Why Canadian Business Is Turning To Accounts Receivable Financing Via A Factoring Company For Survival And Growth

Balance the Cost and Benefits Of A/R Finance In Canada


Information on accounts receivable financing in Canada . How to determine the benefits and cost of using a factoring company for working capital.





Small and medium sized businesses in Canada are almost always facing a financial challenge with it comes to funding to both grow, and yes even survive. However unfortunate, the reality is that thousands of firms have somewhat limited options to meet the funding challenges of their business.

Is there a solution? The answer, simply, yes. One of those solutions is accounts receivable financing via a factoring company or invoice discounting firm.

So why do those thousands of firms consider a/r financing as an alternative to term loans , or even the costliest method of financing, giving up part of your owner equity . Simply because they are in a position, with the right knowledge, to utilize, rather... monetize one of the largest, if not the largest asset on the left hand side of their balance sheet , their receivables.

A/R financing simply speeds up cash flow and allows you to finance growth by monetizing your receivable portfolio, in whole or in part. The process itself is simple; it’s who you partner with and how you structure your A/R financing (and what you pay for it!) that becomes somewhat of a challenge for Canadian business owners and financial managers.

In Canada two types of working capital finance via invoice finance are available. Under the most common scenario you ' sell ' your invoices to your factoring company - they advance you the cash, pretty well the same day, and they begin a process to collect that receivable as it becomes due from your client.

The other alternative, less common but our absolute recommended solution is that same sale of your receivables, but with you doing all the billing and collecting. In both circumstances there is essentially no limit on the amount of financing you can attain - naturally you have to have the sales to support that financing, but more often than not with most clients we talk to sales isn’t the problem, financing is !

If we had to say what confuses, or concerns the majority of first time clients in accounts receivable pricing we would have to put it down to two issues, the cost, and the daily mechanics of this financing vehicle.

So what's the best way to both understand and justify the cost of A/R finance? This is where the ' rubber hits the road' so to speak. The best way we can explain it to a client is that you have to look at the cost of this working capital from a couple different angles. One is that you are already carrying accounts receivable, so you have a cost. If the clients are low margin profits to you and taking a long time to pay that cost is significant, often as much or more than the cost of A/R finance.

The other way to look at it is that there is a large value to cash in the ongoing operations of your firm. You can maintain solid relations with suppliers and vendors by paying them promptly, taking advantage of discounts, as well as capitalizing on the buying power of your new found cash. A typical discount on, say, a 100k invoice in Canada is $ 2,000. Simply speaking, it has cost you $2000, on a 30 day basis to receive $98,000 for your invoice. But, consider this, take that 98k now and negotiate better pricing of say 3% less on your vendor purchases, and pay your vendor on delivery or via a 2% prompt payment discount. That combination strategy has saved you 5%, plus, you're ' liquid'. Talk about a winning strategy.

The time it takes your clients to pay, as well as your monthly volumes ultimately dictate your pricing in accounts receivable financing in Canada.

As we said the benefits of utilizing a factoring company are quite clear. Unfortunately in Canada the method in which fees and benefits are presented often lack clarity to the first time A/R finance user. Want clarity on pricing and benefits of accounts receivable financing in Canada? Consider talking to a trusted, credible end experienced Canadian business financing advisor for info on this innovative working capital vehicle.







Stan Prokop - founder of 7 Park Avenue Financial –




http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 :


http://www.7parkavenuefinancial.com/factoring_company_accounts_receivable_financing.html

PO Funding and the Holiday Season

There are areas of the purchase order finance industry that are related to the retail industry - and thus the holiday season. If you do the math, most retailers will start placing their holiday orders in the summer (or late summer) so that their shelves have goods available for the Xmas holiday.

Of course, few invoice factoring and purchase order financing companies will share this information - but I'd be great if we could pool our data into a common index that showed economic health.

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Looking for information on purchase order financing? Read the purchase order finance blog

How Cable Installers Can Benefit From Factoring Receivables

The cable installation business can be very profitable – if managed properly. Most cable installers operate as subcontractors for large telecommunications or cable companies, such as AT&T, Adelphia or Comcast. This can be a great business model that makes a tidy profit for the cable installer. These companies make great customers and provide constant work and reliable payments.

Although working for large companies can be a great source of revenue, business owners need to get used to the fact that they pay their invoices 30 to 60 days after the work is completed. That means that as an owner, you must cover all payroll and all other business expenses while waiting to be paid. This can be tough, especially for new or growing businesses.

When faced with a cash flow challenge, most installers go to their bank hoping to get some business financing. However, they soon learn that getting a business loan is very hard. As a matter of fact, few loans are ever granted to cable installers. Fortunately, business loans are not always the best solution to this problem. In fact, there is a solution that works better than a loan. It is called factoring.

Factoring receivables can provide you with a reliable and predictable cash flow. It provides you with a substantial advance on your invoices, ensuring that you have funds to pay employees and suppliers. Receivables factoring works as follows:

1. You perform the work and send an invoice to the Cable or Telecommunications company

2. You send a copy of the invoice to the factoring company. The company provides you with an immediate advance. The advance will be between 75% and 85%

3. Once your client pays the invoice, the factoring company will give you with a second advance (the remaining 15% to 25%), less a small service fee

The fee will vary based on how much you invoice per month and can range from 1.5% to 3% per month.

One of the most attractive features of factoring invoices is that it is easy to obtain. Most cable installers will qualify provided that they do business with good customers (such as large cable companies) and are free of problems. Factoring invoices is an ideal solution for both established and new companies and can help propel your business to the next level.

About Invoice Factoring Group / Commercial Capital LLC


Searching for factoring companies? We are a leading factoring company and can provide you with a competitive accounts receivable factoring quote. For more information call (866) 730 1922.


Technorati tags: business financing business loan letter of credit purchase order financing

purchase order financing, po funding, po financing, purchase order funding

How Factoring Companies Can Help Staffing Companies Grow

One of the biggest challenges for staffing company owners is meeting payroll. Employees must be paid every week – without exception. However, paying employees can be very difficult if an agency does not have predictable or reliable cash flow. What is worse, waiting for a payment from a slow paying client can seriously jeopardize the agency’s ability to function.

This situation, unfortunately, is quite common in the staffing industry.

What is the solution? When owners or managers face slow cash flow their first instinct is to try and get business financing from their local bank. However, they soon learn that getting a business loan is very difficult. Most banks require that the owner have an extensive business history, spotless personal credit and substantial collateral. Unfortunately, small businesses seldom qualify for business loans.

Nevertheless, there is an alternative that can help you finance you staffing agency. It’s easier to obtain than a business loan, can be set up in days and is available to most business owners. And, it provides staffing agencies predictable cash flow.

The solution is called invoice factoring. Factoring provides you with an advance on your invoices from slow paying clients. That advance – available soon after you invoice for your work – can be used to cover payroll and other expenses. In effect, factoring receivables provides you with predictable cash flow enabling you to better operate your staffing company.

How does invoice factoring work? Well, it’s a simple solution. It works as follows:

1. You deliver a copy of the time sheet and invoice to the factoring company

2. The factoring company advances up to 90% of the invoice within 24 hours

3. Once the invoice by the customer the transaction is settled

Factoring fees can range from 1.5% to 4% per month and are based on your business volume and other criteria.

One of the most attractive features of factoring is that it is easy to obtain. Most staffing agencies will qualify provided that they do business with good customers and are free of problems. Factoring invoices is an ideal solution for both established and new companies and can help propel your business to the next level.

About Invoice Factoring Group / Commercial Capital LLC


Searching for factoring companies? We are a leading factoring company and can provide you with a competitive accounts receivable factoring quote. For more information call (866) 730 1922.


Technorati tags: business financing business loan letter of credit purchase order financing

purchase order financing, po funding, po financing, purchase order funding