Financing of Accounts Receivable

The financing of accounts receivable in the form of a commercial line of credit is the most common medium used by entrepreneurs. By choosing a line of credit, you will give yourself the means to improve the management of your liquidity and to take advantage of short-term financing and the opportunities that present themselves to your organization. The line of credit is a very suitable tool for financing inventory and working capital.

Your mortgage broker can offer you flexible financing solutions tailored to your needs depending on the particulars of your business and its business cycle. His expertise will allow him to quickly obtain a tailor-made financing offer for you.

Financing of Accounts Receivable

In general, it is possible to obtain funding:

  • Can reach up to 80% of Canadian accounts receivable
  • Can reach up to 90% of insured accounts receivable
  • Up to 65% of uninsured foreign accounts receivable

The bank will, however, make certain exclusions from this calculation, including:

  • The amount of accounts receivable less than 90 days (up to 120 days under certain conditions)
  • The amount of unpaid government remittances

To achieve the best financing conditions, your business must demonstrate excellent financial results. The documentation required in this type of funding request will be:

  • Financial statements for the past three years
  • The most recent interim financial statements
  • Financial forecasts and cash budget
  • List of accounts receivable
  • The amount of unpaid government remittances
  • Personal balance sheet of the shareholders

Financial institutions will generally require regular monitoring of your financial results on a regular basis to establish the authorized limit of your line of credit.

You should expect to incur file opening fees, annual review fees, and follow-up fees.



Your mortgage broker

Your mortgage broker will be your ally in order to obtain:

  • The highest percentage of financing to reduce your down payment
  • The longest amortization to reduce the impact on your cash-flow
  • The lowest possible application fees
  • Negotiating the best financing conditions on the market