Invoice factoring has been gaining popularity in Canada as an alternative to conventional business loans and lines of credit. One reason for this is that getting a business loan is particularly difficult. Most lending institutions only provide financing to companies that have substantial assets for collateral, spotless financial records, and a long track record of success. Few small, or even midsize companies, can meet this requirements. However, if your company has cash flow problems because it’s offering payment terms to its commercial customers, then factoring may actually be a better solution than a conventional business loan.

Factoring in Canada is designed to help companies that have cash flow problems because they do business with corporate customers that pay their invoices and up to 60 days. From a capital perspective, your company has to spend money to deliver the service and then wait up to two months for payment. Few companies can afford to do this and grow at the same time. Of course, companies would not have these problems if customers paid their invoices within a few days of receiving your product/service. And this is where factoring your invoices comes in.

Factoring provides a similar benefit to a quick payment, without actually requiring your customers to pay sooner. Rather, a factoring company advances funds to your business using your open invoices as collateral. Usually, factoring companies advance anywhere between 80% to 90% of your invoices as soon as the work is completed. You get the remaining 10% to 20%, less the financing fee, once your customer pays in full.

One important advantage of factoring over other solutions is that it has easier collateral requirements. From a collateral perspective, the most important requirement is that your customers must have good commercial credit. This is most important because your customers payment ability acts as collateral for the transaction. Additionally, your company needs to have good invoicing practices, be free of major problems, and be operated by knowledgeable managers.

One clear benefit of factoring your invoices is that it’s one of the few forms of financing that allows you to leverage the credit strength of your customers to your own advantage.  Additionally, most factoring lines are designed to be indexed to your sales – this means that the line will increase as your sales to credit worthy customers grows. This makes invoice factoring an attractive solution for growth oriented companies in Canada that have cash flow problems due to slow paying clients.

Finding financing for a small business in Canada has always been challenging. Most institutions tend to be very conservative and will only provide financing for companies that have substantial assets and a long track record of profitability. Unfortunately, most small and mid sized companies can’t meet the requirements of large institutions. Fortunately, there are other options for companies. There is one alternative that has been gaining popularity recently in Canada – factoring.

This type of financing helps companies that have cash flow problems due to slow paying clients. In Canada, is common to give customers up to 60 days to pay their invoices. This can create problems for small companies that can’t really afford to wait that long. Factoring solves this problem and accelerates the revenue due from that invoice, improving your cash flow.

Factoring works on a very simple premise – a factoring company advances funds against your slow paying invoices an holds them as collateral. The transaction is settled once your customer pays the invoices in full. A key feature of invoice factoring is that the main collateral is the invoice – and more importantly – the credit strength of your customer who is paying for the invoice. Factoring companies view your customers’ credit strength as an asset.

Factoring financing can be used in a number of industries. Industry examples include transportation (freight bill factoring), staffing and manufacturing among others. To qualify for factoring, a company should have solid commercial customers, be free of legal problems and be free of tax problems. This makes it a perfect solution for companies whose biggest asset their customer list.

Many Canadian companies have an important advantage over their US counterparts. While the US economy was dragged down by a major credit crunch and recession, the Canadian economy and financial system escaped largely unscathed. This will enable many companies, especially those in the transportation sector, to grow at a fast clip as the world economy improves.

The only catch is that the Canadian financial system is known for having strict lending requirements. They will only offer funding to companies that have impeccable financial statements and a solid track records. This can be challenging for transportation companies, especially small trucking companies and freight brokerages, who don’t meet these requirements.

One way to solve this problem is to work with a company that offers factoring in Canada. As opposed to most conventional forms of financing – factoring is fairly easy to obtain. Freight factoring provides a solution to companies that have cash flow problems because they can’t afford to wait 30 to 60 days to get their freight bills paid. Factoring provides a advance on your soon to be paid freight bills, providing you with the necessary cash flow to pay your drivers, fuel expenses and truck repairs.

To qualify for invoice factoring your company must:

1. Work with credit worthy shippers
2. Be free of liens
3. Be free of legal and tax problems

These simple requirements enable small transportation companies whose biggest asset is good shipper relationships, to capitalize on those to grow the business beyond it’s current capabilities.

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We offer factoring solutions in the US and in Canada. We offer factoring in Nebraska and Factoring in Montana.

Running a business in Canada has always had its particular set of challenges. One of the biggest challenges has always been finding the right business financing. The market has been dominated by banks and institutions, which have very tough and strict lending criteria. Obtaining a business loan or almost any other type of business financing in Canada in pretty difficult. However, that is changing. Quickly.

Recently, Canada has seen an increase in the number of independent financing companies that specialize in business financing. Some offer business loans, but the majority have focused on offering invoice discounting (also know as invoice factoring). Although a relatively young industry, the Canadian factoring industry is growing quickly. But, what is invoice discounting?

One of the biggest problems for small and mid sized businesses is waiting up to 60 days to get invoices paid by their commercial clients. This can affect their ability to pay rent, suppliers or salaries on time. This problem is common for many businesses, such as trucking companies, staffing agencies, manufacturers, consultants and others. Invoice discounting is a financial product that eliminates slow paying invoices by financing them.

The factoring process is very simple. Once you invoice an approved client, you send a copy of the invoice to the financing company (also known as the factoring company). The factoring company advances you a significant portion of the invoice while they wait to get paid by your customer. The transaction is settled once the customer pays the invoice. The factoring company offers this service for a small fee or discount.

An invoice discounting arrangement provides you with the necessary funding to pay expenses such as rent, suppliers and employee salaries. This enables you to operate your business efficiently, without worrying about when your clients will pay. Furthermore, invoice discounting can help you win bigger clients, because it eliminates the worries of having to wait for them to pay.

As opposed to bank financing, invoice factoring is relatively easy to obtain. The biggest requirement is that you do business with established clients who pay their invoices regularly. Invoice discounting is truly a flexible product that is within easy reach of small and mid sized businesses.

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Factoring in South Dakota and invoice factoring in Tennessee

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 factoring in Canada 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.

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.

Factoring Canada, 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 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 in Canada 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 Canada 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