Practical and Surprising Methods for Working Capital And Cash Flow Financing For Operating Funds For Canadian Business Owners

Canadian Business Cash Flow Alternatives


Information on working capital and cash flow solutions for operating funds for Canadian business owners and financial managers.


It should be no secret that SME firms that make up the majority of the Canadian economy face the same challenges as some of our larger corporations. Their ability to manage and successfully solve working capital and operating cash flow issues for business probably seems more daunting due to perceived lack of options and the resources to put those solutions in place.

Let’s examine how to address some of those challenges, and where help might lie.

The flow of funds into and out of your business ultimately determines the cash flow needs. That need is driven out of the requirement for you to run your business, pay your bills, produce products and services, and then wait... and hope?! .. to get paid on time.

One of the dangers of cash flow management and use is that it is tempting to use your working capital for fixed asset purchases. That’s not recommended of course, and it’s more viable to look at other methods of asset finance such as equipment finance or term loans for assets required to run your business. In many cases existing assets can also be refinanced for working capital.

The logical solution for additional cash flow needs is of course a bank line of credit, which you can successfully negotiate if your financial statements and personal finances support that type of facility. In higher growth situations more alternative methods of capital rising can be considered - they include purchase order financing, inventory only finance facilities, or the monetization of your tax credits. These are clear options when banks or other lenders require you to put in additional funds into your firm that may not be available from your personal resources. We definitely are always urging clients to try and separate their personal finances from their business assets as that just seems common sense to us... isnt it one of the reasons incorporation exists in the first place?

We encourage business owners and financial mangers to obtain asset financing for their business. As noted, this can come from the alternative sources we mentioned, which also might include receivable financing outside the bank, a true asset based lending facility that monetizes A/R, inventory and equipment into a revolving line of credit, etc. These sort of facilities work perfectly if your firm can’t meet the stringent requirements of traditional cash flow covenants. Banks and institutional cash flow lenders thoroughly investigate your firm’s ability to make payments via ratios and covenants that identify cash flow coverage and debt to equity ratios. If you can meet them... great... if you can’t... consider our alternatives .

Always focus on breaking down short term and long term needs. Short term really focuses solely around your A/R and inventory build up while long term debt is repaid via regular term payments over a long period of time

Our asset based line of credit solution that we referred to above is the optimal solution for asset based working capital and cash flow finance. Receivables are finance dup to 90% of your total A/R, and if your inventory can be fairly easily solid it can also be margined.

If your company is a bit larger towards the high end of the SME sector there are some great hybrid solutions such as mezzanine and subordinated debt solutions. You pay a higher rate for this type of financing, typically in the teens, from a rate point of view, but it is ultimately cheaper than selling permanent equity, particularly if you are bullish on your long term prospects.

Oh, and by the way, the most common sense solution to working capital and cash flow is simply prudent management of those current assets. Keep your profits in your firm, negotiate better terms with suppliers, and strive on a daily basis to reduce A/R and inventory levels. You've just become the savior of your own firm!

Speak to a trusted, credible and experienced Canadian business financing advisor on operating working capital and cash flow solutions for your business - there are more alternatives than you might be aware of!




ABOUT THE AUTHOR - STAN PROKOP

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS FINANCING !


http://www.7parkavenuefinancial.com/working_capital_cash_flow_operating_business.html

Why A Canadian ABL Business Credit Line Is Your New Plan B For A Cash Flow Facility

Canadian Business Financing – Doing It Right The Second Time!



Information on why the ABL business credit line facility for cash flow and daily working capital needs if revitalizing Canadian business financing and providing a solid alternative to traditional financing .




Fortunately, or perhaps unfortunately .. most business owners and financial managers in Canada are familiar with Plan B. Thats the alternative when Plan A didn’t work! That's why we think this is an excellent analogy for consideration of an ABL business credit line for your daily operating line of credit and cash flow facility.

Frankly, things have never been hotter in the asset based finance industry ; ABL financing and its subsets ( receivable financing only, equipment financing only ) provide significantly more amounts of liquidity when they are benchmarked against their PLAN A competitor, Canada's chartered banks.

So how is this achieved, when both solutions, the asset based line of credit and the traditional commercial bank line of credit strives to do the same thing? It’s simple. Increased borrowing leverage on your assets .Typically this is 90% of your receivables, (not 75% you are getting now) and market value leverage on inventories based on raw materials, work in process and finished goods margins.

The other factor in PLAN B's success is simply that these facilities grow as your business grows, pretty well automatically, as the entire premise of and ABL cash flow business credit line facility is based on the business credit line growing lock step with your sales and assets. The bottom line - the financing decision is made on your sales and assets, not the overall strength and structure of your balance sheet and income statement.

Surprising to many, but not to us, is that some of the largest corporations in Canada are utilizing this type of financing, abandoning commercial bank credit facilities in the process. We don’t make any bones about it - if your firm feels its being served well by a commercial bank revolver borrowing facility then by all means stay with that low cost solution. If that isn’t the case, well you know the drill... consider PLAN B!

Let's also spend a minute on cost of ABL cash flow business lines of credit. We hate to sound wishy washy but rates are better than, equal to, or more costly than bank facilities. That kind of covers the bases, right? We simply mean to say that depending on the size of your facility, where your company is at in terms of success and failure, and most importantly, who you deal with ultimately determines your cost structure on an asset based line of credit.

The other interesting note to make about our PLAN B solution is that while we're specifically talking about an ABL as just a business credit line the reality is that it can be used for a management buy out, leveraged buy out, acquiring a competitor, etc. That’s true flexibility.

So why isn’t this type of business financing in Canada more well known? We ponder that pretty well every day. Part of the problem is that the actual players in the industry are limited, some are foreign owned, and some are highly specialized in deal size, industry appetite, etc. But we can assure you an ABL cash flow lender exists in Canada that is suited to your needs.

Current economic challenges in Canada and the world for that matter place a tremendous strain on business capital liquidity. Speak to a trusted, credible and experienced Canadian business financing advisor on why PLAN B can help your firm survive, and grow!



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/business_credit_line_abl_cash_flow.html

# 2 And Trying Harder ! Why Canadian Business Accounts Receivable Financing Is Your Cash Flow Solution

Why Canada’s 2nd Alternative To Cash Flow Financing Just Got Better

Information on Canadian business accounts receivable financing . Why a confidential A/R finance strategy is a solution to cash flow and growth challenges .




We probably all remember the car rental company commercial... they were ‘ # 2 and trying harder ' ... that certainly could describe business accounts receivable financing in Canada - your company's 2nd alternative to cash flow financing after the bank.

So why is # 2 and trying harder gaining so much momentum from Canadian business owners and financial managers? Its pretty simple, it becomes the de facto alternative for businesses that can't achieve the financing they need from what the industry terms ' traditional sources '.

So let’s examine some key basics around how the financing works, and also let’s differentiate it from bank working capital financing... the proverbial business line of credit.

What drives an approval and the ongoing operation of a bank line of credit that is collateralized by your receivables? Of course it’s the size of your A/R base, but at the same time other key factors must come into play. The onus is on your firm to show profitability, debt and equity ratios that work for the bank, as well as more often than not emphasis on personal guarantees and even outside collateral.

However, business accounts receivable financing (aka ' invoice discounting ' ' factoring’) focuses solely on one thing - your receivables. The size of your A/R as well as its general quality essentially determines the size of your new accounts receivable financing facility.

The second key difference in comparing the two is that the bank in effect collateralizes your receivables by registering a security agreement against them. They are in effect ' assigned ' to the bank in the event of a default by your firm.

Business receivable financing however works differently, and that’s quite often mis understood by many Canadian business owners and financial mangers. Under this process you derive cash flow, on a daily basis if you choose, by selling your receivables to the finance firm, in whole, or in part, on an ongoing basis.

That A/R is sold at a discounted price, which in effect becomes your financing fee. (Many customers view this as the interest rate - the industry views it as a discounted purchase from you at a pre determine rate, usually 2-3% per month. So we can also make the statement that the a/r financing process, non bank in nature is a three way agreement, its between yourself, your customer, and your a/r finance partner firm .

Because Canadian banks are highly regulated and generally risk averse they cannot provide the amount of financing that thousands of small to medium sized firms need for working capital. But since the business A/R financing firm is focusing solely on the assets, i.e. your A/R, they can generally advance up to 90% of all your A/R at any given time. So, bottom line, your company doesn’t have to have the capital structure that is required for traditional Canadian chartered bank financing.

In many cases clients are please to hear that their inventory can also be combined into a one stop revolving credit facility by your non bank partner firm. This provides a revolving line of credit with much more liquidity than your firm may have experienced in the past - bottom line - more access to cash flow and day to day working capital for operations and growth.

Clients are generally mystified by the number of firms out there that offer this financing, what they charge, how they work on a daily basis, etc. We recommend they consider a confidential invoice financing facility, one that allows them to bill and collect their own receivables without any third party knowledge, including your customers! Speak to a trusted, credible and experienced Canadian business financing advisor on how business A/R financing can enhance your company’s cash flow today.





Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/business_accounts_receivable_financing_cash_flow.html

Unique Canadian Cash Flow Financing & Working Capital Loans - Finance Options

The Gap. That was the essence of a recent business story in Canada's national business newspaper regarding business financing optimism in Canadian business.At the core of business finance is financing working capital, generating cash flow and being aware of loans and finance solutions that make sense for your firm from a cost and benefits manner.

The incredible part of the May 2011 article was that although Canadian business owners and financial managers were more optimistic about their business these days, dramatically so, but 70% of respondents said that access to ' cash ‘ and capital was still a challenge . Wow. do we ever envy that other 30% who seems to have all the cash flow and working capital financing they need!

There are some unique working capital loans and strategies that work for you, it’s simply a matter of understanding what your current needs are, assessing your financial position, and most importantly, understanding your financial alternatives.
When we think of financing working capital you need to focus on the following, receivables and inventory, other assets, as well as your ability to re structure and re organize your firm if in fact that’s required .

In many cases a simple re financing of existing, owned assets is a unique strategy that often makes sense. This can be done via a sale leaseback strategy, or, not as commonly used, a short or intermediate bridge loan of refinanced assets such as equipment, real estate, etc.

At the core of looking at either traditional or more alternative or unique cash flow and finance solutions is simply to understand the cost and benefits of these strategies. Those costs vary with your overall credit quality and can range from a point or two over prime to 1-2% per month, depending on your current financial position.

Many business owners wrestle with how to simply understand working capital, which allows them to then determine their needs. Unfortunately the text book or your accountant doesn’t do a great job of that... in that they tell us go to the balance sheet, subtract current liabilities from current assets, and that’s supposedly your magic number. We wish!

So we tell clients to look at some very rudimentary but useful tools and allow them to assess their cash flow and loans strategies. One is simply the metrics of the operating cycle - understanding how fast you collect your receivables, how your inventory turns, and the average number of days you take to pay your key payables. Simply tally up the total amount of days in your A/R and inventory and you will find you can’t finance that excess just by stalling suppliers/payables.

The shortfall brings us to those solutions you are looking for. You could finance all your working capital if you paid your suppliers every half year or so, but they won't really buy into that plan!

In Canada the traditional solutions for working capital are bank lines of credit - the only caveat being you have got to have decent financial strength, profitability, good owner credit and assets, etc.

Failing bank financing in Canada you have the ability to access just receivable financing - our favorite facility is called C I D - a method in which you receive cash for your receivables immediately, and bill and collect under your own control.

Other more robust solutions are what we term working capital facilities or asset based loans. These finance loans (they are not loans per se) combine your receivables, inventory and fixed assets into one revolving line of credit. The more sophisticated a facility you utilize brings you maximum margining of your assets.

Alternatively a more esoteric candidate on the horizon is purchase order financing and contract financing - your suppliers are paid by the lender. It’s more costly, but boy does it work to allow you to generate sales you may never have been able to entertain on your own.

So whats our bottom line - we guess it’s simply don't despair! Understanding your operating cycle, assessing the amount of capital you need, and then weighing those needs against the best solution, traditional or alternative, is clearly your recommended route.

More info? Questions ? Ready to begin? Simply seek the services of a trusted, credible and experienced Canadian business financing advisor who can provide you with cash flow finance solutions that make sense.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/cash_flow_financing_working_capital_loans_finance.html

5 Revolutionary Breakthroughs In Working Capital Business Loans & Cash Flow Canada !

Mission impossible? We're going to try and re program your business brain around some innovative ways to look at working capital and cash flow solutions for Canadian business - and it might be a loan scenario... and then again it might not?

And about that word ' revolutionary ‘... we’ll leave that up to you to decide. However, we're quite sure we've got some working capital and cash flow innovation coming your way.

A popular term these days is ' the liquidity gap ' - it is simply the challenge that small and medium sized businesses tend to face in Canadian business financing. When you really think about your balance sheet that liquidity gap more often than not tends to focus on the investment you carry in receivables and inventory.

Also, financing options utilized in the past - we tend to call them ' traditional financing ‘, don't seem to be available, and when they are they don’t suit your needs re size, type of facility, and external collateral and guarantees that might be required.

No one is more a fan of Canadian banks than us. We love them. Canadian business owners and financial managers seem to struggle with why they can’t get financing for the bank. We heard a great explanation of that recently.

So, have we got a great story for you? As Canadians we put our funds into a bank, we also seem to have this feeling that we should be able to get it out anytime we want it. That's the story! Because in a simplistic way the banks can't really over lend to small and medium businesses because that is not the deal it made with me as a depositor. So I apologize for that! I made a deposit; I didn't contribute to a start up hedge fund!

Anyway... working capital and cash flow solutions are clearly available from Canadian chartered banks - but repayment from you must be certain- so have those good balance sheets and additional collateral and guarantees ready.

Back to those ' revolutionary' working capital solutions we have talked about. And as we said, they might not be a pure ' loan ‘.

From our point of view some of the most innovative ways to achieve 'cash flow nirvana ' might be facilities you have never heard of. What are they?

5 of the best solutions you should consider are as follows - purchase order financing, asset based lines of credit, merchant advance loans, C I D receivable financing, and tax credit monetization.


A short recap of those? Purchase order financing allows your supplier to be paid directly by the financier. Asset based lines of credit are facilities based on current and ongoing values of your total inventory and receivables. Are you a smaller or retail oriented business? Merchant advance financing provides cash flow today for sales you make tomorrow.

Everyone has heard of factoring. But C I D receivable financing provides you with the same benefits, i.e. same day cash flow on sales, but you bill and collect your own receivables without notification to clients, suppliers, etc. And finally, got a SRED claim to be filed? Monetize it today with a SR &ED bridge loan.

Want more info? Seeing the potential benefits already? Speak to a trusted, credible and experienced Canadian business financing advisor for a working capital business loans and solutions that maximize your cash flow requirements. It's as simple as that.






Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/working_capital_business_loans_cash_flow.html

Confused About Canadian Working Capital Finance ? Cash Flow Financing Techniques That Work

Clear answers... no, even better, clear real world solutions. That’s what Canadian business is looking for in working capital finance. And that type of financing and cash flow solutions has been tough to come by over the last several years.

Let’s examine why your understanding of working capital and your ability to measure the need and the solution is as critical as ever in the competitive environment you fight every day.

Let's focus on some of the hard facts first. If you don’t have working capital key issues such as payrolls, loan and lease payments, inventory purchases, etc can become big issues pretty quickly!

So how can you change assets and sales into the financing of cash flow? It's a one word answer - monetization! You need to use a razor sharp focus on monetizing (i.e. changing!) receivables, inventory, and sales into working capital to address those key issues we just mentioned above.

The better you do this you will find the better the patients health will be and that patient is of course your company.
Canadian business owners and financial managers know that their balance sheet and income statement are related. Today we're focusing mostly on the balance sheet - The amount and relationships between those current assets such as A/R, inventory, and payables can let you zero in real quickly on what some of the problems might be. (We won't forget telling you about those solutions also!).

Yes, you do need positive working capital to ' stay healthy ' from a working capital and cash flow perspective. And talk about a balance act, if you are growing too quickly your investment in A/R and inventory hinders cash flow, and if sales are shrinking then your receivables shrinks also.

So, we've done the usual pretty good job (we think) of telling you what your problems are. But that’s not why you came here, right? Let’s address solutions.

Are there in fact real solutions that allow you to fix today’s financing of cash flow challenges, and at the same time address these issues in a long term manner . Here's the good news. There are.

We tend to review 6 major methods of addressing your working capital challenges. They are asset based lending facilities, their junior sister, working capital facilities, as well as solely receivable financing. And coming up the rear are inventory and purchase order financing, cash flow term loans, and for smaller businesses merchant advance loans on future sales. And, guess what? Almost all of these solutions are non bank independent finance company solutions! We bet you did not know that?

All of these solutions have different levels of criteria for approval and success. Some are size based, and some are viewed as alternative, but boy do they work! Pricing is a factor also, and each of those solutions brings a different level of financing cost to the table.

If you want to investigate any of our 6 proposed solutions to both immediately and from a long term perspective fix your financing and cash flow issues seek a trusted, credible and experienced business financing advisor. Those solutions are just around the corner.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/working_capital_finance_financing_cash_flow.html

5 Smart Simple Canadian Working Capital Cash Flow Financing Loan Techniques !

Working capital Cash Flow - A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time. That’s one of the better definitions we've seen lately. And could that emphasis on ' financial health ' be any truer? - We don’t think so.

Canadian business owners and financial managers want to... wait a minute, need to! understand cash flow concepts . And by the way cash flow solutions wouldn’t be bad also, and we'll shortly be identifying some of those!

We all agree that cash flow financing forces the business owner to address some really key issues, i.e. dealing with banks, borrowing from other independent finance firms, etc. When we sit down with clients that bring in their balance sheet and income statement its clear to us that there is a true mis understanding often... in the business owners eyes about what that incomes statement is telling us. It's those changes in the balance sheet they should be focusing on instead, in particular our working capital accounts, receivables and inventory.

Are there real world Canadian made solutions for managing cash flow financing , and what type of ' loan ' is best suited to address your cash flow needs, or crisis!
?

When you think of it , it all comes down to managing your billings, aka receivables, granting terms to clients, and of course managing payables which many business owners omit in their ' cash flow analysis '.

We can also add that a great concept we use is often overlooked , and that’s the quality of earnings , Simply speaking, your net profits don’t always ( in fact rarely ) equal your cash flows. The closer you can bring those two together, at a reasonable financing cost, will be the solution to working capital cash flow financing. A quick example would be giving customers extended terms and booking larger sales and profits... for awhile!

So, great job so far on all the technical jargon, right? Not what you were looking for?! Let's jump into the real world, our favorite place. We're identifying 5 working capital cash flow financing ' loan' techniques. And guess what, 4 of them aren’t ' loans ' per se.

If you want to fix, better, or change your cash flow financing consider one of the following - C I D receivable financing, a cash working capital term loan - injection permanent working capital into your firm, a full fledged ABL facility , a junior working capital facility, and , our most esoteric but real solution, inventory and purchase order financing .

Any of these 5 solutions will better your cash flow existence. Want information on what they are, how they work, what they cost and where to get them... seek out and speak to a trusted, credible and experienced Canadian business financing advisor.

-

Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/working_capital_cash_flow_financing_loan.html

Want To Finance Working Capital ? Here’s Your Sources Of Cash Flow Financing

Are you focused on succeeding in financing working capital for your company? If you want to win that battle, and we categorically think business and cash flow financing is in fact a daily battle for most business owners... well you must be aware of the roots of your challenge the and sources and solutions .

As we head into the 2011 business year we're clearly coming out of a time when for many firms such as yours sales were down, margins eroded, and most importantly cash flow financing seemed to dictate where your firm was heading from a success point of view .So how can you assess how profits and growth can be managed from a viewpoint of cash flow financing.
The answer - your scorecard! What do we mean by that ?Simply speaking knowing where your working capital is tied up, and what is the cheapest method of unlocking sources to cash flow financing . And, although it’s a surprise to our clients more often than not, ' cheapest ' doesn’t necessarily mean ‘whats my interest rate '.

Can you point to your working capital? We can. It's tied up out back, in the form of inventory, receivables and equipment you've invested in, via fixed assets.

So business owners can hopefully start to see now that the secret or ‘holy grail’ to that unlocking of cash flow is freeing up cash you've got tied up in those assets. We will point out as a side note that you also have to manage those assets for prompt turnover - that comes with billing promptly, collecting receivables when they are due , and ensuring you have financing mechanisms in place, if you need them , for inventory and equipment .

Many business owners don’t realize that the inventory and equipment can be turned into sources of working capital. Those two assets can be combined as a part of a working capital operating facility , which for larger transactions is known as an asset based line of credit .

The hallmark of being able to finance working capital, more often than not, is managing your receivables. We can categorically say that although the majority of clients have 30 day terms to customer’s typical collection periods actually seem to be 60 and, yes, even 90 days.

How can you monetize that critical asset? In a perfect world (by the way its not) you access receivable financing via your bank. That comes with obligations though, including your need to maintain clean financials, show a profit, and meet ratios and covenants. So it’s agreed. What's plan B!

Plan B can also bring you closer to finance working capital solutions. Plan B could involves the following - securitizing your receivables if you are a mediums size or larger firm . Smaller firms and start ups and monetize A/R via selling their receivables, taking them off the balance sheet, and receiving cash flow today that can be re invested in the business. Terms for this type of financing are invoice discounting, factoring, confidential invoice discounting, etc. If your firm has decent gross margins, good clients, and can you're able to increase sales and profits by having additional cash on hand these solutions are for you.

The long term solution for cash flow could be more equity in your business, or borrowing via term loans for cash flow. Those as viable, possible, but consider your short term options first - giving up equity or taking on debt are not fabulous working capital strategies.

In summary, to keep you business running you must asses your cash flow needs and priorities .We have named 5 or 6 immediate and available solutions to consider. Speak to a trusted, credible and experienced Canadian business financing advisor on cracking those sources of cash flow financing.

--


Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/finance_working_capital_sources_cash_flow.html

Canadian Solutions To Your Working Capital Management And Cash Flow Loan Needs

Are there real world solutions to your business working capital management challenges? Is there a solution to your cash flow needs? Is that type of loan even available?

Today we'll be the finance doctor and we'll start y asking you if you have any of these symptoms : Is your firm growing too quickly , to the point where you are forced to focus on daily cash flow needs almost all the time . And are you also finding that you seem to be selling more and making less, from a net profit or income perspective. Do you even have a cash flow budget in place that allows you to assess your supplier payables, and lastly, but certainly not least and perhaps most serious... are you finding it unable to make certain loan or term obligations that your busines has?

It would appear to us, clearly, that you require a ' prescription ' for those symptoms, and that prescription is simply a working capital solution that works specifically for your firm.

Expanding too quickly allows you to stay ahead of the competition of course, but brings with it something the finance folks call ' overtrading ' which is a cash conversion cycle of negativity when those commitments we referred to cant be made because of the high investment in receivables, inventory, and fixed assets you have made to grow your business .

In other words you have the assets, but they are all tied up, leading to a case of poor liquidity. And we must be honest here; if you didn’t have the assets or sales potential there is almost no way we can help. So your ability to bring liquidity and monetize your assets focuses strongly on identifying how you are able to convert assets to cash.

So, never the ones to be accused of just talking abut the problems, lets talk about the solutions we spoke of.

It always comes down to current assets, so you require a solution to be able to monetize sales quickly, and convert A/R and inventory in working capital management success.

In Canada your alternatives are several, and quite frankly these would apply to almost any business anywhere. Many clients that come to us focus on what they term a ' cash flow loan ‘. Is that available, yes... is it recommended maybe. It’s a term loan for permanent working capital. Naturally that comes with more debt and fixed interest payments, so that is many times not an optimal solution.

Our preferred solutions to the working capital management challenge are the following: Confidential invoice financing, asset based lending, purchase order financing, and inventory financing. These solutions come in a variety of combinations depending on the size of your working capital requirement, as well, as the general financial profile of your business - i.e. are you currently financial challenged , or are all aspects of your business simply great . (It’s rarely the latter when we talk to clients.

In summary, investigate the benefits and mechanics of the 5 solutions we have outlined. Determine which ones work for your firm, and speak to a trusted, credible and experienced business financing advisor on your ability to secure in short order the cash flow and working capital you need to run your business successfully.

-


Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/working_capital_management_cash_flow_loan.html

Does Your Company Need Working Capital Cash And Funds ? Canadian Business Cash Flow Lending That Works!

Knowing that your company has a need working capital cash and funds is one thing of course - knowing what lending solutions are available is of course another altogether different (yet related!) topic.

Let’s examine the real world essentials of working capital financing in the context of the Canadian market, targeted mainly at small and medium sized business such as yours.

We all know the buzz words: cash flow, cash is king, liquidity... you name it, and the text book has them all. But we want to focus on real world solutions to your Canadian business financing needs. And that’s where working capital and operating capital come in, i.e. your daily requirements for managing assets such as receivables and inventory.

What many business owners and financial managers fail often to realize is that your sales backlog, new contracts, , and your other assets in the business often mask the essence of our topic today, with is liquidity and cash flow to meet your daily financing needs . Clients are often surprised to find that although they are profitable, have assets, and have great prospects their inability to manage receivables and inventories and payables leave them in short term and ongoing cash flow crunches.

The most impact you can make on this problem lies in three of your accounts - they are receivables, inventory, and payables. Payables simply because your ability to slow or delay payables increases cash flow, it’s as simple as that. That though, needs to be balanced by maintain proper supplier relationships.

So you therefore have decisions to make around working capital where you will get cash funds, and what is your real need for lending and cash flow on a long term basis. Borrowing on a long term basis for short term needs never works, and time and time again we meet clients who have ' mismatched ' short term needs with long term alternatives .Don’t do that!

We think we have you up to speed now on the problem - les focus on the solutions to the need for that working capital, where those funds come from, and what lending sources can assist you in that cash flow challenge .

As we said, you want to monetize current assets, not borrow and incur long term debt. The one exception to this is a cash flow term working capital loan that in some cases makes sense because you are injecting permanent working capital into the business.

The real solutions to the working capital cash flow challenge revolve around the following - a bank operating facility that margins your receivables and inventory. Many firms either don’t have the financial profile to access this type of facility, or in some cases banks simply don’t lend against inventory, or you are often ' capped ‘ in this regard. Therefore the solutions we recommend to clients are asset based lines of credit with true asset based lenders; smaller firms qualify for a combo working capital financing and cash flow facility that margins your receivables and inventory, but at higher rates than the bank.

Our favorite options for smaller challenged firms is confidential invoice discounting - your ability to finance all you invoices but retaining full billing and collecting ability.

Since it's always about opportunity, many clients aren’t aware that purchase order financing is also available for their cash flow need. This comes at a higher cost but allows your firm to take on significant business it otherwise might have to forsake.

So, there you have it. To recap our bottom line (business owners love the bottom line!) you need to match your financing mix to your own business needs. Solutions you may not even have heard of are available to you now, and your competitors might be using them already.

Speak to a trusted, credible and experience Canadian business financing advisor - identify the need, and implement your working capital solution today!

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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/working_capital_cash_flow_funds_need_lending_cash.html

The Reality Around Working Capital And Cash Flow Business Financing In Canada

Your access, and the way you manage your firms working capital and cash flow play a key role in business financing and your firm’s growth and overall well being. We rarely get an argument on that one.

Your ability to get financing on items such as fixed assets, a/r, and inventory will ultimately depend on how successful and also how fast your company can grow .

Clients are somewhat amazed when we tell them that we can pinpoint the exact time when they will stop being successful! What do we mean by that? Simply that you have a great little tool to determine when you need that extra capital in your business. Most small and medium sized businesses haven’t heard of it, we can assure you larger more sophisticated corporations have a total handle on this one.

So whats the tool - it’s called the Sustainable growth ratio and it’s a simple formula that shows you the most your firm can grow without bringing in new capital. For example, if you want to get a shareholder return on your total capital in the business of 20% you can re invest all your earnings and keep your relative overall financial position the same. Want to grow faster, then access more outside capital .Simple as that.

However accessing more capital from the viewpoint of our clients is either difficult, or undesirable - i.e. reducing their ownership interests, etc. So whats the choice. It’s simply monetize your business financing assets such as receivables, inventory and unencumbered assets and create working capital and cash flow via asset turnover.

You create cash flow financing internally be addressing how you finance receivables, inventory, and accounts payable. Accounts payable you ask?! Yes, simply because as you slow your payables you generate real cash flow progress. Naturally there is a fine line here between generating that cash and alienating your valued suppliers!

We never want to be accused of talking about the problems and not the solutions, and we mean real world solutions, not textbook solutions to Canadian working capital financing.

So let’s recap the solutions and why and when they might make sense. The easy, quick, go to solution is working with a commercial banker to determine if you qualify for bank financing from an operating line of credit point of view. We surmise that if you have all the access to bank credit you need you wouldn’t be here reading our solutions proposed!

Other real world alternatives for cash flow financing in Canada, some of which are even unknown to our clients include asset based lending facilities that are non bank in nature - basically lines of credit from private finance firms. Other solutions include confidential invoice discounting, and purchase order financing, which also occasionally dovetail into the financing of your inventory either prior to purchase or when its on your shop floor .

In summary, we spoke of your desire or inability to attract long term capital to your business, the solution being short term working capital decisions around how you finance on a day to day basis. Speak to a trusted, credible an experienced business financing advisor on how to access the Canadian business financing you need. Today!

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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7
parkavenuefinancial.com/working_capital_cash_flow_business_financing.html

Why A Merchant Cash Business Advance Makes Sense for Cash Flow

A merchant cash business advance is fast becoming a mainstream financing strategy for Canadian small business owners. However, in talking to clients they are concerned about two key issues around this innovative financing method.

Those two key issues are:

How does it work?

What are the Costs?

We firmly believe that if you understand those two critical points then your firm is in a position to benefit from a merchant advance and Canadian cash flow solutions.

And those benefits are significant and quite clear. They include your peace of mind as it relates to business financing, since these facilities grow with your business and are unlike pre-set bank credit lines, etc .
Time is money as the Canadian business owner well knows. A merchant cash advance in Canada works quickly and efficiently (When you have chosen the right partner and the right type of facility). Once the initial set up process is completed, usually in a week or two the facility runs itself at your discretion. You in effect have taken complete control of your cash flow.

Our final key benefit that we should focus on before getting back to our two critical points is simply that this financing tool, if used properly, allows you to generate more sales and increase profits via key turnover of sales and inventory, etc.

O.K. – You now know many of the key benefits of factoring. Is it right for your firm? Critical point #1 – How does it work?
A merchant cash business advance is simply best described as the short term sale, or ‘discounting ‘of your sales . You generate cash, at your option, on the same day that you generate an sale for a sale and delivery of product and services to your client base.

Critical Point # 2- What does this type of working capital cash flow financing cost? .We have actually demonstrated too many customers that the true cost of merchant advance type financing is actually zero or less than bank financing in many cases. Why is that?

We hate to do it, but let’s go to the text book finance formula known as the DuPont Model . If you discount your sales, i.e. , get cash the same day, buy more inventory with that cash, negotiate a better price with suppliers with that cash, and then repeat the process over and over we can almost guarantee you, depending on your industry and A/R turnover that a business advance can become a profit mechanism for your firm. That’s certainly clears up a lot of the ‘negative ‘things you have heard about this type of financing , its costs, etc.

Speak to a trusted, credible and experienced business financing advisor on the benefits of a merchant cash business advance , how it works, and how financing costs can be controlled and reduced. That’s true cash flow and working capital financing for Canadian business.

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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/merchant_cash_business_advance_cash_flow.html