Do you have a company based in Canada? Are you in need of a business financing? This article is designed to help you learn all you need to know. That is, to learn how to finance your company with factoring and invoice discounting.
There are many challenges facing companies in Canada. 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.
To get a business loan or any other type of business financing in Canada in pretty difficult. Nonetheless, there have been some changes lately
May 02, 15 07:24 AM
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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 which is also called invoice factoring. Although a relatively young industry, the Canadian factoring industry is growing quickly.
Among the biggest problems for small and midsized businesses is waiting for almost 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.
Therefore, the factoring process is very simple. Once you invoice an approved client, then, the next step is to 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. Once the customer pays the invoice, the transaction is settled. And the beauty of this is that, the factoring company offers this service for a little 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.
In contrast 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 midsized businesses.