Imagine! Canadian Accounts Receivable Loans That Work – Financing Receivables The Right Way

Updated: June 13, 2011

Cash flow shortages. Sounds like a common challenge you face almost all the time these days. But when solutions to those shortages seem limited then a financing receivables strategy just might be your optimal solution.

In order to embrace a new finance strategy you have to know what it is, and what it costs, and even as important, how does it work. At its most simplest this type of business financing can best be explained as the selling of your A/R as you generate sales, getting cash in return. Naturally there has to be a focus on the quality of the receivable, and its age. (Generally receivables are sold when they are current).

Many clients always ask if they need to sell receivables as soon as they generate them, as in some cases they just might not need the cash flow and additional working capital at that moment. The answer is that you can sell your A/R anytime you want, typically as long as the receivable is less than 90 days. (If your A/R is older than 90 days there is somewhat of an assumption that it is uncollectible, unless you have given special terms to your clients.

So why do firms in Canada embrace this new form of financing more and more every day. Simply because it frees up the capital that you have tied up in inventory and A/R, your current assets. Financing receivables can be implemented more much quickly than any other type of loan or financing.

And, oh yes, getting back to that word ' loan ' - we mentioned that many clients refer to this strategy as ' accounts receivables loans '.

The last thing you want to do when you are short of working capital is to take on debt, so its very important to understand that this type of financing, also called ' invoice discounting ‘.. or ' factoring' does not, we repeat ' does not ‘! bring any debt to your balance sheet. The world loan is a misnomer here, as all you are doing is monetizing or cash flowing your assets, making them immediately liquid.

Any Canadian business owner or financial manager would prefer to take on a new solution to their business in the right way. That means from a viewpoint of both cost and methodology.

Many clients view the cost of financing receivables as a setback. In Canada depending on the size of your A/R and some other factors the costs run between 1-3% per month. What business owners forget is that they can offset those costs in a number of different ways... they could increase their prices nominally, they can take discounts with their suppliers with their new found cash, and, if applicable, they can ' purchase ' smarter and harder. further reducing their cost of financing .

Our favorite and most recommended accounts receivable loans is a strategy called C I D. It stands for confidential invoice discounting, whereby you bill and collect your own receivables during the entire financing receivables process. Unlike your competitors, who are forced into rigorous notification of their financing with their clients or suppliers?

Featured Research
  • Why Q4 is the Perfect Time to Invest in Video Conferencing

    If you’re currently relying on an outdated video conferencing solution - or if you don’t have one at all - you’re in luck. While any time is a good time to invest in video conferencing, Q4 may be the best. One big reason is that Q4 is when you can get the best deals, but there are also other important factors like increased access to seasonal employees. more

  • 8 Ways to Get More From Your VoIP System

    Many businesses adopt VoIP to take advantage of the cost savings without spending enough time reviewing the features and benefits made available by different solutions. If this is true for your business, there’s a good chance you could be getting more from your VoIP system in the form of even lower costs or improved employee productivity. You may even find that your current software offers features that you aren’t taking advantage of! more

  • Best ERP Features and Benefits for Your Business

    Are you considering investing in ERP software for the first time? Or maybe you already have an ERP solution but you’re worried it’s becoming dated. If either of the above apply to you, read our latest guide on the top ERP features and benefits based on the size of your business. You may be surprised at how versatile and cost-effective it is becoming - regardless of if you own a small business or run a large enterprise. more

  • 9 Spooky Signs You Need a Contact Center Upgrade

    When was the last time you evaluated the performance of your current contact center and the software you are using? The results may be frightening! If it’s been awhile since you invested in contact center software, there is a good chance that your needs have changed or that there are better options available now. Fortunately, it’s relatively easy to determine if you need an upgrade or not. more

  • 7 Ways the Wrong Phone System Can Haunt Your Business

    The wrong phone system could be haunting your business - and we’re talking about problems more serious than ghosts and ghouls. From increased costs to issues with scaling, we’ve identified seven important ways that a less than ideal phone system could be holding you back. You’ll be surprised at how much of a difference this can make to your bottom line too. more