YOUR COMPANY IS LOOKING FOR RECEIVABLE FINANCING!
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?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
AR Finance revolutionizes the way businesses manage and forecast their financial health.
Unlock your business potential with smarter cash flow solutions through AR Finance.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer AR FINANCE solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
INTRODUCTION
Receivable financing in Canada. Is there a comparison here between AR financing funding and fine wine? We think there is, and it's pretty simple... Ageing is good for fine wine... it's not really that great for your receivables!
AR Financing unlocks untapped potential for business growth and cash flow solutions. Accounts receivable funding leverages accounts receivables to streamline cash flows while helping to minimize credit risks and enhance a company's ability to predict cash
IS THERE A BENEFIT TO FINANCING RECEIVABLES?
New clients at 7 Park Avenue Financial enquire of us as to whether it is advantageous for a company to finance its receivables. The bottom line is that if your company is having trouble achieving the growth opportunities you need to grow sales and profits and lack of cash flow is a key reason why then a commercial a/f financing program outside of the bank is probably your best solution.
Let's examine why invoice financing is a solid solution for working capital for Canadian businesses. And like our wine analogy, here's another shocker..... You don’t have to take on debt all the time when you want to grow your business!
THE ACCELERATION OF WORKING CAPITAL VIA ACCOUNTS RECEIVABLE MONETIZATION
Invoice financing in Canada, when properly structured and with the right party allows you to grow your business when that growth results in revenues and the resulting A/R that accelerates your need for working capital.
In a perfect world, you want to strive to be able to address these sorts of issues proactively before having cash flow financing challenges.
4 KEY ISSUES AROUND SUCCESSFULLY OBTAINING AR FINANCE SOLUTIONS
So how does that solution work and how do the Canadian business owner and financial manager go about securing Accounts Receivable Financing? It's really about a simple process, on an ongoing basis, of the sale of your receivables as you generate sales. The factors that affect your ability to complete an A/R invoice finance program are
1. Size and nature of your customer base,
2. General quality or creditworthiness of your customer base
3. Particular conditions revolving around your industry - for example - ' construction industry factoring'
4. Your overall company credit profile
What most Canadian business owners don’t realize is that there are several... let’s call them 'flavours' when it comes to this method of finance.
Unlike bank lines of credit accounts receivable facilities operate differently.
In a bank scenario, your receivables are in effect collateralized and form the backbone of your borrowing base via your balance sheet in Canada... it becomes a question of picking the type of facility and factoring company that works best for you. Factoring in effect becomes your business line of credit.
Essentially these agreements can be called Receivable Purchase Agreements, allowing you to cash flow your accounts receivable on an ongoing basis by ' selling' your sales to the finance company. Your firm is of course still owed the money for the goods or services.
While 99% of invoice financing companies in Canada either prefer or mandate your company to have your client made directly to them after they have financed the receivable you do have the ability to bill and collect your receivables.
We term this a confidential invoice finance facility and it's generally available to a firm that has facilities over 250k on an ongoing basis, providing you with access to cash and all the benefits of ' traditional ' .. dare we say it ' old school ' AR finance.
A/R FINANCING IS A BRIDGE BACK TO TRADITIONAL CANADIAN BUSINESS FINANCING
Invoice finance quite often is the first type of finance that many firms enter into when they are in a start-up or early-stage mode. Over time many graduate to a Chartered banking relationship and it's important to note that when banks are not able to service a firm for growth or other reasons accounts receivable finance solutions make a lot of sense.
SOME OTHER BENEFITS OF INVOICE FINANCE
The benefits of invoice finance are quite clear - it provides you with immediate working capital and cash flow when you can't meet the requirements of a bank facility.
Oh, and by the way, your limit on this method of financing.....? It's pretty well unlimited, as the size of your facility is typically based on your receivables and growth. That is NOT the case with a bank.
One misunderstanding around invoice finance is that you are required to finance all your receivables, all the time. Not the case, it's your choice when and how much you wish to draw based on your business needs.
KEY TAKEAWAYS
Accounts Receivable Management - Central to Accounts receivables Finance, this involves strategies to accelerate collections and reduce days sales outstanding.
Cash Flow Optimization - Techniques that ensure liquidity through faster turnover of receivables.
Credit Risk Assessment - Evaluating the creditworthiness of clients to mitigate risks associated with defaults.
Financial Forecasting - Using historical data to predict future financial conditions and cash flows. Invoice Factoring - Selling outstanding invoices to a third party at a discount for immediate cash.
CONCLUSION
The cost of invoice factoring receivables in a receivable finance facility is often misunderstood by borrowers. Interest rates are replaced by fees, which, if your collection terms are 30 days that worksout to 1.5-1.75 % ( that final rate depends on several factors ).
Your firm only pays the fee once your client has paid. If a company has good gross margins your firm can easily sustain an additional 1 or 2% reduction in profit when the corresponding benefit is immediate cash! This is short-term funding for your day-to-day operations and brings no debt to the balance sheet.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in structuring a proper accounts receivable financing solution for cash flow needs.
A 7 Park Avenue Financial we focus on ensuring our clients have the best factoring company working for them via a vis the type of facility they need. Receivable financing ar finance invoice funding solutions can take your business to the next stage of success.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
How does AR Finance improve cash flow?
By expediting the collection of accounts receivable, AR Finance ensures quicker cash inflow, improving overall liquidity.
What are the risks associated with AR Finance?
The primary risk involves the potential default on receivables, but proper credit assessments can mitigate this.
Can AR Finance help in financial forecasting?
Yes, it provides accurate data that enhances the prediction of future cash flows and financial health.
How does AR Finance differ from traditional financing?
It focuses on leveraging existing receivables rather than acquiring new debt, making it a more direct financial management tool.
What industries benefit most from AR Finance?
Industries with long invoice cycles, like manufacturing and wholesale, see significant benefits from improved cash flow management.
What is invoice factoring?
It is a financial transaction where a business sells its invoices to a third party at a discount for immediate cash.
Are there any compliance considerations in AR Finance?
Yes, businesses must adhere to financial regulations and standards, which can vary by region and industry.
What is the typical duration for an AR Finance agreement?
Terms vary, but most agreements revolve around the credit terms extended to customers, typically 30 to 90 days. In some cases a single account receivable can be funded, that is called ' spot factoring'.
How does AR Finance impact business credit?
If managed properly, it can improve creditworthiness by demonstrating effective cash flow management and debt handling around obligations such as accounts payable - that's why its important to understand how accounts receivable financing work flow is key.
How does AR Finance support seasonal businesses?
By providing faster access to cash for unpaid invoices around a company's accounts receivable during peak sales periods, accounts receivable financing companies help to manage operational costs and capitalize on market opportunities.
What is the first step in implementing AR Funding?
Assessing the current accounts receivable process and identifying potential inefficiencies is crucial for effective implementation.
How can AR Financing be a strategic tool in financial planning?
By providing reliable cash flow, it allows businesses to plan for investments and growth initiatives with greater confidence.
