Receivable Finance Canada: Finally Your Clear Explanation Of Factoring & AR Financing
Stan Prokop
Canadian Business Financing | Cash Flow Financing | Asset Based Lending | Equipment Finance | Lender Financing | Purchase Order Financing | Acquisition Financing | SAAS Financing | Acquisition Financing
How To Eliminate??The Hail Mary Pass on Canadian Receivable Financing Techniques
YOUR COMPANY IS LOOKING FOR? RECEIVABLES FINANCE? 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?
CONTACT:
7 Park Avenue Financial South Sheridan Executive Centre 2910 South Sheridan Way Oakville, Ontario L6J 7J8
Direct Line = 416 319 5769
Email = [email protected]
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"Cash flow is the lifeblood of business, and managing it effectively is crucial for growth and stability."
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Struggling with cash flow issues? Discover how invoice factoring can provide instant relief and fuel your business growth.
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7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Accounts? Receivable Financing Invoice Factoring ? another? working capital solutions ?– Save time and focus on profits and business opportunities
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7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
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ACCOUNTS RECEIVABLE FINANCE - CANADA
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Understanding the Basics of AR Financing
The Fear of the Unknown
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Receivable finance generates somewhat of a ' fear of the unknown' when we talk to clients who are business owners / financial mgrs looking at AR Financing , commonly known as ' factoring.'
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The problem, though, is that with so much diversity in the market, the offered solutions are often ' reheated' or misunderstood. Not knowing the different nuances often leaves your company feeling like it needs a ' HAIL MARY PASS' for its Canadian Receivable Financing needs.
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The solution?
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Understanding the offering and how it works and benefits your firm. Let's dig in.
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The Hail Mary Pass Analogy
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A ' Hail Mary Pass'? That's the legendary term coined by NFL great Roger Staubach. He actually borrowed it from two 1930s players at Notre Dame who coined the term when they needed a last-chance, ' low probability' pass that needed divine intervention!
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No divine intervention is needed here, just common sense.
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Owners/finance mgrs must consider A/R financing as a business line of credit against receivables. Simple enough. But not so fast. Because the paperwork of ' factoring' shows that you don't have ' ownership ' of the A/R, specific terms must clearly be understood. Let's cover off some key basics.
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Key Aspects of AR Financing
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Borrowing Capacity
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Your borrowing ability on your factoring line of credit will always be based on specific collateral, i.e. the amount of your outstanding invoices, typically less than 90 days old. (Older invoices are deemed uncollectible).
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Advance Rates
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A typical client's question is, " How much can we get?" The answer is that your advances will often be 90% of your outstanding A/R as an advance rate with a fixed monthly fee.
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Costs and Fees
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Cost? Financing costs are higher in factoring. However, you can lower your expenses by up to 50% or more if you focus on strong clients' collections. Simply speaking, the time your clients take to pay determines your financing costs.
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Miscellaneous fees abound for many offerings, which can increase your cost. These include closing fees, ' facility fees,' aka standby fees, termination costs, monitoring costs, and up-front deposits. Our answer to all of the above - with the right lender pretty well, none of the above should apply to your finance offering.
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Considerations for AR Financing
Ideal Scenarios
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Receivable finance works best when your sales are constant or growing... We caution our clients who might be in high distress of flagging sales that entering into the wrong financing arrangement causes negative cash flow because borrowings will mostly go to reducing the credit line.
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领英推荐
Confidential Receivable Financing
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Have we forgotten anything?
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Our recommended facility for almost all our clients is Confidential Receivable Financing , which allows you to bill and collect your own invoices without the required notification to your clients that 99% of the industry needs. It's much better than the 'reheated' versions of old-school factoring offered by most Canadian firms.
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Three Uncommon Takes on Accounts Receivable Financing Invoice Factoring:
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Key Takeaways
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Conclusion
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Accounts receivable financing, or invoice factoring, revolutionizes how Canadian businesses handle cash flow by converting unpaid invoices into immediate working capital.
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Our bottom line?
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Call 7 Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor who can assist you in determining the total cost, as well as benefits of ' factoring,' including comparing the facility to a bank line of credit. Common sense Canadian business financing - no Hail Mary Pass needed!
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FAQ
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What are the benefits of invoice factoring for my business?
Invoice factoring provides immediate cash flow by converting unpaid invoices into working capital, helping you manage expenses and invest in growth opportunities. You can immediately receive a large percentage of the total invoice value as a cash advance for healthy cash flow.
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How does accounts receivable financing impact my credit rating?
Using accounts receivable financing does not directly impact your business credit rating, as it relies on your customer's creditworthiness.
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What costs are associated with invoice factoring and accounts receivable finance?
Costs for factoring and accounts receivable typically include factoring fees and interest rates, which are based on the volume of invoices and the terms of the agreement.
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Can invoice factoring help with seasonal cash flow issues?
Yes, invoice financing/factoring via a factoring company can provide the necessary cash flow during seasonal fluctuations, ensuring your business remains operational and competitive.
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How do I choose the right factoring company ?
Consider factors financing company fees, customer service, and reputation. It's important to select a provider that aligns with your business needs and growth goals.
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What is the difference between invoice factoring and traditional loans?
Invoice factoring and receivables financing provide immediate cash based on outstanding invoices, whereas traditional loans involve borrowing funds with repayment terms and interest rates.
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Can small businesses benefit from accounts receivable financing?
Absolutely. Invoice receivable factoring is especially beneficial for small businesses needing quick access to cash without taking on additional debt or a traditional bank loan they cannot qualify for.
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What are the common misconceptions about invoice factoring?
Common misconceptions include the belief that it's only for businesses in financial distress or that it negatively impacts customer relationships.
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What types of businesses typically use accounts receivable financing?
Small to medium-sized businesses across various industries use accounts receivable financing to improve cash flow and manage growth.
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How long does it take to receive cash from invoice factoring?
The process for accounts receivable factoring is usually quick for the upfront payment financing solution, with funds often available within a few days of submitting your invoices for cash upfront.
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What should I consider before entering into a factoring agreement?
Evaluate the costs of factoring companies compared to bank loans, the factoring company’s terms, and how the arrangement will affect your cash flow and business operations.
' Canadian Business Financing With The Intelligent Use Of Experience '
?STAN PROKOP 7 Park Avenue Financial/Copyright/2024
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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