OVERVIEW – Information on factoring receivables in Canada . Using specialized offerings in Receivable Finance provides cash flow and working capital supremacy for your business . Account Receivable Finance tricks of the trade
Factoring receivables in Canada is a method in which your sales are turned into automatic cash. The good news is that no magician is required. And one or two little known tricks of the trade will allow you to maximize the benefits of A/R finance. Let’s dig in.
By the way, we’re the first to admit, and educate clients on the fact there is no replacement for ongoing proper management and due diligence on the receivables you generate from sales. We’re never more amazed when even clients with great customers of high quality neglect the ongoing importance of turning that AR investment into cash for operations and growth
And yes, there are other additional ways to generate cash – i.e. working capital term loans, refinancing of assets , bridge loans , monetizing any SR&ED tax credits etc ; but on an ongoing basis your investment in A/R is the next closest asset to cash on the balance sheet – enough said .
Why then is factoring receivables so popular. Part of the lure of this method of Canadian business financing lies in the fact that it’s a simple process. Once your initial agreement is in place (with the ‘right’ commercial lender) you have the ability to raise capital in any amount commensurate with your sales growth. At the right cost, and using what we feel is the best way to utilize factoring (we’re talking about CONFIDENTIAL ACCOUNT RECEIVABLE FINANCE) you have just turned your company into a cash flow machine.
What then are the advantages of Confidential AR Financing? The largest benefit should be self explanatory – it’s in the ‘ MIND YOUR OWN BUSINESS ‘ category, allowing you to finance your cash flow needs without your suppliers, clients etc knowing your financial strategy. 99% of receivable factoring in Canada requires that your clients be notified in this whole process. That is not the optimal strategy sought by the Canadian business owner and financial manager.
Utilizing Confidential Receivable financing is your method of a sales line of credit really; comparable to a bank facility but at a high cost. The trade off is that you have all the capital you need when you can’t access it through traditional sources
Here’s a good example of how the cost of this method of business financing works.
Let’s use a $ 10,000 invoice as an example. When you are in a position to invoice your customer for services rendered or product delivered you would pay approx 200.00$ for a 30 day ‘ loan ‘ on that balance. If your customer pays in 60 days (unfortunately many do!) the finance charge becomes $400.00. Remember though that cash in your bank is now used to generate more sales, grow profits , and you can even reduce your financing costs by using part or all of those funds to take discounts with your own suppliers – who now suspect you’re ‘ cash rich ‘!
If you’re looking to maximize the benefits of the ‘ right ‘ A/R finance solution 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 working capital 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 :
7 PARK AVENUE FINANCIAL = CANADIAN RECEIVABLE FINANCING EXPERTISE
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Canadian Business Financing