Receivable FInancing Factoring Factor Company Working Capital Solutions In Canada

YOUR COMPANY IS LOOKING FOR A/R FINANCE SOLUTIONS

ACCOUNTS RECEIVABLE FINANCING SOLUTIONS

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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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EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

factoring receivables accounts receivable financing factoring financing solutions

Receivable financing factoring is a fairly simple process of funding working capital needs. The process? It's as follows - As you generate sales and invoice your clients for goods and services you have delivered ( Yes, service companies can also be financed in this manner!) your finance factor company buys those from you based on an agreement being in place to do so.

HOW DOES FACTORING WORK? WHAT IS THE COST OF FINANCING ACCOUNTS RECEIVABLE FROM A FACTOR COMPANY?

You typically receive 90% of your funds the same day or within 24 hours, the balance is remitted to you as soon as your client pays, less finance costs. In Canada, these costs average 1.5 - 2% per month - that is a fee and not an interest rate! (Various criteria affect your rate, more about that later). The factoring fee is an oft-misunderstood issue in a/r finance.

WHAT IS THE BEST TYPE OF FACTORING FACILITY

In Canada, the majority (99.9% is pretty well a majority don't you think) require that payments by your clients go directly to the factoring company. We're not big fans of that scenario, so that's why our recommended and preferred solution to clients is a CONFIDENTIAL RECEIVABLE FINANCING facility, allowing your firm to bill and collect your own A/R. That is our opinion is the optimal solution.

A CLOSER LOOK AT FACTORING RATES

Back to those accounts receivable financing rates, which tend to be a point of major discussion when we're facilitating this type of solution? Your overall rates are generally based on the following criteria - the size of your receivables is one. However, make sure you understand that if you're dealing with the right firm you are not required to finance your entire A/R portfolio all the time. You choose when you want to fund and in what amount. And that of course means you only pay for what you use. That's a good solution, right? It's a solid alternative to the traditional line of credit and a great way to finance the balance sheet for business growth.

OTHER FACTORS AFFECTING ACCOUNTS RECEIVABLE FINANCING PRICING

Other factors that affect pricing include the general quality of your customer base, the number of clients you have, average invoice sizes over time, and the overall quality of both your own firm’s finances as well as your client’s general reputation. That’s a lot of qualifiers but in almost all cases unless your company is in a death spiral you will get the financing you need. That's why accounts receivable finance is a clear alternative when traditional bank financing is not available.

The thing about accounts receivable finance is being educated on who to deal with, it's one form of business finance where a ' word to the wise ' is a valuable gift! Many Canadian business owners and financial managers are intrigued by f factoring; they simply don’t have enough quality information to digest why it might work for them.

KEY ISSUES TO CONSIDER IN A/R FINANCING / ACCOUNTS RECEIVABLE FACTORING

When we sit down with clients we talk about a number of key issues in the whole A/R financing process.

That includes the 9 key issues -

1.Benefits of Factoring /Accounts Receivable Financing Accounts & Factoring finance

2.The value of an advisor or consultant

3.Cost of Receivables Factoring & Understanding how factoring fees are applied

4.Due diligence required to set up a facility/importance of owner credit history

5.Tips and tricks to enhance maximum cash flow via invoice factoring

6.Your firms newfound ability to take on larger business

7.Why negative perceptions of this type of finance abound

8.Accounting/banking issues that come with this type of short term business funding facility

9. The merits of non-recourse factoring versus recourse factoring

CONCLUSION

If you're looking for the straight goods on dealing with an asset-based factor company seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow needs.