Factoring Accounts Receivable Financing Canada | 7 Park Avenue Financial

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Factoring and Accounts Receivable Financing In Canada
Kick Back – Relax – And Find Out One Way How To Get Rid Of The Cash  Crunch  



 

YOUR COMPANY IS LOOKING FOR FACTORING AND ACCOUNTS

RECEIVABLE FINANCING IN CANADA! 

AR FACTORING SIMPLIFIED

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

 

what you need to know about invoice factoring and factoring companies in canada

Most Canadian business owners and financing managers often seek out factoring accounts receivable financing/invoice factoring from a factoring company as a quick way to get out of a cash flow crunch when other more traditional methods of financing have been exhausted. 

 

GENERATING SALES ISN'T THE PROBLEM - COLLECTING RECEIVABLES PROMPTLY IS

 

Typically clients tell us that sales or revenue generation is not the problem, with the bigger challenge simply converting those sales into cash flow and working capital. Factoring comes at a higher price than traditional bank financing, but most Canadian business owners recognize that other options are limited. Their situation is one of access to capital versus cost of capital.

 

RECOGNIZING  CASH SHORTAGES AND ADDRESSING THE PROBLEM

 

When you recognize that a cash crunch often comes from your success, it is often much easier to rationalize factoring as a solution.

 

THE RISE IN POPULARITY OF FACTOR FINANCE IN CANADA

Factoring and funding solutions via factoring companies in Canada is slowly catching on as a true financing option – many parts of the economy now view this financing method as a traditional method of financing the business – and the reality is that the big boys use it also, which many are not aware of.

HOW DOES FACTORING WORK? WHY DO COMPANIES FACTOR RECEIVABLES

 

Factoring your accounts receivable is also known as ' debtor finance,' whereby your business, via a factor agreement, sells accounts receivable to receive immediate cash. It's a simple, effective way to monetize sales.

New clients at 7 Park Avenue Financial ask us to explain the difference in factoring versus receivable financing. It's simply the paperwork essentially - in a bank arrangement, your paperwork specifies ' assigning' all your receivables, whereas a factor company's paperwork specifies selling the a/r.


When you utilize factoring, you are in effect selling your receivables as you generate them (at your option, of course) and receive immediate cash for those funds. Don’t let the literature fool you, though – you actually receive funding for  75-90% of your invoices (depending on who you deal with) and the balance is held back and then remitted to you when your customer pays.

 

invoice factoring and trade finance and invoice financing to get paid in a day

 

WHAT DOES FACTORING COST?

Naturally, from this final holdback amount, there is a financing fee or a discount fee. Many business owners view this financing or discount fee as an interest rate, when in fact, the factor finance firms always refer to this as a discount fee.

 

IS FACTORING CONSIDERED AS DEBT?

 

Factoring is not debt as neither your company nor the factoring company takes on debt to their respective balance sheets. You are simply monetizing a current asset - ' Receivables.'

 

WHAT ARE THE REQUIREMENTS FOR FACTORING FACILITIES

The prerequisites for factoring your receivables often revolve simply around the nature of your receivables and customers. Your final pricing or discount fee depends on several key factors. They are:

  • The overall risk profile of your firm – i.e. how you are doing!
  • The quality of your customer base re accounts receivables
  • The size of your receivables portfolio
  • The geographical scope of your invoices - foreign, i.e. U.S. receivables can also be financed.
  •  

You can also choose a non-recourse facility that allows you to transfer your current credit risk/bad debt risk to a factoring company.

 

TWO TYPES OF FACTORING - OLD SCHOOL AND NEW SCHOOL

 

What do you need to know about small business invoice factoring finance in Canada related to the U.S. and U.K. approaches to this type of financing?  Well, in Canada, there are two types of invoice discounting/factoring. Under the most commonly used method, the factoring firm you engage with works with you to invoice the customer, collect the payment, and monitor your overall credit quality.

 

If you view this overall business model and way of financing as somewhat intrusive and undesirable, then seek out the services of  7 Park Avenue Financial, a trusted, credible and experienced advisor who can provide you with a Confidential Accounts Receivable factoring facility that allows you to bill and collect your own receivables.

 

 

Many business owners we meet are concerned with suppliers and customers' perceptions when they find out you are factoring. That comes out of the issue that in the past, many firms that factoring generally was viewed as companies with financial problems. However, the new reality of financing a business in Canada in the year 2021, pandemics included !.., is that factoring is, in fact, a great way for healthy businesses to generate much-needed cash flow and working capital.

 

CONCLUSION

In summary, consider the cash flow benefits of factoring and accounts receivable financing of your receivables and payment to you within 24 hours when you cannot obtain the total amount of financing you need.  Determine if you are eligible (most firms are) and seek out a facility that meets your business financing needs.

 

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' Canadian Business Financing With The Intelligent Use Of Experience '

 STAN PROKOP
7 Park Avenue Financial/Copyright/2022

 

 

 

 

 

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil