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Why A Merchant Cash Business Advance Makes Sense for Cash Flow

Guest post by: Stan Prokop

Article Overview: Information on a merchant cash business advance for cash flow and why this type of financing makes perfect sense form businesses that cant access traditional financing but are growing or having challenges .

Why A Merchant Cash Business Advance Makes Sense for Cash Flow

A merchant cash business advance is fast becoming a mainstream financing strategy for Canadian small business owners. However, in talking to clients they are concerned about two key issues around this innovative financing method.

Those two key issues are:

How does it work?

What are the Costs?

We firmly believe that if you understand those two critical points then your firm is in a position to benefit from a merchant advance and Canadian cash flow solutions.

And those benefits are significant and quite clear. They include your peace of mind as it relates to business financing, since these facilities grow with your business and are unlike pre-set bank credit lines, etc .

Time is money as the Canadian business owner well knows. A merchant cash advance in Canada works quickly and efficiently (When you have chosen the right partner and the right type of facility). Once the initial set up process is completed, usually in a week or two the facility runs itself at your discretion. You in effect have taken complete control of your cash flow.

Our final key benefit that we should focus on before getting back to our two critical points is simply that this financing tool, if used properly, allows you to generate more sales and increase profits via key turnover of sales and inventory, etc.

O.K. - You now know many of the key benefits of factoring. Is it right for your firm? Critical point #1 - How does it work?

A merchant cash business advance is simply best described as the short term sale, or 'discounting 'of your sales . You generate cash, at your option, on the same day that you generate an sale for a sale and delivery of product and services to your client base.

Critical Point # 2- What does this type of working capital cash flow financing cost? .We have actually demonstrated too many customers that the true cost of merchant advance type financing is actually zero or less than bank financing in many cases. Why is that?

We hate to do it, but let's go to the text book finance formula known as the DuPont Model . If you discount your sales, i.e. , get cash the same day, buy more inventory with that cash, negotiate a better price with suppliers with that cash, and then repeat the process over and over we can almost guarantee you, depending on your industry and A/R turnover that a business advance can become a profit mechanism for your firm. That's certainly clears up a lot of the 'negative 'things you have heard about this type of financing , its costs, etc.

Speak to a trusted, credible and experienced business financing advisor on the benefits of a merchant cash business advance , how it works, and how financing costs can be controlled and reduced. That's true cash flow and working capital financing for Canadian business.

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Article Tags: business advance, cash business, cash flow, merchant cash



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