OVERVIEW – Information on accounts receivable financing agreement solutions. A receivables loan allows your company to access daily cash flow needs while running and growing your company . Doing it properly is the consideration !
An account receivable financing agreement loan (by the way, it’s not a ‘loan’!) comes, as does all forms of financing, with some pros and cons. What is the secret then to maximizing the pros and eliminating or ‘ downsizing’ those cons? Let’s dig in.
An a/r funding program is one consideration for almost all Canadian business owners and managers, retail businesses excepted of course. When that struggle to obtain some, or the entire bank financing you need looms large and shortages of cash flow are an ongoing occurrence it just might be time to consider a commercial financing arrangement. The solution to the challenges you have in financing your business might then just be around the corner… if assessed and executed properly.
We’ve already referenced that A/R finance is not a loan in terms of taking on ‘ debt ‘. In actuality you’re simply cash flowing your 2nd most liquid asset – your receivables. The ability to monetize sales immediately into cash is probably the largest ‘ pro’ when it comes to accessing the working capital/cash flow you need.
Getting back directly to those ‘pros and cons’. The pros often seem easier to understand and assess, if only for the reason that thousands of businesses use commercial A/R finance everyday to run and grow their business. Almost irresistible right?
So is an accounts receivable financing agreement right for your company? In practice the simplicity of this finance is almost overwhelming – turning sales into cash pretty well the same day. The legal paperwork, similar to a bank credit line agreement, allows for A/R to be financed on an ongoing basis, typically with a 90% borrowing margin. By the way, bank receivable agreements only offer a 75% borrowing base.
So for companies that can’t or don’t want to borrow outside capital in the forms of debt/loans a/r invoice finance seems like a marriage made in heaven. The ability to monetize sales and transform your largest ‘ current asset ‘ into operating and growth opportunities has appeal.
Traditional ‘ old school ‘ receivable finance also gets you assistance in collecting your accounts – although those firms that wish to maintain being ‘ masters of their domain ‘ can choose CONFIDENTIAL RECEIVABLE FINANCING , allowing them to bill, collect, and fund their accounts with 100% control of their mgmt/staff. Using this method of ‘non notification ‘ keeps you 100% under the radar – let your competitors figure out how fast you’re growing.
So while those competitors are out there having to consider equity capital or even providing personal assets as collateral the A/R finance solution doesn’t force you dilute ownership, or, even worse, explain to the wife or husband why personal and business assets must be co mingled!
So… about those cons! When we talk to new clients about accounts receivable finance typically cost and the, shall we say ‘ stigma ‘ of a non bank solution require some healthy discussion. With respect to ‘ stigma’ hopefully the fact that some of the largest corporations in Canada and the world utilize this and other similar forms of non bank financing should remove any of that concern.
Because the cost in receivables agreements typically is 1.5 -2% per month, as a business owner/financial manager you need to balance that
against generating more profits, being able to buy products and services more efficiently, and being able to eliminate the huge investment require to finance A/R and inventory as you grow your business.
Working with the right advisor or the commercial receivable firm is key – as issues around contract length, financing rate, and being comfortable with the firm that you are dealing with is key. Turning the ‘ cons’ into a smart easy financing solution is the secret. 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 cash flow needs.
7 Park Avenue Financial : http://www.7parkavenuefinancial.com
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 100 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN ACCOUNTS RECEIVABLE FINANCING EXPERTISE
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
‘ Canadian Business Financing With The Intelligent Use Of Experience ‘
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
7 Park Avenue Financial
Canadian Business Financing