We’re the first to agree that when one of Canada’s newest forms of business financing just got better that’s clearly a good thing! We’re talking about the concept of confidential factoring, invoice services that finance your accounts receivable for working capital and cash flow.
Canadian business owners and financial managers demand flexibility when they look to alternate financing methods. If you choose the right facility, as in our case today, confidential accounts receivable financing you have just converted 90% of your receivable investment into immediate cash flow availability.
That benefit becomes even more dramatic when you consider this type of financing essentially gets larger as your sales increase; your financing ability travels locks step with your sales increases. Your revolving credit facility of confidential factoring becomes your new financing safety cushion.
While the majority of our clients use this type of financing for ongoing operations and growth remember also that you have the ability to use this finance mechanism for a number of other reasons – they might include acquiring a business , restructuring your company without the need for additional equity, etc.
Many clients utilize this type of accounts receivable invoice services in the context of also combining their inventory and purchase order financing needs .You’ve then created a triple combination of financing power for your firm , outside of traditional Canadian chartered bank financing .
So lets just backtrack a bit and ensure you understand the whole issue of confidentiality around C I D; Confidential invoice discounting. When you set up this type of facility you effectively retain total control over your A/R function – you are billing and collecting your own receivables.
Those familiar with traditional U.S. and U.K. type offerings available in Canada know full well that is not the case with the offering that is used by 99% of your competitors. Those firms in Canada that use receivable financing but without a confidential facility have in effected handed their billing , collection, and all important client contact info over to the factor company . Does that type of traditional factoring work? Absolutely. It’s just that confidential A/R financing puts you in control, not your finance company. You bill and collect your own receivables, without any notification at all to clients, suppliers, etc.
Canadian businesses are of course used to paying for added value. That’s just common sense. So then our clients can of course be forgiven for asking if confidential factoring services costs more. The answer is NO! Your advance rate and financing charges are the same with confidential factoring as they would be in the traditional for of notification model used by your competitors.
We would add however that to take advantage of confidential receivable financing a typical A/R portfolio should be at lease in the 250k range. There is no real upper limit on the size of any facility
Accounts receivable financing has filled on of the biggest voids in Canadian financing. It is often mis understood, in no thanks to some of the firms that offer it. If your company is growing, unable to attract more traditional financing then confidential then invoice services such as we have describe are for you . The optimal situation is when your cash flow is being drained because your sales are growing, requiring to maintain higher levels of A/R and inventories, etc.
If you wish to better understand the nuances and yes, the benefits of factoring invoice services in Canada, and which one works best for your firm speak to a trusted, credible and experienced Canadian business financing advisor today.