YOUR COMPANY IS LOOKING FOR A/R (AR) FACTORING!
Factoring Companies And Cash Flow Solutions
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?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
An accounts receivable loan transforms your outstanding invoices into immediate capital, enhancing your business's financial agility and stability.
Struggling with slow-paying clients? Unlock the value of your invoices now with an accounts receivable loan!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ACCOUNTS RECEIVABLE LOAN solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Boost Your Business with Effective Invoice Financing Solutions
INTRODUCTION
The truth. We don't think we've met a business person, man or woman, who doesn't appreciate the real truth when it comes to business. So when it comes to AR Accounts Receivable Finance, aka ‘factoring’ let’s just clear up a few things if you don't mind!
We think if you lined up ten business people and asked them who they believe they could rely on when it comes to business lending most would say ' the bank ' That's been Canada's choice for decades .. that’s for sure, specifically when it comes to a credit line.
Accounts receivable loans could well be your secret weapon for unlocking the liquidity tied up in unpaid invoices in the company's accounts receivable - providing a major cash flow solution for businesses grappling with cash flow challenges.
A/R Financing converts sales your company has made on commercial credit terms into immediate working capital - That allows your company to fund day-to-day operations, take on growth opportunities and overall stabilize your financial position if you are unable to obtain a traditional bank loan for cash flow management
DOES YOUR COMPANY HAVE FULL ACCESS TO BANK FINANCING IN CANADA OR A ' BUSINESS LOAN '?
But does everyone company have access to cash flow and growth financing when it comes to our beloved chartered banks? Here's the harsh reality - they don't.
ACCOUNTS RECEIVABLE FINANCING IS THE NEW CASH FLOW OPTION
So is there an option? There is. It's accounts receivable financing, which has become attractive to many firms when they look at some key advantages. Is factoring the only solution? Not, firms can also utilize lease financing, sale-leasebacks, and other debt mechanisms.
Debt mechanisms... optimal? Certainly not all the time, and that’s why AR Accounts receivable Finance/invoice factoring is a non-debt solution. It's just a monetization of your key asset, the receivables.
So why doesn't everyone utilize this form of financing? It certainly appeals to Canadian business owners who can't supply the type of security that a bank requires when it comes to accounts receivable financing.
REASONS WHY SOME COMPANIES AVOID AR FINANCE
What then are some key reasons that businesses avoid factoring? We think we can summarize them quite clearly - they include a general lack of awareness of what the financing is and how it works vis a vis bank financing/
In certain cases, there appears to be an ' image ' problem. Why then do some of Canada's largest and most successful firms utilize this finance mechanism? We'll never figure out that one!
The cost of factor finance always comes up. In Canada, a typical financing facility would be in the 1.5 -2% range based on a collection period of thirty days for receivable financing purposes.
YOUR BUSINESS CAN OFFSET THE COST OF RECEIVABLE FINANCING
What Canadian business owners don't realize though is that cost can be offset in a solid handful of manners - they include your ability to purchase smarter, take discounts with suppliers, and take on new business and contracts you never could even consider in the past. We can honestly say that we've met some clients who have eliminated the entire cost of financing when they utilized receivables factoring.
Some other harsh reality? If your sales are going down instead of going up accounts receivable factoring won't necessarily work, because your borrowing asset base is declining... not growing. Also, a very small handful of industries, such as construction pose more difficult challenges when it comes to AR finance utilization. Bottom line - understand the factoring fee, which is not an ' interest rate '.
3 IMMEDIATE BENEFITS OF AR FINANCE
But the majority of Canadian businesses can actually do the following:
- Access immediate short term funding
- Improve cash flow
- Utilize pay for what you only use the method of business financing - ie financing the balance sheet when you need to!
KEY TAKEAWAYS
Invoice Financing - This is the core of accounts receivable loans; businesses use their unpaid invoices as collateral to secure immediate funding.
Working Capital Management - Understanding this helps businesses optimize their operational efficiency and financial health through improved liquidity.
Credit Risk Assessment - Essential for lenders and businesses alike, this involves evaluating the likelihood that customers will pay their invoices on time.
Interest Rates and Loan Terms - These are critical to understanding the cost of borrowing and the terms under which cash is provided.
Cash Flow Solutions - Accounts receivable loans are a pivotal part of broader strategies to manage and enhance cash flows.
CONCLUSION
So, our bottom line? Take some time to investigate a bit more thoroughly, without some of those biases this method of business finance, ie accounts receivables finance works! Investigate recourse factoring and non-recourse factoring - which allows you to keep the collection risk or transfer it to the financing company/factor.
Call 7 Park Avenue Financial, a trusted, credible and experienced business financing advisor today about the benefits of a factoring company and working capital solutions that work for SME'S / small business owners - Let the 7 Park Avenue Financial team show you how accounts receivable financing works to improve cash flow immediately!
FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
How does an accounts receivable loan improve business cash flow?
By providing immediate access to cash tied up in unpaid invoices, improving liquidity and enabling ongoing business operations while at the same time bringing no outstanding debt to the balance sheet.
How does factoring record loans against receivables?
Initial Sale of Receivables: When a business factors its receivables, it is essentially selling these invoices to the factor. The business will record this transaction by debiting a cash account and crediting accounts receivable, indicating that the invoices have been sold and are no longer an asset of the company.
Factor Fee or Discount: The factor typically charges a fee for this service, which is often a percentage of the total value of the receivables. This fee is recorded by the business as an expense. Specifically, the business will debit an expense account, such as "Factoring Expense" or "Interest Expense" (if the arrangement is structured like a loan), and credit the cash account for the amount of the fee.
Liability Recognition (if applicable): If the factoring arrangement is with recourse (meaning the business is liable if the invoices are not paid by the customers), the business might need to record a liability reflecting the potential obligation to repay the factor. This is recorded by debiting a liability account, such as "Due to Factor" and crediting a contra-asset account or directly adjusting the revenue account depending on the accounting policy.
Bad Debt (if applicable): In cases where the business retains the risk of non-payment (recourse factoring), any invoices that are not paid by customers may require the business to reimburse the factor. Such transactions are recorded as bad debts by debiting the bad debt expense and crediting accounts receivable or the liability to the factor.
What are the typical terms of an accounts receivable loan?
These loans usually feature short repayment periods and are based on the value of outstanding invoices, with terms tailored to the business's sales cycle. Asset based lending solutions allow a company to finance receivables and inventory in the same credit facility.
Can new businesses qualify for accounts receivable loans - How does accounts receivable financing work?
Yes, even new businesses can qualify for ar financing, primarily focusing on the creditworthiness of their customers rather than their credit history. It is a solution for firms who can't access a business line of credit
How does accounts receivable financing differ from traditional loans?
Unlike traditional loans, accounts receivable financing does not require extensive credit checks or collateral, as the invoices themselves secure the loan from receivable financing companies
What impact does accounts receivable financing have on business relationships?
Typically, this financing has minimal impact on business relationships, as the process is transparent and does not involve direct interaction with the clients of the borrower.
How do accounts receivable loans affect a company's balance sheet?
They improve the current ratio by converting accounts receivable into more liquid assets.
Are there any industries that particularly benefit from accounts receivable loans?
Industries with long invoice cycles, like manufacturing and wholesale, benefit greatly from improved cash flow.
What are the risks associated with accounts receivable financing?
Risks include dependency on customer creditworthiness and potential changes in lending terms based on fluctuating invoice values.
How quickly can a business access funds through accounts receivable loans?
Funds are typically accessible within a few days of approval, making it a quick solution for cash flow needs.
Is accounts receivable financing suitable for managing seasonal business peaks?
Yes, it provides flexible, timely funding to manage inventory and staffing needs during seasonal peaks in demand.
How do accounts receivable loans work?
Businesses use their outstanding invoices as collateral to receive a percentage of the invoice value upfront from a lender.
What criteria do lenders consider when providing an accounts receivable loan?
Lenders from accounts receivable financing companies primarily assess the creditworthiness of the invoiced customers and the age of the invoices to determine funding eligibility and amount.
Can accounts receivable loans be used for any type of expense?
Yes, the funds can be used for a variety of business expenses, including payroll, inventory purchases, and other operational costs.
