YOUR COMPANY IS LOOKING FOR RECEIVABLE FINANCE!
WORKING WITH ACCOUNTS RECEIVABLE FINANCING COMPANIES
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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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"Receivable finance is not just about managing cash flow; it's about unlocking the potential within your business and accelerating growth." - John Sculley, former CEO of Apple.
Unlock your business's hidden cash potential with receivable finance – turn invoices into instant capital!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Receivable Finance and working capital solutions – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Receivable Finance in Canada
Receivable finance in Canada is a financial arrangement in which a lender advances a portion of the value of unpaid invoices in exchange for a fee. This is known as accounts receivable financing.
It’s also known as the business invoice-to-cash strategy. Who wouldn’t want the real deal on what’s happening in accounts receivable A/R financing in Canada… how it works, who to deal with, what to watch out for, etc.?
WHAT IS RECEIVABLES FINANCE?
Receivable finance allows a business to fund its sales outstanding invoices based on invoices they have issued to clients that are fully earned - meaning, of course, that the company has shipped its product or provided a service.
Businesses can use their company's accounts receivable as collateral to secure loans, emphasizing the financial implications and options available. Financing the accounts receivable invoice with a commercial lender solves the challenge of waiting for cash flow.
DOES YOUR COMPANY HAVE A CASH FLOW STRATEGY?
Maybe it’s just us, but we notice a certain discomfort among Canadian business owners and financial managers regarding their ability to feel 100% comfortable with their overall cash flow financing strategy.
Regarding accounts receivable financing, can the average Canadian business owner or financial manager say they understand the benefits, costs, and potential disadvantages of a business invoice-to-cash strategy? Not really, in our opinion.
Outstanding invoices are recorded as assets on a company's balance sheet and are crucial in evaluating a company's liquidity and quick ratio.
The time to properly consider such a strategy is when your business is still under control regarding the overall working capital strategy.
When you don’t feel in control, you tend to feel totally uncomfortable acquiring new assets, making on-time payments to suppliers and lessors, or worrying about how you will manage growth.
TAKE TIME TO UNDERSTAND THE TRUE COST OF RECEIVABLE FINANCE
Cost tends to always be the main discussion point when discussing A/R financing with clients. The issue is simply that, in many cases, the business owner is not comparing apples to apples.
Receivable financing accounts allow businesses to use their unpaid invoices as collateral to secure immediate cash, enhancing cash flow by turning accounts receivable into liquidity.
Why is that, then? Simply because the business person makes his or her total decision incorrectly based on the ‘ discounting fee ‘implied in the cost of A/R finance.
MISCELLANEOUS FEES AND COSTS CAN ADD UP
Oh, and by the way, if you are dealing with the wrong company in Canada, you can get blindsided by numerous miscellaneous charges that really add up. These include service fees, an admin fee, a renewal fee, and a utilization fee, and, believe it or not, many of these firms require that you pay them to leave!
Factoring companies specialize in providing financing solutions by purchasing accounts receivable and often handle collections, helping businesses preserve their time and resources. Talk about the importance of dealing with the right firm!
ALTERNATIVE TO ACCOUNTS RECEIVABLE FINANCING
Accounts receivable financing vs invoice factoring
When considering the A/R finance strategy, it is good, though, to compare it to the alternatives when it comes to benefits. Unlike a bank facility, which many firms can’t qualify for anyway, the business invoice-to-cash strategy has virtually an unlimited cap when it comes to access to cash.
Partnering with a factoring company can provide cash flow solutions but may also complicate client relationships and reputations, emphasizing the dual nature of benefits and potential drawbacks.
As most business people know, banks in Canada have pre-set limits on bank facilities. We can comfortably say that you are only constrained by your ability to make sales when considering accounts receivable financing, which isn’t the worst problem.
In effect, you have closed the cash flow flexibility gap and financed the balance sheet.
Our recommended facility is the confidential invoice financing one. Here, you get to bill and collect your A/R while achieving all the other benefits. It’s true receivables financing.
KEY TAKEAWAYS
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Invoice factoring: Selling unpaid invoices to a third party at a discount for immediate cash
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Cash flow forecasting: Predicting future financial positions to make informed decisions
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Credit risk assessment: Evaluating customers’ ability to pay invoices on time
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Working capital optimization: Balancing current assets and liabilities for operational efficiency
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Technology integration: Implementing digital solutions to streamline receivables
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Management processes
Uncommon takes on Receivable Finance:
- Receivable finance as a strategic tool for negotiating better supplier terms
- Using receivable finance to accelerate digital transformation initiatives
- Leveraging receivable finance to enter new markets and expand globally
CONCLUSION
Factoring accounts receivable and your trade receivables?
Are you confused about who to deal with and how it works when it comes to receivable financing?
One way to achieve the real deal on what’s happening in Canadian business financing?
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor ... today!!
Accounts receivables are essential for providing businesses quick access to cash by leveraging their outstanding invoices.
FAQ
How does receivable finance improve cash flow?
Receivable finance converts unpaid invoices into immediate cash, bridging the gap between sales and payment collection. This enhances liquidity and provides steady working capital for day-to-day operations and growth initiatives.
What types of businesses can benefit from receivable finance?
Any business that invoices customers and experiences payment delays can benefit. This includes manufacturers, wholesalers, service providers, and startups with solid accounts receivable portfolios.
Can receivable finance help my business during seasonal fluctuations?
Absolutely. Receivable finance provides flexibility to manage cash flow during slow seasons or high-growth periods, ensuring your business maintains financial stability throughout the year.
How quickly can I access funds through receivable finance?
You can typically access funds within 24-48 hours of invoice submission with receivable finance. This rapid turnaround time allows for quick decision-making and seizing time-sensitive opportunities.
Is receivable finance more advantageous than traditional bank loans?
Receivable finance offers more flexibility and faster access to funds than traditional loans. It also doesn’t add debt to your balance sheet, as you’re leveraging your own assets rather than borrowing.
What is the difference between receivable finance and invoice factoring?
Receivable finance is a broader term encompassing various methods of using accounts receivable as collateral. Invoice factoring is a specific type of receivable finance where you sell your invoices to a factor at a discount for immediate cash.
How does the cost of receivable finance compare to other financing options?
Receivable finance typically includes a fee based on the invoice amount and the time until payment. While it may seem higher than traditional loans, it often provides more value through improved cash flow and reduced administrative burden.
Will my customers know I’m using receivable finance?
This depends on the type of receivable finance you choose. Some methods, like invoice factoring, may involve notifying customers, while others, such as invoice discounting, can be confidential.
What information do I need to provide to secure receivable finance?
Typically, you must provide your accounts receivable aging report, customer information, and business financial statements. The financier will assess the quality of your invoices and your customer’s creditworthiness.
Are there any industries that are not eligible for receivable finance?
While most industries can use receivable finance, some financiers may restrict it to specific high-risk sectors or businesses with primarily consumer clientele.
How does receivable finance impact my business’s credit rating?
Receivable finance generally doesn’t affect your business credit rating as it’s not a loan. It can improve your rating by enhancing cash flow and enabling timely supplier payments.
What are the key factors to consider when choosing a receivable finance provider?
Consider the provider’s experience in your industry, fee structure, advance rates, technology platform, and additional services like credit checks or collections support. Also, evaluate their reputation and customer service quality.
Can receivable finance be combined with other financing methods?
Yes, receivable finance can often be used with other financing methods like lines of credit or equipment financing. This allows for a more comprehensive funding strategy tailored to your business needs.
