YOUR COMPANY IS LOOKING FOR BUSINESS RECEIVABLE FINANCING!
ACCOUNTS RECEIVABLE FINANCING / RECEIVABLES FINANCE SOLUTIONS IN CANADA
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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
Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Receivable services ( often known as factoring ) related to purchasing financing are often a major point of discussion when it comes to two areas of consideration - how they work on a day-to-day basis, and of course... pricing.
HOW DOES AN AR FINANCE SERVICE WORK?
Some might say there are some rough waters related to this aspect of Canadian business working capital financing. We've got some thoughts on pricing, but our real focus on AR finance today is really how a facility works. Let's dig in.
A/R FACTORING SOLUTIONS ARE THE MOST POPULAR NON-BANK TYPE OF FINANCING TODAY
Many clients we talk to are not aware of the growing popularity of receivable finance and a factoring company - and it's a worldwide movement, by the way - if anything, Canada was a bit late to the game. Confusion often exists in the business owner/financial manager's mind related to the differences in financing your accounts receivable via the bank or a third-party commercial finance firm.
We can say somewhat ' tongue in cheek ' that one of those differences is approval, by the way!. But putting aside getting approved, the real difference is how these financing company facilities work.
WHAT IS THE DIFFERENCE BETWEEN BANK AND NON-BANK RECEIVABLE FUNDING?
The words ' purchase ' and ' collateral ' are key in understanding the financing differences. In the case of a Canadian chartered bank, it takes your accounts receivable as collateral under a borrowing agreement. The paperwork around receivable financing in effect states you sell your A/R as opposed to collateralizing it. That's the key difference.
A KEY BENEFIT OF RECEIVABLES FINANCING
One benefit of receivable services is that you can utilize them on an ongoing basis for all your accounts, all the time, or if you choose, you can selectively only utilize what you need at any given time. In fairness, that, of course, also exists at the bank under their facility - in both cases, you are only paying for what you use.
OLD SCHOOL FACTORING REQUIRES NOTIFICATION
For 99% of all purchase financing of receivables, there is a requirement that your client be 'notified ' of the financing arrangement. This creates those ' rough waters ' for many business owners as they don't necessarily like to have the world see how they are financing their business, much less their competitors.
WHAT IS THE BEST TYPE OF FACTORING - IT'S CONFIDENTIAL!
So can the owner/manager seeking cash flow financing avoid that whole issue of notification? The answer is a resounding ' YES YOU CAN ' - and that is achieved via Confidential Accounts Receivable Financing.
HOW DOES A/R RECEIVABLES FINANCE FACTORING WORK AND WHAT IS THE COST
How does that work, then? It's pretty basic - your firm and your firm alone are responsible for billing and collecting your own invoices. Naturally, the better you are at extending credit, and managing asset turnover in receivables lowers the overall cost of this method of financing. (These costs can be reduced big time in other ways - including your newfound ability to take discounts with suppliers as well as the opportunity to negotiate better pricing with suppliers based on payment terms and ability)
WHAT ARE THE QUALIFICATIONS FOR CONFIDENTIAL ACCOUNTS RECEIVABLE FINANCING SOLUTIONS
Confidential accounts receivable financing qualifications are still the same - your customers must be inside North America. You must have the ability to produce regular financial. Your business must be in a steady or upward spiral as opposed to ' downward '! Financing companies provide short-term funding via a factoring solution by a simple paperwork process as your business sell receivables as you generate sales.
CONCLUSION
Accounts receivables' purchase financing of receivables makes total sense when you cannot achieve the cash flow and working capital needs via a bank or owner equity. It's the right way to finance the balance sheet for funding you need regarding your investment in outstanding invoices. To review how things work, costs, and benefits, consider seeking out and speaking to a trusted, credible, and experienced Canadian business financing advisor who can help you navigate rough waters in accounts receivables loans financing considerations for your company.
Click here for the business finance track record of 7 Park Avenue Financial.
Stan Prokop
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