Invoice factoring has been gaining popularity as a way to finance a business in recent years. There are a number of reasons for this, but the most important one is that getting business financing in Canada can be very difficult. Most financial institutions have conservative lending standards and will only provide financing to companies that have an ideal situation – a solid balance sheet, growing income statements, and around three years worth of profitable operations. The reality is that few companies can actually meet the standards. However, a business loan is not always the only – or even the best – way to address all corporate financial problems. If your company has cash flow problems because it’s offering payment terms to its customers and needs the money sooner, the solution may be to use invoice factoring. Because of this, factoring in Quebec is quickly becoming a leading source of funding for companies with cash flow problems.

The premise is simple. A company sells a product or service to a commercial or governmental customer. It offers payment terms of up to 60 days which allows the customer to take up to two months to pay the invoice. Few customers can afford to do this, but they have to if they wish to keep their customers. Factoring helps by providing an advance on the slow paying invoices. This provides the company with working capital that enables it to cover its business expenses. Perhaps more importantly, it also provides a stable financial platform that allows it to take on new customers and offer payment terms with confidence.

Basically, a factoring company advances funds to your company and uses your invoices as collateral. The factoring company also settles transactions as your customers pay on their regular schedule. This last point is very important. Your customers are not required to pay sooner – they pay on their regular schedule.

Factoring is ideally suited for:

• Trucking companies
• Freight brokerages
• Staffing companies
• Consulting companies
• Oilfield service companies

Qualifying for factoring is usually easier than qualifying for other types of business financing. Since the factoring company is financing your invoices, it is very important that your customers have very good commercial credit quality. Additionally, your company must not have any major legal or tax problems. This low barrier of entry makes accounts receivable factoring an option for small companies that can’t obtain conventional business financing. Because of this, factoring in Canada is a growing financial alternative for companies in the province of Québec that have working capital issues because of slow paying clients.

In recent years, factoring financing has been gaining traction in the province of Alberta. Factoring in Alberta has become a popular business financing option for companies in many industries including the booming oil and gas industry. It provides an alternative way to solve a very common issue – cash flow problems due to slow paying customers.

Companies that are looking for financing usually face a number of challenges. Getting conventional financing in Canada is relatively difficult. Institutions will only lend money to companies that have substantial collateral, pristine income statements, and a seasoned track record of success. Unfortunately, few small or midsized companies can actually meet this criteria, leaving them with limited options.

However, business loans are not always required to fix cash flow problems. As a matter of fact, a common cash flow problem can easily be solved with factoring. Most companies have to offer credit terms to their commercial customers. This allows their customers to pay their invoices in up to 60 days. Although getting terms works very well for customers, it doesn’t always work so well for the company that’s offering them. Few have the resources to wait up to two months for payment and need funds sooner. This is were invoice factoring comes in.

Instead of waiting for customer payments, you can enter into a financing agreement with the factoring company. The factoring company will advance funds to your company using your slow paying invoices as collateral. This gives your company immediate liquidity while the financing company holds your invoices until payment. The transaction settles once your customers pay on their regular schedule. In effect, factoring achieves something that is similar to getting quick payments from your customers without actually requiring them to pay any sooner.

Factoring financing has become very popular in a number of industries such as staffing, transportation, consulting, and oilfield services. It has a lower point of entry than most conventional business financing programs. The most important collateral requirement is to have invoices from solid customers. This is critical to the success of the transaction. Additionally, your company needs to be well managed, free of major problems, and have good invoicing practices.

The biggest advantage of using factoring comes from the fact that it’s a growth oriented product. The factoring line is designed to increase as your sales grow, which provides a stable financial platform. This makes factoring financing an attractive alternative for companies in the province of Alberta that have cash flow problems due to slow paying customers.

Factoring has become a popular option to finance companies in Ontario that have cash flow problems due to slow paying customers. In part, the growth of factoring has been fueled by the fact that getting a business loan or line of credit is relatively difficult for small and midsize companies. Most lending institutions have complicated requirements and will only finance companies that have substantial collateral, spotless financial statements, and a seasoned management team. Invoice factoring can solve this very common cash flow problem and has substantially easier qualification requirements, making it an ideal solution for small and midsize companies.

Specifically, factoring in Ontario can help companies that have cash flow problems because their commercial customers are taking up to 60 days to pay an invoice. This is common in commercial transactions where vendors are usually required to give payment terms (or credit terms) to commercial customers. Few companies have the required cash resources to offer terms and also cover their existing operational expenses. And those that can afford to cover their own operational expenses, seldom have the resources to take on new customers. In the end, growth is affected.

Factoring solves this problem by financing open invoices. This provides a similar benefit to getting quick payments from customers, without actually requiring them to pay any sooner. Basically, the factoring company advances funds to the client using their open invoices as collateral. The advance varies between 80% to 90% and is based on industry. This provides the client with the needed working capital to cover operating expenses. And more importantly, it provides immediate working capital to sustain growth. The transaction is settled once the customer pays, at which time your company receives the remaining 20% to 10%, less the financing fee.

Qualifying for a factoring line is comparatively easier because factoring companies have simpler collateral requirements than most lending institutions. The most important requirement to qualify is to have credit worthy commercial customers. This is very important since the whole transaction hinges on your ability to leverage your customers credit worthiness. Additionally, you need to have sound invoicing practices, be free of major problems, and have knowledgeable managers.

This solution is ideally suited for growing companies. This is because the invoice factoring line will increase to adapt to growing sales, as long as your company meets the factoring criteria. This feature, along with accessibility, makes accounts receivable factoring an attractive option for growing companies that have cash flow problems due to slow paying customers.

Getting a business loan in Canada has always been challenging. Most banks and lending institutions have very strict lending standards and will only provide business loans to companies that have excellent financial statements, solid assets, and a seasoned management team. This creates a problem for smaller companies that can’t meet the collateral requirements . When it comes to business financing, most owners think that a business loan or line of credit are their only options. They aren’t – factoring financing in Canada has been gaining popularity as a funding solution for companies in a number of industries.

Most companies that sell products or services to corporate customers usually have to offer payment terms – also known as credit terms. Basically, this gives the customer up to 60 days to pay the invoice. However, your company has to pay for all expenses associated with the delivery of the product or service and then wait for up to two months for payment. Few companies have the necessary cash reserves to afford this, and most would benefit from faster payments. This leaves your company with two options – neither of which is good. You can take on a customer, offer payment terms and risk cash flow problems. Or, you can decline the sale and lose the customer.

In many cases, a better alternative is to streamline your cash flow using factoring. Accounts receivable factoring uses a financial intermediary that sits between your company and your customer. They advance money to your company while using your slow paying invoices as collateral. They also settle the transaction once your end customer pays for the invoice in full. In effect, factoring can accelerate the payments that are tied to your invoices without requiring your customers to pay sooner.

One advantage of factoring over other solutions is that it has relatively simple collateral requirements. The main collateral for the transaction are your invoices, so it’s critical to have credit worthy customers in order to qualify. Additionally, your company should have solid invoicing practices, be free of major problems, and have knowledgeable owners. This puts factoring within the reach of small and medium sized businesses.

Although factoring is popular in most provinces, factoring in Ontario has experienced substantial growth in recent years. This may be because factoring is also ideally suited for growing businesses. The financing line is directly tied to your revenues, and therefore can increase as your sales to commercial customers grow. Because of this, factoring is an ideal source of growth funding for companies that have working capital problems due to slow paying commercial customers.

Most transportation companies in Canada have very dynamic cash flows. Trucking company owners have constant demands on their working capital – they have to pay drivers, repairs, fuel, and other expenses. And all these expenses occur regularly. However, most shippers pay their invoices 30 to 60 days after the load has been delivered. This means that the trucking company has to cover all their operating expenses from their cash reserves while waiting to get paid by the customer. Of course, this will not be a problem for large transportation companies that have substantial cash reserves. Unfortunately – it’s a problem for everybody else.

One way to solve this problem is to use factoring in Canada. Factoring provides a similar benefit to your company than a “quick pay”. However, instead of getting your “quick pay” from the customer, you get it from a finance company. This provides your trucking company with the capital it needs to pay its expenses and to grow. This last point is very important because few Canadian trucking companies can afford to grow and pay their expenses at the same time.

Factoring lines are usually structured as an advance on your open freight bills using two installments. The first installment covers about 90% to 93% of your outstanding invoices and is paid as soon as the load is delivered and accepted. The remaining funds, 10% to 7% (less the funding fee), are advanced as a second installment once your customer pays the invoice in full. There are some instances where factoring can be structured as a single installment, where you get the equivalent of the full advance and whatever is not advanced is considered the fee.

A factoring line will grow with your business. This is very important because usually that is when you need funding the most. The line is dynamic and will increase with your revenues as your sales grow – as long as you meet the factoring criteria.

The most important criteria to qualify for factoring is to have shippers with solid credit. This is very important because the factoring company is using your invoices as the collateral that backs the transaction. Additionally, your company needs to be well run and free of major problems. This makes freight factoring an ideal solution for growing transportation companies in Canada that have working capital problems due to slow paying customers.

Financing a business in Canada has always been challenging. Few small businesses qualify for conventional business financing because many institutions have very strict lending criteria. They can only provide loans to companies that have spotless financial records, substantial collateral and a long track record of success. The problem is that few companies can meet these criteria, leaving them with limited options. However, there is a financing alternative that has been gaining popularity in Canada in recent years. It’s called factoring and it’s designed to help companies that have cash flow problems due to slow paying customers.

Most companies that sell a product or a service to another company have to offer payment terms to their customers. These terms usually give the customer up to 60 days to pay an invoice. And in today’s environment, companies have to offer terms to their best customers if they want to keep them. But this leaves them with a problem because few small businesses can afford to wait long for payment – they have their own expenses to pay. Invoice factoring solves this situation in a simple way. A factoring company advances funds to your business using your slow paying invoices as collateral. This provides your company with the immediate funds it needs. But more importantly, by accelerating revenues, factoring provides a solid financial footing that enables you to manage you business and focus on growth.

Most factoring transactions are structured as the funding of an invoice in two installments. The first installment is called the advance, and covers up to 90% of the invoice (this varies by industry). The advance is provided as soon as the work is invoiced for and accepted by the customer. The second installment is called the rebate, and covers any remaining portion that was not advanced, less the fee. The rebate is provided when your customer pays the invoice.

Factoring in Canada has a number of advantages over other financial solutions. The funding line is flexible and is designed to increase as your sales grow, which enables you to easily handle new orders. Additionally, it’s easier to obtain than many solutions. The most important requirement to qualify  is that your customers must have good credit. Additionally, your business must not have legal or tax problems. This makes invoice factoring an ideal solution for growing companies that have cash flow problems due to slow paying customers.

Canada’s banking industry has been able to survive the global credit crunch unscathed, for the most part, because Canadian financial institutions have very strict lending standards. While this is good, it also has the unintended consequence of restricting access to business financing for small and mid sized companies. Few of these companies have substantial assets and can’t qualify for conventional financing.

Since few of these companies had access to funding many saw their finances deteriorate. The most common financial challenge is due to cash flow problems that originate from slow paying customers. In most commercial transactions, customers get up to 60 days to pay their invoices. The business owner is responsible for covering payroll and supplier expenses until the customer pays. Companies that have a cash reserve can usually wait until payment arrives without any major problems. For companies that don’t have a substantial cash cushion, it’s a different story. They have to juggle bills and delay payments to critical vendors until invoices get paid. In the end, this will restrict growth. And in the worst case scenario, it could put a company out of business.

One solution to this problem that has been gaining traction in Canada is factoring financing which addresses the problems that stem from slow paying customers. Factoring invoices solves this problem by using a factoring company, that acts a financial intermediary between your company and your customer. The factoring company buys your receivables and pays you for them immediately. Then, they hold the receivable until your customer pays, at which point the transaction is settled. For many companies, invoice factoring provides predictable cash flow, which allows owners to manage the company more efficiently. This allows owners to focus on growing the company, rather than worrying about juggling bills.

Another advantage of factoring invoices over other products is its flexibility. Your financing line is directly tied to your sales and grows dynamically with your company. Many times, your sales ability and the ciredit worthiness of your clients will determine the size of your line. This is ideal for entrepreneurial companies with good products and services and whose main problem is slow paying customers.

Qualifying for factoring is easier than qualifying for other types of business financing. It’s also available to startups and small companies.  The most important requirement is to have customers that are commercially credit worthy, because their invoices represent the collateral that factoring companies buy. Aside from that, your company  needs to be free of liens and judgements.

Of all the responsibilities that temporary staffing agency owners have, none is more important than payroll. Employees are the lifeline of the business and making sure they are paid in time goes a long way at ensuring your company has smooth operations. Paying employees on time can be very challenging, especially if a client is late with a payment.

Let’s look at a common scenario for a staffing company. A client leases 10 employees for a short term two week contract. At the end of the two weeks the staffing agency will have to pay the employees. Your client, on the other hand, will get an invoice from you and pay it in 30 to 45 days. Unless you have the funds to pay your employees while waiting for your own payment to arrive – you are going to run into a problem. This situation is unfortunately common in the industry.

The obvious way to solve this problem is with business financing. This is easier said than done. Getting a business loan in Canada can be very difficult. Most banks are very conservative and will only make business loans to clients that can show substantial assets and impeccable financial statements. While these are desirable characteristics, the biggest asset that a staffing agency has is its employees. This makes them hard to finance.

If we look at the problem, it’s fairly simple. It’s the payment gap between delivery of services and payment by the client. One easy way to handle this is to use invoice factoring. Invoice factoring provides a funds advance for the invoice. This gives you the funds to meet your payroll and business expenses without having to wait for your client to pay.

Most transactions are structured with two payments. The first payment varies but it’s usually about 85% to 90% of the invoice. This payment is given to you as soon as you submit the invoice for financing. The remaining 10% to 15%, less a fee, is advanced once your client actually pays for the invoice.

One of the big advantages of factoring in Canada is that it’s easy to qualify for. The most important requirement is that your client have solid credit and the ability to pay the invoice on time. This makes it a great alternative for growing staffing agencies.

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Learn about invoice discounting in New Brunswick

One of the more common business problems involves dealing with slow paying clients. In most business to business transactions, a product or service is sold to a client who pays in 30 to 45 days. Offering this type trade credit is basically the norm, especially if you are selling to large companies. Basically, larger companies get better use of their cash by making their vendors wait to get paid. It’s that simple.

This agreement works well if the vendor, in this case yourself, has the ability to wait 45 days to get paid. Some can. Many can’t self finance, because they have obligations they have to meet. There is payroll. There are suppliers. There is rent and many other expenses that must be met.

This problem can be solved easily with business financing. However, everyone knows that business credit is tight and very hard to get. Most institutions are making conservative decisions. They need to see assets, solid financial statements and a good track record of running you business. This put business loans out of the reach of most business owners. But a business loan is not the only way to solve this particular problem, nor is it always the best solution.

A better solution may be to factor your invoices. Invoice factoring is a type of transaction whereby a factoring company gives you an advance for your 30 to 60 day invoices. This provides you with the funds to meet payroll and other critical expenses. The transaction is then settled once your client actually pays for the invoice.

One of the advantages of factoring in Canada is that it’s easy to obtain, when compared to other products. Factoring companies secure their position by holding the invoice as collateral and they consider this your most important collateral. This an important feature because it provides financing to companies whose biggest – or only – asset is a solid client base. One additional benefit of invoice factoring is that the credit limit is dynamic and tied to your invoices. If you increase your billings to reputable clients your factoring line will usually be increased to match it.

Although invoice factoring is certainly not a cure all, it works very well in instances where the major business challenge is the inability to wait to get paid by clients.

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Learn about factoring in Quebec

Having sufficient working capital to operate your business on a is critical if your company is to prosper. Without it, you won’t be able to meet current liabilities such as rent, payroll and supplier payments. When faced with cash flow problems, many owners try to ignore the problem by waiting before taking action. The hope that the problem will solve itself. This seldom happens. While a cash flow problem may be solved temporarily by a quick customer payment, chronic cash flow problems seldom fix themselves and need management action.

One of the more common causes for cash flow problems is offering net 30 or net 60 terms to clients. By offering terms you are effectively delaying your invoice payment. However, usually, you are still liable to pay your suppliers and employees quickly. This creates a gap between when you need to pay liabilities and when you will receive income from an invoice.

Many companies can bridge this gap by using their own fund reserves to cover expenses. Those that don’t have their own reserves usually try to get some form of business financing to cover the gap. Frequently, an owner will approach their local banker hoping to get a business loan. While business loans can be used to correct this problem, they are better suited for buying assets rather than covering cash flow problems. For many companies, a better solution is to use factoring in Canada.

Canadian factoring, a form of financing offered by a factoring company, provides an immediate advance on invoices that are payable in 15 to 90 days. This provides the cash flow to cover operating expenses, helping ensure that your company can deliver on its promises. Factoring Canada has a number of advantages. The most important one is that the credit quality of your customers plays an important role in the transaction, and for the most part, determines the amount of funding you can get. This feature makes factoring very dynamic as your financing line can grow as your billings grow.

Factoring companies structure the transaction in two payments. The first payment, about 80% of the invoice, is funded as soon as the invoice is presented to the client. The second payment, about 20% (less the fee), is funded once your client actually pays the invoice.

Factoring is a great solution for companies that have great potential but can’t afford to wait to get paid by the clients.

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Learn about factoring in Ontario.