- Finance

An Ultimate Guide To Solve Working Capital For Licensed Cannabis Producers In Canada

Cannabis Factoring & Cannabis Financing / Funding in Canada is a reliable and proven method of financing one of many needs for legal cannabis /commercial marijuana accounts receivables for licensed grow houses, greenhouses, and licensed retail stores in Canada.

 Key advantages of this type of financing are:

-Cash Flow/Working Capital

-Maintaining Owner Equity

Financing Growth Via Cannabis Factoring Finance

Working capital/cash flow financing helps finance growth! As you generate revenues, the upfront funding of sales allows for cash expenditures on other aspects of your business, such as infrastructure/employees/marketing, etc.

Adequate financing of sales revenues allows owners to map cash flow to production, and, as importantly, this kind of financing brings no term debt to the balance sheet.

How Does Cannabis Factoring Work?

There are some primary financing receivables for companies working legally in their respective provinces/provinces in Canada. Companies should deliver proper paperwork around purchase orders, invoices, and client agreements. Your customers must be generally deemed ‘ creditworthy.’

How Does Invoice Financing / Factoring Your Receivables Eliminate the Cash Crunch?

Using Invoice purchasing finance to sell cannabis products ensures your sales will not come to outpace your cash inflows. Allowing that to happen forces companies to invest more and more capital in accounts receivables and inventories. Companies that are compelled to pay suppliers upfront for specific products or services create cash flow management challenges. Many of these challenges come from the simple timing around licensing issues, overheads, growing product and … oh yes – Getting Paid! Keeping a company floating under those issues becomes Job 1! Even beneficial gross margins can’t stop a likely business crisis in those conditions.

How Does Cannabis Factoring of Receivables  Work?

Cannabis producers can now benefit from short-term financing via invoice financing/invoice factoring. Typical transactions allow the producer to instantly obtain a large portion of the invoice ( typically 80-90%) on invoice generation. Your company receives the balance of the invoice amount when your client delivers the invoice – less financing costs which tend to be in the 1-2% range – these prices are quoted as a fee, not as an interest rate.

Your factoring facility becomes a kind of line of credit, and cannabis growers will be happy to know that there is virtually no minimum or maximum dollar amount under your factor finance facility. Increasing the chance of your funding approval significantly. The low credit risk makes factoring almost the most popular financing mechanism given the low risk of provincial governments or significant pharmacy chains. Since the clients are always a government entity, the issue of client credit and history becomes more of a non-event.

Conclusion  

If you’re focused on enhancing financing via Cannabis Factoring & Cannabis Financing Funding in Canada, seek out capital now that can help you with your cannabis finance needs around cash flow. This third-party funding option is your safe bet towards financial success.

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