You Are Looking for A Business Finance Company for Factoring Receivables!
Factoring Receivables: The Short-Term Financing Option You Didn't Know You Needed
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
Unaware / Dissatisfied with your financing options?
Contact Us ! - Direct Line - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
Email - sprokop@7parkavenuefinancial.com
Unlock instant cash flow trapped in your invoices with factoring receivables.
Struggling with cash flow? Turn unpaid invoices into instant cash
Introduction - Understanding AR Financing and Factoring
‘What's the best type of business financing company for my firm?', our clients ask when they consider AR (A/R) financing and factoring of receivables. We believe strongly it's all about the partner, as much as the facility arrangements and we think we can show you why.
A/R (AR) financing companies in Canada tend to be specialized-focused niche lenders in the Canadian business landscape. Unlike our friends in the U.S., these firms tend to be non-bank independent finance firms, Canadian, U.S., or U.K. based concerning ownership.
This type of business finance company has one focus, advancing you cash and working capital on your AR (A/R) similar to a line of credit. The funds you can obtain are unlimited based on all your eligible receivables. In general, receivable financing works for all receivables under 90 days old, as many clients think they are able to
Comparing Factoring to Traditional Bank Financing
So could the right business finance company for the factoring of receivables be a bank?
There are 1 or 2 players in the Canadian banking landscape that do offer receivable finance, similar to a factoring model, however, on a broadly speaking basis, we can categorically state that banks don't finance receivables under the invoice discounting model that you are probably looking for.
We guess that anything is possible and one day we might see the banks gravitating to this type of finance... It certainly might be good from a rate and competition basis.
Selecting the Right Factoring Partner
So we have determined that your search for the right firm re: factoring receivables should focus on a specialist firm offering the type of facility you are looking for. But do you as a Canadian business owner or financial manager actually know the best facility when you meet it?!
Facility Size and Restrictions
Let's walk you through what we consider the key issues in finding the 'perfect' AR financing facility in Canada.
First of all, you want to ensure your partner firm can satisfy your facility size - some firms are very small and have limited capital themselves! which we think is something clients don’t often consider.
Other key issues are as follow facility limit, your ability to finance all your receivables, as certain companies impose restrictions on either the total amount for any one of your customers and believe it or not some firms don't like government receivables for some legal and technical issues around their security.
Understanding Pricing and Advance Formulas - How does accounts receivable factoring work?
Two other factors to consider are how clearly you understand the advance formula in the factoring agreement under which you will draw on the facility... and oh yes, did we forget to mention pricing?
That's a tongue-in-cheek comment of course as the majority of clients we speak to seem focused only on pricing and not the ten or so other issues they should be considering. Many factoring companies are very competitive on pricing these days.
Optimal Factoring Solutions in Canada - Confidential Accounts Receivable Financing
What's the optimal facility in Canada for factoring receivables? At 7 Park Avenue Financial, it's 'Confidential invoice discounting or financing. This allows you to bill and collect your funds without any notice to your customer. This type of invoice factoring facility is perfect for your day-to-day operations. Confidential non-notification finance such as this eliminates any impact on client relationships.
Key Takeaways
- Factoring converts unpaid invoices into immediate cash.
- It improves cash flow, allowing faster growth and smoother operations.
- Different types of factoring cater to specific business needs.
- Fees and rates are key considerations when choosing a factoring company.
- Factoring is not a loan; it's a purchase of your receivables.
Conclusion
In summary, of course, you're the one who will make the final call on the type of facility that makes sense for your firm when it comes to cash flowing your A/R.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can navigate the waters of receivable financing and cash flow solutions for you on issues such as borrowing formulas, rates, terms and conditions, and your ability to improve on these issues for business success.
FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
Does factoring hurt my credit score?
No, unlike traditional loans, factoring receivables for small businesses doesn't impact your credit score - but does improve overall financial health.
What types of businesses benefit from factoring?
Any business with outstanding invoices can benefit, especially those in industries with slow payment cycles, like construction or transportation. According to the U.S. Chamber of Commerce, factoring is one of the most popular SME finance solutions for working capital financing. Factoring receivables for startups is popular as early-stage companies don't qualify for traditional financing but they do have sales and accounts receivables. Versus a line of credit a/r factoring is a solid small business financing option.
Factoring can be combined with other options such as asset-based lending lines of credit. Alternatives to factoring include bank lines of credit if accessible, and short-term working capital loans, aka Merchant cash advances. Some businesses use ' Spot Factoring ' which allows the company to fund only certain invoices as needed.
Understanding the differences in financing options helps you choose the best financing for your business.
How long does it take to get money from factoring?
Typically, within 24-48 hours after invoice approval funds are provided per the advance rate on in the agreement on the value of the invoice - and when the customer pays the holdback amount is paid to the company less the fee for financing.
What happens if my customer doesn't pay?
Depending on the type of factoring, you may be responsible for unpaid invoices in recourse factoring. The factoring company takes responsibility for collections and bad debt in non-recourse financing - Most factoring companies offer recourse and non recourse factoring and the benefits of accounts receivable factoring work in both types.
Is factoring expensive?
The factoring fee from an accounts receivable factoring company varies depending on factors like invoice amount and risk. Compare providers to find competitive rates. Factoring companies charge a fee which is often mistakenly misunderstood as an ' interest rate '. Business borrowers should also look for any miscellaneous hidden costs as well as advance rates and factor fees per the terms of how and when the factoring company pays.
Companies with both commercial and government clients can have invoices funded. Consumer invoices are not eligible as sales to consumers are not commercial financial obligations.
