Receivable financing in Canada. Is there a comparison here between AR finance funding and fine wine. We think there is, and it’s pretty simple… Aging is good for fine wine … its not really that great fro your receivables!

Let’s examine why invoice financing is a solid solution for working capital for Canadian business. And like our wine analogy, here’s another shocker….. You don’t have to take on debt all the time when you want to grow your business!

Invoice financing in Canada, when properly structured and with the right party allows you o grow your business when that growth results in revenues and the resulting A/R that accelerates your need for working capital.

In a perfect world you want to strive to be able to address these sorts of issues proactively prior to having cash flow financing challenges.

So how does that solution work and how does the Canadian business owner and financial manager go about securing Receivable Financing? It’s really about a simple process, on an ongoing basis, of the sale of your receivables as you generate sales. The factors that affect your ability to successfully complete an A/R invoice finance program are the size and nature of your customer base, their general quality or creditworthiness, and any particular conditions revolving around your industry or your own firm’s current situation.

What most Canadian business owners don’t realize that there are a number of… let’s call them ‘ flavors ‘ when it comes to this method of finance. Unlike bank lines of credit A/R facilities operate in a different manner. In a bank scenario your receivables are in effect collateralize and form the backbone of your borrowing base… in Canada it becomes a question of picking the type of facility that works best for you.

While 99% of invoice financing companies in Canada either prefer, or in fact mandate your company to have your client made directly to them after they have financed the receivable you do in fact have the ability to bill and collect your own receivables. We term this a confidential invoice finance facility and it’s generally available to firm that have facilities in excess of 250k on an ongoing basis.

Invoice finance quite often is the first type of finance that many firms enter into when they are in start up or early stage mode. Over time many graduate to a Chartered banking relationship and it’s important to note that when banks are not able to service a firm for growth or other reasons AR finance solutions make a lot of sense.

The benefits of invoice finance are quite clear – it provides you with immediate working capital and cash flow when you can’t meet the requirements of a bank facility. Oh and by the way, your limit on this method of financing…..? It’s pretty well unlimited, as the size of your facility is typically based on your receivables and growth. That is NOT the case with a bank.

One misunderstanding around invoice finance is that you are required to finance all your receivables, all the time. Absolutely not the case, it’s your choice when and how much you wish to draw based on your busines needs.

Speak to a trusted, credible and experienced Canadian busines financing advisor who can assist you in structuring a proper solution for cash flow needs.