YOUR COMPANY IS LOOKING FOR A/R FINANCE !
FACTORING ACCOUNTS RECEIVABLE IN CANADA
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- OUR EXPERTISE = YOUR RESULTS!!
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
"Cash flow is the lifeblood of any business. Without it, even profitable companies can fail." — Anonymous Business Axiom
Accounts receivable (AR) financing is essential for any business that sells on credit. The gap between issuing an invoice and receiving payment is often the most difficult period to manage. Many companies must finance that delay—and accounts receivable factoring may be the right solution.
The Cash Flow Gap That's Choking Your Growth
Your invoices represent money you've already earned, but your bank account tells a different story. While you wait 30, 60, or even 90 days for payment, bills pile up and opportunities slip away. AR factoring companies provide immediate cash access for unpaid invoices to your earned revenue, converting receivables into cash within days so you can run your business instead of chasing payments.
3 UNCOMMON TAKES ON AR FACTORING COMPANIES
AR factoring is actually cheaper than the hidden costs of slow-paying customers – Most business owners calculate the factoring fee but ignore what delayed payments actually cost them in missed early-payment discounts, late fees to their own suppliers, and lost growth opportunities that required immediate cash flow.
The best AR factoring companies care more about your customers' creditworthiness than yours – Unlike traditional lending where your past mistakes haunt you, factoring evaluates the businesses that owe you money, making it accessible even for startups or companies recovering from financial difficulties.
Factoring often improves your customer relationships rather than damaging them – Professional factoring companies handle collections with expertise and diplomacy that many business owners lack, often resulting in faster payment and better long-term customer behavior.
Are You Using the Best Type of Factoring for Your Cash-Flow Needs?
Many businesses already rely on some form of receivables factoring. The problem arises when the facility they received is not what they expected. A few key insights can help you avoid costly mistakes.
Why Do Firms Finance Accounts Receivable? Is Factoring a Good Idea?
Companies finance AR because their working capital cycle creates cash-flow pressure via those outstanding invoices . Waiting to get paid slows operations and hampers growth. AR financing strengthens cash flow, supports purchasing, and helps resolve short-term shortages.
Bank AR Financing Versus Factoring Services
When a company uses a third-party finance provider instead of a bank, the structure of the facility becomes critical. Not all businesses qualify for traditional bank credit, and even approved borrowers may not receive enough funding. A short-term bank loan may help, but most firms need a flexible, ongoing solution for daily operations and growth.
One challenge in Canadian business financing is that lenders are often cautious about rapid sales growth. High-growth companies may require substantial cash support that banks are reluctant to provide. The goal is to keep your business both operating and expanding.
Why Companies Factor Their Accounts Receivable
Small businesses turn to factoring when they need immediate cash and flexible financing. Factoring provides liquidity, stabilizes operations, and supports growth during periods of strain.
Below are the most common reasons companies choose factoring:
5 Reasons to Factor Your Accounts Receivable
Inability to obtain bank financing. Startups or firms with limited credit history can strengthen their balance sheet through factoring.
Exposure to government receivables or foreign sales. These invoices often create delays or fall outside bank lending criteria.
Need for higher financing limits. Factoring may offer greater availability even when a bank approves credit.
Large orders requiring urgent funding. Fast access to capital helps secure and fulfill major contracts.
Slow customer payments. Factoring mitigates cash-flow strain from delayed receivables.
What Is the Best Type of Factoring or Receivable Finance Solution?
There is no perfect structure, but one solution stands out for many Canadian companies. Confidential AR financing allows you to bill and collect your own receivables while accessing up to 90 percent of your AR as needed. It requires no customer notification and offers competitive pricing.
Businesses may also choose between recourse and non-recourse factoring. This depends on how much credit risk you are willing to assume and the size of your typical invoices.
CASE STUDY SUMMARY
Company: ABC Manufacturing Inc. (mid-sized industrial components manufacturer)
From the 7 Park Avenue Financial Client Files
Challenge: Secured $2M automotive contract with net-60 terms requiring major upfront investment, but had maxed credit and insufficient cash to fulfill it—risking loss of their biggest opportunity in 15 years.
Solution: Partnered with AR factoring company that approved arrangement in 4 days, providing 85% invoice advances within 24 hours as work progressed.
Results: Successfully fulfilled contract, earned $340K net profit (despite 2.5% factoring cost), and established long-term client relationship. Used factoring for 18 months while taking larger contracts, eventually qualifying for traditional bank financing. Management credits factoring with enabling their current success.
Key Takeaways
AR financing addresses payment delays and strengthens working capital.
Many businesses use factoring without understanding the structure or costs.
Factoring is often used when bank financing is unavailable or insufficient.
Confidential AR financing offers flexibility, discretion, and high advance rates.
Professional guidance prevents mistakes and improves financing outcomes.
Conclusion
Problems arise when owners do not understand pricing, documents, or the ongoing management of a factoring facility. Proper guidance avoids unnecessary fees and complexity. Work with a trusted and experienced Canadian business-financing advisor to secure the right accounts receivable factoring solution.
FAQ: Benefits of Working With AR Factoring Companies
How does AR factoring improve cash flow management?
Factoring converts invoices into cash within 24–48 hours, eliminating 30–90 day waits. Businesses can cover payroll, secure supplier discounts, and maintain inventory without stress. Steady cash flow supports better planning and reliable day-to-day operations.
What advantages does factoring offer over a traditional bank line of credit?
Factoring grows automatically with sales because funding is tied to invoice volume—not fixed limits. Approvals are faster, with fewer financial requirements, making it ideal for newer firms or companies banks consider risky. No personal guarantees or extra collateral are required beyond the receivables.
How does factoring help me take on larger customers or contracts?
Large orders demand upfront spending on materials and labour. Factoring supplies immediate working capital so you can fulfill big contracts even with long payment terms. This support allows you to compete for opportunities that usually favour larger, better-capitalized companies.
Why choose factoring instead of merchant cash advances or high-interest loans?
Factoring fees (typically 1–5%) are far lower than merchant cash advances, which often exceed 50% APR. You sell an existing asset rather than taking on new debt or daily/weekly repayment pressure. Transparent pricing ensures predictable costs with no hidden fees.
How does factoring help businesses with seasonal fluctuations?
Seasonal companies gain flexible funding that rises and falls with invoice volume. You factor fewer invoices in slow periods and more during peak cycles—without paying for unused credit. This ensures capital is available when production and demand are highest.
STATISTICS ON AR FACTORING
The global factoring market exceeds $3 trillion annually, with steady growth of 5-7% per year
Approximately 80% of factoring clients are small to medium-sized businesses with annual revenues under $10 million
The average factoring advance rate ranges between 75-90% of invoice face value
Manufacturing, wholesale, and staffing industries account for nearly 60% of all factoring volume
Businesses using factoring report 30-40% faster growth rates compared to similar companies relying solely on traditional financing
The average time from application to first funding is 3-5 business days, compared to 30-90 days for traditional bank loans
Canadian factoring volume has grown approximately 8% annually over the past five years, outpacing traditional commercial lending growth
CITATIONS
Commercial Finance Association. "The State of the Commercial Finance Industry." CFA Annual Report, 2024. https://www.cfa.com
Klapper, Leora. "The Role of Factoring for Financing Small and Medium Enterprises." Journal of Banking & Finance 30, no. 11 (2006): 3111-3130. https://www.sciencedirect.com
Soufani, Khaled. "The Decision to Finance Receivables: The Factoring Option." Managerial and Decision Economics 23, no. 1 (2002): 21-32. https://onlinelibrary.wiley.com
LinkedIn."What’s a Factoring Credit Line and How Does It Work?" .https://www.linkedin.com/pulse/whats-factoring-credit-line-how-does-work-stan-prokop-t3pgc/
Industry Canada. "Small Business Financing Profiles." Government of Canada Business Publications, 2023. https://www.ic.gc.ca
Medium / Stan Prokop ."Receivable Finance In Canada: Get Back On Top With Financial Factoring" .https://medium.com/@stanprokop/receivable-finance-in-canada-get-back-on-top-with-financial-factoring-712d298fbcdb
Summers, Bruce, and Nicholas Wilson. "Trade Credit and Customer Relationships." Managerial Finance 26, no. 11 (2000): 57-73. https://www.emerald.com
Bank of Canada. "Credit Conditions Survey Results." Bank of Canada Quarterly Reports, 2024. https://www.bankofcanada.ca
Bakker, Marie Hélène, Leora Klapper, and Gregory Udell. "Financing Small and Medium-Size Enterprises with Factoring: Global Growth and Its Potential in Eastern Europe." World Bank Working Papers, 2004. https://www.worldbank.org
7 Park Avenue Financial ." Finance Factoring Receivable Financing Canada" . https://www.7parkavenuefinancial.com/finance-factoring-receivable-financing-canada.html
