Factoring Financing - How Canadian Companies can Benefit from Factoring

  Waiting 45 days to get paid by your customers can be painful, especially if you own a new and growing company. Business clients, especially medium sized and large companies, always insist that you give them credit terms. That means they will pay 30 to 60 days after delivery. Trying to negotiate a quick payment usually doesn’t work. Especially, with larger clients that have established vendor payment policies that they follow to the letter. This creates a substantial problem for the business owner. You have expenses that must be paid now, such as employee salaries, supplier expenses and taxes. However, cash flow is delayed by clients. 
Is the solution to go to the bank for a business loan or line of credit? Perhaps, though Canadian banks seldom offer business financing to small companies. They have stringent financing requirements that must be met – without exception. 
However, there is a solution to this problem that has been gaining popularity in Canada. It’s called invoice factoring. Factoring provides you an 80% quick pay advance on your invoices. This gives you the necessary funds to pay employees, suppliers and taxes. The remaining 20%, less a small fee, is paid to you as soon as your client pays the invoice, usually 30 to 45 days after issuance. 
Factoring financing provides the funds you need to operate your business and capitalize on new opportunities. One of the biggest advantages of receivables factoring is that is much easier to qualify than bank financing. The most important requirement is that you do business with reputable and credit worthy customers. The whole transaction hinges on your customer’s ability to pay their invoices on time. 
As a solution, factoring invoices is very popular with staffing and transportation companies. Freight bill factoring and staffing agency factoring have been gaining substantial traction in Canada for the past few years. However, factoring can benefit any company that has good commercial customers and a need for operating capital.