Invoice Discounting (also known as Factoring)

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Leveraging Your Accounts Receivable (A/R) to improve your Cash Flow Position?

Spergel Corporate Finance (SCF) President Glen Dalzell explains that invoice discounting or factoring can help a business solve their cash flow challenges.
Many Canadian business owners and financial managers are unfamiliar with selling receivables as a business cash flow strategy. A lack of understanding of how the process works and the related costs may keep the benefits of this option under the radar for many businesses looking to improve their cash flow. When cash flow becomes an issue, financing your accounts receivables can be a quick and simple solution to generate the cash needed to cover operating expenses.

The Benefits of Factoring:

Simply put, you convert outstanding A/R into cash to fund business operations. With factoring you will also benefit from:
  • Simple application process
  • Immediate cash-flow for your business
  • Easy to understand fees
If your business hasn’t directly investigated how this option can help you succeed, contact Spergel Corporate Finance (SCF) for more information. SCF works with many of the funders who work in this space. We can provide you with information about pricing, advance rates and how it all works.

How Does Invoice Factoring Work?

When you use factoring, you are not adding debt to your balance sheet. It is a simple conversion of assets: A/R to cash. So how does it really work?
  • You issue invoices the way you always have.
  • Construction Company FinancingOnce the goods have been shipped or the services provided (i.e. the invoice has been earned), you can factor the invoice and receive funds.
  • Supporting documentation typically includes a copy of the invoice, Purchase Order (if applicable) and Proof of Delivery (i.e. Bill of Lading).
  • The initial advance will range from 80-90% of the invoice amount. The remaining 10-20% (known as a holdback or reserve) is forwarded to you when the invoice is paid less the financing costs.
We would be happy to discuss your business cash flow needs and review how you can use your accounts receivables to meet your operating obligations. Please contact SCF to discuss how factoring can work for you.

The Spergel Corporate Finance Advantage

At Spergel Corporate Finance we are dedicated to helping businesses achieve their goals. We act on their behalf, sourcing the appropriate funder(s) to maximize proceeds while minimizing costs. We want to provide the peace of mind of knowing that you don’t have to worry about running out of the cash necessary to run your business effectively. We guarantee fast service, an easy to follow fee structure, no long-term contracts and financing that is customized to fit our clients’ needs.