Business Headlines
| It is Possible to get Business Loans in Canada: Accounts Receivable Factoring |
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| Written by Wade Henderson | |||||||
| Wednesday, 25 March 2009 07:00 | |||||||
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Not long ago I was contacted by a company that had been unsuccessful in acquiring a new Operating Line of Credit from its bank in Toronto, Canada. The company is in the Import Business.
Not long ago I was contacted by a company that had been unsuccessful in acquiring a new Operating Line of Credit from its bank in Toronto, Canada. The company is in the Import Business. China is the origin of the goods they import. The $50,000 Credit Line with their bank barely covered a quarter of their outstanding Accounts Receivable. The terms with their suppliers in China are 30% with the order placement and the balance before the product leaves the warehouse. These are quite popular terms when dealing with China for goods. The sales for the company are $1.5 million per year with typical days sales outstanding of 45 days, which is quite common, and in many industries considered quite good. The average amount in Accounts Receivable is $200,000 so you can see the $50,000 Line of Credit was of little use to them. In their industry, it is expected that the goods that are ordered by their customers are to be shipped within 7 days which required the Importer to carry inventory as their source of goods was in China. The owners had tied up their personal assets as much as possible in order to have the cash flow needed to carry the inventory. My office set the Importer up with a new Operating Line of Credit using their Accounts Receivable as security in a Factoring facility. With an advance rate of 85% against the $200,000 open invoices, the company now has $170,000 available to them which allowed them to order sufficient inventory to support their growth, pay off the bank Line of Credit and pay off the personal loans they had taken to support the business. To make it even better, the Operating Line of Credit they have now will grow with their outstanding Receivables. So as their sales grow, so does their Line of Credit. About the Author: Wade Henderson is a recognized Professional in Commercial Lending with over 14 years Experience in the Business Finance Field and a strong reputation for getting the deal done. Visit IMMFinancial.com to put his experience to work for you. Factoring Loan * Invoice Factoring * A R Factoring * Small Business Factoring
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