A tale of two worlds - one in which you have unlimited cash flow or one in which you had day to day cash flow challenges that hamper your ability to grow and manage your business. A cash flow financing solution could well be the solution to all your problems.
Canadian business owners and financial managers face, on a daily basis real world cash flow challenges. Lets look at an example at why accounts receivable finance can be your holy grail of working capital financing. Cash flow financing goes by a number of different names in Canada that is part of the confusion we are always trying to wade through on our client's behalf - various terms apply to this type of business financing. They include: factoring, invoice, discounting, A/R financing, etc. Depending on how you transaction is structured and who you are dealing with is really the key issue, not what the financing is called.
Clients always want to know if they are a candidate for this type of business financing. There are some perfect candidates, so let's look at a profile or two in order that you can determine if you fit. Generally you will have accounts receivable that pay fairly regularly but are on occasion slow - your overall bad debt experience has probably been quite satisfactory. Your invoice and stated terms for your customers is 30 days, but guess what, most of them seem to be paying in 60 and 90 days - that definitely seems to be the trend of clients we talk to.
Does size count - In cash flow financing it really doesn't - speaking in general terms if you have at least $ 50,000 of invoices a month you are a candidate for accounts receivable finance. The reality is that corporations with many millions of dollars in receivables actually utilize this form of financing also.
We hasten to say that in most instances the size of your facility will affect your overall pricing. In our experience you can potentially reduce the cost of your accounts receivable finance facility by close to 1% per month if you have a large facility. However, we spend many hours and many meetings educating Canadian business on factoring pricing, which is grossly mis understood by most clients who look into this type of business financing.
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