Receivable Credit In Canada : How To Properly Finance Trade

Receivables In Canada
Heres The Only Right Way To Finance Receivables
OVRVIW ! In"or#ation on receivable credit sol$tions in Canada% &nowing how
to "inance trade receivables #a'i#i(es cash "low and #ini#i(es costs o" "inancing %
Heres why and how
Receivable credit sol$tions don't always come from the bank. Any business selling on
credit, large or small soon feels somewhat ' tied up .
Those goods and services you've delivered require payment and the ability to finance
trade receivables is critical. Let's dig in.
f a !anadian chartered bank or business credit union can't supply the financing you need
is there an alternative" #ou knew there was, and it$s the financing of your A%& through an
independent commercial finance company. The problem" 'hich of their multiple
solutions works for you... is one better than the other, and can the costs of such financing
be managed properly or reduced"
'hile the ' street terminology ' refers to this method of financing as ) F*CTORI+, )
there are in reality a number of subsets of this type of commercial finance . !hoosing the
right one is your key to success,
(aven$t had someone fully or clearly e)plain how *-R Finance works" #ou've *ust
received your clearance for a full e)planation+ ,,- .ased on an up front financing security
agreement being signed you can draw down typically up to /01 of the value of your total
receivables that are under /0 days old . .y the way the banks typically allow you to draw
down only 231 of A%&, so one immediate observation is that you *ust managed to
negotiate more liquidity % cash flow for your business,
The balance of 401 is in effect a ' holdback' of sorts, and when your client pays you
received that 401 back immediately, less a financing cost that is in the 4.53 , 51 range.
6o using a 40k invoice as an e)ample your financing cost would be 453 .00 , 500.00 7.
8aturally the costs are geared toward your client paying promptly in 90 days, which are
very typical commercial trade receivable credit terms...
Two critical points come to bear here:
.% /o$ can red$ce "inancing costs by "oc$sing harder than ever on yo$r #anage#ent
o" receivables , That includes:
!onsidering advance%down payments in some form
nvoice clients the day you deliver your product or service
;ffering prompt pay discounts
mproving collection procedures and invoicing clearly and properly
<ey point = any time your clients pay over 90 days increases financing costs, and that
includes higher financing costs or simply the higher cost of carrying receivables that are
unpaid , >)ample... The carrying cost on 740,000 paid in ?? days at 4@1 interest rate
would be: 740,000 ) .04@ % 9?3 ) ?? A 7539.00
0% Only draw down on yo$r ) "actoring "acility when yo$ need it
>nsure you have a facility that doesn't require you to finance all your A%& all the time , if
that$s the case you're dealing with the wrong firm
Bocus on the benefits of a !;8BC>8TAL &>!>DA.L> B8A8!8E solution ,
This is our recommended solution for all our clients, as it allows you to bill and collect
your sales without the ' notification' that is required by traditional factoring services
Fse your receivable credit facility to reduce overall financing costs , this includes taking
prompt pay discounts with your own suppliers, as well as negotiating better prices with
suppliers for goods you can pay for on delivery
f you're focused on achieving the best method to finance trade receivables seek out and
speak to a trusted, credible and e)perienced !anadian business financing advisor with a
track record of success in &eceivable !redit solutions.
&eceivable credit solutions don't always come from the bank. Any business selling on
credit, large or small soon feels somewhat ' tied up . Those goods and services you've
delivered require payment and the ability to finance trade receivables is critical. Let's dig
in.
f a !anadian chartered bank or business credit union can't supply the financing you need
is there an alternative" #ou knew there was, and it$s the financing of your A%& through an
independent commercial finance company. The problem" 'hich of their multiple
solutions works for you... is one better than the other, and can the costs of such financing
be managed properly or reduced"
'hile the ' street terminology ' refers to this method of financing as ' BA!T;&8E '
there are in reality a number of subsets of this type of commercial finance . !hoosing the
right one is your key to success,
(aven$t had someone fully or clearly e)plain how A%& Binance works" #ou've *ust
received your clearance for a full e)planation+ ,,- .ased on an up front financing security
agreement being signed you can draw down typically up to /01 of the value of your total
receivables that are under /0 days old . .y the way the banks typically allow you to draw
down only 231 of A%&, so one immediate observation is that you *ust managed to
negotiate more liquidity % cash flow for your business,
The balance of 401 is in effect a ' holdback' of sorts, and when your client pays you
received that 401 back immediately, less a financing cost that is in the 4.53 , 51 range.
6o using a 40k invoice as an e)ample your financing cost would be 453 .00 , 500.00 7.
8aturally the costs are geared toward your client paying promptly in 90 days, which are
very typical commercial trade receivable credit terms...
Two critical points come to bear here:
.% #ou can reduce financing costs by focusing harder than ever on your management of
receivables , That includes:
!onsidering advance%down payments in some form
nvoice clients the day you deliver your product or service
;ffering prompt pay discounts
mproving collection procedures and invoicing clearly and properly
<ey point = any time your clients pay over 90 days increases financing costs, and that
includes higher financing costs or simply the higher cost of carrying receivables that are
unpaid , >)ample... The carrying cost on 740,000 paid in ?? days at 4@1 interest rate
would be: 740,000 ) .04@ % 9?3 ) ?? A 7539.00
0% ;nly draw down on your ' factoring$ facility when you need it
>nsure you have a facility that doesn't require you to finance all your A%& all the time , if
that$s the case you're dealing with the wrong firm
Bocus on the benefits of a CO+FI1+TI*2 RCIV*32 FI+*+CI+, solution ,
This is our recommended solution for all our clients, as it allows you to bill and collect
your sales without the ' notification' that is required by traditional factoring services
Fse your receivable credit facility to reduce overall financing costs , this includes taking
prompt pay discounts with your own suppliers, as well as negotiating better prices with
suppliers for goods you can pay for on delivery
f you're focused on achieving the best method to finance trade receivables seek out and
speak to a tr$sted4 credible and e'perienced Canadian b$siness Financing *dvisor
with a trac5 record o" s$ccess with a track record of success in &eceivable !redit
solutions.
6tan Pro5op , 7 Par5 *ven$e Financial :
http:--www%7par5aven$e"inancial%co#
.usiness financing for !anadian Birms , specialiGing in working capital, cash flow, asset
based financing , >quipment Leasing , franchise finance and !dn. Ta) !redit Binance .
Bounded 500@ , !ompleted in e)cess of /0 Hillion 7 of financing for !anadian
corporations . In"o -Contact :
7 P*R& *V+8 FI+*+CI*2 9 C*+*1I*+ TR*1 RCIV*32
FI+*+CI+, :PRTI6
Have * ;$estion -Co##ent On O$r 3log Or Canadian 3$siness Financing
*lternatives <
CO+T*CT:
2 Iark Avenue Binancial
6outh 6heridan >)ecutive !entre
5/40 6outh 6heridan 'ay
6uite 904
;akville, ;ntario
L?J 2JK
1irect 2ine A @4? 94/ 32?/
O""ice A /03 K5/ 5?39
#ail A sprokopL2parkavenuefinancial.com
) Canadian 3$siness Financing With The Intelligent 8se O" 'perience )
6tan Pro5op