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From Receivables to Cash: Transforming Your Business with Invoice Financing
Solving Cash Flow Crunches: The Role of Invoice Financing Companies
YOUR COMPANY IS LOOKING FOR CANADIAN INVOICE CASH (Factoring) 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?
CONTACT US - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
"Invoice financing offers a lifeline to businesses, providing immediate access to cash by leveraging unpaid invoices as collateral."
"Struggling to maintain cash flow? Invoice financing could be the solution you've been searching for."
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer INVOICE FINANCING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Unlocking Financial Potential with Invoice Financing
Accounts receivable financing, known as factoring, is the AR to invoice cash conversion process and is a solid financing solution to cash flow pressures.
As a Canadian business owner, you, in fact, feel that pressure every day - one business owner we at 7 Park Avenue Financial know, who has had his business for over 30 years says you aren’t an entrepreneur until you have 'sweated a payroll' - which of course meets rising to the challenge of meeting that key payroll requirement for your employees.
Here's where a factoring finance solution might just work, and here's how and why.
Addressing Working Capital Challenges
Invoice cash - How can Canadian companies address the problem of growth and lack of working capital when it comes to factoring accounts receivable? The majority of any firm’s liquid assets are tied up in accounts receivable. Over the years customers that paid in 30 days now take 60 or 90 days to pay your firm. This then places tremendous pressure on working capital. That's the problem - is there a solution?
Evaluating Working Capital Tightening
How can a Canadian business owner or financial manager determine when working capital is tightening? They are some very basic calculations you can perform. There are several great indicators you can monitor - here is one - it’s the ' Collection Period ‘. That's also known as your DSO.
Calculating Your Collection Period
Simply take your accounts receivable and divide you your average daily credit sales the longer your Collection period number is the greater attention you need to pay to working capital. Receivables are a huge component of working capital.
So what if you had a solution to obtain all the working capital you needed based on current and projected sales growth?
Exploring the Origins of Factoring in Canada
That solution is invoice cash, or the immediate factoring or discounting of your accounts receivable. If you have no bank line with a Canadian chartered bank, by sacrificing a couple of percentage points in your gross margin, you can immediately monetize your accounts receivable via the invoice financing company solution.
The ' challenge ' - if we can call it that, in the Canadian marketplace is simply setting up the right invoice cash facility. We advise our clients to focus on a 'non-notification' facility when it comes to invoice factoring company solutions.
Optimizing Factoring Facilities
Factoring, or invoice cash, or accounts receivable discounting, came to Canada via the U.S. and Europe, where the process has been in practice hundreds of years. Canadian business owners are less willing to turn over their accounts receivable function to a third-party finance firm.
Embracing Non-Notification Solutions
We therefore focus on non-notification solutions for clients - a financing facility where you can bill and collect your own receivables, and still get daily, weekly, or monthly advances (It's your choice) on your accounts receivables.
Maximizing Financial Options
An even better option is to marry an invoice cash facility with an inventory financing facility - you'll be able to finance your inventory also. That means only one more thing - additional cash flow and working capital
Key Takeaways
Types of Invoice Financing: Understand the different methods like factoring, discounting, and spot factoring.
Invoice Financing Process: Learn how it works from submission to funding when the customer pays
Benefits of Invoice Financing: Explore advantages such as improved cash flow, flexibility, and risk mitigation.
Eligibility Criteria: Know the requirements for qualification, including creditworthiness and invoice quality. The difference between invoice financing and bank financing is that a/r financing is easier to obtain.
Risks and Considerations: Recognize potential drawbacks in receivables financing such as financing cost, customer perception, and dependence on invoices.
Conclusion
Call 7 Park Avenue Financial, an experienced, trusted business financing advisor on your options for Invoice Cash, also known as accounts receivable factoring, in Canada. Putting together the right type of facility will allow you to generate the needed working capital and cash flow to run (and grow!) your business.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What is invoice finance, and how does invoice financing work?
Invoice financing is a funding solution where businesses sell their outstanding invoices to a third-party lender at a discount in exchange for immediate cash. This helps businesses access funds quickly instead of waiting for customers to pay their invoices.
What are the benefits of invoice financing for businesses?
Invoice financing offers several benefits, including improved cash flow, faster access to working capital, flexibility to meet financial obligations, and the ability to seize growth opportunities without taking on additional debt.
Is invoice financing suitable for my business?
Invoice financing is ideal for businesses with outstanding invoices from creditworthy customers. It can be particularly beneficial for businesses experiencing cash flow challenges or looking to accelerate growth but facing delays in receiving payments due to unpaid invoice scenarios.
How do lenders determine the amount of funding available through invoice financing?
Lenders typically assess the creditworthiness of the business's customers rather than the business itself. The funding amount is based on the value of the outstanding invoices and the likelihood of timely payment by customers.
What are the costs associated with invoice financing?
Invoice discounting, aka invoice factoring cost varies depending on factors such as the lender's fees, discount rates, and the creditworthiness of the business's customers. It's essential to compare offers on invoice financing cost from different lenders and consider the overall cost-effectiveness of the financing solution.
How quickly can I access funds through invoice financing?
The speed of funding largely depends on the lender and the efficiency of the application process. Some lenders offer same-day funding, while others may take a few days to approve and disburse funds.
Can I choose which invoices to finance?
Yes, invoice factoring advantages include the fact that most invoice factoring providers allow businesses to select which invoices they want to finance. This flexibility enables businesses to manage their cash flow according to their specific needs and priorities.
What happens if my customers fail to pay their invoices?
In the event of non-payment by customers, the responsibility for collecting payment typically remains with the business, not the factoring company . However, some invoice financing agreements may include recourse or non-recourse provisions, which determine whether the business is liable for unpaid invoices.
Is invoice financing risky?
Yes, invoice financing carries some level of risk when dealing with invoice factoring companies, like any financial arrangement. Risks may include potential non-payment by customers, extended payment terms , dependency on invoice quality, and costs associated with the financing.
What is another name for invoice financing?
Another name for invoice financing is accounts receivable financing.
What is the difference between factoring and invoice financing?
Factoring and invoice financing are similar but differ in certain aspects. Factoring involves selling accounts receivable to a third party at a discount, with the third party responsible for collecting payment. Invoice financing, on the other hand, involves using unpaid invoices as collateral for a loan, with the borrower responsible for collecting payment from customers. Both solutions solve cash flow issues with a traditional business loan.
' Canadian Business Financing With The Intelligent Use Of Experience '
STAN PROKOP
7 Park Avenue Financial/Copyright/2024
Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil
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