YOUR COMPANY IS LOOKING FOR FACTORING AND
RECEIVABLE FUNDING!
ACCOUNTS RECEIVABLE FINANCING & INVOICE FACTORING EXPLAINED
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!
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Factoring and receivable financing in Canada is growing in popularity - we feel this is for several reasons. One key reason is the current economic and financing environment in Canada - any financing strategy that is an alternative financing strategy to traditional bank financing is being assessed as an alternative by many Canadian firms.
IS BANK FINANCING MORE DIFFICULT TO OBTAIN?
As bank financing and traditional working capital facilities become more difficult to obtain firms look to alternative methods such as receivable financing facilities.
HOW FACTORING WORKS AND IS IT RIGHT FOR YOUR FIRM
Only two key issues remain unknown to the Canadian business owner - how does A/R finance work, and is it the appropriate type of financing for my firm?
Factoring companies provide for the immediate sale of your accounts receivable. You get the cash as soon as you invoice - sounds great so far, right? The receivables you sell must be current; current is usually defined in the Canadian marketplace as any receivable less than 90 days. As your receivables approach 90 days you can be forgiven for thinking they might be uncollectible, so you might not want to sell them and be responsible to the lender for repayment of the cash advanced against that receivable.
CONCERNS VERSUS BENEFITS AROUND A FACTOR FACILITY
While pricing, customer perception and some other miscellaneous issue might seem a deterrent to your consideration of a factor-type receivable financing facility we would quickly point out some of the benefits. The bottom line is that under a pure factor facility (more about that later) you are out of the collection business. The factor collects the receivable and notifies you accordingly.
Companies usually define working capital around accounts receivables and inventory investments. The freeing up of receivables for cash allows the business owner to free up capital tied up in inventories.
RECEIVABLE FINANCING PROVIDES INSTANT CASH
Many firms find it both times consuming and tedious to report to banks and other lenders on their receivable levels and margining capability. Factoring or receivable financing is as close to instantaneous as you can get. If you need cash flow ( all companies do ! ) , factoring provides you with almost same day cash.
HOW OLD SCHOOL INVOICE FINANCE WORKS
Previously we spoke of a pure factoring facility. The type of factoring that is prevalent in Canada is based on the traditional model of U.S. and European factoring companies - that process is quickly summed up as follows:
You bill your customer
The Factor buys your invoice immediately - you receive cash the same day or within 24 hours
The factoring company collects your invoice
Your firm absorbs the financing fee on the transaction
IS THERE A BETTER WAY TO RECEIVE THE BENEFITS OF FACTORING - YES THERE IS - IT'S CALLED CONFIDENTIAL RECEIVABLE FINANCE
While this method of financing works it’s not optimal sometimes from an ‘ optics’ perspective! Is there a better way? There is! Not all Canadian firms know that some factor facilities allow you to bill and collect your own receivables.
This eliminates the intrusion of third party finance firms - "the factor 'calling your customer, who has never heard of them by the way, for money. That’s why at 7 Park Avenue Financial we recommend Confidential A/R Financing creating a win/win when it comes to working capital and cash flow finance that puts you in control!
HAS NOTIFICATION A/R FINANCING HELD YOU BACK?
Canadian firms have been much slower to catch on to factoring primarily because of the customer intrusion level which they equate with their own customer's perception of their viability.
In summary, we have highlighted some of the benefits, as well as some of the perceived negative aspects of factoring or funding receivables in Canada. As in all aspects of business, Caveat Emptor (buyer beware!).
CONCLUSION
Choosing a reliable and experienced factor partner will allow the business owner to maximize the benefits of factoring services while minimizing the negative aspects of this solid alternative financing scenario.
Factoring - it works if you make it work. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your firms working capital and receivable financing needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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