Monthly Archives: August 2017

Low Finance Rates Vs Rebates

How To Get The Best Car Deals:

Quick tips that will help you at the car dealer:

How to understand Rebates and low financing offers:

Vehicle MSRP: Manufacturers Suggested Retail Price – This price is always negotiable – don’t ever agree to pay MSRP

Exception: Some vehicles that might be “hard to find” or “limited in production” might be sold by the dealers at MSRP or, sometimes higher. This is usually called Market Adjustment.

Manufacturers Rebates: This is your money and has nothing to do with discounts given by the dealership. This money is given to you directly from the factory. Never let the rebate be used as a negotiation tool by the dealer. Any discount or negotiation from the dealer should be separate of any rebates offered.

Low finance rates: 0.00% 1.00% 1.9% etc… These are called Sub-vented rates, they too are offered by the factory and not the dealership. Do not allow a “low” finance rate to be used as part of a negotiation by the dealer. These rates are granted over and above any discounts, rebates, etc.

Exceptions: There are several exceptions to Sub-vented finance rates, but here are two that you really should be aware of:

1. Not all people qualify for these rates. So, if you suspect that you might have some issue that will cause you not to qualify, there is nothing wrong with expressing to the dealer that the low finance rate is something you are interested in, and you would like to apply first, before going through the long, timely steps of deal negotiation. Many dealerships will view this as unusual; however, any “good” dealer will be happy to let you submit an application first if you insist. Why is this important? As we always say, knowledge and preparation are the keys to not overpaying at a dealership. What happens if your entire deal is worked, negotiated and finalized with the dealer? Then you head over to the finance office to finalize the finance terms and payments… You expected to pay 0.00% interest, then at the last second you are told: “Sorry” because you don’t qualify… NOT GOOD THE WHOLE DEAL CHANGES.

2. Rebates and “low” finance rates can not always be combined. Some factories allow it some times, however there is no rule; you must do your homework first. For instance, Chrysler offers manufacturers rebates on most their vehicles, plus they offer low finance rates on most vehicles as well. Though, you the customer must decide which offer you want, you can’t have both. Although, sometimes Chrysler will run special offers that allow you to “combine” both the financing and rebate offers at once. But be careful, dealers won’t always tell you that these offers are available, if you are unaware and you agree to pay higher finance rates, you are stuck.

Commonly Asked Question: Which is the right choice, Rebate or Low Financing?

This is an interesting question asked by many customers, the answer is simple yet many people have no idea.

Remember this rule: You should do what’s best for you, do not ever inquire with a person, dealer, or anyone else that has any other motive than what’s best for you.

What that means is this: When you ask a dealership which makes more sense, the dealer will likely tell you: “Take the rebate – not the low interest rate.”

The reasoning behind this answer is, if you take the rebate you are actually paying “less” for the vehicle than if you elected the low interest rate. So, being that the vehicle price is the most important issue, you should always take the rebate. Is this correct or incorrect?

Rule: Don’t be concerned what the dealer is making or losing, it’s not relevant to what’s best for you.

Does the dealership stand to gain more if you chose the rebate vs. the low finance rate? The answer to that question is yes, the dealership does stand to gain more. They receive a little more in “reserve money” from the lender if you chose conventional finance rates. The fact is however; that this point is completely irrelevant. Who cares what the dealership is making? Why is that important anyway? Is there some rule that says a dealership is not entitled to make profit? The only person who is doing something wrong in this scenario is you. You’re asking the wrong party for information. If the complete and honest answer might cause the dealer to make less, chances are more than likely the answers will be carefully weighed to fall on their side.

SR&ED Tax Credit Financing

SR&ED Tax Credit Financing is somewhat misunderstood, or in fact not really considered by many Canadian business owners and financial managers in Canada. We use the word ‘considered ‘simply because many SRED claimants are not aware that their SR&ED claims can be financing as soon as they are filed – in some cases prior to filing!

So let’s return to our topic – what are the two things you need to know about financing your SRED tax credit. We’ll keep it simple –

1. You have to have a SR&ED claim to obtain financing for the claim!

2. A SRED financing claim is in fact similar to any business financing application – frankly it’s quite simpler and more focused!

Is that it? Yes, it’s as simple as that. SR&ED tax credit financing is one of the most unique ways to bring valuable cash flow and working capital back into your firm. Just the very nature of SRED itself suggests that your firm relies heavily on the credit to recover the capital you have spent under the government’s quite generous non repayable grant.

So let’s return to our point # 1 – to finance a claim, you need a claim. The SRED program in Canada is the governments rebate; in effect it’s a grant, back to Canadian business for any investment you make in research and development. More and more information is coming out everyday from government and private sources which suggest that many firms who are eligible for the program either aren’t aware of it, or even more disappointing, don’t know how to go about preparing and filing a claim. We are often amazed when some clients infer that it’s ‘too much trouble ‘to prepare a SRED claim.

A couple of points can be made on this subject. We have met a small handful, and we repeat small handful! Of clients over the years who prepare their own filings. This of course is possible, legal, and in some business owners minds ‘cost effective. The hard reality is that most firms don’t have the technical and financial know how to complete a claim on their own. (Apologies to the firms which successfully prepare a file their own claims – you know who you are!)

The majority of claims in the SRED area are prepared by what is known as SRED consultants. We tell clients that these consultants are high specialized, are up to date on current government SRED and accounting matters, and in most cases work on contingency – meaning that they prepare the claim at their own risk and time, and charge a fee which is totally based on success of the final claim approval. If Canadian business owners and financial managers don’t choose to pay a contingency fee then they can play a flat rate based on the SRED consultant’s time on the claim and filing. Naturally more often than not the SRED fee has to be paid as soon as the claim is completed, even if you still have to wait several months to a year to get your funds.

More importantly, as it relates to the financing of the SRED claim, a claim tends to be more financeable when it is prepared by a reputable consultant in this area. And in fact when you claim is financed, either at time of filing or prior, the SRED consultant can also be paid in full or in part out of the financing.

So the bottom line on our point # 1 is simply – make yourself aware of the program if you are not, prepare a solid claim with the use of a reputable consultant, and be knowledgeable that the claim can be financed during preparation or at time of filing.

Let’s move on to point # 2- Clients ask, is it really that simple to finance a SR&ED tax credit. There is only one answer, which is of course yes. You should treat your SRED tax credit financing just as any other basic financing. Because this area of Canadian business financing is somewhat of a boutique are you should ensure you are working with a credible, trusted, and experienced advisor in this area.

Let’s cover some of the very simple key basics around the financing of your claim. Most firms are eligible, under the program itself, to receive anywhere from 20-50% of your expenses in the R&D area. Your SRED claim will ultimately have a final value, which is made up of the federal and provincial portions combined. Let’s assume its 200,000.00 as an example. You and your accountant have filed your year end financials, and included a SRED claim of 200k. What happens now if you want to finance that claim. The reality is that you simply have to fill out a standard business financing application – just as if you were borrowing for any other matter. In our case the ‘collateral ‘, if we can call it that, it’s the SRED claim.

Important to note hear that you are not incurring debt or creating a ‘ loan ‘ on the SRED – Your balance sheet stays intact, you are simply ‘ monetizing ‘ the SRED claim in order to generate working capital and cash flow now. Generally you receive approximately 70% of the claim as an advance, with the 30% held back and payable to yourself in full when you final claim is audited, approved, and that cheque from the government is ‘in the mail ‘! The financing feels itself, associated with the tax credit financing are deducted from that final 30% holdback. You can generally create a SRED loan for a period of a minimum of 60 days, but most SRED financing generally last from 3-12 months, depending on the size of your claim, its eligibility with CRA, and whether you are a first time filer.

Zoom in the Fast Track of E-Financial Business

We love to have a solid finance back up at the sometimes it turns a headache to manage those finance affairs. I thank people who come forward to help us with online finance management solutions! Are you one of such helpful men? If so, my article is going to tell you how choosing one of the best finance website templates to give your financial business a boom!
There are two major factors when you want to develop a website for your online finance business. One is choosing a template shop and then finding one of the best finance web templates from the templates available in a template shop. There are some matters which help to find a good template shop and select one of the best finance website templates. I am here pointing you some features of finance web templates and how to know a template shop as best template shop.

  • A cool design in color application is must for finance website templates. Money matters are serious affairs so simple yet elegant color increases soothing effect in the visitors’ mind.
  • The first sight falls on the header of a site so it has to be attractive. The header portion of the finance website templates needs to keep provision for showing off the purpose of the site. It is like grabbing the opportunity at first sight.
  • A visitor will come to get your services. In the finance web templates the focus will have to be always on the services. So the service portion has to get maximized notice.
  • It is found that visitors want some live news. In the finance web templates there should be always a panel about keeping live report about finance markets. It will help to compare and understand your finance solutions against present market.
  • Anytime or every time a visitor lands on a site, wants to know what is special! Finance website templates need to keep a space to show the special finance services from the service providers.
  • With the space for other related and valuable finance content keep a block for finance success stories. In the finance web templates the place for successful finance related stories increases the chances for investment.
  • People like to keep them updated. So a direct like for accepting newsletter services has some importance. In the finance website templates there may be a place for subscribing newsletters. This part will let the service provider chance to remain in touch with the visitors who subscribe to the service.
  • Last but not the least is quick solution and quick support panel. In the finance web templates there has to be a panel for quick contact as it lets visitors chance to get finance solution fast. People are coming to get solution let them find support fast.

In the above points I have tried to show you what should be the standard features in finance website templates or the finance web templates. Other features like programming support to open source and hard core development, SEO friendliness, affordability are the primary factors for finance web templates. Now to find all these qualities in finance website templates you have to find out a template shop. But you have to search a template shop that emphasizes on all the above qualities in finance web templates. And of course you should look for a template shop that cares to provide affordable templates.

Purchase Order Financing Tips

Your worst business nightmare just occurred. You got the order/contract! Now what?!

Purchase order financing is a great tool for firms that have unusual purchase order and contract sales financing needs but are potentially unable to access traditional financing via banks or their own capital resources within their firm. How does trade finance P O financing work, does your firm qualify, what are the costs, and how does it work? Great questions, now let’s explore some answers!

Typically Canadian firms looking for this type of financing are distributors, manufacturers, or perhaps wholesalers. A variety of industries in Canada have access to this type of financing, but those certainly tend to be the typical firms needing assistance.

Your need for purchase order financing arises out of what we call the classic working capital gap. What do we mean by that? It’s a case of your suppliers requiring payment either up front or within 30 days, with your firm unable to generate those funds for payment and therefore unable to fill large purchase order and contracts in your favor. Your supplier is asking your for payment in advance or 30 days, and you wont receive payment for at least 60-90 days, perhaps more depending on your build cycle, etc.

Naturally you don’t want to turn down orders or lose competitive market position.

The obvious solution for low cost large amounts of funds are Canadian chartered banks, but our observation is that many firms simply cant satisfy the banks requirements for this type of financing to occur. If your firm is growing, profitable, has a clean balance sheet and strong historical cash flows and history you of course have a solid chance of meeting bank requirements, however that typically is not the case, certainly in the amount of clients we talk to who are looking for alternatives to their growth challenge!

When you access p o financing you can have comfort that your suppliers will be paid, and at the same time you generally have access to all the funds you need. Typical purchase order financing applications take anywhere from 2-4 weeks to complete and involve basic financial due diligence on your firms ability to fulfill the order, who your customer is (they must be credit worthy), and your proper supplier sources must be identified and vetted. It’s as simple as that.

So what are the basic pre requisites for a solid P.O. Financing deal? Naturally your company must be in possession of a contract or order that is not cancelable by your client. The P O finance firm arranges to pay your suppliers directly, that alleviates all you cash flow and working capital concerns. The transaction is completed when you ship the goods and your receivables are generated on the sale. It is at this time the purchase order finance firm expects to be paid, and this is traditionally handled by your firms monetizing of its receivable via a bank or factoring facility. Factoring facilities are great partners to the P O financing strategy, because use of them guarantees payment to your P O firm.

Let’s cover off a couple tips and secrets around the cost of purchase order financing – It generally is in the 2-3% per month range in Canada, and that means you have to have solid gross profit margins in order to be able to sustain the finance charges. But let’s be honest, let’s say your firm has been doing 750k of revenue for the last couple years and you finally get the large order from a major customer for 1 Million dollars. Wouldn’t you give up 2-3 % of your profit margin in order to make one sale which is the equivalent of your entire year’s business? We think you should positively consider that! Clearly the higher cost of this type of financing covers off the complexity and risk that the P O finance firm takes in paying for goods, waiting to get paid, and having the belief that your firm will fulfill the contract order.

It has been our observation with certain clients that your successful completion of a purchase order finance deal typically significantly enhances your relationship with your major suppliers and of course customers, that’s a secret benefit that is intangible but invaluable at the same time.

Is P O financing for everyone. Maybe not. Could it be possibly the solution to major working capital needs if your business is growing and can’t be financed traditionally – we certainly think so? Speak to a trusted, credible and experienced purchase order finance expert to explore your options.