in Canada. Is such a delicate operation even possible? Is there a ( business ) doctor in the house …We think so. Let's ' scrub down ' AR financing and get started!
STREAMLINE FINANCES WITH AN A/R FACTORING FACILITY
Properly financing receivables can be a game-changer for business cash flow, and that’s precisely what an AR Factoring Facility offers. Cash-flowing receivables provide immediate funds to businesses and help bridge the gap from receivables to immediate working capital.
Whether you’re a small business facing liquidity challenges or a larger enterprise looking to optimize cash flow, understanding how AR factoring can transform your business is vital.
THE INEQUALITY OF CASH FLOW / HOW DOES FACTORING HELP
Many businesses in Canada face a fundamental inequality issue. Some have cash on hand, cash flow, and working capital, and some don’t. Some firms qualify for a bank or short-term loan, while others do not.
There is more inequality, as traditional bank financing is almost ‘ coveted’ for firms that can access business capital in conventional forms.
Accounts receivable factoring companies provide a non-bank solution for generating cash flow through cash advances via a factor fee solution, as a company generates sales to creditworthy clients and sells its A/R.
AR FINANCING IS AN EFFECTIVE BUSINESS FINANCE SOLUTION / FINANCING YOUR BALANCE SHEET
If your firm, large or small, is in the latter category, factoring accounts receivable in Canada is one of the most solid and effective solutions to your problem.
But how does a factor company work, and where do you find one? Oh yes, what does it cost? That cost, in most cases, quite frankly, is usually the 2nd or sometimes the first reason that the ‘ouch’ exists in the mind of the Canadian business owner and financial manager.
THE KEY BASIC AROUND HOW FACTORING WORKS & FACTORING COMPANY CHARGES
The actual factoring transaction regarding your company’s accounts receivable is fundamentally easy to understand.
Unlike borrowing against your receivables, which you do via a Canadian chartered bank or business credit union, an invoice financing company works by having documentation in place with the receivable factoring companies that specify your ongoing actual sales of the receivables.
So the accounts receivables aren’t collateral per se, the cash you receive for them is the proceeds of the sale.
That’s the basic explanation most clients need to know when we point out the differences between a bank facility and a factoring company, which is usually in the sole business of financing receivables.
OTHER FINANCING SOLUTIONS ARE COMPLEMENTARY TO A/R FINANCE!
However, we do add that several other financing mechanisms can be ' bolted on ' to your accounts receivable factoring facility—typically, they include:
Inventory financing
PO finance
Borrow against owned equipment.
But that comprehensive solution we have just described is a conversation for another day—our focus here is factoring A/R.
So how much can a client finance their firm given they have opted to consider an A/R finance strategy? The answer is as much as you want, as long as you have the receivables to back up the solution. That's how factoring companies work.
THE COST OF FACTORING RECEIVABLES/ FACTORING FEES
The actual financing mechanism via factoring company solutions is worth exploring for a moment. Your unpaid invoices are ' sold 'via your original documentation agreement with the factoring company at a discount of approximately 1-2% if you are selling on 30-day terms. That reduction in the value of your sale is the factoring company’s profit.
HOW TO REMOVE THE ' OUCH FACTOR ' IN A/R FINANCING FACTORING COSTS
The absolute method in which we can assure clients that they can remove the ' OUCH ' factor in receivable financing A/R in Canada revolves around a few basic issues in dealing with most factoring companies -
A clear understanding of how invoice factoring fee pricing works for outstanding invoices from business customers relative to the invoice value of your client/account debtor
Getting a competitive rate in receivables factoring around the average invoice amount and size of your facility
Understanding the differences in nonrecourse factoring solutions and how to avoid a long term contract
Dealing with the right firm - Hint - VERY IMPORTANT!
Ensure you have a confidential facility that allows you to bill and collect your receivables. (99% of the firms you might choose to deal with cannot do this for you) -
Not all factoring companies will offer Confidential Receivable Financing. Small businesses can benefit from the non-notification factoring agreement. In Canada, many other factoring companies do not provide the confidential solution as an added flexibility. Even start-ups can benefit from this funding by accessing cash before their client will pay the invoice, although back office functions for startups are typically not confidential.
KEY TAKEAWAYS
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Immediate Cash Flow: AR factoring converts unpaid invoices into immediate cash, enhancing liquidity.
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Accounts Receivable: Businesses sell their accounts receivables to a factoring company for instant capital.
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Factoring Companies: These entities purchase invoices and provide upfront cash, charging a fee for their service.
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Credit Control: Factoring companies often handle credit control and collections, reducing administrative burdens.
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Non-recourse Factoring: Offers protection against bad debts, as the factoring company assumes the credit risk.
CONCLUSION - THE ACCOUNTS RECEIVABLE FACTORING COMPANY SOLUTIONS
So, has your operation been successful regarding unpaid invoice accounts receivable financing factoring services? We hope so.
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist with your factoring needs. Many factoring companies offer solutions for companies selling their unpaid invoices to their business customers for the total invoice value.
FAQ: FREQUENTLY ASKED QUESTIONS
What is accounts receivable factoring?
Factoring is a financial transaction in which the company sells its receivables to a factor finance company or financial company, which will collect from its customers.
Factors provide an advantage for companies that want quick cash flow from outstanding receivables rather than waiting on credit terms—there's no need, as the factoring company buys those invoices! The factor takes a fee for this service.
Some online factoring companies offer many a/r finance solutions. The owner's credit score is not a factor in obtaining cash flow financing solutions via factoring. A small business can, therefore, maintain a good ongoing cash balance to fund day-to-day operations. The three parties to this funding are the company, the factoring firm, and the company client. Funds can usually be accessed the same business day or, at the latest, the next day.
Some factors specialize in specific industries, while others are serviced and financed. Factoring won't typically work if a company does not sell to clients. The discount rate will vary depending on portfolio size, credit quality, annual revenues, average invoice size, etc.
Traditional factoring takes on all the risks associated with collecting payments from customers so a company can focus on running its business and making it work for its success through high advance rates on sales.
What is an AR Factoring Facility?
An AR Factoring Facility is a financing solution where businesses sell their accounts receivable to a factoring company in exchange for immediate cash.
How does AR Factoring work?
Businesses submit their outstanding invoices to a factoring company, which advances a percentage of the invoice value and handles customer collection.
What are the benefits of using AR Factoring?
AR Factoring provides immediate cash flow, reduces the burden of credit control, and offers protection against bad debts through non-recourse factoring.
Who can benefit from AR Factoring?
Small—to medium-sized businesses facing cash flow issues or looking to optimize their working capital can significantly benefit from AR Factoring.
What are the costs associated with AR Factoring?
Factoring companies charge a fee for their services, typically a percentage of the invoice value. This fee varies based on the creditworthiness of the invoices and the agreement terms.
How does AR Factoring differ from traditional loans?
Unlike traditional loans, AR Factoring does not involve debt. Instead, it provides cash based on the value of outstanding invoices, making it a more flexible financing option. Factoring receivables accounts complies with basic cash flow accounting.
Can AR Factoring help improve credit ratings?
Yes, AR factoring can help businesses maintain or improve their credit ratings by improving cash flow before the customer pays, and timely payment of liabilities.
What industries commonly use AR Factoring?
Similar to a line of credit, Industries such as manufacturing, transportation, staffing, and distribution frequently use AR Factoring to manage cash flow and operations efficiently.
Is AR Factoring suitable for start-ups?
Yes, start-ups with substantial accounts receivable can use AR Factoring via invoice factoring providers to access immediate capital without additional debt.
Can international invoices be factored?
Yes, many factoring companies offer services for international invoices, providing businesses with global cash flow solutions via factoring receivables.
What is the difference between recourse and non-recourse factoring?
Recourse factoring accounts receivable means the business retains the credit risk, while non-recourse factoring transfers the credit risk to the factoring company.
How long does it take to receive funds through AR Factoring?
Once invoices are submitted, businesses typically receive funds via the cash advance within 24 to 48 hours.
What criteria do factoring companies use to evaluate invoices?
Factoring companies assess the invoice payers' creditworthiness and the invoices' terms to determine eligibility for factoring.
