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Struggling to secure funding for your business? Confidential factoring can unlock your unpaid invoices and fuel growth, all without your customers knowing.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer CONFIDENTIAL FACTORING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
ACCOUNTS RECEIVABLE FINANCING SOLUTIONS
INTRODUCTION TO CONFIDENTIAL FACTORING IN CANADA
At 7 Park Avenue Financial, we're the first to agree that when one of Canada's newest forms of business financing just gets better, that’s clearly a good thing!
We're talking about confidential factoring, invoice services that finance accounts receivable for working capital and cash flow.
AFFORDABLE INVOICE FINANCING SERVICES
Canadian business owners and financial managers demand flexibility when seeking alternative financing methods.
If you choose the suitable facility, as in our case today, confidential accounts receivable financing, you have just converted 90% of your receivable investment into immediate cash flow availability.
HOW DOES YOUR BUSINESS BENEFIT FROM FACTORING
That benefit becomes even more dramatic when you consider this type of financing essentially gets larger as your sales increase; your financing ability travels in step with your sales increases.
Your revolving credit facility of confidential factoring becomes your new financing safety cushion.
While the majority of our clients use this type of financing for ongoing operations and growth, remember that you can use this finance mechanism for several other reasons, including acquiring a business or restructuring your company without the need for additional equity.
WHAT ARE THE KEY BENEFITS OF CONFIDENTIAL INVOICE FACTORING
Improves cash flow: By converting outstanding invoices into immediate cash, confidential factoring allows you to meet ongoing business expenses without waiting for customer payments.
Reduces workload: Absolutely. The factoring company handles the collection process, freeing you to focus on core business activities.
Maintains customer relationships: Certainly. Your business relationships are preserved since your customers remain unaware of the financing arrangement.
Flexible solution: Indeed. Depending on your needs, confidential factoring can be used for all or a portion of your invoices.
Boosts growth potential: Undoubtedly. With improved cash flow, you can invest in new opportunities and take your business to the next level.
BENEFITS OF INVOICE FACTORING COMPANIES
Many clients utilize this type of accounts receivable invoice service to combine their inventory and purchase order financing needs.
You've then created a triple combination of financing power for your firm outside of traditional Canadian chartered bank financing.
So, let's just backtrack a bit and ensure you understand the whole issue of confidentiality around C I D: confidential invoice discounting.
When you set up this type of facility, you effectively retain total control over your A/R function, which is billing and collecting your receivables.
FACTORING ACCOUNTS RECEIVABLE IN CANADA
Those familiar with traditional U.S. and U.K.-type offerings available in Canada know full well that this is not the case with the offering used by 99% of your competitors.
Those firms in Canada that use receivable financing but without a confidential facility have, in effect, handed over their billing, collection, and all-important client contact information to the factoring company.
Does that type of traditional factoring work? Absolutely. It’s just that confidential A/R financing puts you in control, not your finance company.
You bill and collect your receivables, without any notification to clients, suppliers, etc.
Canadian businesses are, of course, used to paying for added value. That’s just common sense. So, our clients can, of course, be forgiven for asking if confidential factoring services cost more. The answer is NO!
Your advance rate and financing charges are the same with confidential factoring as they would be in the traditional form of notification model used by your competitors.
We would add, however, that to take advantage of confidential receivable financing, a typical A/R portfolio should be at least in the 250k range.
There is no actual upper limit on the size of any facility.
Accounts receivable financing has filled one of the biggest voids in Canadian financing.
It is often misunderstood, in no thanks to some of the firms that offer it. If your company is growing and unable to attract more traditional financing than confidential, then invoice services such as we have described are for you.
The optimal situation is when your cash flow is drained because your sales are growing, requiring you to maintain higher levels of A/R, inventories, etc.
KEY TAKEAWAYS
Process: Businesses sell unpaid invoices to a factoring company in exchange for an immediate cash advance
Confidentiality: Customers remain unaware of the factoring arrangement in this factoring facility
Benefits: Faster access to cash, improved cash flow, reduced credit control burden.
Fees: Factoring companies charge fees based on invoice value and turnaround time in invoice finance facilities
Suitability: Ideal for businesses with slow-paying customers or needing short-term working capital.
Three uncommon takes on confidential factoring:
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Confidential factoring is a competitive advantage in bidding for large contracts
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Using confidential factoring to support rapid international expansion
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Leveraging confidential factoring to navigate seasonal business fluctuations
KEY TAKEAWAYS
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Invoice selection: Choose high-value, reliable invoices for optimal cash flow impact
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Credit assessment: Understand customer creditworthiness to minimize risk
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Advance rates: Grasp how factoring percentages affect immediate funding
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Fee structures: Comprehend cost components for informed decision-making
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Recourse vs. non-recourse: Recognize risk allocation between factor and business
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Confidentiality measures: Implement strategies to maintain customer relationships
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Integration with accounting: Streamline processes for efficient financial management
CONCLUSION - FACTORING RECEIVABLES AND FINANCING SERVICES
Want to understand the nuances better and, yes, the benefits of factoring invoice services in Canada, and which one works best for your firm?
Call 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor today.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
How does confidential factoring differ from traditional bank loans?
Confidential factoring provides immediate cash by selling invoices, while bank loans involve borrowing money. Factoring is based on your customer's creditworthiness rather than your business credit. It's typically faster, more flexible, and doesn't create debt on your balance sheet.
What types of businesses benefit most from confidential factoring?
Businesses with longer payment cycles or high-volume invoicing often benefit most. This includes industries such as manufacturing, distribution, staffing agencies, and service providers. Companies experiencing rapid growth or seasonal fluctuations also find confidential factoring particularly useful.
Can I choose which invoices to factor ?
Yes, you can typically select which invoices to factor. This flexibility allows you to factor only the necessary invoices to meet your cash flow requirements. However, some factoring companies may have minimum volume requirements or prefer to factor all invoices from certain customers.
How quickly can I receive funds through confidential factoring?
Once your factoring agreement is set up, you can usually receive funds within 24-48 hours of submitting an invoice. The initial setup process may take 1-2 weeks, but after that, funding is rapid, allowing for quick access to working capital.
Will confidential factoring affect my relationships with customers?
Confidential factoring is designed to maintain your existing customer relationships. Your customers are not notified of the factoring arrangement, and you continue to manage all customer communications. This confidentiality helps preserve your direct relationship and avoids any potential stigma associated with factoring.
What financing options are available for small businesses?
Many options include bank loans, lines of credit, small business grants, and alternative financing solutions like invoice factoring.
How can I improve my chances of securing a business loan?
Building a strong credit history, having a solid business plan, and presenting a clear financial picture can increase your chances of loan approval.
What are the drawbacks of traditional bank loans?
Qualifying can be challenging, and the loan approval process can be lengthy. Additionally, loan repayments can strain your cash flow.
Are there financing options that don't require good credit?
Invoice factoring can be a good option for businesses with less-than-perfect credit, as the focus is on customers' creditworthiness.
How do I choose the right invoice finance facility financing solution for my business?
Consider your needs, cash flow situation, and long-term goals when evaluating financing options.
Is confidential factoring the same as invoice factoring?
Both involve selling invoices to a factoring company for immediate cash. However, confidential factoring keeps the arrangement hidden from your customers while you manage cash flow and finance invoices.
How much does confidential factoring cost?
Fees for factoring costs typically range from 1% to 2% of the invoice amount, depending on factors like invoice volume and the creditworthiness of your customers.
