AR Finance in Canada. The devil is in the details they say is a popular saying, and that’s the case with an account receivable funding loan for business financing success.

Fundamentally it’s an easy story to explain to our clients. Receivable financing is simply a cash flow tool that allows you to fund your sales as you make them – generating instant cash flow. As you provide your goods and services you typically are advanced 90% of the invoice value, that remainder being temporarily held back and refunding to you ( less finance costs ) as soon as your client remits.

The benefits also could not be more clear. Its access to working capital when you need it, you have maximum flexibility around borrowing only when you need it (and of course only paying for what you use).

Where things get a little ‘ muddy ‘ shall we say is in the type of AR Finance that you choose . Ultimately that depends on the overall size of your business ( all business sizes qualify – some of the largest corporations in Canada use the service – all the way down to start ups ) and the industry and cash cycle your business finds itself in.

We’re often asked if we have a ‘ recommended’ strategy or solution around this method of financing a business. We do, and we are recommending that you get ‘ CHOC IFIED ‘. What’s that? Well C H O C simply stands for ‘ CLIENT HANDLES OWN CREDIT ‘ – so our preferred method of invoice finance is in fact confidential receivable financing. You maintain total control over your credit function , continuing to handle, as you did before, all your own invoicing and collection in the middle of that whole ‘ client relationship ‘ thing!

More traditional methods of account receivable funding work – they are just simply somewhat, shall we say ‘ intrusive’ when it comes to your preference to running your own business – and who wouldn’t want to do that if you in fact had a choice. The ability to finance your business and maintain customer control is key in confidential invoice finance.

So back to those details. Many clients we talk have been confused around the terms of invoke finance, the way that costs are explained (or not explained). The main thing to always remember is that this method of finance provides you with the significant advantage of having cash flow available right away. But unlike handing all your invoicing and collection to a traditional ‘ old line ‘ A/R finance firm remember that you have the option of control over you financial operations if you choose to get ‘ CHOC IFIED’.

Is the confidential finance solution available to everyone? It is if, and it’s an important if, you firm can demonstrate it has proper financial statements, accounting controls, etc. Simply speaking, you have to have your business act together!

A/R financing solutions don’t have to be as complicated as some (you know who you are!) make them out to be. It’s flexible, ties cash flow directly to your sales, and is an alternative options to firms who can’t or don’t want to seek Canadian chartered bank financing. Seek out and speak to a trusted, credible and experienced expert Canadian business financing advisor on solving your cash flow needs.