Business Cash Flow Problem Working Capital | 7 Park Avenue Financial
How To Recover From Cash Flow Shortage Shock
CASH MANAGEMENT AND ASSET TURNOVER HELP CREATE PROFITS
Every business goal pretty well revolves around creating profits. As that process works itself through your business you should be constantly trying to both manage cash and improve asset turnover.
The business owner's ability to manage, and finance working capital allows it to generate equity, pay taxes and employees, keep supplier short term relations positive, etc.
Calculations around working capital cash flow typically revolve around the relationship of current assets and current liabilities on your balance sheet.
WHAT IS THE OPERATING CYCLE
A great way to look at your business is to constantly be focusing on what we call the ' operating cycle '. It's essentially the ' journey ' that a dollar takes as it travels through your business.
Two drivers in understanding your cash and working capital are your:
1. Revenue recognition
2. Accounts payable management
Business owners should also check out their cash flow statement which is a key part of business financial statements allowing you to see cash from a ' where got /where gone ' perspective.
DON'T FORGET PAYABLES MANAGEMENT
While not often directly understood, most business owners /managers understand that managing payables is a key part of the cash cycle. You increase your cash from operations by delaying payables to the extent that you can, given you don’t want to damage supplier relations. Delaying payables, your major ' current liabilities ' asset is working capital management to the extent you can given vendor payment terms, etc.
FINANCING YOUR INVESTMENT IN A/R AND INVENTORY
If your business isn’t a retail or online business you have an investment in accounts receivable. Numerous financing solutions exist to allow you to better access real cash, as opposed to the A/R and inventory build-up on your balance sheet that is not liquid.
Those solutions include:
WHAT THOSE TEMPORARY CASH FLOW CRUNCHES!
If our businesses were a straight line with totally repeating ongoing transactions a lot of cash flow shortage shock would go away. Unfortunately, that is rarely the case, so seasonal and bulge situations often occur, often along the lines of the ' cash flow shock' we talk about.
The owner /manager's ability to forecast seasonality and bulges in business will always alleviate working capital shock .
WHAT TYPE OF BORROWING FACILITY DO YOU NEED?
At the end of the day, the most common solution to the business cash flow problem is the ability to ensure you have a borrowing facility in place that allows your company to address future cash flow uncertainty.
If your firm has profits, historical cash flow and acceptable financials chartered banks and business credit unions are the solutions for the long term.
FINANCING THE BALANCE SHEET
As long as you have business assets (receivables, inventories, equipment, orders/contracts) numerous non-bank solutions exist to allow you to feel that you have cash flow availability. Funding current assets is a key part of addressing a cash flow crunch.
If you're looking to avoid small business cash flow problems shock and ensure you have access to financing solutions that address the right stage your company is in ( start-up, mature, high growth, turnaround, etc ) to grow products and services, so seek out and speak to a trusted, credible and experienced Canadian Business Financing Advisor who can assist you with your financing needs. It's all about the amount of cash you need to satisfy enough cash for funding your company.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Direct Line = 416 319 5769
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7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.
Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.
Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced
business financing consultant.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
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