How To Obtain The Best Receivable Financing In Canada And Why Factoring Receivables Works Best When

Your mission, should you choose to accept it? It’s finding a financing receivable strategy that works, is cost efficient, and allows you to mind your own business when it comes to this popular method of Canadian business financing!

Factoring receivables gains daily momentum in Canada – If you feel either confused, mis informed, or just generally out of sync with how this type of financing works and what it costs lets get you up to speed.

It’s actually not as complicated as you thing – on a daily, week, or monthly basis, (it’s your call) you provide your invoices and proof of delivery and shipment . And then here’s the good news, you receive cash, the same day, for those funds. Actually, to clarify, the amount of the advance on your invoices is actually 90% – you receive the rest of the funds, i.e. the ten per cent, when your customer pays – less the financing charge.

And we know from experience that clients want to always know and talk about that financing charge, so let’s clarify that point right away. First of all did you know that some of the largest corporations in Canada utilize this method of financing receivable portfolios? Their cost is often either the same as traditional bank financing, and in some cases less.

However the majority of business in Canada that seek out factoring receivables actually pay anywhere from 1 – 2.5% per month for the cost of factoring. But let’s be clear here, receiving those funds when you invoice allows you to maintain a totally positive cash flow, and at the same time continue to grow sales and profits. We also point out to clients that they are now in the enviable position of taking 2% discounts on all their qualified purchases with their suppliers, and, if they are really smart, can negotiate better terms and pricing from their suppliers on product.

We referenced the term C I D when it came to our favorite, and recommended financing receivable solution. So what exactly is C I D? It’s a unique form of factoring, that by the way, costs the same as other types of factoring receivables financing. However, unlike traditional A/R financing it allows you to bill and collect your own receivables on a confidential basis. Your suppliers, clients, etc are simply not aware of how you are financing your company, and we think that’s important. C I D is the acronym we provide for Confidential Invoice Discounting. So again, to clarify, you are financing your business on a confidential basis – your competitors who use this type of financing are not. That’s your key advantage, and we think it’s significant.

Selecting a receivables financing partner can be a challenge – simply because there’s hundreds of small and larger firms out there with difference criteria. You have to be able to distinguish between recourse and non recourse factoring, and if the firm even offers (or has heard about!) C I D financing. Other factors (pardon the pun) to consider are the size of your portfolio, misc fees that add up quite frankly, and must be understood or negotiated. And pricing is reflected to a certain degree by the size of your monthly receivable financing. A/R portfolios of 250k per month generally receive better pricing and structures.

Interested? Confused? Hopefully not the latter, but if you are seek out a trusted, credible and experienced Canadian business financing advisor who will steer you through the financing receivable maze – we’re sure you’ll come out the other side well informed and with a factor facility that works best.

Stan Prokop is founder 7 Park Avenue Financial ; Originating financing for Canadian companies,specializing: working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies . For info / free consultation on Canadian business financing / contact details see:

The Only Disadvantage Of Factoring Receivables And Why Confidential Accounts Receivable Finance Work

Looking for a creative, ‘outside the box’ Canadian business financing solution? You may have investigated factoring receivables already but either didn’t understand how accounts receivable financing works, or, probably more to the point weren’t comfortable with how it works for your firm on a daily basis.

We’ve got the perfect solution for those worries, and its called confidential receivable financing, in Europe its more commonly known as C I D, confidential invoice discounting .

Let’s examine why this type of business financing works in general, and then let’s focus in on why our solution makes a solid solution even better.

In general terms when you ‘factor ‘ your receivables you essentially sell them to the factoring firm. That can be done on a one of basis, on a periodic basis, or all the time. That’s one of the key advantages of this type of financing, you only use what you need, and… More importantly, you only pay for what you use!

Paying for what you use in accounts receivable financing is key because factoring, in general terms can be a more expensive type of financing. We say ‘ can be ‘ because quite frankly if you use it properly it actually could be a cheaper method of financing than your bank. That’s a point our clients are always amazed at when we discuss this type of Canadian business financing.

The cost of factoring receivables can be significantly offset, or in some cases removed completely by your firm using these funds to take supplier discounts and purchase more efficiently and at better prices .

And… Think about this carefully, if you can finance your receivable the days you issue the invoice (that’s what factoring does) then you are in a position to generate funds to sell more products and services to your customers, generating additional margins and profits. Or, of course, you could take the non factoring approach and wait for your customers to pay you in 30, 60, or… dare we say it, 90 days. And that hasn’t worked for you in the past, which is why you are looking for a better solution.

So lets examine how factoring works, and lets get you over the hump, so to speak, on why our preferred type of accounts receivable financing is confidential invoice discounting .

When you generate an invoice under a factoring receivables agreement you receive 90% of the invoice in the form of immediate funds the same day. The other 10% is a holdback, and is remitted back to you promptly when you customer pays, less the financing charges, which are typically 1.5 – 2% for a 30 day period.

In 99% of traditional factoring arrangements the factor company verifies your invoice with your customer and actually collects it. Under confidential invoice discounting you bill and collect your own receivables, and are in a position to finance your firm without your customers and suppliers having anything to do with how you finance your business.

Speak to a trusted, credible and experienced Canadian business financing advisor on why confidential accounts receivable financing will work for your firm, allowing you to supercharge that cash flow and those profits!

Stan Prokop is founder 7 Park Avenue Financial ; Originating financing for Canadian companies,specializing: working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies . For info / free consultation on Canadian business financing / contact details see:

Accounts Receivable Factoring Allows You to Take Advantage of Your Biggest Asset (Part 2)

Another term for Accounts Receivable Factoring is Invoice Factoring, the terms are essentially interchangeable.

When you evaluate the statistics of the number of days your invoices are waiting to be paid and how many are over due. This is simply data about the likelihood of collections. It has nothing to do with sales and how to increase sales.

Do you consider a large Accounts Receivable as a bad thing? Most people do. To determine if this is a bad thing, or good, it will depend on how the Accounts Receivable is made up. Here is an example.

What I am referring to is, if you have a huge inventory finishing out a season, you will need to sit on the goods for several months while you wait for the season to come back. If you had the opportunity to sell off the goods right away, but wait 90 days to get paid, what would you do?

If it is a new customer and you have never dealt with them before, you will review their credit. You come to the expectation that it will take a few months to collect your invoice. Will you accept the order from the client?

Certainly not if we think in terms of the traditional role of the area of credit and collection and containment of risk.

Of course yes, if we consider the area of credit as a generator of value. Even better, use Invoice Factoring to collect on the payment with 48 hours of delivery of the goods and clear out the warehouse. Yes it will cost a bit in terms of a fee for Invoice Factoring, but now you will not have to pay for warehouse space.

This is a very simple example of how Invoice Factoring can help your company. Invoice Factoring will play a major role in the coming years of Commercial Finance and Commercial Credit as it is quickly becoming the preferred method for Working Capital finance.

Think, is 3 times cheaper to retain and maintain a client to get a new one and if Invoice Factoring will help you keep the business you have now, grow new business and reduce the stress of juggling your Cash Flow, you definitely need to speak with a Commercial Finance Broker.

Wade Henderson – very Professional – 15 yrs in the Business Finance Field – Gets the deal done.
IMMFinancial.com – Accounts Receivable Factoring – Accounts Receivable Financing

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