Receivables Lending: Transform Your Invoices Into Immediate Cash Flow for Canadian Businesses | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR FACTORING AND ACCOUNTS

RECEIVABLE FINANCING IN CANADA! 

AR FACTORING SIMPLIFIED

UPDATED  O6/24/2025

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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?

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

EMAIL – sprokop@7parkavenuefinancial.com

ACCOUNTS RECEIVABLE FACTORING IN CANADA    

Most Canadian business owners and financing managers often seek out factoring accounts receivable financing/invoice factoring from a factoring company as a quick way to get out of a cash flow crunch when other more traditional methods of financing have been exhausted.

Breaking Free from the Cash Flow Prison

Your business is thriving with solid sales, yet you're constantly stressed about paying bills because customers take forever to pay invoices.

This cash flow gap strangles growth opportunities and keeps you awake at night worrying about meeting payroll.

Let the 7 Park Avenue Financial team show you how Receivables lending transforms your outstanding invoices into immediate cash, eliminating the waiting game that's holding your business hostage.

Three Uncommon Takes on Receivables Lending

1. The "Reverse Insurance" Perspective: While most businesses buy insurance to protect against potential losses, receivables lending acts as reverse insurance – it protects against the "loss" of time by converting future cash into present cash, essentially insuring your business against the opportunity costs of waiting.
2. The "Customer Relationship Preservation" Angle: Unlike aggressive collection tactics that can damage client relationships, receivables lending allows you to maintain positive customer relationships while still accessing your cash early, since the lending process doesn't typically involve direct customer contact.
3. The "Business Credit Building" Strategy: Many business owners don't realize that consistent use of receivables lending can actually improve their overall creditworthiness by demonstrating strong sales patterns and reliable cash flow management to future lenders.

GENERATING SALES ISN'T THE PROBLEM - COLLECTING RECEIVABLES PROMPTLY IS  

Typically, clients tell us that sales or revenue generation is not the problem, with the bigger challenge being simply converting those sales into cash flow and working capital.

Factoring financing comes at a higher price than traditional bank financing/bank loans, but most Canadian business owners recognize that other options are limited. Their situation is one of access to capital versus the cost of capital.

RECOGNIZING CASH SHORTAGES AND ADDRESSING THE PROBLEM - UNDERSTANDING ACCOUNTS RECEIVABLE FINANCING VS FACTORING NEEDS  

When you recognize that a cash crunch often comes from your success, it is often much easier to rationalize factoring as a solution.

THE RISE IN POPULARITY OF FACTOR FINANCE IN CANADA  

Factoring and receivable financing funding solutions via factoring companies in Canada are slowly catching on as a true financing option –

Many parts of the economy now view this financing method as a traditional method of financing the business – and the reality is that the big boys use it also, which many are not aware of.

HOW DOES FACTORING WORK? WHY DO COMPANIES FACTOR RECEIVABLES?

Factoring your accounts receivable is also known as 'debtor finance,' whereby your business, via a factor agreement, sells accounts receivable to receive immediate cash. It's a simple, effective way to monetize sales.

New clients at 7 Park Avenue Financial ask us to explain the difference between factoring versus receivable financing. It's simply the paperwork essentially – in a bank arrangement, your paperwork specifies 'assigning' all your receivables, whereas a factor company's paperwork specifies selling the A/R.

When you utilize factoring, you are in effect selling your receivables as you generate them (at your option, of course) and receive immediate cash for those funds. Don't let the literature fool you, though – you actually receive funding for 75-90% of your invoices (depending on whom you deal with), and the balance is held back and then remitted to you when your customer pays.

WHAT DOES FACTORING COST?  

Naturally, from this final holdback amount, there is a financing fee or a discount fee. Many business owners view this financing or discount fee as an interest rate, when in fact, the factor finance firms always refer to this as a discount fee.

IS FACTORING CONSIDERED AS DEBT?

Factoring is not debt, as neither your company nor the factoring company takes on debt to their respective balance sheets. You are simply monetizing a current asset – 'Receivables.'

WHAT ARE THE REQUIREMENTS FOR FACTORING FACILITIES?

The prerequisites for factoring your receivables often revolve simply around the nature of your receivables and customers. Your final pricing or discount fee depends on several key factors.

They are:

• The overall risk profile of your firm – i.e., how you are doing!

• The quality of your customer base regarding accounts receivables

• The size of your receivables portfolio

• The geographical scope of your invoices – foreign, i.e., U.S. receivables can also be financed

You can also choose a non-recourse facility that allows you to transfer your current credit risk/bad debt risk to a factoring company.

TWO TYPES OF FACTORING - OLD SCHOOL AND NEW SCHOOL

What do you need to know about small business invoice factoring finance in Canada related to the U.S. and U.K. approaches to this type of financing?

Well, in Canada, there are two types of invoice discounting/factoring. In addition to factoring, Canadian businesses often explore options such as inventory financing for optimizing cash flow. Under the most commonly used method, the factoring firm you engage with works with you to invoice the customer, collect the payment, and monitor your overall credit quality.

THE BEST ACCOUNTS RECEIVABLE FINANCING COMPANY SOLUTION?

If you view this overall business model and way of financing as somewhat intrusive and undesirable, then seek out the services of 7 Park Avenue Financial, a trusted, credible, and experienced advisor who can provide you with a Confidential Accounts Receivable factoring facility that allows you to bill and collect your own outstanding invoices.

In the past, factoring was generally viewed as being for companies with financial problems.

However, the new reality of financing a business in Canada , pandemics included!, is that factoring is, in fact, a great way for healthy businesses to generate much-needed cash flow and working capital.

Case Study: Manufacturing Company Success

Challenge: Canadian manufacturer  faced a critical cash flow gap wheir largest customer extended payment terms to 90 days, creating a $200,000 working capital shortage that threatened their ability to purchase raw materials for new orders.

Solution: 7 Park Avenue Financial structured a receivables lending facility that advanced 85% of invoice values within 48 hours, providing immediate access to $170,000 in working capital.

Results: The company maintained production schedules, accepted new orders worth $500,000, and improved supplier relationships by paying on time. Within six months, their business grew 35% while maintaining healthy cash flow through ongoing receivables lending support.

CONCLUSION - FACTORING ACCOUNTS RECEIVABLES  

In summary, consider the cash flow benefits of factoring and accounts receivable financing of your receivables with payment to you within 24 hours when you cannot obtain the total amount of financing you need. Determine if you are eligible (most firms are) and seek out a facility that meets your business financing needs.

Call  7 Park  Avenue Financial, a trusted, credible, and experienced Canadian Business Financing advisor.

FAQ

What types of businesses benefit most from receivables lending?

Receivables lending works exceptionally well for B2B companies with creditworthy customers, including manufacturing firms, service providers, wholesalers, and professional services businesses that typically extend 30-90 day payment terms.

How quickly can I access funds through receivables lending?

Receivables lending typically provides funding within 24-48 hours of approval, making it one of the fastest business financing solutions available for companies with established invoice patterns.

What's the difference between factoring and accounts receivable financing?

Receivables lending encompasses both factoring (selling invoices) and AR financing (borrowing against invoices), with factoring transferring customer payment responsibility to the lender while AR financing keeps collection responsibility with your business.

Do my customers need to know about receivables lending arrangements?

Receivables lending can be structured as either notification (customers are informed) or non-notification (customers remain unaware), depending on your preference and the specific program structure.

What documentation is required for receivables lending approval?

Receivables lending typically requires recent financial statements, accounts receivable aging reports, customer credit information, and sample invoices to assess the quality of your receivables portfolio.

Who qualifies for receivables lending in Canada?

Receivables lending qualification focuses on businesses with B2B customers, consistent invoice generation, and creditworthy clients rather than just the borrower's credit score.

What percentage of invoice value can receivables lending provide?

Receivables lending typically advances 70-90% of invoice value, with the exact percentage depending on customer creditworthiness and invoice terms.

When should a business consider receivables lending?

Receivables lending becomes valuable when cash flow gaps create operational challenges, growth opportunities require immediate capital, or seasonal fluctuations affect working capital needs.

Where can Canadian businesses access receivables lending?

Receivables lending is available through specialized factoring companies, alternative lenders, banks, and financial service providers like 7 Park Avenue Financial across Canada.

Why choose receivables lending over traditional bank loans?

Receivables lending offers faster approval, requires less collateral, doesn't create additional debt on balance sheets, and bases approval on customer creditworthiness rather than just business credit.

How does receivables lending impact business credit scores?

Receivables lending typically has minimal impact on business credit since it's often structured as asset-based financing rather than traditional debt.

Which industries use receivables lending most frequently?

Receivables lending is popular in manufacturing, distribution, staffing, transportation, textiles, and professional services where extended payment terms are common.

What costs are associated with receivables lending?

Receivables lending costs include factoring fees (1-2% of invoice value), service charges, and potential additional fees for credit checks or wire transfers.

How long do receivables lending arrangements typically last?

Receivables lending can be structured as one-time transactions, short-term solutions for specific needs, or ongoing facilities that grow with your business.

Why do businesses prefer receivables lending over other financing?

Receivables lending provides immediate cash without creating debt, improves working capital management, and often includes credit protection services for peace of mind.

How does receivables lending improve cash flow predictability?

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

What growth opportunities does receivables lending unlock?

Receivables finance enables immediate reinvestment in inventory, equipment, marketing, and staff expansion without waiting for customer payments to fund growth initiatives.

How does receivables lending reduce business financial stress?

Receivables lending eliminates the anxiety of wondering when customers will pay, provides working capital security, and creates breathing room for strategic decision-making.

What competitive advantages does receivables lending provide?

Receivables lending allows businesses to offer better payment terms to customers, take on larger orders, and respond quickly to market opportunities without cash constraints.

How does receivables lending support seasonal businesses?

Receivables lending provides flexible funding that adjusts with invoice volume on the company's balance sheet, helping seasonal businesses maintain operations during slower periods and capitalize on peak seasons.

Can start-up businesses access receivables lending?

Receivables lending for start-ups depends on having established B2B customers and invoice history, though newer businesses may qualify with strong customer creditworthiness.

How does receivables lending work with international customers?

Receivables lending with international customers requires additional due diligence on the company's accounts receivable on foreign credit risk, currency considerations, and potentially longer collection timeframes.

What happens if customers dispute invoiced amounts on unpaid invoices?

Receivables lending providers typically have procedures in their accounts receivable financing agreement for handling disputed invoices, often requiring reserves or adjustments until disputes are resolved satisfactorily.

Are there industry restrictions for receivables lending?

Receivables lending availability varies by industry, with some sectors like healthcare, government contractors, or high-risk industries having specialized requirements.

How does receivables lending integrate with accounting systems? Receivables lending can integrate with most accounting platforms through APIs or file transfers, streamlining invoice submission and funding processes.

What makes receivables lending different from traditional loans?

Receivables lending differs from traditional loans by using existing invoices as collateral, focusing on customer creditworthiness rather than borrower credit, and providing funding based on actual sales performance.

How do lenders evaluate receivables for lending purposes?

Receivables lending evaluation examines customer credit quality, invoice terms, concentration risk, industry stability, and historical collection patterns to determine funding parameters.

What ongoing responsibilities do businesses have with receivables lending? Receivables lending requires maintaining accurate records, submitting invoices promptly, communicating customer issues, and following agreed-upon collection procedures.

Statistics on Receivables Lending

• 73% of businesses experience cash flow challenges due to late customer payments
• Average B2B invoice payment time in Canada is 49 days
• Receivables lending can provide funding in 24-48 hours versus 2-6 weeks for traditional loans
• 68% of businesses using receivables lending report improved cash flow predictability
• Invoice factoring market has grown 8.2% annually over the past five years
• 42% of small businesses have used alternative financing methods including receivables lending

Citations

1. Canadian Federation of Independent Business. "Business Barometer Survey: Payment Delays Impact." CFIB.ca
2. Bank of Canada. "Business Credit Conditions Survey." BankofCanada.ca
3. Industry Canada. "Small Business Financing Profiles." IC.gc.ca
4. International Factoring Association. "Global Factoring Statistics." Factoring.org
5. Financing Solutions Association. "Alternative Lending Market Report." FSACanada.com
6. Statistics Canada. "Business Financial Management Survey." StatCan.gc.ca
7. 7 Park Avenue Financial ."How Do Factoring Companies Work in Canada?". https://www.7parkavenuefinancial.com/accounts_receivable_finance_business_invoice.html