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.
Flexibility is one of the major benefits of factoring. Factoring is a great option for small businesses that frequently get rejected by banks for loans
Small to medium sized businesses do not always have the cash on hand to fulfill orders, so these businesses are sometimes forced to utilize receivable financing as a viable and fast solution. As the company waits to get paid for the products it has shipped in good faith, it continues to need cash to maintain operations and 1st Commercial Credit delivers the funds.
Many businesses will need to find a funding source during their business growth and expansion that provides quick cash and doesn't involve extra debt. Applying for a bank loan is always an option but not accessible for many small businesses and startups. On the other hand, invoice factoring is a financial method that involves selling your accounts receivables to a factoring company in Toronto. This type of financing will aid businesses in experiencing cash flow issues while waiting weeks or months for customer payments on pending invoices. The factoring company will verify the invoices before sending you the cash advance but once verified, the cash will be in your hands in no time. Many companies in various sectors in Toronto use invoice factoring as it is more accessible than a traditional bank loan, and it doesn't require credit checks to qualify.
A factoring company (or accounts receivable factoring) converts invoices sold on credit terms for 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.
Let's take a close look at the invoice collection process and try to determine how much of it your company can actually control. Your sales professionals head out into the world and sell your products or services to a target audience. If you do your marketing properly, then you can arm your sales professionals with leads that have a strong chance at turning into paying clients.
You and your accounting group do your due diligence prior to approving each and every new credit account in the hopes that you can establish relationships with customers that do not promise to buy more product than they can actually pay for. The point to credit is to allow customers to buy product now, and then pay for it later. But the unpredictable nature of when customers will actually pay is when problems start to occur.
Since these customers are on credit terms, your company is fronting your customers the money to buy these products. Until your customers actually pay their invoices, your organisation is on the line for the money required to fill orders.