Securing financing in Canada presents unique hurdles for business owners. Traditional bank loans often require years of profitable operation, excluding newer or rapidly growing companies. If conventional loans are out of reach, factoring and purchase order financing offer viable alternatives.
**Challenge 1: Extended Payment Terms**
Waiting 60 days or more for client payments can strain cash flow, especially with immediate obligations like salaries, rent, and supplier invoices. Factoring, also known as invoice financing, addresses this by accelerating payments, shrinking the wait time to as little as two days. Eligibility primarily hinges on dealing with creditworthy commercial or government clients.
**Challenge 2: Funding Large Orders**
Distributors, wholesalers, and resellers often face a dilemma: suppliers demand prompt payment while clients prefer extended terms. Purchase order financing bridges this gap by covering up to 100% of supplier costs. This empowers businesses to fulfill large orders confidently and expand their sales volume.
**Is Factoring or Purchase Order Financing Right for You?**
These financing options are well-suited for businesses meeting two key requirements: healthy profit margins (ideally 20% or higher, but at least above 10%) and a customer base of reputable commercial or government entities. Meeting these criteria positions companies to leverage these tools for growth and expansion.