YOUR COMPANY IS LOOKING FOR A/R FINANCING SOLUTIONS!
ACCOUNTS RECEIVABLE FINANCING SOLUTIONS
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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?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Accounts receivable financing in Canada, also known as ' receivable factoring - Rarely does paying proper attention to business details not pay off, and that's what we maintain this method of Cash Flow financing is all about - the ability to get paid as you generate sales for your products and services. And, despite what you perhaps have heard, there’s no real harsh reality here. Let's dig in.
A/R FINANCING VIA FACTORING COMPANIES IS PART OF CANADA'S ASSET BASED LENDING SOLUTIONS
Accounts receivable financing in Canada is really a ' subset ' of what we call asset-based financing in the Canadian business financing marketplace. So why should the Canadian business owner or financial manager pay attention to this financing solution? Only one reason, that this financing allows a cash flow advance to your company as you create sales - so if you believe cash flow and working capital are critical to your business (that's a mantra we NEVER give up on) then you're pretty well on board already.
RECEIVABLE FINANCE IS TYPICALLY NON BANK LENDING
This method of financing is, 99.9% of the time, offered by non-bank lenders. They are commercial finance companies that specialize in providing your firm with a business based accounts receivable line of credit.
LET A/R FINANCE BE YOUR NEW BUSINESS LINE OR CREDIT - BETTER THAN THE BANK? YOU DECIDE!
While this type of facility works in the same manner as the traditional bank line of credit (you supply regular accounts receivable and sales ageing - funds are advanced). One immediate positive difference is that these funds are generally advanced at 90% of your outstanding a/r under 90 days - banks, surprising taking a more conservative approach, (!) advance at only 75%.
DIFFERENT FROM THE BANK
If we had to clearly identify to our clients one major concern most companies have it's the level of involvement of the A/R financier in your business when you borrow under this method. While banks simply register security against your receivable and allow you to borrow funds against a specified limit at your will the A/R financing solution can be described as ' more involved '.
Why is that? One basic reason is that many firms that borrow from banks have a financially stronger financial profile. Firms utilizing AR finance often cannot meet bank criteria for any or all of the borrowing they need.
WHAT IS THE BEST TYPE OF RECEIVABLES FINANCING
So is there actually a way to retain all the benefits of a business line of credit in A/R financing and control full ownership and control of your billing and sales function? There is... and it's called CONFIDENTIAL RECEIVABLE FINANCING. Under this method, your firm retains total command of your cash flow cycle. Bottom line, you're receiving all the benefits of A/R financing while being the master of your own domain - i.e. billing and collecting within our current customer relationships. Your business receives cash typically the same day as you generate
THE COST OF FINANCING
Another key factor, often also becoming a harsh reality, is the fact that Receivable financing from a commercial finance firm is more expensive than bank financing, which of course these days is in the low single digits when it comes to interest rates on business credit facilities.
The size of your AR facility is often a key determinant in pricing. While a small majority of firms in Canada can in fact achieve bank-type pricing on this type of credit facilities the reality is that the overall cost of cash flow financing of receivables from a non-bank finance firm is typically in the 2% per month range. But when you benchmark that against having all the cash you want, and having the ability to take on as much business as you want it’s not the worst tradeoff in the world.
CONCLUSION
Most companies can offset a huge amount of their financing costs on funding their outstanding invoices on the balance sheet by achieving faster asset turnover as well it allows companies to be in a position to take discounts with suppliers now, often equaling the total cost of their borrowing!
So, if you haven’t paid attention to this method of a factoring company solution now just might be the time - it's short term access to immediate cash and financing may just be the fix for the inevitable cash flow crunch.
And employing the services of a trusted, credible and experienced Canadian business financing advisor just might eliminate those harsh realities that were top of mind when it comes to financing accounts receivable in your business.
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Stan Prokop
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