1st Commercial Credit funds Canadian-based businesses by offering accounts receivable factoring services. Additional cash flow solutions including purchase order financing and trade payable finance. When your Toronto company is in growth mode, you might feel empowered by the exciting changes you're bringing to your organization. However, growing too quickly can be a dangerous situation for a business.
When things fall back into perspective, you might realize that you've hired or spent prematurely, leaving your business in a tough financial position. To prevent your startup from suffering the effects of growing too quickly, preparing and planning can save your business from financial ruin. Once a company is profitable, it is common for the next step to be expanding, and borrowing against receivables can provide the ability to continue growing without emptying your business cash reserve.
The costs of running a successful business can be challenging to manage, especially when a lot of the cash flow reserve has been taken out to improve the business operations. At this point, your business in Toronto may be surviving on credit as you try to grow sales and revenues. As you push for higher sales, monthly expenses will continue accumulating and potentially exceed your business monthly revenues. If your collections are on time, that's not a big deal.
However, a cycle of delayed collections or extended payment terms could leave your business in a challenging spot. To keep a healthy cash flow, your business will need to anticipate the cash shortage with a plan that accounts for delays in collecting receivables. Working with a financing company might be the right decision. A factoring company can give you access to immediate cash with a line of credit, solving all of these financial struggles.
A factoring company like 1st Commercial Credit helps companies in Toronto by delivering the funds when they need them the most with accounts receivable loans. Once a customer is set up on a receivable-based financing program, we can offer other financial instruments like supply chain financing, inventory lending, short-term cash advances, and purchase order financing. These types of services could be advantageous to businesses with seasonal sales or other fluctuating capital demands. Our decision-making is within hours when a client requests additional working capital once a factoring line of credit is in place.
If you own a business in Toronto and your sales are growing at a speedy pace, and you're increasing profits each year, your business is undoubtedly headed in the right direction. But even growing, profitable companies can be hit with cash flow issues if their operations, finance, and/or investing activities aren't running efficiently. For instance, if your payables (amounts you owe) are due before your receivables (money from a sale not yet collected) come in, your business will face cash flow problems.
This means you won't be able to pay your bills on time, leading to even bigger problems, like making payroll on time. If you want to improve your cash flow, think about working with experienced cash flow lenders who can provide the working capital your business needs. The cost of factoring receivables varies depending on the type of industry. Still, in general, you will pay a factoring fee of between 1% and 5%, although several factors can all affect the actual rate.
A factoring company (or accounts receivable factoring) converts invoices sold on credit terms to immediate working capital at a discount. It has become a simple, fast and easy way to access business cash flow. In comparison with a traditional bank loan, a company that factors receivables has a quicker approval process.
1st Commercial Credit is a factoring company that specializes in evaluating accounts receivable and can make a prompt approval decision. The documentation requirements are not as lengthy, and the main requirement is that an applicant has invoices for work or orders that have already been satisfied. It also helps to have creditworthy customers. As long as a business has been in operation, meets revenue requirements, and is free of liens or legal issues, approval is likelier.
Advantages of factoring with 1stCC
Working with a company that factors receivables in Toronto can provide many advantages to your business. Some of those benefits are: