Reduce Business Financing Turbulence With AR Finance ! Why You Just Might Need Receivables Financing

Why You Just Might Need Factoring

Information on AR Finance as a business receivables financing solution in Canada



Fasten your seatbelts. if you are encountering some business finance turbulence these days. Our good friends at Webster’s define turbulence as a ‘disorder... or commotion” That’s why one new tool in your finance toolkit just might be an AR Finance facility! Let's look at receivables financing and what you need to know.

More often than not, but not always, it’s simply an alternative to a bank line of credit. And the reality in our current environment economics is that this financing often becomes either the first or only choice when any business, from start up to mature, cannot acquire the financing they need, or better said, the amount of financing they require to grow.

To put it in the proper context what this is simply, is a sub set of what we term asset based lending. We hate to get lost in the terminology sometimes, but when you combine a Receivable facility with inventory financing it’s often called a working capital facility. That is to say that both A/R and inventories are margined at a pre agreed amount, and you borrow against them.

The fundamental belief of your AR finance partner is that the quality of the underlying collateral alone is good enough for you to borrow against. Banks in Canada are challenged to accept just that collateral alone, as their rules and regulations force them to focus on cash flows, balance sheets, historical profits, and all the ratios and covenants that come along with that.
Just leverage alone sometimes, i.e. too much of it, ensure you won't qualify for a traditional bank facility.

By the way, that brings up an important point, which is the actual financiers of AR Finance receivables financing are in fact non bank commercial finance firms. They vary in size from huge corporations, or subsidiaries thereof, to small boutique firms specializing in a certain size of deal of industry. That’s of course why talking to an expert in the field allows your firm to quickly focus in on working with the right partner in your firm’s particular situation.

Receivables financing works because it maximizes the amount of cash flow and working capital you can draw on, and, as we noted, if you combine it with an inventory line you're more often than not either doubling or tripling your access to capital. So when your current finance model isn’t working it’s absolutely never too late to consider a new finance tool for your firm!

We are often asked by clients if they are required to provide personal guarantees for such a facility. If you're a private company in the small to medium enterprise sector the answer is, yes, probably. But, and it’s a key point here, the emphasis on any A/R financing facility is never the personal guarantee, it’s the underlying receivables or inventory that is being financed.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining if its time for your company to consider this growing from of business finance.

7 PARK AVENUE FINANCIAL
CANADIAN A/R FINANCING EXPERTISE




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/ar_finance_receivables_financing.html

























Stan Prokop

Looking To Plug the Cash Flow Drain? Consider Sale Leaseback Of Assets Or Securitization Financing As Solutions !

Two Unique Canadian Cash Flow Strategies


Information on a sale leaseback strategy for assets your firm owns . Consider Securitization Financing as an additional cash flow generater!





Canadian business owners and / or their financial managers might not necessarily be fully familiar with two sold financing strategies, the sale leaseback of assets, and the potential ability to enter into a securitization facility. Let's cover off some basics.

When it a comes to a sale lease back scenario there are some accounting , tax and financial statement issues that we also encourage clients to consider . It might be time to give your accountant a call!

So when in fact does doing a sale leaseback make sense? Although it is often used when the company cannot obtain bank financing, that is not always the case and it's still a beneficial strategy when your company requires a capital infusion of some sorts.

The interesting thing about this method of refinancing is that quite often the assets in questions are of value, and are not pledged to another lender. They belong to the company and can assist the company who is, as the expression goes ' asset rich ' but ' cash poor '.

Typical assets that are used in a sale lease back include phone and computer systems, manufacturing equipt, heavy construction machinery, rolling stock ... etc!

The strategy itself could not be more simple- your company sells the assets to a leasing or finance firm in exchange for immediate working capital.

One area of caution is that complications can ensure when its time to confirm you have the ability to enter into a transaction such as this. Simply speaking, other creditors of your firm may be asked to confirm they hold no security in the collateral being refinanced... that just makes sense.

Because different assets have different life cycles and value its important to get a firm understanding up front as to the true total financing capability you can extract from this type of transaction .

Payments under a sale leaseback loan or lease are commensurate with your credit quality as well as the true liquidation value of the assets. That’s not how you might look at the transaction, but we assure you the lender does!


On to our other relatively unused and unknown financing, ' SECURITIZATION '. If your firm is over leveraged or simply doesn’t have access to the liquidity you need it's one unique method of financing a company in Canada .

In some ways securitization is a more complex type of sale leaseback - however instead of financing your hard assets you are financing future cash flows that come from receivables , or what we can broadly call ' cash flow contracts '. Oh, and by the way larger public companies do this all day, every day as a way to enhance balance sheets.

Although some of the mechanics of a securitization might be viewed as complex by a small firm, medium sized or larger firms simply collateralize those rights to collect in their A/R or contracts. They more often or note are responsible for any shortcomings in future collections.

Naturally for the securitization lender they are looking at both sides of the coin, the quality of your cash flows coming in, as well as the overall credit quality of your customer base. Here issues such as concentration, geography, type of asset, etc come into play for the final financing decision. Lenders can protect themselves even more by holding back some of the funds; in effect they are over collateralized.

So, whether it’s a sale leaseback of hard assets or a securitization of cash flows your company might to well to investigate each method to see if it works for your firm.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in evaluating these great, and unique business financing mechanisms.





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 9 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/sale_leaseback_assets_securitization_financing.html

Financing A Business Purchase In Canada . A Buyout Financing Loan .. Done Right !

Canadian Business Financing – Management Buy Out Finance Info


Information on financing a business purchase in Canada . Buyout financing strategies and info for a management buyout loan or a business acquisition.



Financing a business purchase in Canada requires a strategy that doesn't have to be as hard as you think if you have the right information. What sometimes makes buyout financing or a loan strategy complicated is the good news; there are a variety of options available that make sense to you the purchaser, and the owner.

Business people and managers looking to orchestrate a management buy out or business acquisition want one thing: A solid simple strategy for both valuation and financing! The goal should be quite clear: agreeing on price and value, and then raising the right mix of debt finance and owner equity capital that suits the asset and capital base of the business going forward.

Of course valuing the business is often the first and largest challenge. That is complicated by the size of the firm, whether it’s a service or an asset / product based business, and whether the firm is a going concern, or heaven forbid, in dire straits.

What should be a good starting point in valuation - no surprise to us, its one of our favorite terms - ' CASH FLOW '! That means taking a look at what cash flow has been, and what it could be. That requires a solid handle on revenues and a proper forecast for those sales.

Asset valuation is a good step # 2. That naturally involves some method of appraisal of asset types such as equipment, real estate if there is any attached to the sale , vehicles, and those all important ' current assets ' , Receivables and Inventory .

We often find ourselves in the middle of a valuation issue when assisting clients with a business purchase - suffice to say there is an occasionally a huge difference in value as placed by the owner or the purchaser. We're often reminded of the old saying that best deal is often when both the purchaser and the seller both feel they didn’t get the best deal!

Taking a good hard look at how the seller presents financial statements is key to financing a business purchase successfully. Here's where the majority of clients we speak to need some good experienced assistance. Areas of focus are:

Collectability of receivables

Revenue recognition policy on sales, contracts etc

Lease obligations - (premises/equipment)

Fixed asset list value

One time losses i.e. why/what happened

Owner/management compensation


With reference to the last point, ' COMPENSATION' we see numerous cases where a hard look at current compensation can save thousands of dollars to the new owner/manager. And that includes the strategy of taking the previous owners kids and family members off the payroll!

If we had to summarize an all inclusive strategy in looking at the business financials we would say it involves simply a solid hard look at:

Debt
Liquidity
Profits
Assets

Easier said than done though, right? But a lot easier with some experienced assistance for an advisor, etc.

When it comes to actually financing the purchase this can be through bank term loans, asset based lending deals, unsecured cash flow loans, and even for smaller business purchases (under 350k) the Govt SBL loan.

Speak to a trusted, credible and experienced Canadian business financing advisor on assistance for financing a business purchase and a buyout financing loan / finance strategy... that works!

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE / MGMT. BUYOUT EXPERTISE


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/financing_business_purchase_buyout_financing_loan.html

How To Kick Start Franchise Financing Success. Funding Your Franchising Loan Needs In Canada

Canadian Franchise Financing Tips / Tactics


Information on franchise financing in Canada . How does the entrepreneur access funding for a franchising loan ?



Thousands of Canadian would be entrepreneurs in Canada clearly recognize the trend that franchising in Canada is a major industry and a leading contributor to the economy as a whole. You want to be a part of that trend!

So, that being said how does the entrepreneur translate that opportunity into his or her ability to kick start franchise financing funding in a manner that makes getting a franchising loan a success as a part of their overall entrepreneurial strategy?

Let's share some solid advice on what type of financing you should utilize to successfully complete your new or existing business acquisition. Yes, existing franchises can be purchased and financed also!

The amount of money that you yourself put into the business is a key factor in your potential sales and profit success. But two questions immediately arise: Do those funds necessarily guarantee you success based on how much you put in, and secondly, where do you access the balance of the finances you require?

One somewhat intangible issue that also always comes up is the ability of the entrepreneur/ borrower to demonstrate how much experience they have in a chosen industry or business. So things like your own outlook on being an entrepreneur / business owner (it’s not as easy as you think) and matching your skills to the type of business you buy and finance are critical.
By the way, we think there are very few executives in even the largest most successful corporations in Canada that have the total skills involving sales, marketing, operations and finance as a total skill set . Those people are the real superstars.

Naturally one of the reasons you purchase a franchise is that you are buying into, hopefully, a proven system of a brand, business model, marketing and advertising assistance, etc.

OPM is important when it comes to franchise financing. That of course stands for Other People Money, which represents the balance o the funding you need for your franchise purchase. In Canada, along with your equity, or we'll call it a down payment the balance of your financing comes from either a commercial finance company that either specializes in franchise finance, or one that can compliment the financing you need. A good example of that is an equipment finance company that can acquire and lease assets for you such as POS systems, other hard assets, vehicles, etc,

In general anywhere from 10 to 40%, sometimes more is required as a down payment or equity contribution to your business. We quickly add that that doesnt always necessarily mean that money is permanently contributed or ' tied up ‘, but you just must show that you have access to liquidity to get the busines off to a good start for working capital and growth purposes.

Two key points for the franchisee - a solid majority of the franchising loan scenario in Canada is done via the government BIL/CSBF program. It offers great rates, terms and structures for the acquisition of your business. Where the program falls down a bit is when it comes to a service type business where there are limited or no assets to purchase / finance.

Our other key point - have a crisp ' package ' in place when it comes to a business plan, industry overview, financial projections, etc. This isn’t the rocket science it sometimes seems when it comes to getting a good proposal in front of your lender. You can't afford to miss out on your business purchase just because of a poor presentation package, and it can also be easily accomplished by using an expert such as a Canadian business financing advisor that is experienced and has success and knowledge of franchise finance.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISING FINANCE EXPERTISE




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/franchise_financing_funding_franchising_loan.html

Untangling Biz Financing Via ABL Capital . Overcome Business Line Of Credit Finance Hurdles !

It’s Changing Times In Business Finance . Here’s One Reason Why !



Information on accessing ABL capital in Canada . Let the asset based business line of credit help you untangle the biz finance maze



Is ABL capital a solid or maybe your ‘best choice’ when it comes to untangling the challenges your business faces when it comes to a comprehensive business line of credit? We think it's a solid finance solution and many industry experts agree. Here is why!

What is ABL? .... which of course stands for asset based lending. We ask that question only because it, and other terms such as ' cash flow ' mean different things to different people. In our terms it is a total solution business line of credit that allows you to borrow against your receivables, inventory, equipment, and even real estate, all within one revolving facility. It is as simple as that.

It's really a total solution that , in effect, is an ' evolution ' in the concept of a business line of credit. For the asset based lending company, your new partner in business banking its all about the balance sheet. That is of course compared to Canadian commercial business banking, where it’s all about the balance sheet... and your cash flow statement, and your income statement... and your personal guarantees. Those of course are what drive Canadian business banking rates to be so low and so great... if you can access them!

If we had to line up the different companies that access ABL capital its a diverse group - its larger firms that are very bankable but can access more capital at better rates , all the way down to start ups with a more limited financial history, at the same time having assets that can be financed .

We are pretty sure this doesnt exist in Canada, we certainly haven’t seen it yet, but in the U.S. there is a huge ABL capital market known as ' Second Lien '. Under these facilities the asset based lender sits on top of the senior bank facility, in 2nd position, and advances even more against the total assets already being financed by the bank. Surely that is one reason why our banking and lending practices are much more conservative in the world marketplace - we don't lend twice against the same asset!!

When we sit down and talk with clients about what can be financed and how its often practical to finance current asset accounts such as a/r and inventory via an ABL line of credit, while at the same time financing the equipment and other fixed assets under a separate facility with a finance partner/lender who has an appetite for those type of assets. That total combination of two facilities gives our client a lower ' blended cost ' of funds and at the same time increases borrowing power - talk about a ' double whammy '!

What made asset based finance popular in Canada when it comes to business owners and financial managers seeking solid biz credit facilities? A lot of it revolves around 2008/2009 when financial markets went awry and thousands of Canadian businesses started to investigate alternative methods of financing their business. And ABL sure was one of them.

And the irony in the above? Simply that companies that even theoretically qualified for more traditional financing could not get it... enter the ABL facility!

So is there a trend emerging in Canadian business lines of credit. We think there is. In the U.S. experts confirmed that in 2011 asset based credit lines almost doubled. Did that happen in Canada? We think it did, perhaps somewhat less so, but clearly the emergence of a new trend.

If your company is looking to grow (or just survive) investigate the benefits of ABL capital , making you a more effective competitor . Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision with the right type of facility.

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED LINE OF CREDIT EXPERTISE





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 9 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/abl_capital_business_line_of_credit_finance.html





















Stan Prokop

Christmas Cancelled Due To Cash Flow Financing! Avoiding Problems And Accessing Solutions To The Working Capital Gap In Canada

Business Financing Not Working For Your Company . Here’s Why!

Information on critical cash flow financing problems , What solutions can the Canadian business owner use to solve working capital problems



Say it isn’t so. Please say it isn't so. But it is so. There it was. The front page of Canada's best known business page, Sept 10/2012. It was a headline that screamed at us to look into it.

What was the story ?It involved one of Canada's most iconic and largest corporations , indicating that the company had chosen to preserve cash due to their investments in growth and the future . The result? Travel cancellations, no new hires, and yes ... and we're quoting here:

‘CUTTING ALL FUNDING FOR CHRISTMAS PARTIES’


We suppose if they had been politically correct they should have said ' holiday parties ' but we’ll weigh in on that one another day ... as in never.


So, cash flow financing. Is it that important that it makes the front page of Business news? Well we have always thought it was so thanks for the vindication.

Let's examine why front page news is where working capital solutions belong. Business owners and managers in larger corporations all the way down to start up realize that its that elusive cash flow that runs their business on a daily basis ; and in the case of our subject company today allows you to plan and grow for the future .

So, it’s all about careful planning, and solutions to not run out of cash. And as we're always saying, you can both access cash flow and working capital solutions, as well as managing your assets to optimize cash.

The business owner always struggles with debt and although that strategy (taking on debt) is on way of accessing capital it's certainly not always the solution. In fact we tend to favor two better solutions:

Managing asset turnover in receivables and inventory (and payables)

Monetizing assets into cash flow solutions that include:

Bank credit lines
Non bank business lines of credit
Receivable and inventory financing - together or separately
Supply chain / PO financing
Monetizing valuable tax credits under the SR&ED or **Film Tax Program - * unfortunately not all of us make movies though


Canadian business owners and managers need to run their business while at the same time understanding their cash flow cycle - its not that simple - just doing some basic calcs around how long it takes for 1 dollar to flow through your corporations, from the time you buy supplies and services to the point where your valued clients pay you . It doesn't take long for the business owner and manager to understand that cycle can be anywhere from 60 -120- days. And in between that? It's the cash flow gap!

Also, differentiate between making a profit on paper and having cash, or access to cash on your balance sheet. Huge difference.

In Canadian business financing today there are numerous solutions for working capital. Some are called ' alternative ‘... many are newer and innovative, often called ' alternative '. All of them can work for your firm when you understand how they work, what they cost, and what the benefits are.


So, Xmas cancelled. We hope not. But in the meantime, speak to a trusted, credible and experienced Canadian business financing advisor on how you can access cash flow financing that makes sense for your firm... today.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS FINANCE EXPERTISE

Don’t Commit These Deadly Sins In Canadian Lease Financing . The Business Equipment Leasing And Loan Decision

It’s Never Too Late To Get Equipment Leasing Right



Information on lease financing in Canada . Serious mistakes lessees can make when entering into a business equipment leasing or loan .






Are there some ' deadly sins ' Canadian business owners and financial managers can make when it comes to lease financing in Canada? We think there are a good handful of them, at least 4, so let’s cove those off. More importantly, let’s talk about avoiding them and using business equipment leasing as a solid tool to help finance your business.

So, what are those 4 key areas of potential ' sins' when it comes down to that asset acquisition decision? For us it comes down to:

Entering into the wrong type of equipment lease/ loan

Mistakenly purchasing the asset that in effect depreciates while at the same time providing your firm with certain benefits over a period of time

Entering into a term loan for the asset

And finally...

Working with the wrong lease finance firm



The good news is that there are some great solutions to avoiding today’s ' sins ' . A good place to start is spending some realistic time around both the costs and payments involved in your transaction, as well as any balance sheet and tax type issues that you might need to consider, if not now .. down the road!

The timing of cash outflows on your lease, versus the expected benefits is a key area to focus on. This is a classic way of weighing the alternatives to leasing. This analysis offers proof you are making the right decision!

Let's use a typical example, which in today’s case will be the acquisition of a computer, or a whole computer system, as well as all the related costs that come with that, i.e. software, maintenance, etc. That's an area of our businesses where real cash outlays are required these days!

So what must be considered in our example? Naturally actual cost is a factor. We have often said that using a financing mechanism such as asset finance in your business in effect helps you to remove what a dear friend of ours called ' the obstacle to innovation ‘. So just your ability to buy the best and the most with your dollars is one great way to ensure you're not committing one of today’s ' deadly sins '.

Other factors you should consider are the depreciation and obsolescence that comes with an asset such as this ... (or any other asset for that matter ... in truth some assets depreciate quicker than others - a cement truck can be leased or financed for ten years). Note to reader: We don't recommend financing computers and related equipment over a ten year period!!

Another key point is to ensure that the type of lease you enter into covers off what the leasing companies in Canada call the residual value, or end of term. Bottom line - focus on what you intend to do with the asset at the end of the term... is there some value still? If the asset can be replaced, upgraded, or still utilized it might be beneficial to enter into an operating lease versus a lease to own type scenario.

There are substantial differences in a loan versus a lease, including areas such as payment of the taxes, down payments required, balance sheet consequences, and credit requirements depending on who you are dealing with.

So who can give you a straight answer on what lease is best for you, and when? Resources include independent commercial lease companies, captive finance firms, bank leasing companies, etc. Or perhaps a solid decision is to use a Canadian business financing advisor who has strong relationships and knowledge about all of those resources, some of whom have very vested interests to make asset financing work more for them than you.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING EXPERTISE!






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/lease_financing_business_equipment_leasing_loan.html