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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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AR Factoring might well rank as one of the oldest professions in Canada. (Probably not the oldest profession you thought we were going to talk about!) How, though, do such solutions as confidential receivable financing and factoring invoices remain such tried and true working capital and cash flow solutions? Let's dig in.
The world of business financing must surely seem more complex than ever in today’s hi-tech world, a world of VC capital, private equity, etc. But even though business owners and financial mgrs can utilize technology to identify capital solutions, the rubber hits the road when real capital can be accessed through solutions such as receivables factoring.
The ability to generate cash when you make a sale is most welcome to most owners/managers and entrepreneurs! Naturally, factoring costs must be understood, as they are not priced in the same manner as an ' interest rate ' and need to be fully understood. Companies should have a good gross margin able to absorb a reduction in 1-2% profit. This type of financing is also called ' invoice purchasing ' but comes in a lot of flavours!
HISTORY AND THE MEANING OF FACTORING
We're told that a/r financing, i.e. ' factoring,' goes as far back as 1000 years B.C. However, our experience is that owners/mgrs still want the same thing as those early A/R financing practitioners - the ability to sell products and services and obtain cash to keep their business operating cycle rolling.
It's that liquidity that keeps business rolling. There are several different factoring forms, so uneducated borrowers can sometimes fall into the trap of utilizing the wrong type of facility or working with the wrong firm/lender. Factoring companies sometimes do a good job of confusing clients around fees, costs, notification issues, etc. Working with an expert will always allay those concerns.
Most business owners and their financial managers are often reluctant to take on business debt, and solutions such as confidential A/R finance solve that problem nicely.
The thousands of companies that utilize A/R finance today more often than not ' get it. ‘ For other clients that we meet and talk to, a certain amount of education is required around costs, benefits, and the many tech solutions that are now delivered through the A/R financing process.
HOW DO YOU FACTOR AND WHAT'S THE BEST FACTORING PROGRAM
The key benefit around ' Confidential non-notification ' AR financing is your firm's ability to bill and collect its own receivables while at the same time receiving as much cash as you need or want. You mind your own business.
Cash flow and working capital financing are all about ' current asset financing, ‘namely the finance of your inventories and receivables. Factoring / AR finance are actually ' subsets' of asset-based lending, which can also include turning your fixed assets into a part of your business credit line.
What drives owners/mgrs to consider financing receivables and other current assets? It simply the realization that profits and sales seldom equal ' Cash '! and the inability of your company to bridge that gap will often determine the true success of your firm and its business financing needs.
WORKING CAPITAL AND CASH FLOW SOLUTIONS
Confidential Receivable Finance - Solutions from factoring companies around accounts receivable financing
SR&ED Tax credit finance bridge loans
Asset-based non-bank lines of credit (combining A/R, inventory and fixed assets into one borrowing facility)
Unsecured cash flow loans
If you're focused on separating myth vs. reality around true, current asset financing strategies, seek out and speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor.
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