YOUR COMPANY IS LOOKING FOR RECEIVABLES FINANCE SOLUTIONS!
INVOICE FACTORING & ACCOUNTS RECEIVABLE FINANCING
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?
CONTACT US - 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
Receivable financing companies revolutionize business liquidity by converting invoices into immediate working capital.
Unlock cash trapped in your invoices today – Empower your business via receivable loans!
Breaking the Cash Flow Barrier: Why Receivable Financing Works
INTRODUCTION
Financing Receivables in Canada. A large majority of business owners, financial managers, CFOs, Controllers, etc have heard of this stand-alone (it doesn't have to be the case) method of Canadian business financing and how it can help with working capital - But do they understand it? Let's dig in.
Receivable financing companies offer a lifeline to those trapped in the typical cash flow conundrum. By transforming accounts receivable into immediate capital, A/R Financing companies empower businesses to fund day-to-day operations, invest in growth opportunities, and navigate financial challenges.
This innovative financial solution not only accelerates cash flow but also provides a strategic advantage in managing payables and investing in growth opportunities, making it a valuable tool in your business financing strategies.
UNDERSTANDING THE BASICS OF A/R FINANCE ( FACTORING )
We maintain, when talking to our clients, that you simply need to know a few key basics to effectively master this finance solution. And by the way, you don't have to be a rocket scientist to master those. We suppose it's our version of ' Technically Speaking '! when it comes to financing your customer base and monetizing the balance sheet for your investments in receivables to fund your business.
However, if you don't we can clearly say you're under-advantaged when it comes to understanding benefits and risks regarding who you're dealing with and how you're dealing with them. Bottom line, we're talking about what can go write and what can go wrong when it comes to ' invoice discounting '.
FINANCING ACCOUNTS RECEIVABLE GENERATES .... CASH!
At the end of the day, receivable financing is simply one method to generate cash out of your sales and those cash flow gaps due to your investments in receivables. All you are doing is shortening what is known as the operating cycle - you’re no longer in the ' waiting room ' when it comes to waiting for customers to pay.
2 METHODS OF FINANCING ACCOUNTS RECEIVABLE IN CANADA - HOW DOES ACCOUNTS RECEIVABLE FINANCING WORK?
In Canada, you have two methods of addressing factoring. You can let a third party take over the whole process, or you can become the manager of the whole process yourself.
We call that second method here at 7 Park Avenue Financial Confidential A/R Financing. We'll call the other method ' Traditional Factoring ‘ with eligible accounts receivable, and it’s been used for hundreds of years by thousands of companies all over the world. This ain't new!
TRADITIONAL ' OLD SCHOOL' FACTORING
If you go the traditional route your billing and collecting process is somewhat taken over - in effect, your company's accounts receivable and credit and collection process is outsourced and managed. Under a confidential scenario, you maintain total control over all your billing and collections, with both methods essentially costing the same. They should cost the same - if they don't you’re not dealing with the right party when it comes to the right factoring agreement for your firm.
UNDERSTANDING THE DISCOUNT RATE - SPOILER ALERT - IT'S NOT AN INTEREST RATE
The basic finance charge around this whole process is what is known as the discount rate. That discount rate, which many people understandably, but mistakenly call an ' interest rate ‘is a key element in the overall pricing of this finance solution.
BANK FINANCING VERUS FACTORING - WHAT IS THE DIFFERENCE
A lot of clients we speak to seem to wrestle with the issue of understanding how this method of growth financing differs from bank finance.
It comes down to how the bank, vs. the receivable finance firm ‘papers ' your transaction. That technical aspect involves two key terms, 'Assigning' your A/R to the bank, or ' Selling ' your A/R to your A/R Finance firm.
So that's just the paperwork on the deal, and it's not as complicated as you think when it comes to actual cash flow in your business. There is much less of an emphasis on personal credit score, and more of an emphasis on the quality and size of your A/R as it relates to lender approval.
WHAT YOU NEED TO KNOW!
Financing receivables via commercial accounts receivable financing companies is a method of financing trade commercial receivables.
The benefits are fast access to business cash and easier qualification.
Who you deal with and how you manage this method of growth/sales financing becomes the risk in the factoring process, and we want to help clients of 7 Park Avenue Financial understand the options they have in small business lending and in financing sales revenues.
KEY TAKEAWAYS
- Invoice Financing: Provides immediate cash against unpaid invoices.
- Accounts Receivable Management: Enhances financial health through efficient monitoring and collection of receivables.
- Factoring Services: Offers a mechanism to sell invoices to a third party for immediate liquidity. Accounts receivable financing rates vary on the size of receivables, credit quality, and invoice size.
- Working Capital Optimization: Ensures businesses have the necessary funds for daily operations and fund business loans outstanding
- Cash Flow Management: Critical for planning and controlling funds' inflow and outflow to meet obligations and invest in growth.
CONCLUSION
Small business owners are always challenged with how to fund their capital structure and monetize and turnover assets.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business advisor with a track record in financing companies for growth and success for the financing option/options such as accounts receivable financing that you need to run and grow your business and manage your business debt schedule obligations.
Check out the accounts receivable loan solution - P.S. It's not a ' loan ' !
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
How does receivable financing benefit my business?
By converting your outstanding invoices (via AR asset-based lending ) from slow paying customers into immediate cash, accounts receivable factoring improves your cash flow, allowing for smoother operations for small businesses and SMEs and the opportunity to invest in growth via your company's balance sheet looking much healthier.
What types of businesses can use accounts receivable finance?
Businesses of all sizes and from various sectors that have commercial clients and issue invoices can leverage accounts receivables financing services for factoring invoices to improve their liquidity. As an example, trucking companies and staffing agencies are large user of this method of working capital financing for consistent cash flow. Firms that cannot obtain a bank loan and are unable to qualify for bank financing use a/r financing as an alternative solution.
How quickly can I access funds through receivable financing?
Typically, funds from a factoring company can be accessed within 24 to 48 hours after the invoices are verified and approved by the financing company and a factoring agreement is in place. Typciall just your financial statements, business bank statements, and AR agings are all that is required for approval.
Is receivable financing considered a loan?
No, it's not a loan; factoring companies advance on your outstanding invoices. This means there's no debt on your balance sheet, making it a less risky financial tool.
What criteria do receivable financing companies look at?
They primarily assess the creditworthiness of your clients (the invoice payees), your business’s invoicing history, and the overall risk associated with your accounts receivable.
What is the difference between receivable financing and a traditional loan?
Receivable financing focuses on the value of your invoices, not your credit score, offering quicker access to funds without increasing your debt.
Are there any industries that particularly benefit from receivable financing?
Industries with long invoice payment cycles, such as manufacturing, wholesale, and services, often find receivable financing especially beneficial, as it helps bridge the gap between invoicing and payment.
How do I choose the right receivable financing company for my business?
Look for companies with experience in your industry, transparent fee structures, and positive customer reviews. It's also important to consider their funding limits and how quickly they can provide the funds.
Does using receivable financing affect my relationship with my clients?
Most financing companies handle the collection process professionally and discreetly, ensuring your relationships with your clients are not negatively impacted. Some arrangements allow you to maintain control over your client communications.
What are the typical fees associated with receivable financing?
Fees can vary widely depending on the company and the risk involved but generally include a percentage of the invoice amount. Understanding these fees upfront is crucial to determining if the financing is cost-effective for your business.
How does the application process for receivable financing work?
The process usually involves submitting an application, providing details about your business and invoices, and undergoing a creditworthiness review. The speed and simplicity of the application process can vary, but many companies offer online applications for convenience.
Can I select which invoices to finance through a receivable financing company?
Yes, most receivable financing companies allow you to choose which invoices you want to finance, giving you flexibility in managing your cash flow and financing needs. This selective approach helps tailor the financing to your specific requirements.
