Whether they are hearing about it from their business peers, reading about it, or being ‘ pitched’ on the factoring of receivables, whether in Toronto or the rest of Canada is a hot topic in the world of Canadian business financing.
We think we can simplify the issue into some valuable basic pieces of information around what receivable factoring is, what it costs, and more importantly, how it works re benefits and solutions!
At its most basic it is simply the ‘ sale ‘ of your receivables as you generate the . Think of it – receiving cash flow and working capital the day you generate a valid sale and invoice. The cost of that service is a fee, generally between 1-3% which you as a business owner have to rationalize against the benefits of receiving that cash immediately and making use of it. That really is where the crux of our advice comes in, that the cost of the instant cash flow actually can be offset significantly, in some cases totally, by the effective use of those funds.
That is achieve in the following manners – more sales and profits, taking on orders and contracts you couldn’t even consider before, and finally, the less tangible but very real benefit of using that cash flow to purchase in larger and smarter quantities, as well as taking payment discounts which might e offered through suppliers . If those benefits don’t ring clear then we confess we will have to give up now to demonstrate the clear benefits of factoring of receivables.
Whether its Toronto factoring, or anywhere else in Canada the challenge for the business owner is really to get the best advice on what type of receivable factoring to get, who to get it with, and where to get it. In all businesses we rely on experts, and the financing of your business in Canada surely demands an expert – there is not a lot of room for error when it comes to how your business is financed. So seek the services of a trusted, credible, experienced Canadian business financing advisor who can set you on the right track.
It’s frankly all about the nuances, and as we speak to clients and determine they don’t really often understand how receivable factoring works it’s at that time they need advice. It’s really about the day to day. We rarely get into debates with clients about ‘do they qualify ‘ because frankly if you have a business and are generating commercial receivables then, guessing what, you qualify.
So free up the cash flow, maximize on the working capital benefits of factoring of receivables, and whether it’s Toronto factoring or anywhere else in Canada feel free to board the receivable factoring bus! Just do it right though.