YOUR COMPANY IS LOOKING FOR A/R FINANCE ASSISTANCE!
Boost Your Business Growth with Invoice Factoring Solutions
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?
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
Account receivables factoring is a powerful financial tool that transforms unpaid invoices into immediate cash flow.
Unlock immediate cash flow and fuel your business growth with account receivables factoring.
INTRODUCTION
Account receivable financing in Canada is the Canadian business owner/financial manager’s way of reversing the curse. The curse? It's, of course, carrying your accounts receivable. And a receivable factoring program is one solid method of eliminating that curse. Let's dig in.
Healthy cash flow is crucial for the survival and growth of any business. Account receivables factoring, a financial solution that allows companies to finance invoices to a third party, provides an effective way to manage cash flow challenges and secure immediate cash flow and working capital.
THE BENEFIT OF ACCOUNT RECEIVABLES FACTORING
By leveraging this financing method, companies can convert their outstanding receivables into cash immediately, ensuring they have the necessary funds to meet their operational needs on a day-to-day basis, as well as capitalizing on opportunities for future growth.
For Canadian businesses, the level and importance of carrying A/R depend on several key elements. These include the quality of your customers, the size of individual transactions/invoices, and whether your product is a product or a service.
WHEN THE BANK SAYS NO
A/R financing addresses all of those issues. If your firm cannot qualify for traditional bank financing but can generate clean invoices that demonstrate your clients have received the products and services they have bought or contracted for, you, in effect, have unlimited access to business credit. That surprises many clients who feel challenged to obtain business cash flow/capital.
The other key point around a successful invoice factoring program is your firm's ability to take on an unlimited amount of business. Again, that surprises the Canadian business owner/manager who feels constrained in their ability to grow their business.
There is an exciting analogy we can make about the pricing around A/R finance. Many Canadian businesses offer a discount to their clients for prompt payment, typically in the 2% range. While most of your clients can't take that discount (they have their cash flow problems!), the pricing around a factoring program is quite similar.
By that, we mean that financing receivables works essentially the same way—you forgive that 2% to get all your A/R or as much as you want, immediately funded the day you bill for your products and services. Talk about coincidence!
BENEFITS OF A/R FINANCING STRATEGIES
One of the key ' power issues' around a receivables factoring program revolves around the issue of ' turnover'. While many view the financing as more expensive than bank financing (we’re assuming they think they qualify for unlimited bank financing!), the reality is that if you sell, finance your A/R, generate profits, and keep selling more and repeating that process, your firm is an instant winner in the profit/growth game. So yes, you should always weigh the cost of account receivable financing against all your alternatives. More often than not, you will find it's always there and always available.
ASSET TURNOVER IS THE KEY
By the way, your firm's owners, investors, and any lenders you have, term or otherwise, will always examine how you manage your cash flow, predominantly via current asset management.
Why are you always going to need some level of AR financing? If you're growing the number of receivables, it will grow commensurately with your level of sales. (That situation will worsen when if you manage your accounts poorly).
THE IMPORTANCE OF GOOD MARGINS
Your gross profit margin is always a factor when considering how you finance your A/R effectively. In a perfect world, you will have high margins high turnover and good clients. (It’s not an ideal world by the way!) A great way to track your effectiveness in A/R mgmt and financing needs is to chart sales and your A/R levels together.
So yes, carrying A/R is a curse of some manner. But don’t forget it allows you to grow sales, generate profits, and take your company to the next level. An effect factoring program via account receivable financing is a great way to address the issue.
WHAT IS THE BEST TYPE OF A/R FINANCING?
By the way, our recommended solution is CONFIDENTIAL A/R FINANCING, which allows you to circumvent the traditional factoring program and bill and collect your own accounts.
KEY TAKEAWAYS
-
Invoice Financing: Understand the process of converting invoices into cash by selling them to a factoring company.
-
Cash Flow Management: Learn how factoring improves cash flow by providing immediate funds.
-
Factoring Companies: Identify the role and selection criteria for companies that offer factoring services and understand accounts receivable factoring cost
-
Working Capital: Discover how factoring boosts working capital for operational needs and growth prior to collecting payment when payment terms are not met by customers
-
Business Financing: Explore the broader impact of factoring accounts receivable on a company's overall financing strategy.
CONCLUSION
Call 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor with a track record of business financing solutions.
FAQ
How does accounts receivable factoring work?
Account receivables factoring involves selling your unpaid invoices to a factoring company at a discount in exchange for immediate cash. The factoring process can fund commercial or government clients
solution provides quick access to funds without waiting for invoice payments until the customer pays - thereby preventing cash flow issues
What are the primary benefits of factoring?
Factoring improves cash flow, provides immediate working capital, reduces the burden of managing receivables, and offers flexibility in financing without adding debt to your balance sheet.
Is factoring suitable for small businesses?
Yes, factoring is especially beneficial for small businesses as it offers a way to manage cash flow, support growth, and handle operational expenses without incurring additional debt.
How does factoring impact customer relationships?
Factoring companies often manage collections, which can improve customer relationships by allowing businesses to focus on core operations while ensuring professional handling of invoice payments.
What types of businesses benefit most from factoring?
Businesses with slow-paying clients, seasonal cash flow needs, or those experiencing rapid growth can benefit significantly from factoring, ensuring steady cash flow and financial stability via the cash advance.
What is the difference between recourse and non-recourse factoring?
Recourse factoring means the business remains liable if the customer fails to pay the invoice. Non-recourse factoring transfers the risk to the factoring company, where the factoring company takes responsibility, thereby protecting the business from bad debt. Many factoring companies offer both solutions and credit insurance.
How are factoring fees determined?
Factoring fees from an AR factoring company is typically based on your customer's creditworthiness, the volume of invoices factored, and the industry. Fees can vary, so it's essential to compare different factoring companies.
Can factoring help during economic downturns?
Yes, factoring and selling unpaid invoices to finance companies provides a reliable source of cash flow during economic downturns. It helps businesses maintain operations and meet financial obligations despite market challenges, similar to a line of credit to fund invoice value.
What should I consider when choosing a factoring company?
When factoring receivables, consider the company's industry expertise, factoring fee structure, and terms of the factoring agreement, as well as issues such as customer service and reputation in the market for accounts receivable financing.
How does factoring compare to traditional bank loans?
Accounts receivable Factoring Company solutions provide immediate cash flow without adding debt, unlike traditional loans or working capital term loans, which require lengthy approval processes and add to your liabilities.
How does account receivables factoring improve cash flow?
Factoring converts unpaid invoices into immediate cash, ensuring steady cash flow to meet operational needs and invest in growth.
What are the typical requirements to qualify for factoring?
Qualification typically depends on your customers' creditworthiness, the quality of your invoices, and your business's financial stability. Factoring companies evaluate these factors during the application process.
How can factoring fees affect overall profitability?
Factoring fees reduce the amount received from invoices, but the immediate cash flow and improved financial stability often outweigh the costs, contributing to overall business profitability.
