A Finance Approval Can Be a Moving Target

Jul 13 2020 Published by under Uncategorized

Financing equipment in all markets is always a slightly moving target. Hard credit rules are constantly changing because underwriters and credit teams are pressured to make the right decision; their jobs depend on it. The squeeze on one end for lenders is to minimize bad debt by avoiding financing clients which end up in default. On the other end, lenders and investors need to make a profit and federal regulations require they approve a certain number of loans. The scenario is frustrating for both the customer and finance agent but we can confirm that investors are still lending and approvals are much higher than last year.

What are some common approval guidelines?

Complete financial disclosure is best for getting a quick decision. Knowing what your credit, assets, liabilities look like and how your company is performing will provide the underwriter a complete picture thus allowing them to offer the best terms possible. Hiding bad debt almost always comes out and simply delays or terminates the evaluation process so put all your cards on the table. Explain specific losses or why certain bills went unpaid.

Check your own credit score or Dun & Bradstreet report; if something negative pops up then work to correct or repair it before you fill out an application; there are many agencies which help correct or fix credit quickly. Rectify the issue and have proof that it has been cleared; this step will show the underwriter that your credit is being managed properly.

If you’re a smaller business, be prepared to PG (personally guarantee) your finance. It’s a blanket guarantee with your assets as a pledge that you will make your payments. If you don’t, then like any creditor, they will leverage or take your assets to repay the debt. Years ago, small businesses were not regularly asked to PG but now, they are. Lenders feel if you don’t “believe” in your business and prepared to stand behind it, then why should they. Side note; often high net worth individuals with poor cash flow feel they should get approved based on how much they are worth. This is often not the case, lenders are not in the business of filing lawsuits and chasing after assets for repayment which often results in a loss to them anyways. They want to lend to businesses which have a high probably of paying them back through their normal business operations.

Finally, write a brief summary of yourself, your business and why the finance request will benefit your company. Whether you are the vendor or the borrower, putting a human touch to the finance application goes a lot further than many people realize. Describe length of time in business, who the owners are with brief background, what products you sell and areas or markets you serve and describe the opportunities. It’s how you would describe the business in a two minute introduction to a stranger.

This market requires awareness and flexibility on both sides of the transaction; it’s not what lending was five years ago but in the long run it will be much better for all of us. Remember, you’re asking to borrow money from a stranger who has to be comfortable with your ability and willingness to pay them back.

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Confidential Cash Flow Factoring – Turn Accounts Receivable Into Your Best AR Finance Strategy

Jul 13 2020 Published by under Uncategorized

We are going to demonstrate how a little known, and in our opinion almost a secret strategy can called confidential cash flow factoring can turn your accounts receivable into a virtual cash flow machine, turning past AR finance obstacles into cash flow solutions!

Search engine analysis will show you that thousands of Canadian businesses search everyday for what they hopefully believe will be valuable information around the most popular method of business financing today. Those businesses, of all types and sizes by the way (even the largest corporations in Canada) want to know why cash flow factoring offers unlimited unlocking of cash flow based on your sales and receivables.

Initial explanations and overviews to clients sometimes become bogged down in key issues such as the cost of this method of AR finance, and, equally important, is the unwillingness of some clients to accept how invoice discounting (that’s another name for this type of financing) works.

Canadian business owners and financial managers want to like a good thing, at the same time they want to know how it works and how they avoid any pitfalls. Lets discuss the ‘ how it works ‘ portion first and then share with you the method we believe eliminates the major pitfall perceptions viewed by many firms considering this type of financing.

We’ll focus on small and mediums sized business – the larger corporations have access to all sorts of financing and external finance strategies – while the small and medium sized businesses in Canada tend to rely on their own cash flow to fund their ongoing growth and working capital. In fact many firms realize they have potential to grow sales and profits, but cant because of that lack of working capital.

Back to the ‘how it works’! Cash flow factoring of accounts receivable is the ongoing sale, in whole or in part of your sales invoices as you generate them and deliver products and services to your customer. The invoices are purchased at 1- 3% discount from yourself, and you receive cash, 99% of the time the same day, for those sales. So, in effect all your sales now fuel that cash flow machine you have turned your company into.

So far, so good, right? Where complications arise, especially in Canada, is the fact that this type of financing requires your client to be notified of the process, directly, or indirectly, and payments are required to be forwarded to your factoring finance firm. Canadian business, in our eyes, has a reluctance to involve their customers in their internal financing policies, and challenges. As a result, many firms are skeptical of entering into AR finance of this manner.

Is there a solution? We told you there was – it’s a breakthrough called confidential invoice discounting. This type of financing comes at the same cost, allows you to bill and collect your own receivables, and gains all the benefits of that cash flow factoring machine we turned your company into.

Speak to a trusted, credible, and experienced Canadian business financing advisor who can put you into a proper AR finance facility, allowing you to reap the benefits of cash flow invoice financing, while at the same time allowing competitors, customers, and vendors to remain exactly where you want them to be, outside your financing strategies and challenges! Let’s let your competitors try and figure our how you’re doing so well in both growth and profits.

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Merits and Demerits of Debt Finance

Jul 13 2020 Published by under Uncategorized

Debt financing means to borrow funds or to arrange for investments from external sources. Large scale businesses and organizations are not able to run all their affairs from their own capital so it is usual for them to take loans. The most prevalent example of this type of finance is the loans taken from banks. The amount of the loan is to be repaid in agreed installments along with interest at a specified rate.

Merits of Debt Finance:

Following are the merits of debt finance:

(i) Scope for Expansion: Debt financing allows business to expand its operations. New branches can be opened in other cities and countries. New lines of business can be adopted to increase revenues. The easy availability of credit encourages entrepreneur to take new risks and float new products. It also enables businessmen to increase the scale of their operations and to upgrade their products in time.

(ii) Research and Development: Debt financing allows the process of research and development. Loans taken from banks can be used to accelerate R & D activities. Earning potential of the company increases when the research hard products are floated in the market. The new innovation, besides increasing companies reputation, also reduces its cost of production.

(iii) High Profit: Due to expansion of business and use of new techniques the revenues and profits of the business also grow. Huge revenues means that there will be a room for further expansion of the business. Higher profit can also be used to repay the bank loans. Thus increasing the solvency of business.

(iv) Ease of Working Capital: Debt financing helps in maintaining adequate working capital of the business. It also provides a room for making regular payments easily.

(v) Revival of Sick Units: Debt financing may be used to give a breathe to the sick industrial units. The organization’s loans can be rescheduled and new credit can be taken for such units so that they can start their production. Besides providing finance, proper supervision and guidance should also be given. All this will rehabilitate the sick units and can help them to be successful and profitable units.

(v) Saving from Insolvency: Debt financing may be used to save the business from insolvency. In case any essential payment is to be made and there are not enough equity funds then a loan can be taken to make payments and to save the business from insolvency.

(vi) Tax Advantage: As the interest charge is subtracted from net income before applying tax rate, so this leads to lower tax liability.

Demerits of Debt Finance:

Following are the demerits of debt financing:

(i) Interest Payments: Very huge amount out of net profit of the business have to be paid on account of interest on borrowed capital.

(ii) Depression: If a business comes under depression and losses occur, then the payments of interest could become a great problem due to inadequacy of funds.

(iii) Suit Against Business: Creditor can file suits against business if business fails to make payments as agreed.

(iv) Seizing of Collateral: If the business fails to pay interest on capital amount of loan the bank could seize the collateral or mortgaged property.

(v) Risky Investment: If a business is already running on the huge borrowed capital, further investment in a business becomes risky. This risk discourages investors. Banks also hesitate to grant loans to such business which are already under debt burden.

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The Finance Lease Option and Why Ford Transit Custom Is So Attractive a Lease

Jul 13 2020 Published by under Uncategorized

Van leasing is a common and popular option among business owners. Varied finance methods are available for those who are interested for leasing a van. Finance lease is a particular type that is rapidly gaining popularity among the business owners scouting for a van to lease.

What in the World Is a Finance Lease?

The finance lease is used as a payment mode for businesses to pay for assets such as vehicles. The business is able to acquire vehicles and use it for the period of the lease. This commercial agreement is characterized by the following:

• The business or customer, the lessee in legal terms, gets to pick a vehicle of his choice.

• The leasing company goes out and buys that particular vehicle for the lease.

• The business looks after and assumes responsibility for maintaining the vehicle.

• The business or the lessee is bound to pay monthly rentals for the period of the lease in exchange of the asset.

Usually it is found that the monthly rental is arrived upon by taking into consideration the following things:

• The price of the vehicle initially minus the taxes like VAT or as applicable.

• The leasing period

• The vehicle’s residual value plus the applicable interest.

It is to be noted that in such an agreement the finance company retains legal ownership of the vehicle during the period of the finance lease.

A finance lease comes with its own sets of advantages:

• Capital outflow is kept within means and at a minimal

• The monthly budget remains precise and certain.

• Agreements may also be made with interest rates that are fixed

• One can recover a large portion of the VAT or other applicable taxes according to the laws of the land.

• As an option one may also chose to have the vehicle replaced in case of vehicle failure.

Why You Want To Go For a Ford Transit Custom

Fuel economy is rapidly gaining grounds for manufacturers of vans as a marketing tool of great value. As fleet operators testify Bluemotion, Econetic, Ecoflex and other keywords that signify a new vigor in fuel economy find takers in plenty.

The CO2 emissions have also forced the van leasing community to take a closer look at such vans among which the Ford Transit Custom DCIV is so typical.

The engine along with the state of the art sophisticated right off-the-shelf features that are distinctively superior to the fuel saving features of other conventional vans.

There is no dearth of new technology also, such as Acceleration control that cuts down on fuel spend in a big way. Tires, brakes and other components are also spared of some of the torture.

Driving in urban scenarios is made with ten percent less fuel consumption in the Econetic model that boasts of a standard stop-start. Some models also sport of a switchable seventy miles to the hour speed limiter, an unique and innovative engine calibration, an optimized gearbox that has a six percent longer final drive ration and the like.

However the Transit’s Econetic has struck a chord with the van leasing community which other van manufacturers would be eager to investigate and replicate.

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Reasons to Choose Mezzanine Finance

Jul 13 2020 Published by under Uncategorized

If you are not specifically involved in banking or are not familiar with the features and offers that it has to offer, it is highly likely that you won’t be familiar with mezzanine finance. However, that doesn’t imply that it won’t be of value for you. It is more than likely that you are missing on a feature that your local bank has to offer. If you have recently came to know about the term and are looking for more information regarding it, then you have landed on the right page. The information mentioned below about mezzanine finance is going to help you a great deal.

If all you are looking for an incredible and a rather combination of equity financing and debt, the mezzanine finance is exactly what you are looking for. A number of companies are not making use of it in order to finance the expansion costs in an appropriate fashion. According to the requirements, timely payments are to be made on the loan or equity interest or even ownership will be given to the lender in the company. However, it is to be kept in mind that the interest rate on such loans are tremendously higher than the ordinary ones and do also happen to be for short term as well.

There is no argument over the fact that the benefits that mezzanine finance has to offer are numerous to say the least. And before you go out opting for this sort of finance, it is of prime importance that you are familiar with the benefits that it has to offer in order to analyze whether or not such benefits are going to be suitable or valuable for you and your company. Taking this into consideration, we have mentioned a few of the prominent benefits that such finance option has to offer.

You may be familiar with the fact that your company’s cash flow plays a vital role if you are looking forward to apply for a traditional loan. However, more often than not, the company’s cash flow may not hit the mark that is determined by the financial institutions hence making an application for a traditional loan almost impossible. Equity investors may be a suitable alternative to the aforementioned issue. However, it is indispensable to mention here that equity investors are probably the most costly option for the capital since under such circumstances; capital has to be exchanged with the ownership in the company.

This is exactly why mezzanine finance turns out to be a commendable option since it enables you to get the amount in cash that you need without having to let the lender have an ownership in your company as long as it ensured on your part that the debt is being paid in a timely fashion. Furthermore, such a kind of financing option appears as equity on the balance sheet of the company which enables the owner to apply for traditional loans in a much more convenient fashion.

Taking the information mentioned above into account, it is only fair to conclude that mezzanine finance has a number of different benefits to offer that you must look for if you own a company and are looking for a loan. The benefits that such a kind of finance option has to offer over the traditional loans make it an absolutely worthwhile option to consider. Rest assured, you are certainly not going to have to regret making the decision of choosing mezzanine finance over traditional loans provided that you are capable of paying the debt in a timely fashion.

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