Always Business Cash Flow Challenged? Here’s Why And One Solution

OVERVIEW – Information on business cash flow solutions in Canada . How does the role of the AR factor contribute to a positive cash flow and working capital financing balance

Business cash flow
pretty well always comes with challenges. The A/R factor has emerged as a solid solution that has stayed constant through turbulent and normal times. What then are the benefits of such solutions, which type is best, and just how do things work? Let’s dig in.

In business it’s all about performance and the ability to generate cash flow and working capital from A/R financing can be a solid contributor to that performance.

Why does a business owner/manager choose an ‘ AR FACTOR’ more traditional Canadian chartered bank financing? The process seems simple enough once we explain it to clients – it’s the ability of your company to generate immediate cash against your sales. This can happen, at your choice, periodically, i.e. weekly, monthly, etc, or constantly… ie all the time!

It should be no secret that the primary ‘ collateral’ of this method of Canadian business financing is your actual accounts receivable. Bank lending, in contrast, relies on that same collateral, but places a very large amount of emphasis on historical and present profits, clean balance sheets, and business and personal collateral. Suffice to say that that latter combination provides a strong safety net for our Canadian banks.

Utilizing an AR factor in Canada is almost always a short term or intermediate solution to a growing company, or one has faced and is fixing some challenges. Using Europe as example top experts tell us that anywhere from 15-30% of all businesses in the SME sector (small to medium enterprise) have used A/R financing solutions as offered by commercial finance firms. Those same experts also draw a very clear conclusion that financing A/R outside of the bank plays a large role in economic development.

Cash flow that is generated from an A/R factor solution is used for a variety of reasons – it’s ‘ asset monetization’ and is not term debt of any sort. For that reason the business owner/manager has the flexibility to use funds for immediate needs primarily related to growth and operations. Think of it as a ‘ buffer ‘ to ongoing working capital requirements.

So why don’t more business access business cash flow via A/R financing. Studies tell us that one major reason is Canadian business simply doesn’t know about this solution. They also tell us that there are key misconceptions around what type of company is using these methods. It might surprise many business owners/managers that the largest and most well known of corporation’s access this same financing vehicle… in certain cases the Bay street gang just gives it a fancier name – such as Securitization.

Cost also plays a factor in the adoption of the use of an AR Factor. It’s critical to understand also that this method of financing works best in a normal or high growth environment. Companies that are in a downward sales spiral would not benefit from the solution.

Still others feel its complex to administer on a daily basis. While that might be true our recommended client solutions, CONFIDENTIAL RECEIVABLE FINANCING allows for the business to bill, collect and cash flow their sales in a completely confidential manner.

So bottom line, the AR factor solutions is NOT a loan, it’s not a bank overdraft facility, it’s simply a method to cash flow sales on an ongoing basis in an unlimited manner. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your A/R financing and growth needs.

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 :


Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:Business Cash Flow
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 905 302 4171

Office = 905 829 2653

Email =

‘ Canadian Business Financing with the intelligent use of experience ‘

7 Park Avenue Financial
Canadian Business Financing