Cash On Hand! What A Concept! Let Canadian Accounts Receivables Credit Financing Be Your Solution

Maximize Cash Flow with Accounts Receivable Financing

YOUR COMPANY IS LOOKING FOR ACCOUNTS RECEIVABLE CREDIT FINANCE!

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

Accounts Receivable Line of Credit Financing transforms outstanding invoices into immediate business working capital.

Unlock cash tied up in invoices today—boost your business's financial flexibility!

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer  Account Receivable Line of Credit  solutions that solve the issue of cash flow and working capital  – Save time and focus on profits and business opportunities

Canadian Business Financing with the intelligent use of experience

Accounts Receivable Credit Line Financing

Accounts receivable finance is one method by which thousands of firms in Canada generate ‘cash on hand.’ Of course, that phrase is the accounting/business term that business owners and financial managers in Canada refer to concerning their positive cash balances.

The Importance of Cash on Hand

Your ability to have cash on hand at any given time provides you, of course, with the sense of positive feeling that you’re able to fund both operations and, hopefully, growth.

Unpaid invoices can significantly impact your cash, tying up funds that could otherwise be used for business activities. We’ve observed over the years that Canadian financial statements typically seem to reflect less cash on hand when it comes to monthly or annual financial statements.

Challenges During Economic Downturns

Naturally, in tougher economic times, it is even hard to maintain positive cash balances, and we’re quite sure most business owners would maintain that they are not 100% satisfied with their cash position over time.

Accounts receivable factoring can help maintain positive cash balances during economic downturns by providing immediate cash from outstanding customer invoices.

It is of course important to remember that too much idle cash is a negative item - large corporations even risk losing their ownership when suitors circle with the intent of leveraging the firm’s cash and assets to in effect take their company away from them via a buyout. But we digress…

Factors Affecting Cash Flow

The pressures that reduce cash flow are obvious to most business owners and managers.

Accounts receivable financing work can help mitigate these pressures by providing advances from outstanding invoices in exchange for a fee, allowing businesses to use the cash for expenses or investments.

They are fluctuating sales, lower profit margins, and the inevitable slow-paying clients, which take anywhere from 60 to 90 days, even though your terms are net 30. We wish!

Enhancing Business Cash Flow

Although the management of businesses in the small and medium-sized sector in Canada (SME) typically focuses on survival and daily operations, it’s clear to all, hopefully, that cash flow success also translates into the ability to grow your business. Accounts receivable financing companies, including online lenders, fintech companies, and certain banks, play a crucial role in enhancing business cash flow by providing AR financing.

Strategies to Increase Cash Reserves

So how does business increase the cash cushion? One effective strategy is to use receivable loans, which allow companies to access the cash tied up in unpaid invoices. The simple answer is to lower your costs, get extended credit with key supplies, lower inventory levels, improve collections, and monetize current assets.

Factoring Receivables

Factoring receivables focuses on the latter, monetizing your typically largest asset, your A/R. A factoring company plays a crucial role in purchasing your invoices, collecting payments from your customers, providing immediate funding, and managing your accounts receivable.

Accounts receivable credit financing, i.e. ‘factoring’ allows you to get paid on invoicing, typically getting 90% of your funds as soon as you deliver your product or service.

By the way, that other 10 percent isn’t the cost of financing! That balance is remitted to you as soon as your customer pays, less financing costs, typically in the 1.5-2% range if your terms and collectability equate to 30 days. The bottom line is that suddenly, your cash cushion is on hand, and it’s positive!

The Receivable Financing Industry in Canada

The receivable financing industry in Canada is fragmented, consisting of several large and small players. Accounts receivable financing rates can vary based on factors such as advance rate, risk level, and facility size. They offer firms instant cash flow, allowing them to meet the obligations we spoke of, i.e., payroll, government remittances, and growth.

When to Consider Factoring Receivables

So when should a customer consider factoring receivables? Invoice factoring involves selling outstanding invoices to a factoring company, which advances a percentage of the invoice value and takes on the responsibility of collecting payments directly from the customers.

Typically it’s when you have become the financing company you never intended to be, carrying larger amounts of inventory and receivables than you desire. Suddenly you’re in a position to take supplier discounts and entertain larger orders and contracts.

Key Takeaways

Accounts Receivable Line of Credit Financing allows businesses to obtain immediate cash based on  a/r on the company's balance sheet, using their outstanding invoices as collateral. This setup typically covers up to 90% of the invoice value upfront, empowering companies to manage operations and growth effectively.

Companies must maintain sound financial records and demonstrate the creditworthiness of their clients to the finance  company  to qualify.

Once the invoice is settled, the remaining balance, minus a financing fee based on accounts receivable financing rates, is paid.

Such arrangements are especially beneficial in industries with longer sales cycles, providing the necessary liquidity to bridge gaps. Asset-based lending solutions such as factoring and accounts receivable finance improve cash flows and offer an alternative to companies that don't qualify for bank financing from a traditional financial institution.

Conclusion

Call  7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor who can assist you with your 'cash on hand' needs!!

FAQ : Questions and Answers

How does Accounts Receivable Financing benefit my business?

It provides immediate funding based on your invoices, enhancing cash flow and enabling growth.

What types of businesses benefit most from this financing?

Businesses with long invoice payment terms find it particularly beneficial to manage cash flow.

Are there any risks associated with Accounts Receivable Financing?

Potential risks include dependency on customer creditworthiness and financing costs.

How quickly can I access funds through Accounts Receivable Financing?

Funds are typically available shortly after invoicing, often within a few days.

What percentage of the invoice value can I finance?

Most financiers offer about 80% to 90% of the company's accounts receivable invoice value upfront, with the rest upon payment.

What is the difference between Accounts Receivable Factoring  Financing and a traditional loan?

This financing is secured by invoices, whereas loans often require broader collateral and business loans also have a higher requirement and emphasis on personal guarantees and overall balance sheet and income statement financial health

Can Accounts Receivable Financing improve my company's credit score?

Indirectly, as accounts receivable financing companies allow the business to pay short-term obligations and other debts promptly, they can help maintain or improve credit scores.

Is the interest rate for Accounts Receivable Financing competitive?

Rates  on invoice financing from a factoring company in Canada are generally competitive, especially compared to unsecured loans, reflecting lower risk.

Can I use Accounts Receivable Financing for any type of invoice?

Generally, yes, as long as the invoices are to creditworthy commercial or government clients and free of legal encumbrances.

How is Accounts Receivable Financing set up with my existing banking arrangements?

It can often be integrated, with funds managed through your current business accounts.

What determines the cost of Accounts Receivable Financing?

Costs depend on the financing period, amount, and perceived risk the lender assesses.

Can small businesses use Accounts Receivable Financing effectively?

Absolutely, it's particularly beneficial for small firms needing to stabilize cash flow.

How does Accounts Receivable Financing affect my relationship with customers?

It usually has minimal impact as financing arrangements are typically confidential.

' Canadian Business Financing With The Intelligent Use Of Experience '

 STAN PROKOP 7 Park Avenue Financial/Copyright/2024

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil