Cash Flow Via Invoice Financing AR Finance Receivable Loan Solutions

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ACCOUNTS RECEIVABLE FINANCING WORKS

Accounts Receivable loan solutions in Canada have significant advantages for Canadian business owners/financial managers seeking to improve (and accelerate) their overall cash flow/working capital situation. A/R is typically one of the largest assets on a company's balance sheet.

RECEIVABLE FINANCING PROBLEMS AND SOLUTIONS

Shortages in ongoing cash needs, safe to say, leave owners somewhat 'restless'! That's why the right accounts receivables financing/accounts receivables loan solution is critical when it comes to invoice financing for trade receivables in those unpaid invoices. Let's dig in.

Invoice financing is, in essence, a form of asset-based credit lines. They are the 'bank alternative' and allow you to leverage A/R assets to maximize cash flow. Many firms can't access traditional bank loans for a business credit line for a variety of reasons - that's why AR financing is so popular. And by the way, that eliminates the need for more equity financing which might dilute ownership.

WHY THE ACCOUNTS RECEIVABLE FINANCING SOLUTION?

Factoring and invoice discounting companies are playing a larger role in the overall climate of business financing - coming off very challenging years (2008-2009) as the global meltdown severely hampered small and medium-sized firms' ability to raise business loan financing for operating capital needs. And let's not talk about COVID/ Pandemics!

ENTER THE ACCOUNTS RECEIVABLE FINANCING PROVIDER

Borrowing via accounts receivable financing is a very simple way of leveraging assets, without taking on additional debt to your balance sheet, and converting accounts receivables into cash - allowing your firm to reduce payable and invest in ongoing growth and profits while covering day-to-day business expenses.

So those are all great positive aspects to working capital benefits - so the question remains to be asked, is there any 'downside'? The reality is that there is no one single perfect solution for any firm considering working capital financing - There are pros and cons to every method of financing your Canadian business.

RECEIVABLES FINANCING & CAVEAT EMPTOR

So the recommendation we provide is simply, 'caveat emptor - or to translate that Latin phrase into plain English - investigate invoice discounting and factoring and determine if the benefits of that type of financing can help you survive and prosper!

When you secure an invoice discounting or factoring facility you have new flexibility in a number of areas - you have additional cash for one thing - never has the phrase 'cash is king' meant so much in today's competitive business environment.

Many Canadian firms have seized the day and taken the global financing challenge head-on and in effect capitalized on invoice financing availability - they have acquired a competitor, merged with a synergistic partner, or in some cases engineered a management buyout. Factoring or invoice discounting and full asset-based lines of credit can assist you in any of those strategies.

More often than not funds acquired through a factoring facility are simply used to reduce payables or help to affect a business turnaround after a firm has had a very difficult year. In some cases, traditional financing has been curtailed, and leverage of cash flow via factoring has emerged as the only option for business survival.

In the direst cases factoring or a full asset-based line of credit has helped many a firm, in fact, survive the bankruptcy or reorganization process. But it's important to know that some of the largest and most successful public and private companies in Canada finance A/R through non-bank alternative finance solutions.

Why does A/R financing work? It's because it immediately frees up cash in your receivables - this helps to increase sales and allows your firm to invest in additional inventory - the cycle, of course, continues as this inventory is again converted into a receivable, generating further profits for your firm.

Many times smaller and medium-sized firms cannot take advantage of the strategies that larger firms utilize to liquidate receivables - they don't have the funds to invest in corporate credit and collection personnel, as well as sophisticated cash management and planning. So, utilizing factoring and invoice discounting issues such as being 'too small, or 'too new a firm‘ holds little relevance.

FINANCING RECEIVABLES

Many Canadian firms adopt formal U.S. or European methods of factoring - careful investigation, best achieved by working with a trusted and credible advisor, will allow you to find a facility that meets your long-term needs. In a perfect world we recommend to clients that they seek a facility that provides maximum loan to value on receivables, can incorporate inventory as some additional component of financing, and, most importantly, allows you to bill and collect your own receivables as your customer pays.

Our recommended solution in receivable loan financing for outstanding invoices from accounts receivable financing companies? It's Confidential Receivable Finance, allowing you to have full control and bill and collect on your receivables, utilizing and paying for the amount of financing you need when you need it and minimizing financing company contact.

CONCLUSION - RECEIVABLE FINANCING SOLUTIONS

Is factoring or invoice discounting the optimal solution for your firm? The accounts receivable financing company application is simple and basic. Weigh the benefits, and speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help you eliminate that 'restless' feeling that comes with funding challenges for small business and medium-sized businesses in Canada and ensure your business growth.

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK

What is AR financing?

Accounts receivable financing allows companies when working with a factoring company to receive early payment on their outstanding invoices via the invoice factoring solution. A company using accounts receivable financing loans from an accounts receivable company to cash flow all or some of its outstanding invoices

The company receives immediate cash as sales are generated which is a huge factor for small businesses who wish to address working capital needs. When it comes to accounts receivable financing vs factoring choices the business owner and manager must assess access to capital versus the cost of capital as this method of financing, while more expensive provides all the cash flow the company needs as it generates sales revenues.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

Invoice Financing AR Finance Receivable Loan |7 Park Avenue Financial