OVERVIEW – Information on alternative financing in Canada. The type of solution delivered by a factoring company or asset based lender for cash flow requirements should be checked out and understood by all owners/managers via Small Medium Enterprise ( SME ) COMMERCIAL FINANCE
Alternative business financing for some folks might mean thoughts of their ‘ first trip to the rodeo ‘. Not us though, so we’re sharing some of the best factoring company cash flow solutions available in Canada today.
Many private companies in search of SME COMMERCIAL FINANCE solutions have the one pre – requisite for this type of financing: Sales and a customer base! These firms often cannot secure what we term ‘ traditional bank financing ‘ because they can’t satisfy some of the basic criteria for bank loans and business revolving credit facilities.
Those requirements? Strong financial statements, assets, collateral, cash flow, and positive credit history. Have we forgotten anything? Yes, that focus on personal guarantees. (Note – Personal guarantees are a part of almost any financing for small to medium businesses – but with Canadian banks they are a key focus point)
Why does receivable financing, aka ‘ factoring’ work so well then. For one reason it’s because your clients are often broadly diversified and represent a good credit risk to the lender in terms of diversification. Firms whose client base includes larger well known companies find themselves in even better shape when it comes to negotiating receivable finance rates and terms.
Our recommended solution in this whole area? We thought you would never ask! It’s CONFIDENTIAL RECEIVABLE FINANCING – Allowing your firm to bill and collect its own invoices, thereby financing all your sales, with no notification to any supplier, client, etc.! Check it out.
Firms that are ‘ service ‘ firms find themselves even in greater need than typical mfg type companies. That’s because one of their prime expenses is payroll which creates a high cash flow need, coupled with the fact that they don’t have a heavy investments in fixed assets, inventories, or other collateral. In the cases of ‘ tech ‘ firms their assets might in fact often be intellectual property of intangibles such as software, etc.
Even if your clients are overseas / international those receivables can also be financed under a factoring solution by adding a credit insurance component to your borrowing facility.
If there is one reason (among many) that thousands of business owners/financial mgrs utilize A/R financing is that it’s fast and flexible. In the case of growing companies the problem is even more basic:
Their revenues are growing faster than their access to credit lines!
Why does the factoring company itself like their business? Simple! They aren’t lenders per se, they don’t offer business debt, they are simply purchasing your receivables on an ongoing basis in order to provide your firm with working capital it needs. No new debt comes on your balance sheet.
Unlike our regulated Canadian banking system factor firms don’t have any of the legal of regulatory issues that challenge major Can financial institutions such as banks and insurance companies.
If you’re tired of chasing down financing solutions that make sense for your firm and industry seek out and speak to a trusted credible and experienced Canadian business financing advisor who can assist you with your cash flow and factoring company needs.
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