Receivable Lending Solutions for Canadian Businesses | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR CANADIAN BUSINESS CASH FLOW FINANCING

ACCOUNTS RECEIVABLE FACTORING SOLUTIONS WORK! HERE'S WHY AND HOW!

 UPDATED 05/31/2025 

You've arrived at the correct address! Welcome to 7 Park Avenue Financial

        Financing & Cash flow are the most significant issues facing businesses today 

                              ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CONTACT US 

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

ACCOUNT RECEIVABLE FINANCING VS FACTORING  

Accounts receivable financing alternatives were virtually close to unheard of some years back.

How did  'cash flow factoring' become so popular and fast-growing for business owners and financial managers who need to access working capital funding for trade receivables in their businesses when a traditional bank loan financing arrangement is not available. Let's dig in.

From Invoice to Cash: Solving Your Cash Flow Crisis 

Cash flow gaps kill businesses faster than a lack of profit. You're sitting on thousands in unpaid invoices while bills pile up and opportunities slip away.

Traditional bank loans take weeks with mountains of paperwork.

Let the 7 Park Avenue Financial team be your financing partner and show you how Receivable lending converts your outstanding invoices into immediate cash within 24-48 hours, keeping your business moving forward.

ARE YOU ABLE TO ACCESS ALL THE TRADITIONAL FINANCING YOU NEED  

Suppose your firm does not have traditional financing in place with a Canadian chartered bank or can't negotiate that financing.

You are forced to explore alternative working capital solutions for accounts payable and other commitments through a firm, such as an accounts receivable factoring company for invoice amount funding.

RECOURSE OR NON-RECOURSE? FINANCING CREDIT RISK  

When factoring receivables, you can choose between non recourse factoring or recourse factoring, depending on how you wish to manage traditional client credit risk.

With factoring of receivables with recourse, you assume your normal credit risk on the transaction. In recourse factoring, your firm sells its receivables and still has a liability to the factoring company if receivables prove uncollectible.

When factoring accounts receivable without recourse, the company transfers credit risk to the factoring company.

Factoring costs for financing accounts receivable will vary based on the type of solution you choose. Financial accounting and factoring company charges are easy to understand, and your accountant can clarify the difference between a business loan/bank loan versus a/r finance.

ACCOUNTS RECEIVABLE FINANCING COMPANIES  

How long does it take to put an A/R financing solution in Canada with finance companies/factoring companies?

Suppose you are well-researched or use the services of a trusted and credible experienced advisor. In that case, our experience is that you access that type of facility within a couple of weeks.

This is significantly less time than it might take you to negotiate traditional bank type financing or a working capital term loan with a banking/credit union or other conventional sources of capital.

So why then are owners/managers looking at this type of solution via receivable factoring for their growth and operating needs?

While historically, some industries have used the financing more than others, we can safely say that almost every industry in Canada is currently utilizing this financing solution, simply because a company sells its a/r.

When a business sells, its a/r is similar to assigning your receivables to a bank - the paperwork is merely different in the financial transaction. The interest expense is reflected in your financial statements.

A KEY REASON TO CONSIDER FUNDING RECEIVABLES    

The most typical firm will often be one with expansion capital needs or is simply growing too quickly.

It is somewhat ironic that banks and more traditional lenders frown on hyper-growth because of the imbalance in changes in working capital accounts; therefore, invoice factoring becomes a potential solution.

The bottom line is that a company is forced to carry more accounts receivable and inventories. That issue, though, is the simple reason that working capital funders like your business growth, more assets to finance

In some cases, factoring can be a temporary ' stop-gap ' solid in financial distress or restructuring - generally, firms in this category use factoring for some time and then gravitate back to a more traditional type of financing.

UNDERSTANDING FACTORING COSTS

Many clients we meet and speak to want to discuss their perceptions that factoring is a ' costly ' method of financing for the factoring fee/costs. Congratulations!  You are 100% correct and 100% incorrect!

While the face value cost of financing your receivables in a factoring solution might seem much higher than bank rates, let’s make sure to cover a few key points.

First of all, it costs you to carry your accounts receivable. We meet with customers who sell on thirty-day terms and constantly tell us they are waiting 60 and 90 days to collect their receivables.

Remember that savvy business owners comprehend the cost of carrying those receivables.

All of a sudden, factoring seems a bit less expensive.  Also, consider this scenario: do you want to sell your product or service once and wait 60 to 90 days to collect your funds?

Or ... would you rather sell your product or service, get paid the same day for those goods (that’s what factoring does), and then reinvest those funds into more goods, allowing you to bill your customer and generate more revenue and profit?

Firms with respectable gross and net profit margins can fairly easily absorb the additional costs of A/R finance via a non-bank commercial lender. 

If you have those decent margins, you can quickly see that a strong case could be made that factoring is the cheapest financing method for factoring fees!  The factoring fee is considered interest expense but is not expressed as an interest rate per se.

Not all factoring companies offer Confidential receivable financing, our recommended solution here at  7 Park Avenue Financial.

The factoring accounts receivable formula stays the same in this non-notification type of financing receivables confidentially. Many factoring companies do not provide this method of financing, so call the 7 Park Avenue Financial team.

And remember, it’s cheaper and more accessible than accessing more equity or taking on term debt on your balance sheet. 

The bottom line of factoring: It cash flows your sales instantly when using most factoring companies that offer the type of solution you are looking for.

We strongly suggest you analyze your own ' costs to carry ' in the context of selling your products and services and replicating that process 2-3 times in a 60-90 day period.

Your accounts receivable balance is often one of the most significant assets on your balance sheet.

Effective management of your company's accounts receivable and constant turnover of unpaid invoices is key to business and cash flow success!

The invoice value of outstanding invoices should be monitored on an ongoing basis - A/R solutions can also be done via a total asset-based lending solution that funds your receivables/inventories, and hard assets. For more info on 'ABL' solutions, talk to the 7 Park Avenue Financial team.

Case Study: Receivable Lending Benefits

Manufacturing Success Story

Toronto-based precision parts manufacturer faced 60-day payment terms from automotive clients while needing immediate funds for raw materials. Traditional bank loan approval would take 6 weeks.

Solution: Implemented receivable lending facility, advancing 85% of invoice value within 48 hours.

Results:

• Reduced cash flow gaps by 90%
• Increased production capacity 40%
• Secured new contracts worth $500,000
• Maintained all customer relationships
• Achieved 15% revenue growth in first year

The manufacturer now processes $150,000 monthly through receivable lending, enabling consistent operations and strategic growth.

 KEY TAKEAWAYS

• Customer creditworthiness evaluation - The foundation determining approval and rates

• Advance rate calculations - Typically 70-90% of invoice value affects immediate cash availability

• Fee structure understanding - Monthly rates, transaction fees, and additional charges impact total cost

• Notification vs non-notification - Choice affects customer relationships and operational complexity

• Recourse vs non-recourse - Risk allocation between business and lender influences rates and terms 

CONCLUSION - ACCOUNTS RECEIVABLE FACTORING COMPANIES   

Perceptions? Reality? 

Call   7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can help you demonstrate the ' speed test ' success of receivables factoring that comes with cash flow via receivable factoring companies.

 FAQ: FREQUENTLY ASKED QUESTIONS  / PEOPLE ALSO ASK / MORE INFORMATION  

What is accounts receivable factoring?

Invoice Factoring via a factoring agreement helps companies free up their most liquid asset on the balance sheet and is a great way to turn your invoices into cash without the hassle of dealing with applications and waiting periods. You can even deal directly on the internet if you require quick funds! Accounts Receivable Financing, referred to as "Factoring," allows companies with good credit but a lack of liquidity because their customers haven’t paid them yet, access to short-term loans through an invoice sale at discounted rates from specialized finance companies known as Factors that buy these receivables outright.

Why do companies factor receivables?   

Accounts receivable factoring provides immediate cash flow for businesses that are waiting on payments from customers Invoices on the company's balance sheet debt is taken on the balance sheet, and a firm can fuel growth without relying on external financing when the factoring company pays invoices.

How does accounts receivable financing work?  

A company can factor its receivables after it has provided goods or services and generated an invoice. A company can receive immediately approximately  90% of the invoice  - the remainder  10% is paid to the company by the factor, less a finance fee, when the client pays the invoice. Factor fees for accounts receivable loans in Canada from a commercial financing company are in the 1-2% range.

What is the difference between factoring and financing of accounts receivable?   

Factoring industry solutions for AR financing and bank financing are different methods of financing receivables with the issue being ownership of the receivables - Factoring companies charge a fee and buy your invoices at a discounted rate while banks take an assignment of a company's receivables and allow a company to borrow them at a rate which is typically in the 70% range. It is all about who owns these accounts receivable regarding the company's customers.

What percentage of my invoices can I finance?

Receivable lending typically advances 70-90% of invoice value immediately, with the remainder paid when your customer settles the invoice, minus fees.

Do my customers know I'm using receivable lending?

Receivable lending can be structured as either notification (customers pay the lender directly) or non-notification (customers continue paying you normally).

What credit requirements exist for receivable lending?

Receivable lending focuses primarily on your customers' creditworthiness rather than your business credit, making it accessible for companies with limited credit history.

Who uses receivable lending services in Canada?

Receivable lending serves Canadian manufacturers, wholesalers, distributors, professional services, and B2B companies who have supply chain finance issues, and need immediate cash flow from outstanding invoices and assisting firms to maintain cash flow for business needs.

What documents are required for receivable lending approval?

Receivable lending requires aging reports, sample invoices, customer contracts, and financial statements to verify invoice authenticity and customer creditworthiness.

When should businesses consider receivable lending over traditional loans?

Receivable lending becomes ideal when businesses need immediate funding, have limited credit history, or face seasonal cash flow challenges that traditional lending cannot address quickly.

Where can Canadian businesses find reputable receivable lending providers?

Receivable lending providers include specialized finance companies, alternative lenders, and some traditional banks offering accounts receivable financing programs across Canada.

Why do businesses choose receivable lending over factoring?

Receivable lending often provides more control over customer relationships, flexible terms, and better rates compared to traditional factoring arrangements.

How does receivable lending impact business credit scores?

Receivable lending typically doesn't require personal guarantees and focuses on invoice quality, making it less impactful on personal credit compared to traditional business loans.

What industries benefit most from receivable lending?

Receivable lending particularly benefits manufacturing, distribution, staffing agencies, professional services, and any B2B industry with extended payment terms.

Which receivable lending structure works best for small businesses?

Receivable lending structures vary, with selective invoice financing often suiting smaller businesses better than whole portfolio arrangements.

How much does receivable lending cost compared to other financing?

Receivable lending costs typically range from 1-5% per month, often competitive with merchant cash advances but higher than traditional bank loans.

What happens if customers don't pay financed invoices?

Receivable lending arrangements vary, with some offering recourse (you're responsible) and others non-recourse (lender assumes risk), depending on the agreement structure.  Typically, the accounts receivable financing agreement will identify how customer non-payment is handled.

How does receivable lending improve cash flow predictability?

Receivable lending creates predictable cash flow by converting variable payment timing into consistent funding, allowing better financial planning and operational stability.

What growth opportunities does receivable lending enable?

Receivable lending provides immediate capital for inventory purchases, equipment acquisition, staff expansion, and new contract opportunities without waiting for customer payments.

How does receivable lending compare to traditional bank financing?

Receivable lending offers faster approval, minimal collateral requirements, and qualification based on customer credit rather than extensive business financial history.

What operational advantages does receivable lending provide?

Receivable lending eliminates collection concerns, reduces administrative burden, and allows focus on business operations rather than accounts receivable management.

How does receivable lending support seasonal businesses?

Receivable lending provides consistent funding regardless of seasonal payment patterns, helping businesses maintain operations during slower collection periods.

Can receivable lending help businesses with poor credit?

Receivable lending qualification depends primarily on customer creditworthiness rather than your business credit, making it accessible for companies with credit challenges.

Is receivable lending considered debt on financial statements?

Receivable lending typically appears as an advance against receivables rather than traditional debt, potentially improving financial ratios compared to conventional loans.

How long are receivable lending agreements typically structured?

Receivable lending agreements range from single invoice transactions to ongoing facilities, with terms typically lasting 6-24 months depending on business needs.

What happens to receivable lending during economic downturns?

Receivable lending providers may tighten customer credit requirements during economic uncertainty, but the facility often remains more accessible than traditional credit.

Can receivable lending be combined with other financing options?

Receivable lending can complement other financing sources, though lenders may require coordination to avoid conflicts with existing collateral arrangements.

What's the difference between receivable lending and factoring?

Receivable lending typically maintains your customer relationships and provides more control over collections, while factoring often involves transferring customer management to the lender.

How do lenders evaluate invoices for receivable lending?

Receivable lending evaluation focuses on customer creditworthiness, invoice authenticity, payment history, and industry stability rather than your business credit profile.

 Citations / More Information

1. Bank of Canada. (2024). "Small Business Credit Conditions Survey." https://www.bankofcanada.ca

2. Business Development Bank of Canada. (2024). "SME Cash Flow Management Report." https://www.bdc.ca

3. Atradius Payment Practices Barometer. (2024). "Canada Payment Behavior Survey." https://www.atradius.com

4. Statistics Canada. (2024). "Business Financing Patterns in Canada." https://www.statcan.gc.ca

5. Canadian Factoring Association. (2024). "Industry Market Analysis." https://www.cfainc.ca