YOUR COMPANY IS LOOKING FOR FACTORING!
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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?
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
Canadian companies continue to look at Factoring, also known as Receivable Financing (and also known as Receivable Discount / Cash flow financing!) as a very viable working capital alternative. This type of facility works for Canadian firms for the following basic reasons:
-It is an alternative to chartered bank financing which the company cannot always obtain
-It provides high advance rates on all receivables
-It has the ability, under the right circumstances, to be combined with an inventory and purchase order facility -
Why does the Receivable Financing Facility seem complex to a lot of Canadian business owners and financial managers -
It plain and simple seems confusing at times. Why the confusion.? We suppose it’s because a fragmented market. The receivable financing 'battleground' in Canada is made up of the following types of firms -
*Some Canadian chartered banks (they offer a factoring facility as an alternative to bank operating lines)
*Subsidiaries Branches of Larger U.S. and International Factor firms
* Canadian owned and managed factor firms
We would note that all of these firms have different geographical preferences, some have market niches, and some do not have the capital to service all the customers they acquire.
Most Canadian businesses have heard the basics of factoring - it all seems quite simple - Your company sells products, issues an invoice, ' factors' the invoice, gets paid immediately by the factoring firm, and the whole process starts over.
However, we caution business owners that a great deal of care and diligence is required in picking the right partner firm. The key issues the business owner should understand thoroughly are:
What is the size, reputation, and financial credibility of the Factor firm I am considering (This firm in certain situations will be in direct, yes very direct! contact with your customers - You will want to ensure they are professional, have a solid back-office operation, and understand at least a bit of your business.)
Is there an alternative to having such a firm contact your clients? There is, and its called Confidential receivable financing. This type of facility allows you to bill and collect all your own receivables, still utilizing the key benefits of A/R factor financing. It is clearly the optimal solution.
A receivable financing facility in Canada is right for your business if you as a business owner are experiencing either failure or difficulty in arranging traditional bank operating facilities. From start to finish a full-fledged factor and receivable discounting facility should be able to be implemented in a couple of weeks. Negotiating a bank operating facility with covenants, disclosure, additional collateral, etc can take many weeks, often much longer than that.
Factoring will also meet your business financing needs if your firm is in high growth mode. Most business owners are surprised to find out that high explosive growth is not necessarily desired by traditional banks, trust companies, credit unions, etc. That is because of the volatility in cash flows, financial ratios, etc., as well as the constant need to revise the facility.
Although a factoring facility is often perfectly suited to the growing firm or the firm that has challenges obtaining traditional financing it is a more expensive type of financing. Although 95% of the time the factoring solution will have a higher cost attached to it many customers will benefit and offset those costs by selling more, collecting quicker, and turning inventory over more profitably.
All of those are very measurable in financial calculations and Canadian business owners often fail to take them into account when confronted with the 'sticker shock 'of factor pricing. It can be very technically proven via solid financial analysis that this type of financing in fact is a solid cost alternative to traditional financing, which comes at a perceived much cheaper cost.
In summary, a factoring facility will meet your business financing needs, providing you with unlimited working capital as your receivables grow. It can also, with the right partners, be combined with other facilities that are very complimentary.
If a Canadian company wants to understand how this financing works, who the credible players are,, and the nuances of different types of factoring seek out an speak to a trusted, credible and experienced Canadian business financing advisor who can .. you guessed it, clear the air!
Click here for the business finance track record of 7 Park Avenue Financial 
Stan Prokop 7 Park Avenue Financial/Copyright/2020
