OVERVIEW – Information on working capital factoring in Canada . Why does the Receivable factor solution deliver on cash flow in a number of different situations that the Canadian business owner finds themselves in
It’s an interesting analogy if only for the fact that the receivable factor firm solution, properly done creates capital you never had. Let’s try and ‘connect the dots’ in those solutions so the business owner / financial manager sees a clear path to business cash flow freedom. Let’s dig in.
There are of course options in working capital finance – they include taking on debt under a working capital term loan or mezzanine unsecured cash flow loan; or the traditional route of Canadian chartered bank financing – theoretically available to all but unfortunately not always to those that need it most.
So why does financing your sales via A/R factor financing a logical step to business capital freedom? For a starter that low cost bank line of credit may not be available to your firm for many different reasons. If for any number of reasons your firm does not qualify for bank credit you’re back to square one… our version of business homeless!
Many firms have the most incredible problem imaginable – they are too successful and growing too quickly. That ‘ rush ‘ from getting a large new contract or purchase order or seeing sudden surges in sales brings working capital nightmares, as more and more funds are tied up in materials, inventory, and finally accounts receivable
In certain situations your working capital is required for expansion needed for lease/loan payments on new assets, or marketing and headcount growth. Many clients we meet do great business only at certain times of the year – that seasonality causes cash flow needs to rise and fall dramatically at certain times, sometimes unexpected.
One final situation is the whole issue of payment terms and collections. Even large corporations are often typically the ones that pay the slowest, and then there’s… the government!
While certain situations immediately disqualify you for bank financing (negative net worth, fluctuating profits and cash flows, huge jumps in sales revenues) it’s these exact situations which make your firm a solid choice to be financed by a receivable factor.
By the way, in many cases a working capital factoring solution can be a component of a ‘ total ‘ asset based lending deal, whereby your A/R, inventory and un-liened equipment are combined into on solid business line of credit. It’s typically called an ‘ ABL ‘ line by the pros.
Is there one type of receivable factor solution that works best? In our opinion it’s non -notification CONFIDENTIAL RECEIVABLE FINANCING , allowing you to bill and collect your own receivables, draw cash against sales when you need it, and only pay for what you are using .
If you want some help in connecting the dots in A/R financing solutions 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 in that ‘ homeless’ to ‘ rich’ transition in business capital!
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 FACTORING AND CONFIDENTIAL RECEIVABLE FINANCING EXPERTISE
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