YOU ARE LOOKING FOR ACCOUNTS RECEIVABLE FINANCING / FACTORING FOR CANNABIS RECEIVABLES
A/R FINANCING FOR CANNABIS BUSINESS OWNERS IN CANADA
You've arrived at the correct address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
HOW WILL YOUR COMPANY ACCESS THE CAPITAL YOU NEED TO STAY COMPETITIVE IN CANNABIS
Cannabis Factoring & Cannabis Financing / Funding in Canada is a reliable and proven method of financing and purchasing power for the many financial needs for legal cannabis /commercial marijuana accounts receivables for licensed grow houses, greenhouses and licensed retail stores in Canada.
ALTERNATIVE FINANCING OPTIONS IN THE CANNABIS INDUSTRY WHEN TRADITIONAL BORROWING IS LIMITED
Canadian legislation changes in government cannabis industry policy for cannabis businesses allowed billions of dollars of primarily equity financing to enter Canadian cannabis firms. However, cash flow financing and traditional forms of debt financing have been, for the most part, absent from the needs of the Canadian cannabis operator.
The cost to cover expenses, buy new equipment, and access to debt have been a challenge! That has a lot to do with traditional conservatism and reputation risk in Canada's highly regulated banking industry and business-oriented credit unions.
REGULATORY ISSUES AROUND TRADITIONAL FINANCING
Those ' regulatory' issues at both the federal level and provincial levels make the cannabis business's most valuable asset, its license, not transferrable or able to be collateralized in some manner. Safe to say that such topics as inventory collateralization and federal government security clearances make the matter even more difficult for traditional commercial lenders - providing for some unique challenges.
Licensed and pre-licensed producers can now access, through firms such as 7 Park Avenue Financial alternative financing models such as accounts receivable financing - aka ' factoring' and purchase order financing.
2 KEY BENEFITS OF ALTERNATIVE FINANCING FOR LICENSED MARIJUANA COMPANIES
The key benefit of these forms of financing are two-fold :
1. Cash Flow
2. Maintaining owner equity without additional dilution (non-dilutive)
FINANCING GROWTH VIA CANNABIS FACTORING FINANCE - ELIMINATING CASH FLOW CHALLENGES
Working capital/cash flow financing helps finance growth! The upfront funding of sales as cannabis operators generate revenues allows for cash expenditures on other parts of your business, such as infrastructure/employees/marketing, inventory, etc.
Adequate financing of sales revenues allows owners to map out in a timely manner cash flow to production, and, as importantly, this type of financing brings no term debt to the balance sheet.
HOW DOES CANNABIS FACTORING WORK?
There are some basic financing receivables for a cannabis company operating legally in Canada's respective provinces/provinces.
Companies should be able to provide proper paperwork for factoring companies around purchase orders and invoices and client agreements. Copies of bank statements which show cash inflows are also recommended.
Your customers must be generally deemed ' creditworthy.' Issues such as credit score for principals of cannabis companies do not really apply here, unlike more traditional financing
HOW DOES INVOICE FINANCING / FACTORING YOUR RECEIVABLES ELIMINATE THE CASH CRUNCH?
Here at 7 Park Avenue Financial, we're the biggest fans of that tried and true saying ' Cash is King'! Using Invoice purchasing finance to sell cannabis products ensure your sales will not come to outpace your cash inflows. Allowing that to happen forces firms to invest more and more capital in accounts receivables and inventories.
Companies that are forced to pay suppliers upfront for specific products or services create cash flow management challenges.
Many of these challenges come from the simple timing around licensing issues, overheads, growing product .. and ... oh yes - Getting Paid!
Keeping a company afloat under those issues becomes Job 1! Even healthy gross margins can't stop a potential business crisis in those conditions.
HOW DOES CANNABIS FACTORING OF RECEIVABLES WORK?
Cannabis producers can now take advantage of short-term financing via invoice financing/invoice factoring. Typical transactions allow the producer to immediately receive a large portion of the invoice ( typically 80-90%) on invoice generation. Your firm gets the balance of the invoice amount when your client pays the invoice - less financing costs which tend to be in the 1-3% range - these costs are quoted as a fee, not as an interest rate.
Your factoring facility becomes a line of credit, and cannabis growers will be pleased to know that there is virtually no minimum or maximum dollar amount under your factor finance facility. At 7 Park Avenue Financial, we are not big fans of locked-in contracts or long-term commitments, and borrowers can expect that our goal is to achieve the lowest cost of financing possible.
Increasing the probability of your funding approval significantly. The low credit risk makes factoring almost the most popular financing mechanism given the low chance of provincial governments or significant pharmacy chains. Since the clients are always a government entity, the issue of client credit and history becomes more of a non-event...
CANNABIS PRODUCERS USE SHORT TERM FINANCING AS A ROAD BACK TO TRADITIONAL FUNDING
In general, invoice finance and factoring have never been viewed as long-term solutions. It's the goal of most firms to search for a bridge back to traditional financing.
We can't overemphasize to new clients at 7 Park Avenue Financial that getting the financing you need in the early stages of your business is critical - allowing you to have as close to a ' normal' cash cycle as you can manage. In some cases, a business plan is a solid accompaniment to your financing search - traditional or alternative. This will help with proper due diligence on your transaction.
Your business's ability to establish a ' borrowing base' backed by receivables will be the cornerstone of your receivable financing arrangement. Cannabis producers are generally unable to finance inventory, so growth capital via a/r financing becomes invaluable. Alternative financial solutions provide the financing that more traditional businesses have access to.
The purchase order financing solution we referred to becomes a way to fill multiple or large customer orders and meet cash flow goals - and the application process is simple.
The grower's ability to focus on asset turnover and lower days sales outstanding is a key success component of any company, large and small.
In most cases where companies want and need a collection policy based on professional customer service standards, the right factoring company/ partner enhances your company's reputation. It's a true win/win when receivables are financed and collected promptly, allowing you to grow revenues in your products and services. Simultaneously, some cannabis growers might have potential real estate to leverage as equity or collateral; that certainly is not the case for many firms - not to mention that growers have other pressing financing needs such as equipment capital and technology.
THE CAPITAL DEMANDS ON THE CANNABIS INDUSTRY
Effective receivables financing if your cash flow bridge to financial health - allowing owners and managers to focus on expansion. Growers are typically looking forward and focus on additional land expansion, equipment financing, green energy systems/HVAC and leasehold improvements and security systems. This necessity for capital for small businesses only emphasizes the need for strong a/r turnover and monetizing sales via factoring as a funding alternative.
CONCLUSION - CANNABIS FACTORING ACCOUNTS RECEIVABLE FINANCING & INVOICE DISCOUNTING
Invoice financing is an excellent opportunity for cannabis business owners to manage cash flow and fund new opportunities via cannabis business loans / cannabis invoice factoring - This type of credit offers quick access to business credit with flexibility - with funds typically received within 1 day of when a business generates an invoice a client via the early payment under cannabis receivable finance.
If you're focused on improving financing via Cannabis Factoring & Cannabis Financing Funding in Canada speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor that can assist you with your cannabis finance needs around financing solutions for cash flow. This third-party funding option is your safe bet toward financial success.
FAQ:FREQUENTLY ASKED QUESTIONS/MORE INFORMATION/PEOPLE ALSO ASK
What is cannabis factoring?
Cannabis receivable financing uses your receivables to access the money your customers owe - that early payment allows the producer to no longer wait for clients to pay -
What is the cost of cannabis financing for accounts receivables?
The cost of factoring and financing your receivables will fluctuate but will typically between 1-3% of the invoice value, so licensed producers should have good gross margins that will absorb the financing costs from the cannabis lender/financier- Receivables factoring has different factors that affect pricing include overall credit quality of the business, client credit worthiness, invoice size and the average age of the receivables with respect to the collection period and terms of payment .
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