When You Can’t Afford Mistakes In Canadian Working Capital Cash Flow Financing - Finance Options and Tools That Work

Need Some Help In Cash Flow Financing & Mgmt?


Information on working capital cash flow financing solutions and management techniques for Canadian business . Finance alternatives that work.



Managing it... and getting it. That’s two different ways of addressing work capital cash flow in the financing of your company. The importance of cash can’t be underestimated in any business, and how to finance and both manage and address the requirements you have is challenging for many Canadian business owners and financial managers.

It certainly doesn’t help that in the current 2011 somewhat volatile economy that the struggle for that cash ' lifeblood' seems as hard as ever. Many clients we meet in the small to medium size sector of Canadian business have the owner or owners of the business spending a little too much time on chasing cash. And borrowing for the liquidity has always remained a challenge.

Business owners realize all to quickly that sales growth demands a lock step in working capital requirements... the bottom line is that your a/r increases, inventory levels rise, and many of those ' variable costs ' increase also .

That’s where it’s all important for Canadian business to spend some time taking a hard look at their particular cash cycles - that’s the time gap for a dollar to flow back into their company from the time you make a sale. That must be balanced of course against your ability to meet your short term obligations.

So how do you protect and sustain that working capital cash flow? There are two types of solutions, internal and external. Internal solutions will drive a lot of more stress out of your business than you think - it’s simply about focusing on managing receivables and your overall credit and collection policy in a better fashion. Naturally you can slow cash outflow by slowing down your payables, but that’s a fine line to walk when you're talking supplier and vendor relationships that are key to your company.

So we guess that takes us over to external. Focus one typically for many business managers and owners is to seek a bank facility that meets all their needs. That is of course pretty well the least costly solution when it comes to external financing in Canada - if... ands its a big IF... your firm can meet Canadian chartered bank borrowing criteria .

When true traditional financing cant be achieved then you should consider alternative strategies that are becoming more mainstream everyday. Take a look at the right left side of your balance sheet. Would you prefer to see 500k of receivables there or 500k of cash?

We think we know your answer... and that is achieved by simply financing your receivables as you generate them. The cost of doing that , between 1-3% of a sale ( assuming your customer is a reasonable payer ) can easily be offset by now putting you in a position to take supplier 2% net 10 day type discounts . Additionally you can now purchase goods and services ' smarter and harder ' with your new found liquidity.


Other external working capital solutions, non bank in nature, include asset bases lines of credit, monetizing your tax credits due your firm, and generating cash via a sale leaseback on some assets.

In summary... it’s a two style challenge, internal and external. If you want some assistance in this regards speak to a trusted, experienced Canadian business financing advisor who can help you on both challenges. Cash flow, not an area that allows you to make mistakes!



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/working_capital_cash_flow_financing_finance.html

Back By Popular Demand ! Canadian Working Capital Cash Flow Financing And Loan Alternatives

‘Focus On Growth ‘- That was the heading in a June 2011 business article in one of Canada's two leading business newspapers. We try as often as we can to translate their interpretations of whats happening back to where we work every day, which is the real world!

So, working capital and cash flow financing, whether through a loan or other facilities. That’s our focus today. A key point made in the article focused on the fact that so many firms had cut costs or held back that they missed, or are missing major growth opportunities to grow both sales and profits . The focus of the Canadian business owner and financial manager was ' cash shortages ‘, said the article, thereby impacting growth.

‘Make better use of your cash ‘said the article, and encouraged you to maximize supplier credit, and at the same time work the other end of the spectrum, which is your own receivables policy.

A constant comment we hear from clients is that they not only don’t know ' the fix ' to a working capital and cash flow problem, they often actually don’t understand what the problem is or how to measure it. Let's look at some of those measurement tools, and more importantly, ' the fixes'!

As business owners ourselves we can relate to the fact that every time a business feels some sort of cash shortage you might feel your business is ' in trouble '.

Businesses finance working capital through the current asset accounts, namely receivables and inventory. In Canada those assets are financed either through a bank line of credit, or various types of working capital facilities that are more alternative in nature. They include asset based lines of credit, receivables financing facilities, and purchase order financing.

The latter three solutions tend to be more expensive for Canadian business, but in our experience provide you with much more cash flow and working capital. Important also to remember this type of solution is not a loan alternative, you are simply monetizing or cash flowing your assets, and that’s a good thing.

We spoke of ways to measure the strain you have on working capital. Business owners need to realize that only efficiently moving receivables and inventory can be financed. If you are financing through a bank then not only is your margining limited but you more often than not have a borrowing limit. That can really impact growth ability.

It’s also important for Canadian businesses to understand that access to more working capital shouldn’t make them lose their focus on losses and unprofitability.

Let's look at a quick example - let’s say a business has an operating line of credit of 1.2 Million as an example. The firm borrows to the maximum but then sales drop off significantly. Your bank reduces the credit line because your borrowing and margining power just is not there due to those slow sales. This then puts tremendous pressures on those supplier payables resulting in both loss of credibility with suppliers and operating losses due to those lower sales. It's a vicious circle.

The bottom line is of course that lack of working capital and cash flow financing can kill your business - short term losses aren’t great, but they are manageable. But insolvency due to real cash flow challenges is very real and deadly

And back to our article that we mentioned on growth. Small and medium sized business in Canada has the ability to access traditional credit, as well as numerous other ' growth' working capital alternatives. A loan or debt is typically not the answer to growth.

So investigate cash flow financing alternatives such as tax credit financing, working capital facilities that are non bank in nature and margin A/R and inventory, as well as more esoteric financing such as purchase order finance and specialized inventory finance. Want more info... seek a trusted, credible and experienced Canadian business financing advisor who can put you on track to ' growth ‘!


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_cash_flow_loan_financing.html

Your Executive Decision in 2011 - Working Capital Cash Flow! Working Capital Finance Is Easier Than You Think!

It’s resolved, all those in favor say aye! Doesn’t the timing to reassess your working capital cash flow needs heading into 2011 seem perfect? Working capital finance solutions are available, and they are not always what you thought they might be.

Let’s try and be realistic and positive here. The recession (we read this in the newspaper today, so it must be true) is over, your business is on the rebound, but, those same cash flow challenges still haunt your ownership and management on a daily basis.

Your ability to put together effective techniques and solutions around working capital financing always goes back o the management of your short term assets such as cash, receivables, and inventories. And yes, it’s always a balancing act that challenges you everyday, we know that. The cash requirements come out of the need to meet your day to day expenses, pay employees, and make payments on any debt obligations you have

In talking to clients inventory levels that allow you to run your business, minimize constant re ordering, and taking advantage of price and volume discounts continue to be a main challenge.

Can this challenge be addressed? It sure can, and in a number of ways. You can arrange a long term unsecured working capital loan to address product needs - alternatively you can blend the borrowing power of your receivables and inventory on a combo basis via a working capital facility that margins receivables and inventory. This facility, called an asset based line of credit when it’s for a larger amount will turn your company into a constant cash flow machine if you manage it properly. We point out to clients that this type of working capital cash flow facility we just described is offered by a non bank private finance firm, so we encourage clients to speak to a Canadian business financing advisor as to how these facilities work.

Working capital finance inevitably focuses on the management of your receivables. You can amend credit policies, shorter your payment terms, extend those terms, or simply collect your receivables more efficiently and aggressively. Those are all measures of how you identify your credit policy. The other side of that coin is how you finance that huge investment you more than likely have in a.r.

In Canada several clear options are available, for smaller firms you have the ability to generate an unsecured business merchant cash advance against your future sales and receivables, credit card sales included! Medium sized firms in Canada can access the aforementioned working capital facility, aka the asset based line of credit. Larger corporations can entertain the securitization of their receivables via an off balance sheet financing.

There is only one bottom line in working capital cash flow - its simply that you need to understand your cash flow challenge, and then investigate the proper options to remedy that challenge, allowing you to fuel long term growth and profits .

In some cases traditional bank financing, via the right bank and banker will work. When it doesn’t consult a credible, experienced and trusted Canadian business financing advisor who will help you identify real world solutions for cash flow success.

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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/working_capital_cash_flow_working_capital_finance.html