Pleading Guilty On Understanding Receivable Finance Options ?

OVERVIEW – Information on receivable finance options for Canadian business. What solutions are offered in non bank cash flow financing

Are Receivable Finance Options and cash flow financing in Canada an entitlement? We’re told of course that that term is a ‘ feeling or belief’ by the business owner that they ‘ deserve to be given something such as a ‘ special privilege’ when it comes to understanding what their choices are in business financing. Let’s dig in.

So when clients come to us looking for receivable finance options is all about really one of two choices – The Canadian chartered bank solution or the use of a non bank commercial finance firm that provides A/R financing services in a manner that the banks can’t and don’t.

But which one is for your firm.

If you of course can access bank financing it’s about 2 things – low cost, tempered with ability, or inability! to qualify for all the capital you need to operate, and grow your business.

Receivable finance via an invoice factoring/discount solution gives you unlimited access to cash flow financing, but has the business owner rationalizing costs and different procedures.

The essence of the whole debate revolves really around how the two different methods are documented. In the case of the bank it takes a general security agreement on your A/R and takes an assignment of all your present (and future) receivables. You then borrow up to 75% of your outstanding AR that is under 90 days old. The banks logic is that if your accounts are older than 90 days that’s your problem, not theirs! By the way, we agree, as you ability to manage your credit granting to clients is one critical factor in business success. It’s the cash flow!

A/R Invoice financing works differently. Under that mechanism, in our ‘ not a bank ‘ solution you have paperwork that allows the finance firm to, on an ongoing basis, ‘ buy’ your receivables, typically at a 98 – 98.5% discount. That basically closes the transaction off. One way to look at it is that the finance firm takes a commission for allowing you to generate instant, same day cash flow.

Same day Service?

What do we mean by that ?Simply that when you are financing cash flow needs via receivable finance you have the ability to access working capital/cash flow at the same time you generate sales. You have turned your company into a cash flow machine. Congratulations on that!

Naturally you don’t have to finance every sale you make, the prudent business owner and financial manager simply accesses cash as they need it as they sell products and services and grow their company.

One more tip. We strongly recommend CONFIDENTIAL A/R FINANCING, allowing the business owner to bill and collect all their accounts, finance them, without any knowledge of other parties such as suppliers, clients, etc. It’s simply the bank alternative.

Looking for more info on AR financing? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your receivable finance options. Don’t please guilty to being unable to access the business financing entitlement you deserve – choices!

Author: Stan Prokop – founder of 7 Park Avenue Financial

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of 90 Million $$ of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:


Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171