AR Financing in Canada. It’s clearly ‘ takin’ care of business’ when it’s used properly with respect to accounts receivable loans for financing your business in Canada .
One of Canada’s greatest rock anthems gave us some ideas about how receivable financing in Canada is appropriate for thousands of firms, and getting more traction everyday. ‘Start your slaving job to get your pay ‘… perhaps BTO meant to stress the importance of collecting receivables in order to facilitate cash flow for payrolls? So as the song says ‘ take good care of my business ‘… and you don’t need to ‘work overtime.’
So what then are the advantages of AR financing in Canada and do they in fact make sense for your firm. Those advantages become very clear if in fact your firm has tried to access more traditional bank financing but finds itself unable to do so.
First of all the time and level of financing in accounts receivable loans (it’s not really a loan per se – it’s a monetization ‘ provides you with a significant amount of working capital immediately without the additional collateral and guarantees that might be required by another lending source.
And what do we really mean by ‘ immediately ‘. Well how is ‘ same day service ‘, because firms get funded typically the same day they generate sales and invoices.
Organizations like the Federation of Canadian Business speak extensively on ‘ ease of access’ to financing for companies in the SME sector. AR Financing is typically very easy to apply for and turnaround time for a proper facility should never be more than a week or two.
Also, if you’re dealing with the right firm (unfortunately many firms in Canada are not) you should be also able to finance U.S. receivables at no cost. Foreign receivables might, but no always require some level of credit insurance, and we’re referring of course to non North American A/R.
The overall mindset of the Canadian business owner changes once he realizes the difference between A/R financing and a bank facility. So unlike a bank overdraft which is collateralized by your assets, accounts receivable loans are in effect the sale of your A/R to a third party finance firm. Oh , and by the way, as your busines grows so does your receivable loan facility, there is no real need to ‘ reapply ‘ or wait until you have another year of financial statements under your belt .
So if we’re so right about invoice financing in Canada why isn’t everyone on the program? Good question. The reality is that there is still a lot of lack of awareness of how the financing works, what it costs, as well as the perception that it’s non traditional in nature. If thousands of firms in Canada use AR finance we’re quite sure it’s no longer that ‘ alternative ‘ in nature.
We do acknowledge though that if your sales are in fact shrinking or not stable that there are some challenges here and this method of financing might not be for your firm. The bottom line though that if you are in fact growing you can use cash flow from A/R financing to productively finance your firm. That includes by the way using the funds to purchase more effectively as well as taking supplier discounts, potentially alleviating the cost of accounts receivable loans.
Looking for a business financing solution that helps you control business cash flow performance and growth? Then speak to a trusted, credible and experienced Canadian business financing advisor today on how A/R financing can help your firm.
P.S. Again, it’s not a loan, it’s a ‘ monetization’!
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.
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