Factoring in Canada

Interstate Capital, one of North America’s leading factoring companies since 1993, began working with Canadian companies to improve their access to working capital in January 2004. Today Interstate continues to serve the cash flow needs of clients across the nation in many industries. While Interstate’s  first clients came from four cities –Calgary, Saskatoon, Toronto, and Vancouver –by the fall of 2007, Interstate Capital was working with business owners across Canada and incorporated a new subsidiary, ICC Canada, Ltd.

For clients, factoring in Canada works almost exactly as it does in the United States.  Interstate Capita can fund its Canadian clients either in Canadian dollars or in U.S. dollars. The company’s Canada factoring process disburses funds to Canadian clients through Toronto Dominion Bank (TD Bank) and its clients’ customers remit payment to Toronto Dominion’s Toronto lockbox address. Payments originating in Canada do not cross the border; the entire transaction is considered domestic.

Factoring law in Canada governing Canada factoring transactions has very few meaningful differences from its American counterpart. Some terminology is different for factoring companies in Canada and some laws may vary slightly from province to province. Quebec law, for example, is somewhat unique to Quebec, so certain steps are necessary for factoring companies to secure payments from their clients’ customers based in that province.

The Canadian law that governs secured transactions for Canadian factoring companies is called the Personal Property Security Act (“PPSA”). The American counterpart, the Uniform Commercial Code (“UCC”), performs the same function. Both sets of laws are intended to be uniform throughout the United States and Canada, with some exceptions. Both set out the manner in which factoring companies must notify their clients’ customers that payments are assigned to the factor; both set out the rules for lien priority among competing creditors; and both perform the function of a public registry of secured parties’ claims against debtors’ assets. Shaped by England’s common law, the Canadian legislation requires that debtors be notified of the factoring arrangement between a factoring company and a business selling its invoices. Otherwise, the assignment of payment for those invoices in exchange for a cash advance would not be valid.

Interstate Capital specialists in Canadian factoring

Spot FactoringEver since factoring was first widely used in the textile business in Canada, the practice has grown in other industries including trucking, staffing, and construction. Interstate Capital’s client base of small and medium-sized companies in Canada has also grown. Interstate’s factoring specialists can customize programs for Canadian businesses seeking quick access to working capital. These programs are designed to meet Canadian financial regulations and advance terms, with the same benefits U.S. clients enjoy from Interstate Capital.

Because of Interstate Capital’s increasing numbers of clients in Canada, the company has extensive experience in serving the cash flow needs of Canadian businesses. Years of travel and face-to-face meetings with clients in different provinces have enabled Interstate management to provide superior factoring services through changing business cycles.

Factoring in Canada is only slightly trickier than in the U.S. because public credit information on Canadian businesses has not historically been as widely available as it has been for businesses in the U.S. Yet there are still numerous resources available for a factoring company to check credit worthiness and payment habits of clients’ customers and Canada. Perhaps the largest provider of credit information on businesses in North America is Dun & Bradstreet. Factoring companies rely extensively on Dun & Bradstreet files in the U.S., and the company reports on Canadian businesses as well. Experian also provides some good information in some sectors for invoice factoring in Canada. Factoring companies may rely on other sources of information to gather information about their clients’ customers in Canada. In addition, factoring companies in Canada will generally have a credit application that they will ask their clients’ customers to sign if there is no publicly available information.

Invoice factoring in Canada is a rapidly growing source of alternative financing for businesses of all sizes. The accounts receivable factoring specialists at Interstate Capital have had extensive experience in helping companies maintain their cash flow and grow their business. As more companies turn to factoring Canada businesses will continue to be an important part of Interstate Capital’s client base.

If you have a company in Canada and are ready to turn your accounts receivable into cash in your pocket, Interstate Capital is ready to make this happen for you. Contact us today for free cash flow assessment!

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