The truth. We don’t think we’re me a business person, man or woman, that doesnt appreciate the real truth when it comes to business. So when it comes to AR Accounts Receivable Finance, aka ‘factoring’ let’s just clear up a few things if you don’t mind!

We think if you lined up ten business people and asked them who they believe they could rely on when it comes to business lending most would say ‘ the bank ‘ That’s been Canada’s choice for decades .. that’s for sure.

But does everyone company have access to cash flow and growth financing when it comes to our beloved chartered banks. Here’s the harsh reality – they don’t.

So is there an option? There is. Its accounts receivable financing, which has become attractive to many firms when they look at some key advantages. Is factoring the only solution? Definitely not, firms can also utilize lease financing, sale leasebacks, and other debt mechanisms.

Debt mechanisms … optimal? Certainly not all the time, and that’s why AR Accounts receivable Finance is a non – debt solution. It’s just a monetization of your key asset, the receivables.

So why doesnt everyone utilize this form of financing. It certainly appeals to Canadian business owners who can’t supply the type of security that a bank requires.

What then are some key reasons that businesses avoid factoring? We think we can summarize them quite clearly – they include a general lack of awareness of what the financing is and how it works.

In certain cases there appears to be an ‘ image ‘ problem. Why then do some of Canada’s largest and most successful firms utilize this finance mechanism? We’ll never figure out that one!

The cost of factor finance always comes up. In Canada a typical financing facility would be in the 1.5 -2% range based on a collection period of thirty days.

What Canadian business owners don’t realize though is that cost can be offset in a solid handful of manners – they include your ability to purchase smarter, take discounts with suppliers, and take on new business and contracts you never could even consider in the past. We can honestly say that we’re met some clients who have totally eliminated the entire cost of financing when they utilized factoring.

Some other harsh reality? If your sales are going down instead of going up factoring won’t necessarily work, because your borrowing asset base is declining… not growing. Also, a very small handful of industries, such as construction pose more difficult challenges when it comes to AR finance utilization.

But the majority of Canadian businesses can actually do the following:

– access immediate short term funding

– improve cash flow

– utilize a pay for what you only use method of business financing

So, our bottom line? Take some time to investigate a bit more thoroughly, without some of those biases this method of business finance. Speak to a rusted, credible and experienced business financing advisor today.