A Review Of The ‘ Good Bad And The Ugly ‘ Of A/R Finance In Canada

OVERVIEW – .Information on invoice discouting in Canada . Factoring invoices is the new kid in town when it comes to a working capital and cash flow solution


Invoice discounting in Canada. It’s one a couple terms Canadian business owners use for the concept of ‘ factoring invoices ‘ in Canada. We can safely say that Canadian business owners/managers view this method of financing as somewhat of their own review of ‘ THE GOOD, THE BAD, and AND THE UGLY ‘. Let’s dig in.

No business owner or manager in Canada, especially in the start up to SME sector business denies that financing a business is a challenge. So when exactly does utilizing A/R finance make sense, and when does it get ‘ good ‘ and how you prevent ‘ bad’ and ‘ ugly ‘?

Utilizing invoice discounting is probably the easier one for us to address first, with a viewpoint to allowing you to see quite quickly if you’re a solid candidate for this method of financing. Typically you will find yourself in one of probably 3 different situations.

First, you  find your firm is unable to access traditional chartered bank financing in Canada. In some cases you do have access to bank capital, but… it’s not enough. That’s very simple because our banks focus heavily on a small handful of criteria that all must be in place – they include profits in your firm, cash flow coverage, strong personal credit of the owners of the business, etc.

We can absolutely say that thousands of firms that could never qualify for bank credit in Canada access daily millions of dollars in commercial financing via factoring. The quick explanation for this seeming conundrum is simply that factoring, a subset of asset based lending, focuses on your assets, not necessarily your performance. Hopefully you’re constantly striving to improve financial performance. Otherwise, your business is probably a hobby as opposed to a business!

Growing is the other component of what drives the success of A/R finance in Canada. Banks typically prefer regular steady growth. The business owner and entrepreneur would love to generate 10% growth per annum neatly in the future. But business life doesn’t work that way. Large opportunities emerge that the owner / manager wishes to seize. It’s at that time that invoice financing comes to the rescue.

Our third category. It’s simply allowing your company to be more diverse. That might include taking on larger deals and contracts, selling into the U.S. or other foreign markets, launching new product lines, etc.

All of the above scenarios lend themselves to a Factoring/invoice discounting solution.

So, if that’s the ‘ GOOD ‘, what then is the bad and ugly?! We can boil that down into a few very helpful tips. First of all, consider a confidential accounts receivable financing solution that doesn’t involves your suppliers or clients when it comes to how your firm is financed. Traditional factoring (we call it ‘old school ‘ ) can only be viewed as cumbersome when it comes to the paper trail that is required and notification to clients, etc. Also, make sure to get a handle on pricing as not all parties make understanding that simple. And it is simple if you are dealing with the right firm or advisor.

So, if your working capital financing is ‘ broken ‘ consider ‘ unbreaking’ it with a solid invoice discounting and factoring solution. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with surmounting the business finance challenge.

Author: Stan Prokop – founder of 7 Park Avenue Financial


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

7 Park Avenue Financial = Sale Leaseback Financing


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 302 4171
Email = greg@7parkavenuefinancial.com

7 Park Avenue Financial
Canadian Business Financing