Account Receivable Credit Solutions : Do You Know Them All? account receivable credit

OVERVIEW – Information on account receivable credit solutions in Canada. How does bank financing and factoring receivables differ in benefits, cost, and methodology .One recommendation offered works best

Account receivable credit solutions simply enhance the ability of Canadian business to facilitate business credit sales to customers. Whether its bank financing or commercial factoring receivables solutions these offerings put you in a position to eliminate what must sometimes seem like a ‘ bleak future ‘ when it comes to accessing business funding. Let’s dig in.

Novice entrepreneurs up to experienced savvy business finance folks are keenly aware of ‘ the gap ‘. It’s simply the time in between shipment or delivery of your product or service to the time you get paid – with 60 days feeling very much like the norm these days. A further complication? Traditional bank financing for revolving facilities is worth a million, but unfortunately no accessible by all.

Enter various forms of ‘ factoring receivables ‘ one of which might just be perfect for your business. We say ‘ one of ‘ because there are numerous offerings in the marketplace, making it easily confusing for the owner/financial manager.

The paperwork around various forms of factoring essentially does one thing – it identifies that receivables are being ‘ sold’ as they are financed, unlike the bank which simply takes the A/R as collateral. More often than not business factoring mirrors bank financing in your obligations – that is to say that you are still responsible for any bad debt.

The key benefit of a commercial non bank A/R financing solution often boils down to:


Amount of capital you can access

While bank credit lines typically have a ‘ cap ‘ a solid non bank facility will often have unlimited upside financing capability. Simply speaking – if you have sales and A/R you will have full funding.

Spoiler alert! Factoring receivables will always be more expensive than bank financing with a typical fee on each receivable being in the 1.5 – 2% range. Simply speaking, on a 10k sale to a client you will receive same day funding and can expect to pay 150-200$. Clients we have worked with have been able to significantly reduce that cost by taking similar discounts with their new found cash, or in some cases negotiating better pricing with their vendors. Clients also forget that it costs money to carry A/R.

Many clients we speak to have heard of, or wish to avoid the involvement of a Commercial factoring company in their business model and client relationship. Can that be achieved? It can, via the use of CONFIDENTIAL A/R RECEIVABLES factoring, allowing you to bill and collect all your accounts with no notice or involvement to your clients or suppliers.

If you’re not sure you understand all the benefits and mechanics of good and bad A/R financing offerings seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in turning that ‘ bleak’ cash flow future into a positive financial growth opportunity for your business.

Author Stan Prokop
– 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact : account receivable credit

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