YOUR COMPANY IS LOOKING FOR
THE BEST A/R FINANCING SOLUTIONS!
ACCOUNTS RECEIVABLE FINANCING WORKS - HERE'S HOW!
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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
Oakville, Ontario
L6J 7J8
Receivables Discounting in Canada. We can't even imagine the positive feeling the Canadian business owner / financial manager knows when they have avoided the mistakes made by others when entering into a Finance Factoring facility. Let's explain!
WHAT EXACTLY IS RECEIVABLES DISCOUNTING
Receivables Finance, aka ' Invoice Discounting ' is a financing method by which your accounts receivable is funding for cash, typically at 90% of their value - the balance being remitted to your firm when your client pays- it's as simple as that.
GROWING SALES CREATES CASH FLOW AND WORKING CAPITAL NEEDS!
Your business is (hopefully!) profitable and growing. The only challenge (as usual) is cash flow and working capital. One method that gets a bit more popular every day is using an A/R financing strategy to ensure you've got sufficient capital to meet your business financing obligations, at the same time growing your business.
Receivables discounting is the method that allows you to ' cash flow ‘your sales at the same time you generate receivables. All of a sudden you're in a position to compete with the big boys when it comes to taking on new orders, contracts, etc. as the immediate cash you receive from invoice discounting makes you a ' player ' with the competition.
TAKING ADVANTAGE OF GROWTH OPPORTUNITIES FACTORING AND INVOICE DISCOUNTING
While business owners and managers would like to be able to ' train' their clients to pay promptly the reality is that can often be a lifelong project. All of a sudden those great clients are in fact the same ones holding you hostage to the sort of business opportunities you need and want to take advantage of.
Working capital term loans require a major long term commitment - receivable financing addresses the challenge immediately and moves lockstep with your sales growth, whether that's seasonal bulges or just continued steady growth.
But, while thousands of firms in Canada are gravitating to this method of finance you can clearly avoid some mistakes others have made along the way. Here's how!
Utilize factoring for your day to day business - funds used from your working capital accounts should in general NOT be used for long term financing needs.
HOW IS YOUR DSO ?
If you are growing or just have a long collection cycle invoice finance works well - if you are in dire straits and sales are plummeting this method of financing is generally not the right one.
THE BEST FACTORING SOLUTION ? 7 PARK AVENUE FINANCIAL RECOMMENDS CONFIDENTIAL A/R FINANCING
The majority of factoring finance facilities offered in Canada involves notification to your clients on amounts financed. Can you avoid this? You sure can, by considering instead a confidential A/R facility that allows you to bill and collect your own receivables.
RECOURSE FINANCING / NON RECOURSE
Also, don’t think that this method of A/R finance avoids bad debts and collection issues. You are always going to be paying for what you have borrowed - just as in a bank arrangement - so prudent credit policies and good collection policies are still VERY important whether you are dealing with a factoring company or a Canadian bank.
The general Canadian landscape for receivable finance facilities is in the 1.5-2% per month range. That means it will cost you 200$ on a 10,000.00 invoice if your terms are 30 days and if you've enforced those terms as we have recommended above.
HOW TO TAKE ADVANTAGE OF THE ADDITIONAL CASH FLOW VIA FACTORING
Also, don't forget to beat your competitors at the same game - used new founds funds to take discounts from suppliers and purchase more efficiently. You can reduce 1/2 of your financing costs if done properly, allowing you to effectively generate sales on your goods or services.
CONCLUSION
In summary, finding solid accounts receivable financing solutions such as invoice factoring and is always a good feeling. If you have avoided the mistakes made by your competitors it’s even a greater feeling! Avoid the emotional reactions from bad financing decisions when it comes to cash flow finance. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor to assist you with your cash flow needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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