A/R Financing – Page 6 – NeeBo Capital Blogs

Canada invoice factoring – We offer fast Canada invoice factoring

There are a number of companies in Canada that do invoice factoring. Oftentimes, the same company will service multiple areas like Manitoba, Saskatchewan, Newfoundland & Labrador, Prince Edward Island, New Brunswick, Nova Scotia, Quebec, and Ontario. Eastern and Central Canada comprise the previous cities. Some companies also service the major cities of Quebec City, Ottawa, Winnipeg, Montreal, and Toronto.
Most of these companies won’t just do invoice factoring though. They’ll have related services like payroll funding, business loans, business financing, freight factoring, accounts receivable factoring, and, of course, invoice factoring. Cash flow solutions to businesses are an important part of keeping business running smoothly, and Canada invoice factoring businesses go a long way in making that happen.
Canadian companies understand that financing business growth can be a big challenge. Established and newly developing businesses alike can use cash flow support while they’re going through tough times, or while they’re trying to finance the growth of their business. Some businesses just might need more capital because of increase sales, and the resultant growth that is required. These kinds of businesses are going to get very favorable deals because they’re not necessarily cash-strapped, but the money is just forcing needed expansion, or perhaps the expansion will guarantee even more sales. Business invoice factoring is a normal and healthy part of business in Canada.

There’s no need to borrow money from a bank when you use Canada invoice factoring companies to assist your business in getting the job done. Some Canadian invoice factoring companies will only provide assistance to certain kinds of companies, like staffing companies, manufacturers, distributors, and transportation companies. Check the company you’re looking into, and see if your industry or market is included on the list of allowable companies that can receive financing.

What is accounts receivable financing anyway? What kinds of services are these Canadian companies actually providing? Is it limited to Canada? Business invoice factoring is a normal part of international business, and it’s seen in nearly every country and every industry. It used by businesses to convert the sales that were based on credit terms to immediate cash flow. It’s the preferred financial method to get capital for the majority of Canadian businesses. It’s an extremely popular financial practice in Canada, in other words, and you shouldn’t feel wrong or bad about taking advantage of that for your company.

A lot of these companies are highly flexible. Their financing programs can help companies that have uneven or seasonal sales patterns or start-up companies without any kind of financial foundation to rely upon. Any business can get receivables financing if it makes enough sales on terms of open credit to customers who have financial strength to pay the invoices. You are going to have a lot of help with getting immediate cash flow for your company if it is generating enough sales. Canada invoice factoring could be just the thing for your company if it’s going through a tough time and needs some immediate cash flow to move forward.

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What is Factoring of Receivables?

Receivables financing is sometimes called factor, and it’s a method that businesses use to convert their sales that were done on credit to an immediate cash flow. This is the preferred financial tool in getting liquid working capital for businesses of all types and sizes. The credit line that can be received is based on the customer’s financial strength, that is the buyer, and not the client, that is the receivables seller.

Factoring is a kind of financial transaction, and a business will actually sell its invoices to another party, and this party is referred to as a factor, for a discount.

The three separate parties involved are the party who sells the receivable, the customer, and the factor. The receivable is basically a kind of financial asset that’s connected with the liability of the debtor to pay the money back to the seller, and it’s often for work that’s done or goods that are sold. The seller will then sell at least one of his invoices, that is, the receivables, at a discount to another party, which is called the factor, and the purpose is generally to get cash.

The receivables sale basically transfers the ownership of the invoices to the factor, and that means that the factor has all the rights that are connected with the receivables. Basically, the factor will get the right to get the payments made by the debtors for the invoice amounts and, in a certain kind of factoring known as nonrecourse factoring, he will also have to bear the loss if the debit never pays the invoice because of a financial instability to pay it. The account debtor might be notified of the invoice’s sale, and the factor will bill the debtor and carry out the collections. There is also non-notification factor, where the seller will collect the accounts that are sold to the third party factor, as the factor’s agent, and that also happens.

The origins of factoring lie in trade financing, especially international trade. Factoring might have originated with ancient culture in Mesopotamia, and it is by no means something new. There were rules of this process that were written into Hammurabi’s Code.

Factoring as a part of business was done in England even before 1400, and it started in America with the Pilgrims too, in the early 1600s. It seems to be nearly related to the early merchants of this country. Factoring has changed over several centures. There have been changes in how companies are organized, technology, the advent of the telephone, and the advent of the computer.

Factoring is generally a method to obtain cash. Sometimes, the cash balance of a company will be insufficient to meet the current needs and obligations that they have, like contracts or new orders. Sometimes, there are industries where factoring has been a historic part of how they run their business, like in apparel or textiles. The firm can keep a smaller cash balance that’s ongoing with factoring. By cutting down on the cash balance size, a lot more money is available as an investment for the growth of the firm.

Need A/R Factoring Quick? – We Factor A/R Quickly!

A/R Factoring quickly — If you need capital quickly for a business, but you can’t get a normal loan, or you don’t want to get a normal loan, then look into accounts receivable factoring.

If you need quick cash for a business, but you can’t get a normal loan, or you don’t want to get a normal loan, then look into accounts receivable factoring.

It’s a separate source of income for your business, and it can really work to help progress your business quickly without taking on any more debt, or waiting for those customers to pay their bills. It makes use of the existing invoices that you have, but that haven’t been collected upon yet, and you are able to sell those invoices to a third party, called a factor, at a discount.

What is Factoring, Exactly?

Factoring is when someone purchases all your accounts receivables, and then they are charged with the task of collecting. You can sell your invoices to the factor directly too. The purchaser definitely can’t give you the total value on the receivables, because they’re not even sure that they’re going to collect on them. It might take a good amount of time for them to check the credit on all the customers and go through the whole collections process too. You lose a little money, but they do all the hard work. It’s a great set-up and system. They might also want to see records for the length of time that your customers have owed money, to see how likely it is that they are going to pay it at all, or quickly enough.

What Can I Expect To Get?

Factoring companies will pay based on a number of factors, like the length of time that the receivables have been unpaid, the amount of receivables, and the customers’ credit ratings. The factor will take a look at your receivables, and they will give you a first amount, probably about 80%, within a couple of days. They’ll then charge a fee for the whole collections of between 2% and 6%. The receivables may be really difficult to collect, so they might charge you more or less, depending on that. You might not get any more than 40% of the receivables that you have. That’s really an estimate though. Your numbers might be different.

Is It Legal?

Factoring is definitely legal, and it’s an industry that’s around $150 billion per year. Factoring companies are valid businesses. They make the money they have by being aware of the receivables value. Some industries have had factoring as an ordinary part of how they do business from time immemorial. Take a look at apparel and textile companies. There are businesses that do it just because they need a surge of cash to do a massive business expansion, but don’t want to take on any new debt. Sometimes, they can garner a whole lot of additional invoices through the money that they re-invest, so it all evens out.

What About the Customers?

The factoring company will definitely want to treat your customers in the right way. The factoring company wants to make sure that they get the payment. The factoring company doesn’t want to hurt the relationship that you have with your customers either because they want to make sure that your company can continue to use them in the future for even more invoices.

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Business invoice factoring

Business invoice factoring is a way that firms can obtain much-needed cash, and they do so by selling their receivables, also known as invoices, at a discount to a third party, also known as a factoring.

Factoring is technically a financial transaction, and a business will sell of its accounts receivables at a discount of what they would normally make off of them, in order to collect cash from a third-party immediately. It’s not a loan. They’re completely selling off their invoices. It might be up to the factor to collect the invoice, or it could be the duty of the seller to make sure that the invoices are collected on.

There are three parties involved in a factoring arrangement. There is the person who sells the receivable, or the company who sells the receivable, there is the debtor who is also the seller, and there is the factor. The receivable is basically a financial asset, and it’s connected to the liability of the debtor to pay the money that’s owed to the seller, and it’s often for goods that are sold, or work that is performed. In some industries, factoring is a normal part of how the industry works, like in apparel or textiles. It’s just the way that business has always been done. In other industries, it’s sometimes just done by firms on an individual basis in order to get some much-desired short-term cash.

The sale of the invoices will basically transfer the ownership of the invoices to the factor, and it will indicate that the factor has all the rights that are connected to the invoices. Basically, the factor will get the receive the money paid by the debtor for the invoice cost, and in a certain kind of factoring that’s called nonrecourse factoring, he will have to take on the loss if the debtor doesn’t pay the invoice.

Invoice factoring is also a great way that a business can get a quick cash advance on any of its clients that aren’t paying very quickly. Someone else may want to take on that obligation, and a business may want to get rid of that obligation. If they can just collect a certain amount on their unpaid invoices, then it’s better than nothing. It’s the factor’s problem if he can’t collect on that invoice, at least in some factoring agreements.

Factoring lets a predictable and steady cash flow to come in. It’s not a loan in any way, shape, or form. It lets your business have the flexibility to grow and get bigger because you get instant cash flow. Immediate capital to expand your business can end up resulting in more invoices, which will result in more money overall, even if you lose a lot of money on the invoice factoring initially. It’s sometimes considered a trade-off to expand the business necessarily. It’s up to an astute financial team to determine if it’s the right move for a business. It’s always a good idea if it can expand the business in a guaranteed way.

How to Choose Among Factoring Companies

Once your company has decided to use a factoring company for accounts receivable financing, you really need to choose the right one. Making the wrong decision can have disastrous consequences for your company, and this can, not only negatively affect your current profit margins, but also cause some ripples in your company’s future transactions.

Here are some tangible hallmarks you should be looking for in factoring companies:

References:

The best way to find information about a factoring company is to collect information from its previous and current clients. This should be more objective than the information provided by the people working for the factoring company.

The information you need to gather from the references should include the following:

The simplicity and ease (or lack thereof) of the application process, and the time it takes for the factoring company to approve the funding request;
The quality of support received from the factoring company;
The time period from the initial approval of the funding request to receiving the initial funding and the time required before the company received the remaining balance of the advance;
The reaction (complaints and comments) of the company’s customers regarding the factoring company;
Their willingness to use the services of the factoring company in the future.

Customer Support

For the best service, the factoring company should offer many kinds of support for their clients, such as telephone and email support, and face to face meetings. A factoring company that offers only email support may not be as supportive as those companies which offer many other avenues of communication. By offering several modes of communication, your company has a better chance of having its questions answered promptly, which can prevent or minimize the possibility of misunderstandings later on.

Factoring Company History

The length of time that a factoring company has been in the industry is also a very telling indication whether it is reputable or not. That a factoring company has stood for many years says that it has provided sound services for its clients, which is why it has very little difficulties in finding new clients. It is also vital that the factoring company should have a long history of providing their services to companies in your industry.

Although it is entirely possible that a newer factoring company can provide the same quality of service for your business, your company takes on more of a risk with a factoring company that has a much shorter history of service in the industry.

Of course, there are also intangible signs you may wish to look for, such as the personality and professionalism of the factoring company. After all, it is your company’s reputation at risk, and if you select a factoring company which deals rudely with your company’s customers then you may lose some customers.

You may even tarnish your company’s reputation and lose potential customers when word of the factoring company’s rudeness spreads, which is why it is crucial that you choose wisely among the many factoring companies offering their services.

What are Receivable Factoring Companies?

Receivable factoring companies offer money in cash for your account receivables invoices, which they collect for you and from which they get a certain percentage as fee. Choosing among them to solve your cash flow situation will depend upon a number of factors and these are discussed below.

How Much Do They Charge For Their Services?

Receivable factoring companies have their own ways of charging for their services. There are generally two ways in which they earn their money:

The first is the percentage of the total amount of the receivables’ total face value. For example, when if the total amount of the accounts receivables is $100,000 then you may get up to $90,000 right away instead of waiting for a few weeks or months to get it all. Some companies may offer a larger percentage for your share than their competitors.
Each transaction often comes with its service fee, which may range from 0.5% to 3% of the bill. This is why it is preferable to turn over only your largest accounts instead of a lot of smaller ones. If you have a single account which owes your company $100,000 then the service fee may be nearer to 0.5%. But if that total is comprised of many little accounts, then the service fee for each may be nearer to 3% because they increase the workload of the factoring company.

How Do They Treat You As A Customer?

Once you have entered into an agreement with a receivable factoring company, at some point you will have questions for them to answer while they process the billing. The way they deal with you is important, and the best receivable factoring companies make sure that you have plenty of ways to communicate with them. They also make sure that they reply to your queries promptly and with all the necessary information you require.

So if a factoring company merely gives an email address as a way to contact them, don’t be surprised if they are tardy when they respond to your questions. This lack of communication increases the chance of misunderstanding between the two parties later on.

How Do They Interact With Your Customers?

Since a factoring company will be the one to handle the collections of the bills that are due to your company, the manner in which the factoring company interacts with your customers can affect your business as well. In a way, they represent you in the eyes of your customers. And if they are overbearing and discourteous when they go about collecting the money from them, the factoring company won’t be alone in getting the blame. In fact, the customers may place most or all of the blame on your business. After all, you chose them to collect the bills for you.

So get some feedback as to how receivable factoring companies do their collecting, and how professional they are when dealing with customers. It may be better for the future of your company to pay just a little more in terms of interest and service fees to ensure that you and your customers are treated properly.

Invoice Factoring And Why Your Business Requires It

Whatever business you may be a part of or running, having a good cash flow is always imperative. Anyone who is running a B2B operation will know that late payment of invoicing is a persistent and ever present problem and can build stress within the company, even when it is doing really well.

Invoice factoring is a form of accounts receivable financing which will help you get paid on time every time and will enable you to perform daily operations and payments normally. While invoice factoring as a does have its pros and cons, the cons for the most part apply only if the process is used on a business model which does not need this type of financing.

What is Invoice Factoring?

Invoice factoring is a type of financial transaction where you, as a business owner will sell your accounts receivable to a third party, called a factor at 80% to 95% of their face value. The third party then goes around collecting payments for the invoices and forwards any balances that may be left less charges to you.

Here is a step by step illustration of how the process works:

Step 1: You contact a factoring company and sell your overdue invoices to them at a pre-determined rate which is typically 80% to 95% of the invoice’s value.

Step 2: The factoring company will provide you said value, usually within 24 hours thereby freeing up capital for your company.

Step 3: The factoring company then collects the payment due on those invoices it just got from you.

Step 4: Your customers pay the factoring company instead of you and any residual balance which is left is immediately remitted to you.

This type of accounts receivable financing will help you free up locked capital quicker and also take care of a huge headache by allowing you to pursue your business goals rather than running after customers for payment.

What Types of Businesses is Invoice Factoring Good For?

Invoice factoring is typically applicable when businesses are extending their customers a line of credit, or if they are a B2B operation selling to other companies. Also businesses which need cash now, rather than cash later can use invoice factoring to get the money they need in order to run their operations normally. By using Invoice factoring you will be able to plan out your cash flow better, pay bills and take care of payroll. Finally when you use invoice factoring, the factor will then take care of your sales ledger and do the running after for you.

Invoice factoring is a brilliant solution to traditional bank loans whereby you can free up working capital and raise cash for your business immediately. With this type of accounts receivable financing, your cash is in the bank, the funding is immediate and is primarily driven by your costumer’s demand for your products. Finally, another advantage of invoice factoring is that the service fee is only charged against advances that are not fulfilled by your customers. So every time a customer pays, the debt is automatically repaid.

Challenges Faced by Small Businesses and Tackling Them With Invoice Factoring

Regardless of your ground breaking ideas, any business you start will always face some core issues. Perhaps the most vital of these is cash flow management, having a healthy cash flow is pivotal for any business however delays in payment can easily set you back and create stress within the company. Invoice factoring, which is a kind of a accounts receivable financing can help you overcome your cash flow issues which you can then use to tackle other issues.

What is Invoice Factoring?

Invoice factoring is a kind of financing solution where a factoring company purchases your overdue invoices at a discounted rate which can range from 85% to 98% of its original value. It then collects the money from the company’s customers and remits any outstanding balance back to the company. By doing so the business has cash immediately available for use, which it can then use to pay its bills, pay rolls and suppliers.

Challenges Faced By A Typical Business

Here is a list of issues that a business will typically face.

1. Staffing & Payroll Payment: All businesses need to hire employees and pay them. However as the business needs to have its invoices paid first, any delays on that front can lead to delays in payment of the company’s staff. Such delays typically result is friction between the employees and the company’s management and the company can end up losing valuable workers. By opting for Invoice Factoring, you can be assured of having cash in hand so that you can pay your staff on time.
2. Sales: Increasing sales is also another major concern that a business faces. However if you are always getting paid late, you are going to have to hold your plans back. Invoice factoring can allow you to create new products, improve on your services and look into more opportunities.
3. Training Employees: With cash readily available, you can train new employees quicker and let them contribute to the company as well. You can also invest in training your managers and bringing them up to speed with the latest in management techniques and also arming them with the best tools required to increase the company’s bottom line.
4. Managing Change within and Without the Company: Having more cash readily available will help you respond to changes in the market faster, fueling your company’s growth.

So, in short a lot of your company’s hassles can be easily tackled simply if you have cash in hand. If you are running the type of business which requires cash now rather than later, then it is even more imperative to at least consider opting for Invoice factoring.

In doing this you are also ensuring that you do not need to rely on a line of credit from a bank as your growth will be driven by your customer’s demand for your products and/or services. Give Invoice factoring a chance, it may just be the solution to your accounts receivable hassles you were looking for.

Rates of Return for the Factoring Of Accounts Receivable

If you run a business and you want some ready cash to bolster it, you can enter into a factoring agreement with another company which provides this kind of service instead of applying for a loan.

When you enter into a factoring agreement, you agree to sell your accounts receivables invoices for a fraction of their total face value. The rates of return for the factoring of accounts receivable can help you determine which factoring company you enter an agreement with, or whether you enter into a factoring agreement at all.

“Rate of return” in practical terms, however, can mean different things for different businesses. It’s up to you to determine the kinds of benefits your business needs.

The Different Percentages of Your Account Receivables

Let’s say you have about $100,000 coming to you in customer payments, but you may have to wait a few months in order to get them all in full. If you want or need that money now, you can sell your invoices but you certainly won’t get the full amount. Typically, the percentages range from as low as 70% to as high as 90% of the total amount of the money coming to you. But recently, competition has been fierce among factoring companies, which has led to some pretty startling offers regarding these percentages.

Greater Maximum Amounts

Every creditor institution has its own limits as to how much they are willing to front each business it deals with. Some companies may offer up to a few hundred thousand dollars maximum, but others are willing to front up to $2 million (or even more).

Faster Transactions

If you are willing to forgo a percentage of accounts receivables so that you can get the money more quickly instead of waiting for a few months for them, then time is obviously an important factor for you. But there is also a time factor involved when dealing with a factoring company. You will have to consider just how fast a factoring agreement can be reached with a particular factoring company, and how fast each one can get you the money after the agreement has been finalized. It’s typical for a factoring company to need about two to five business days before they can get you your money, although others may need less than 24 hours. The speed of the transaction may also affect the eventual rates of return for the factoring of accounts.

More Willing To Accept Risks On Behalf Of Your Company

There are many kinds of factoring agreements, and some of these agreements concern what happens in the event that a customer doesn’t pay. Some factoring companies are willing to take on the risk of non-payment, although they would have to evaluate each customer to see if they meet their standards regarding acceptable risks. The “real” rates of return for the factoring of accounts you receive may depend on how many of your customers pass this form of screening. The more customers a factoring company regard as acceptable, the more money you get in return.

Distributors Invoice Factoring: A Way to Solve Cash Flow Problems for Distributors and Wholesalers

Invoice factoring can get you the revenues that are tied up in your accounts receivables without forcing your clients to pay up any sooner than the agreed terms.

If you have a wholesale or product distribution business, then you probably have heard of distributors invoice factoring. Yes, it may sound familiar, but truth be told, not a lot of people truly understand how it works.

Product wholesalers and distributors, much like any other business, need to make sure that their revenues are being managed wisely; otherwise they might face some cash flow shortage. Looking at the expenditures side, you have suppliers that need to be paid up. If you’ve already established yourself as a worthy client to your suppliers, then you can probably ask them for some payment terms.

However, at some point in time, (and normally this happens to budding businesses) you may exceed your credit limit, therefore forcing you to make upfront payments. On the revenues side of the fence, you have clients who will also negotiate for credit payments from you. And if they are indeed credit-worthy and you want to keep their business, then you will need to agree to some payment terms.

Scenarios like these make cash flow management a bit tricky and if your wholesaling/distribution company starts to grow rapidly, then you might face the possibility of running out of funds. If you won’t take immediate action, this can lead your business into a downward spiral.

Fix Your Money Woes by Factoring Your Invoices

The financial dilemma mentioned above can be addressed by going for distributors invoice factoring. This move can get you the revenues that are tied up in your accounts receivables without forcing your clients to pay up any sooner than the agreed terms. Rather, you do the financing with the help of a third party lender. Lenders will pay you in advance whilst they hold your invoices until your clients pay up. Once your clients have paid their dues, the lender gets their fees with the corresponding interests, then settles the transaction.

Get Your Funding By Using Your Clients as Leverage

The credit strength of your clients can be put into good use with distributors invoice factoring. But sometimes invoice factoring alone will not suffice. If you are a small business that landed a big deal but lack the fund to complete the transaction, the next best course of action is to get a purchase order loan. In PO financing, lenders check your client’s credit records, and if they pass, they’ll give you the loan. Once you’re able to deliver your products, go into invoice factoring to release the revenues tied with it. These two solutions, when combined, can give you a supply of cash that can keep your business operations running. So if you know that your client has good credit terms, use that as your leverage in securing your loans.

Will You Qualify for Funding?
For this to happen, you need to ensure that your invoices are from credit-worthy clients. You also need to make sure that you have lien-free invoices, a good management team running the show and follow good invoicing practices. Often you don’t need any other hard collateral to be approved for funding; your invoices should suffice if you are applying for distributors invoice factoring.