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I meet with many Canadian business owners or their financial managers who have a problem. What's the problem you ask? They say they are growing too quickly and can't finance that growth. Many of my other customers only wish they had that problem. Is there a solution for Canadian firms who need growth capital but are unable to get either additional Canadian bank support, or in some cases who simply don't want to take on more debt? In many cases Invoice Cash or factoring (also known as receivable discounting) is a great way for your firm to address the best problem in the world, growing sales! The working capital challenge happens when you are receiving orders and or contracts that seem larger than you can handle, based on your inventory and accounts receivable levels of growth. The accounting text books call this a ' SUSTAINABLE LEVEL OF GROWTH ' – That simply means you need to determine how much you can grow before borrowing additional funds, short term or long term to fund that growth . If you are in a cash business that is not necessarily a problem – if you are not in a cash business and extend credit to your customers then you have working capital and cash flow challenges. Canadian business owners and financial mangers almost intuitively know how the cash flow and working capital challenge feels. They send out, for example, invoices totaling 100,000.00 every month. During that time they have paid employees, covered their fixed costs, and have suppliers who are requesting payment for their goods and services to your firm. Yet you are now in the position of waiting 30, 60, and sometimes 90 days to collect those funds that are due. More and more firms in Canada are turning to factoring, also called invoice cashing, or receivable financing, to cover those working capital needs. Is there one simple Canadian factoring solution? Not really, the market is fragmented, many U.S firms are operating in Canada, and Canadian firms aren't necessarily comfortable with the U.S. factoring financing model. When we meet with our customers we advise that in our opinion the best factoring or working capital (invoice discounting) solutions is a non notification working capital facility. We recommend you sit down with a trusted experienced and credible financing advisor in this area to ensure that this facility meets all your needs – we think it will. How does our facility work? It works well on a day to day basis. You receive cash daily, weekly, or monthly (your choice) for all invoices you wish to immediately turn into cash. In our facility, which is called non notification, you receive funds for invoices the day you bill your customer, and then you bill and collect your invoices according to your terms and customer relationships. The cost of this type of financing in some cases can sometimes be 100% offset by smart purchasing on your part , or now being able to take advantage of supplier discounts . We would point out that this has the intangible benefit of greatly improving your relations with suppliers, therefore enhancing your competitive advantage. Discuss your working capital needs with a trusted advisor – Your cash flow, profits and supplier relations have a significant chance of improving. That's a good thing! Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see : http://www.7parkavenuefinancial.webpage66.com/invoice_cash_Making_money_with_factoring.html
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