YOUR COMPANY IS LOOKING FOR RECEIVABLE FINANCE!
The Accounts Receivable Factoring / Invoice Factoring Solution
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 - 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
An Accounts Receivable Facility in Canada transforms unpaid invoices into immediate working capital, empowering businesses to enhance their financial agility.
Boost your business's cash flow without waiting for payment—unlock the value of your invoices today!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ACCOUNTS RECEIVABLE FACILITY solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Canadian Business Financing with the intelligent use of experience
INTRODUCTION - ACCOUNTS RECEIVABLE FACILITY
Whether he or she likes it or not, Canadian businesses are somewhat obsessed with growth. This obsession might stem from the perception that to be successful, you have to grow. We're not 100% sure we disagree, but if your firm prioritizes growth, financing is probably a challenge you consistently face.
An Accounts Receivable Facility can provide an immediate cash solution for Canadian businesses. Finishing outstanding invoices gives businesses the capital to run and expand their businesses.
WHAT IS AR FINANCING? HOW DOES ACCOUNTS RECEIVABLE FINANCING WORK?
A/R Finance allows a small business or SME to raise funding by selling its accounts receivable invoices to a third-party finance company, a ' factoring company '. A discount fee, also called a ' factoring fee ', of approximately 1.5-2% is charged, allowing the company to cash flow sales revenues immediately on invoicing—thereby providing business capital for day-to-day funding via your receivables financing agreement.
The ' factor ' is a commercial finance company that funds your accounts receivable, charging a discount fee of approximately 1.5-2%, allowing your firm to generate cash flow immediately upon invoice if you choose. Companies should have decent gross margins to absorb the ' fee', often confused as an ' interest rate', which it is not! A factoring company is unlike a bank loan, as the bank takes an assignment of your receivables, while a factoring agreement specifies a 'sale', not an assignment.
We admit there might be some risks to not growing much, including competitors' ability to run all over you and even steal some of your people and clients.
RECEIVABLE FINANCING ALLOWS A COMPANY TO GROW - PROVIDING FUNDING FOR SALES REVENUES
One way to feel a lot better about ' growth ' is to utilize Accounts Receivable finance to enhance your overall return on capital. Your growth can come from only four areas. They include acquiring business your competitors previously had, raising your prices, seeing your industry grow as a whole, and finally, your potential acquisition of a competitor.
So, we suppose you could say we're getting a bit more converted to the concept of ' growth ‘... when it’s done properly.
Proper sales growth does bring more value to your company, but how do you get the financing to achieve it? One solution is factor funding of your accounts receivable—your second most liquid asset—cash being your first!
Typical factoring agreements are on a recourse basis - with your firm continuing to carry the credit and risk, although non-recourse factoring is also available. Naturally, a company has a further choice: to consider insuring accounts receivable against bad debt.
Receivable financing/accounts receivable factoring, considered ' expensive ' by some in fact is a very critical and valuable form of business financing in Canada... and becoming more so every day. It's simply an agreement between your firm and your chosen finance partner (choose one carefully!) to provide you with cash as soon as you generate sales. Suddenly, your balance sheet and perhaps some temporary operating losses aren't holding you back... you guessed it... growing!
The Canadian business owner and financial manager can probably immediately see the advantages here of this method of finance.
You are now in a position to improve relations with suppliers, take prompt pay discounts with cash now that you never had before, and all along the way, you don't have to deal with restrictive bank covenants. Oh, and finally, you’re on equal footing with competitors who have been taking that business away from your firm. Finally... a level playing field.
FACTORING PROVIDES UNLIMITED FINANCING AS YOUR SALES GROW
A common question from clients who suddenly see the benefits of factor funding and growth is, ' So what is the financing limit here?’ The answer? There is no limit—your sales, in effect, determine the limits you can finance against. Companies also have the choice to select non-recourse factoring, allowing them to transfer credit and bad debt risk of the invoice amount to the factoring company.
2 KEY CRITERIA FOR SUCCESSFUL FACTORING FUNDING
So, when does financing your A/R work best? The following conditions create a perfect storm for this method of finance:
Good gross margins
Pricing ability on your products and service
KEY TAKEAWAYS
-
Immediate liquidity: Selling invoices on the company's balance sheet before the customer pays to finance companies provides immediate cash.
-
Criteria for eligibility: Businesses must typically have creditworthy clients and unpaid invoices.
-
Cost considerations: Fees on funding accounts receivables are based on a percentage of the invoice and vary by provider.
-
Financial control: This financing does not require equity dilution or maintaining owner control.
-
Expedited funding: Funds can often be accessed within 24 to 48 hours.
CONCLUSION
Whether you consider the pricing of accounts receivable factor funding ' high' the ability to get fast funding and immediate cash on making sales, that flexibility to get all the funding you need in place is probably very much worth considering when considering factoring company and a factoring program for short term working capital.
If you're looking for information on accounts receivable factoring companies and how accounts receivable financing works, call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your Receivable finance needs.
FAQ
How can an accounts receivable facility benefit my business?
Using an accounts receivable loan facility allows your business to access funds immediately, via financing a/r on your balance sheet - this can be crucial for maintaining operations and seizing growth opportunities without waiting for payments.
What types of businesses are best suited for accounts receivable financing?
Any business that issues invoices with payment terms can benefit, especially those in industries like manufacturing, wholesale, distribution, and services.
What are the typical costs associated with an accounts receivable facility?
Costs for an accounts receivable financing agreement generally include a fee based on a percentage of the invoice amount, depending on the factoring company's terms, your industry, and the creditworthiness of your customers.
How quickly can I access funds through an accounts receivable facility?
Funds for invoice factoring are typically available within 24 to 48 hours after the financing company has verified and approved the invoices.
What is the main difference between factoring accounts receivable financing and traditional loans?
Unlike traditional loans or a bank line of credit , receivable loans via accounts receivable financing does not create debt or require collateral besides the invoices themselves, offering a quicker and often more accessible funding solution.
How does accounts receivable financing affect my relationship with my clients?
Your clients will be notified of the financing arrangement as their payments will be directed to the financier, but this does not typically disrupt client relationships if managed properly.
Is there a limit to how much funding I can obtain through accounts receivable financing?
The funding limit is generally based on the total value of your outstanding invoices and the credit limits set by the financing company, which can increase as your invoicing grows.
What happens if a client fails to pay an invoice under an accounts receivable facility?
Responsibility for non-payment depends on whether the facility is with recourse (you cover unpaid invoices) or without recourse (the financier absorbs the risk).
Can I select specific invoices to finance through an accounts receivable facility?
Yes, most facilities allow you to choose which invoices to finance, providing flexibility in managing your cash flow.
Are there any industries that are ineligible for accounts receivable financing?
While most industries are eligible, those with high customer credit risk or that typically receive payment at the point of service, like retail, may not be suitable.
What is the typical advance rate in an accounts receivable facility?
The advance rate is the percentage of the invoice value that the financier will pay upfront, typically ranging from 70% to 95%.
How do I evaluate different accounts receivable financing offers?
Compare factors in accounts receivable financing companies such as the advance rate, fees, contract terms, and client reviews to determine the best fit for your business needs.
What are the latest trends in accounts receivable financing in Canada?
Trends include the increasing use of digital platforms for faster processing and integration of artificial intelligence for risk assessment and management.
