YOUR COMPANY IS LOOKING FOR BUSINESS FACTOR FUNDING!
ACCOUNTS RECEIVABLE FACTORING - YOUR SMALL BUSINESS FUNDING SOLUTION
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
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Business factor funding in Canada. When it comes to immediate and short term cash flow financing strategies we're often quoted as proponents of new and alternative working capital strategies. But truth be told (similar to fashion!) there's one AR Financing strategy that seems new, but apparently is about 4000 years old. Recycling is hotter than ever... so let's dig in!
BACKGROUND AND HISTORY OF INVOICE FACTORING
Although we were quite aware that business factoring - aka ' receivable finance ' is ONLY about 4000 years old, supposedly during the reign of King Hammurabi of Mesopotamia. From that, it grew even faster in medieval times as it helps growing garment and textile industries in Europe and North America.
So that quick history tour of the factoring company that brings us up to today, where thousands of Canadian business owners and financial managers find themselves in what we can only often describe as challenging times in business finance. So cash flowing your invoices via AR finance, previously deemed as ' alternative' in nature is now simply one of the fastest-growing business finance methods. Additional credit protection via non-recourse solutions is also available.
HOW DOES FACTORING WORK?
We often find ourselves almost ' over-explaining ' why and how invoice financing factoring works. A simple explanation is to simply say that it's not ' borrowing ‘... it's ' selling'. The paperwork around the accounts receivable financing solutions is the mechanism that allows you, at your will and choice, to generate immediate cash by invoking the AR finance mechanism ' factoring'.
IT'S NOT BORROWING - IT'S ' SELLING'!
So while many business owners/managers find themselves thinking of ' borrowing ' for business finance, they might just want to think more of ' Selling'. As they generate those sales they get immediate SAME DAY advance on the revenue they generate. By the way, the right A/R financing solutions allows to you sell invoices when you want, and certainly not all the time - only when you need the cash. Typically business owners tend to utilize the power of Factoring at key cash flow disbursement times approach - that might be payroll, term loan obligations, CRA payments, etc.
HOW TO UNDERSTAND THE ' ADVANCE RATE ' IN A/R FINANCING
It's important to understand the concept of advance rate within this financing mechanism. Typically, more often than not, the cash advances will be 90% - known as the advance rate. That is to say, if you have a 100k sale, which has been in fact ' earned' by shipping your product, or providing your service, you would receive that same invoice day, if you choose, 90k as immediate cash flow funding. The 10% is a holdback and that’s remitted to you as soon as your client pays. That holdback, in the case of our 100,000.00 invoice will typically have a 2k financing charge attached to it if your client honours typical 30-day terms.
The cost of factoring is expressed as a fee per month and is typically in the 1.5 to 2% range. Companies with decent gross margins can easily absorb this reduction in profit in order to receive all the benefits of immediate cash flow on your sales. Receivables factoring typically delivers cash on your sales withing 24 hours, eliminating the need to wait for payment from clients.
ASSET TURNOVER AND THE RIGHT FINANCING EQUALS ACCOUNTS RECEIVABLES FUNDING SUCCESS
If your firm has significant amounts of capital tied up in current asset accounts such as inventory and receivables you will clearly benefit from immediate same-day cash flow received from the solution provided by factoring companies. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your working capital solutions.
CONCLUSION
Accounts receivable financing, most commonly known as ' factoring ' is an accepted way to cash flow your sales and generate the working capital and cash flow financing you need to run your business. It's an effective solution to your business line of credit needs.
At 7 Park Avenue Financial we recommend and offer Confidential Receivable Financing, allowing you to bill and collect your receivables without any notification to clients, etc. Your firm receives all the benefits of traditional factoring
Stan Prokop
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