Financing a business in Canada has its unique set of challenges. If you are like most business owners you have probably relied on the banking industry to obtain financing. However, obtaining business loans is difficult. Your business must have years of profitable operation experience in order to qualify. But what if your business is new (but growing)? Or, what if you don’t qualify for a business loan but still have a great business?
You have two options, and they are not available from your bank. They are available from a factoring company. Do you have one of these two problems?
Problem: Your clients take up to 60 days to pay. You need payment faster!
Waiting up to 60 days (or sometimes more) to get paid can be very challenging for a business owner. Especially if you have regular expenses, such as salaries, rent and suppliers that must be paid. The solution to this challenge is to factor your slow paying invoices. Factoring (also known as invoice discounting) allows you accelerate client payments, reducing the 60 day wait to 2 days. It’s very easy to obtain and the main requirement is that you do business with good commercial or government clients.
Problem: Your client just placed a large order. You need money to pay suppliers.
If you are a distributor, wholesaler or reseller, then you have a unique set of challenges. You have suppliers that need to be paid quickly and clients that want to pay slowly, leaving you trapped in the middle. The solution for this challenge is purchase order financing. Purchase order financing covers up to 100% of your supplier payments, enabling you to deliver the goods and close the sale. With purchase order financing you can accept big orders with confidence, knowing that you’ll be able to deliver.
Is factoring or purchase order financing for you?
These financing products work great if you meet two very important criteria. First, your profit margins must be above 10%, and ideally closer to 20% (or more) Second, you must do business with reputable commercial clients or the government. If you meet these two criteria, then these products should help you grow your company and take it to the next level.
Showing posts with label factoring canada. Show all posts
Showing posts with label factoring canada. Show all posts
Tuesday, July 13, 2010
Monday, July 12, 2010
Factoring and Purchase Order Financing in Canada
There was a time when obtaining business financing in Canada was very hard. But this is changing as small business financing companies are moving into an area previously dominated by large banking institutions.
As most business owners know, qualifying for a business loan or a line of credit is very hard. Bank lending criteria is so strict that few companies ever manage to get any financing. But that is changing.
If you own a company that sells goods or services to other businesses (or the government), then there are two financing options that are available to you. They are invoice factoring and purchase order financing.
Are your clients taking up to 60 days to pay their invoices? Consider invoice factoring.
Selling to mid size and large companies is great, as they can provide you with reliable and steady business. However, their payment terms are always challenging. They usually demand the right to pay in up to 60 days. In the meantime, you must cover paying rent, salaries and suppliers. This can easily be fixed by factoring financing. Factoring can eliminate the 60-day wait and get your invoice paid in 2 days. The process is simple, you sell your invoices to a factoring company, who pays you up front for them (less a small fee). You get your money up front, while the factoring company waits to get paid.
Need money to pay your suppliers? Consider purchase order financing.
If you sell products as a reseller or wholesaler, then your biggest challenge is getting the financing to pay your suppliers. In this case, purchase order financing may be the right solution for you. Purchase order funding provides you with the necessary funds to cover your supplier expenses, allowing you to fulfill the order and deliver to your clients. The transaction is then settled when your client pays their invoice and the collateral is the purchase order from your client.
Conclusion
Both factoring and purchase order funding are easy to obtain and can be set up in days. The biggest requirement is that you own a profitable company and that you do business with reputable clients.
As most business owners know, qualifying for a business loan or a line of credit is very hard. Bank lending criteria is so strict that few companies ever manage to get any financing. But that is changing.
If you own a company that sells goods or services to other businesses (or the government), then there are two financing options that are available to you. They are invoice factoring and purchase order financing.
Are your clients taking up to 60 days to pay their invoices? Consider invoice factoring.
Selling to mid size and large companies is great, as they can provide you with reliable and steady business. However, their payment terms are always challenging. They usually demand the right to pay in up to 60 days. In the meantime, you must cover paying rent, salaries and suppliers. This can easily be fixed by factoring financing. Factoring can eliminate the 60-day wait and get your invoice paid in 2 days. The process is simple, you sell your invoices to a factoring company, who pays you up front for them (less a small fee). You get your money up front, while the factoring company waits to get paid.
Need money to pay your suppliers? Consider purchase order financing.
If you sell products as a reseller or wholesaler, then your biggest challenge is getting the financing to pay your suppliers. In this case, purchase order financing may be the right solution for you. Purchase order funding provides you with the necessary funds to cover your supplier expenses, allowing you to fulfill the order and deliver to your clients. The transaction is then settled when your client pays their invoice and the collateral is the purchase order from your client.
Conclusion
Both factoring and purchase order funding are easy to obtain and can be set up in days. The biggest requirement is that you own a profitable company and that you do business with reputable clients.
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