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Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.



Showing posts with label cash flow based financing. Show all posts
Showing posts with label cash flow based financing. Show all posts

Monday, September 27, 2010

What If Inventory Financing Lenders Were the Solution to Your Cash Flow Based Financing

Just what if your firm had a significant inventory component and you had access to cash flow and working capital against that inventory investment in working capital that your firm has made.

A proper inventory financing facility in Canada is one in which you can draw down on a satisfactory level of your inventory value and repaid it as you replenish capital via account receivable and cash collections. Your success in achieving a proper inventory financing component in your overall business financing in effect optimizes your working capital to the extent you need to.

How would your overall financial position change with that additional working capital and cash flow? You would then have the ability to take on additional contracts and purchase orders, your supplier relationships would most probably improve, and faster asset turnover of assets and receivable generates faster profits and return on assets. Those are good things.

The main advantage of an inventory financing or A/R financing component is your ability to accelerate cash flow. Let’s be honest, if you were self financing (i.e. no borrowing facilities) and had to wait for inventory to be sold and receivables collected then you are significantly slowing your growth ability.

In the context of the inventory financing we are discussing this financing is not a loan per se - that’s important to understand. It becomes a part of your revolving facility and is simply collateralized by receivables and inventory.

Your inventory financing arrangement is reflected in a type of document generally known as borrowing base certificate. We also advise our clients that it is highly preferable to have a strong handle on your inventory reporting, and also you should preferably be using some sort of a perpetual inventory accounting system.

Inventory is a very generic term, we hate to do it but we complicate things further by discussing with clients the fact that inventory can consist of raw materials, work in process, and of course final finished goods inventory . As a result the valuation of what is financed varies by industry and inventory type. Slow moving or highly specialized product is much more difficult, but not impossible, to finance.

Could you be more competitive and profitable if you have inventory financing at 40-50% of your gross inventory value - we are pretty sure you could be!

On larger transactions you should fully expect some sort of initial appraisal and valuation on your inventory.

In Canada inventory finance is highly specialized, we can almost call it a niche financing. Speak to a trusted, credible, and experienced business financing advisor to determine if this financing works for you. Through that process you should be able to develop a clear understand of the differences between bank financing, asset based lending, which incorporates inventory finance, and purchase order financing if that is applicable to your business model .

At this point you are now in a position to ensure that inventory financing advances are a great way to acquire mfr and carry inventory for orders and contracts you receive.

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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/inventory_financing_lenders_cash_flow_financing.html