Community Savings Credit Union announces affordable invoice factoring for cannabis licensed producers

| Staff

A BC-based credit union is launching a new invoice factoring program intended to meet the needs of British Columbia’s federally licensed cannabis producers. 

Community Savings Credit Union’s new program aims to help provide BC cannabis producers with access to affordable and readily available working capital to support growth.

The “affordable invoice factoring program” will enable BC LPs to receive payments from their BC and Ontario government distributor invoices early. Waiting several weeks, or in some cases, months, for these payments can be a significant challenge for cannabis producers, especially smaller producers with thin margins and little extra cash flow. 

Ensuring these producers can receive payments from the BC and Ontario distributors gives companies more leverage in the market and is a more affordable alternative to current factoring options available, says Community Savings in a press release.

Access to banking has been an ongoing challenge for the cannabis industry in Canada, with all sorts of companies that work in or serve the cannabis industry often finding themselves unable to access even a basic account, much less institutional lending. Community Savings Credit Union is one of a handful of organizations that have worked to create solutions for cannabis companies that other institutions turned away. They even recently launched an account specifically for micro-cannabis licence holders.

Mike Schilling, President and CEO of Community Savings Credit Union, says: “As a pro-cannabis credit union, we are proud to be the only industry-owned solution to give BC LPs affordable access to working capital from their provincial receivables. We have the ability to purchase every BC and OCS invoice for every BC LP today, helping BC cannabis producers with continued growth.” 

Community Savings partnered with We Can Capital, which provides financial assistance for the cannabis industry, on the project. 

Joshua Reynolds, partnerships director at We Can, says this new factoring program is a way to help out BC’s storied cannabis industry. 

“In British Columbia, we are fortunate to have a long-standing and renowned cannabis market. However, cannabis businesses have not always had access to the full range of financial tools necessary for success. This relationship with Community Savings will redefine the role of factoring and demonstrate its value as an exceptional growth tool. We take pride in offering highly affordable invoice factoring that is industry-driven, providing BC LPs with access to their own working capital to maintain their status as leaders in Canada.” 

One example Community Savings provides of how factoring can work is of a BC cannabis licensed producer selling $150,000 worth of pre-rolls to the Ontario Cannabis Store (OCS) with a maximum of 60-day payment terms.

“We know that sooner than 60 days payment can and does happen, but the consistency is unpredictable and not healthy for operational cash flow,” explains the company in a press release. “One week later, the LP received an additional order for $100,000 worth of pre-rolls. In order to fulfil that product order quickly, the LP sells the already-delivered OCS invoice to Community Savings Credit Union and We Can Capital for up to 85% advance against this $150,000 receivable for much-needed working capital, with a same-day turnaround on funds. 

“The LP can now facilitate the production of the new order without delay. This instant cash can also allow the ability to negotiate better terms with suppliers that offer a discount for early cash payments. Without invoice factoring from Community Savings and We Can Capital, this BC LP would previously have needed to wait for the original payment to start an additional production run.”

Dayna Lange, the CFO of Tricanna Industries and Community Savings Credit Union cannabis member, says the program will help cannabis producers like Tricanna build better supply chain relationships. 

“Having instant access to our own money has been a game-changer for the way we approach the continued growth and reputation of our business,” says Lange. “With a one-day funding and settlement model, we are able to continue to increase sales and maintain strong relationships with our suppliers. This is long overdue, and we are very encouraged to see mainstream financial services supporting BC cannabis.”

Cannabis producers in BC interested in learning more about the program can find more information here.