|
Are you nuts? AR Finance... inexpensive? That was the reaction of one client when it came to discussing factor receivable funding in Canada for business. The reality is that receivable financing in Canada is probably one of the most misunderstood areas of business financing when it comes to benefits, mechanics, and, as we said, cost. We'll come to the issue of ' cost ' in a bit - let's make sure we have got the benefits and mechanics under our belts first! AR Finance is Canada is, simply speaking, flexibility for short term working capital financing. It's mechanics, though relatively simple, provides Canadian business owners and financial managers with a large measure of cash flow and working capital when it comes to new orders and contracts, increased need for working capital as inventories and receivables grow, and , simply speaking, keeping your daily operations running smoothly.
It's of course your A/R that provides the backbone behind the capital that you need, allowing you the leisure of actually, as they say, working on your business, not in your business... and boy is that a difference as we all know.
One key benefit either overlooked or misunderstood is simply the fact that your factor receivable funding facility has the ability to grow as your business revenues grow. And don't forget , the key concept of AR finance in Canada is that your company isn't taking on debt when you finance your receivables ; you're simply monetizing one the most key assets of any business, your receivables. A good analogy is that you are basically turning a Business To Business model into a cash business. As you sell, and invoice you receive cash the same day. Your facility of course fluctuates exactly similar to a business credit line, so factor receivable funding for your business goes up and down every day, just like a bank line of credit. You are of course paying for only what you use. Many miscellaneous benefits accrue to your firm when you consider this method of receivable financing. They include: - Ability to only draw down the amount of financing you need - It's a pay per use method for working capital - Same day financing of your sales revenue - Typical advances for A/R funding are 90% of your receivables - A good facility will have per diem pricing - Little or no emphasis on personal guarantees - All North American receivables can be financed, and foreign A/R is financed via credit insurance which can be easily arranged
So, back to our client who said' ARE YOU NUTS '? As it pertains to AR costs of course!
Your business should be focused on profit and turnover. By having a constant supply of working capital and access to cash flow you have the ability to increase sales and profits. Many firms also have the ability to achieve overhead reduction as a competent AR partner firm performs these services for you. Many clients we have spoken to have had to turn away sales volumes and large contracts because of financing inability .We see that all the time. With AR Finance you are now in a position to basically accept unlimited orders and contracts. Do you believe you could enhance relationships with key suppliers by paying those cash or taking their offered discount? We sure think you could, and that's a key benefit of factor receivable funding. That type of business activity also enhances your overall firm's commercial credit rating, which should be important to you in the long run. 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/ar_finance_factor_receivable_funding_business.html
Related Articles -
AR FINANCE, FACTOR RECEIVABLE FUNDING, BUSINESS,
| 
