Sources Of Canadian Business Capital And Debt Financing

Financing Solutions For Growth ( And Survival ) In Canada


Information on sources of business capital in Canada . The proper choice in equity and debt financing helps guarantee success for Canadian business owners / managers





Businesses that are growing require sources of capital. The capital in a company of course comes from the owner or borrowed funds. Generally speaking business owners prefer to borrow rather than sell equity in the company, as that sale of equity dilutes the ownership position, i.e. they own less of the pie!

Debt vs. Equity


New equity can come from friends and family, venture capital firms, and angel investors. These parties are looking for good management, integrity, owner financial stake, and growth potential.



However, in the current difficult financial environment many lenders are in fact insisting that business owners put more of their own money into the company. There is never an easy answer when it comes to the debt or equity question.

When businesses borrow funds there is a cost to that capital - as interest on that debt reduces over-all profits. New equity in the company of course does not reduce those earnings, however the profits are distributed more widely and the earnings are proportionately reduced.


Borrowing funds of course comes with risk, as those loans must be repaid. Business owners sometimes get caught in the trap of financing long term projects with short term money - they are therefore at the mercy of having to always roll over that debt, and potentially also seeing rates go up, sometimes dramatically. Also, a business can carry only so much debt, at which point cash flow becomes a potential problem if the company is over leveraged.


Currently rates are very low for businesses that have access to capital. Therefore in many cases it might make sense to lock into longer term loans in the current attractive rate environment.


When the business owner has made the decision to purse business loans the old Boy Scout model works very well - BE PREPARED! Business owners that do their homework will usually be successful. Lets not forget the banks and finance firms are actually in business to loan funds. Naturally collateral, or additional collateral certainly improves the chances of debt financing success and loan approval.


Debt and equity financing as a sources of capital should be used for the right reasons - expansion, seasonality of business, increased inventory and working capital that will increase sales. Funds that need to address business inadequacies such as poor management, financial losses, falling sales, etc are very difficult to come by!




Solutions for debt capital include :

Real Estate / Asset Leasebacks
Bridge Loans
Term Loans
Government Loans
Unsecured Cash Flow Loans/sub debt


Additionally assets can be monetized without the necessary addition of debt ; These include:


Receivable Inventory Financing ( or combinations thereof )
Supply chain financing
Royalty finance
Tax Credit Monetization

In summary, business owners should carefully consider the positive and negative effects of additional debt or equity capital. Once they have made an informed decision, either on their own or with a credible, experienced and trusted Canadian business advisor they should consider the cost of that capital and how it is best achieved.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS CAPITAL 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/business_capital_debt_financing.html

How ‘ Not ‘ To Be Great At Mismanaging Cash Flow . Fixing Working Capital With Solid Financing Solutions

Become A Good Manager Of Cash Flow Assets



Information on cash flow and working capital financing solutions for the Canadian business owner / manager who is challenged by the right way to manage business growth and finances .



Cash flow and working capital solutions in Canada. If there is one myth about success with growth and financing solutions it’s that sales and revenue growth will get you there. It won't.

As the Canadian business owner and financial manager well knows it takes more than that to get lenders, ( bank and non bank ) to get a good feeling about financing your firm . At the end of the days it’s about ' protecting ' their financing and collateral interests in your company.

Unfortunately there are ways to be totally ' not great ' at proving that you're a good cash flow business owner/manager.

In financing, more often than not it’s about ' the assets '. So while we can easily get caught up in fancy formulas are EBITDA and other calcs the reality is that it’s your assets and their turnover that determine your real working capital health. Mismanaging those assets makes you a great ' mismanger ' of cash flow and working capital.

America’s great cash flow and investment manager, WARREN BUFFETT once said ‘Does management think the tooth fairy pays for (future) capital expenditures?).

Naturally term debt lenders focus on your long term viability to generate payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

So when profits and ebitda calcs are positive we meet clients that still are having a challenge paying suppliers and meeting payroll obligations.

So what we are saying is that it’s important to understand that sales revenue and profits and the ' value ' of your company, if you're focusing on just those, have made you a great Mismanager of cash flow and working capital.

It's all about know how your firm can access cash from assets , as well as being able to plan for future needs . That's where a bit of planning comes in - putting together a sales and receipts forecast, discussing these needs with bank or non bank lenders. The biggest mistake we see in this area from clients is they are not properly analyzing cash timing of collections from accounts receivable.

If your cash flows are negative through this plan process the solutions are pretty clear, and limited:

Take on term debt

Have shareholders put in more money

Delay payments to suppliers

Really increase sales!

And finally - convert assets into cash

Converting assets into cash via receivable financing, sale leaseback, or comprehensive asset based lending lines of credit is our personal favorite, mainly because they monetize assets without really creating new debt.
Use these solutions and tips to avoid being a MISMANAGER of working capital solutions for your firm . Speak to a trusted, credible and experienced Canadian business financing advisor on how to achieve the right solutions for financing your firm for health, growth and success.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS AND CASH FLOW 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/cash_flow_working_capital_finance_solutions.html

The Operating Cycle - My Washing Machine Or My Business Cash Flow ? !

The 'operating cycle is a distinct part of any business. Frankly we believe that most business owners intuitively know it exists - they just didn't know it had a name.

The operating cycle is the repetitive pattern of a turnover of a businesses current assets and liabilities. Let's examine that in a bit more detail. In essence each business establishes within their company, and probably within their industry, a repetitive pattern of turnover.

In the first phase of the operating cycle a business, unless it is a service business, buys inventory and materials which they will resell to customers. Normally these goods are obtained on credit. The company buys product, and obviously has an account payable to that supplier. So we find that company paying their supplier, cash goes down and inventory goes up. So far so good.

In phase two of the operating cycle the company sells product to a customer. More often than not it sells on credit - this generates accounts receivable - the good news is that the company can finally record sales, or revenue.

In phase three, the final phase of our operating cycle, the company collects the receivable and converts the entire process we have gone through back into cash.

Yes, our analysis is over simplified, and of course behind all these processes the company has administrative and sales costs that back up the entire operating cycle. All of these costs are in some manner related to the final sale and have some sort of contribution in that regard.

We also need to remember that through the entire process bank loans or working capital facilities regularly turn over. Hopefully !

Each company and industry has a different operating cycle - within each industry some companies are clearly doing better than others. How is your company doing?

One of the best know ways to measure a firms operating cycle is a formula created by the DUPONT COMPANY many years ago - not surprisingly the formula is called the DUPONT FORMULA!

The formula looks at relationships, or ratios, in the balance sheet and income statement and provides solid ways of measuring the operating cycle and how it affects a company's profit, and operations. It provides a lot of insight into how a company can improve profitability by emphasizing asset turn over and showing how it's important as sales.

Even a non- financial person should be able to understand this - we are simply saying that if a company can buy something, sell it, and collect the money fast and start all over that will increase profits over a company who takes twice as long to repeat that entire process. Sales are not always the be all and end all! A company, using DUPONT, can show that even if they make a little less on each sale, but turn over inventory and receivables faster, can do as well or better than the competitor.

In summary, a true understanding of the operating cycle allows a business owner or financial manager to focus on expenses, asset turn over, and margins, and see the inter - relationship of all these three components of a business. Understanding and improving your operating cycle with the right type of financing will make your firm a leader, not a laggard, in your industry.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS CASH FLOW FINANCING



Stan Prokop is the founder of 7 Park Avenue Financial. See

http://www.7parkavenuefinancial.com

The company originates business financing for Canadian companies, and is a specialist in lease financing, working capital financing and acquisition financing on behalf of clients.
For more information, or questions ->

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

Ready To Reboot Your Computer Financing Strategy? Make Equipt Leasing Your New Friend With Benefits For Tech and Software Finance Needs

Avoid A ‘ Forced Fit ‘ . Make Leasing Work For You, Not Against Your Firms Goals


Information on computer financing in Canada . How does the business owner / manager address tech finance software and hardware leasing issues .



There's probably no better time for a (business) friend with benefits than when it's time for computer financing. The whole area of tech finance, whether its computers, software , etc just begs for some solid help, and it's often proven that leasing finance solutions come through just when you need them most - in the world of costly and complex technology assets

We maintain to clients that you need though, to make lease finance work for you, it shouldn’t be a ' forced ' solution.

The whole area of lease finance gives you a positive outlook that you at least have a chance of beating the high price of technology, the fear of obsolescence , and that constant looking over your shoulder ( via the internet ?) at what your competitors are doing .

And let's face it, your boss, or maybe you're the boss are looking to cut expenses, not increase them or take on debt. Fundamentally, whether they admit it or not, most Canadian business owners and financial managers want to acquire the best asset without burning through those valuable credit lines and other accesses to capital.

The good news for Canadian business is that the whole spectrum of technology is in fact financeable, and, as we've noted that includes software, which is a surprise to some. Software is typically financed as a full lease to own scenario, so the key benefit quite often is simply the fact that you are matching the benefits of the software with the cash outflows of a lease finance scenario.

We're making the assumption here that the business owner, CIO, or financial manager has done what most refer to as a ' lease vs. buy' scenario. Here the business person takes into account the life of the asset, all the software licenses and support they will need for the asset, as well as the final outcome re: disposition of the asset. THIS JUST IN - IT'S A SHOCKER! - Computers don't last and don't hold their value! Many experts and industry analysts actually estimate that you'll have another 25,000.00 of costs associated with the acquisition of, for example, of $ 100,000.00 of new technology.

There has naturally been a dramatic change that can't even be properly being described in tech assets for your firm. Today its not just servers, pc's, laptops, netbooks, etc, new focus is on cloud computing and wireless solutions. And all that can still be financed. It always seems to come back to the funding.

It's often the use of lease finance that becomes the solution for the ' budget breaker. Continuously replacing tech assets often calls for budgets to be ' broken ' and that's where leasing plays a key role, eliminating the challenges of fiscal deadlines and fixed spending plans. Some stats from leading IT guru firms indicate that over 50% of all companies, large and small have lease lines of credit available for the financing of their technology. Those solutions include the two main forms of tech finance, capital ' lease to own' scenarios, and operating ' lease to use ' solutions. It's important you pick the lease ' friend with benefit' that suits you most.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a reboot of your tech and software financing needs.


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/computer_financing_tech_finance_software_leasing.html

3 Questions ( And Answers ) On Factoring In Canada. Your AR Receivable Finance Questions Answered .. Finally !

Fundamentals of Factoring in Canada


Information on factoring in Canada . What every business owner needs to know about receivable finance and ar finance costs and strategies .




We get a lot of questions on factoring as a business finance solution in Canada. The concept, background, and mechanics of financing just your AR is somewhat misunderstood we think. Let's share some basics for the sake and benefit of those firms considering this method of business financing.

1. Where is factoring at in Canada? First of all there seems to be a general consensus that this type of finance vehicle for your business is one of the faster growing and certainly feels like it is getting more popular everyday. The reality is that it's been around for many, many years, and in the case of being around period it’s been around for hundreds of years in North America, Europe, etc... Kind of reminds us of that saying in the fashion industry, ' what's old is new again ...'!

As a potential user of A/R finance it kind of makes sense to know who you are working with. In Canada the market is somewhat smaller and fragmented, with firms offering AR finance being either small or mom in pop in nature, or to the other extreme subsidiaries of some very large U.S. and Global corporations. Talk about a choice!

It's also important for you to distinguish between firms who offer this financing as a part of their overall solution, or if you're dealing with a specialty firm, for all the right reasons! We've always preferred to work with an expert ourselves!

From our perspective it kind of feels that Factoring got a lot more popular after the 2008 recession. That's not hard to disagree with because of the way the business credit totally dried up at that time, with thousands of small and medium size firms finding they have a lot less access to business credit. Canada’s chartered banks clearly no longer dominated all of Canadian business financing, that’s for sure.


2. What size and type of Companies utilize factoring? Here’s where it get's interesting, and not doubt speaks to the fact of this new found popularity. Why? Small firms use factoring, start up firms use it, SME firms utilize it, and guess what.... some of the largest corporations in the world utilize AR receivable financing, although it takes a new name higher up the food chain, often referred to as a ' Securitization '. At the end of the day it’s all about taking A/R off the balance sheet immediately, replacing it with cash, and taking on a finance charge for that privilege of enhancing your balance sheet with cash.

3. When does Factoring work best? Several business situations arise that drive the popularity and success of this finance solution. Primary is the inability of the borrower, small or large, to get traditional bank type financing.

But we remind clients also that even start ups qualify for receivable financing, and many firms that are actually doing quite well ( too well in fact because they are growing too fast ) also embrace this finance , cash flow and working capital solution. It's also a great way to assist in the restructuring of a company that is having any one of a number of business challenges that preclude it from accessing working capital elsewhere.

Is that everything you need to know about AR Receivable financing in Canada? Probably not, but it’s not a bad start and business owners and financials managers should speak to a trusted, credible and experienced Canadian business financing advisor for more info and assistance on this widely misunderstood finance solution .

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING 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/factoring_receivable_finance_ar.html
















Stan Prokop

Protect Your Company From These Trouble Signs ! Liquidity, Business Cash Flow And Financing Funding Tips

Getting Out Of Trouble With Business Finance Solutions


Information on tell tale signs of business cash flow and liquidity problems. Here’s the fix for financing and funding challenges.



Business financing in Canada. Keeping an eye on what's happening with your company’s overall financial position isn't a bad thing, and understand what the problem and fix might be is even better.

And even better suggestion for Canadian owners and business mangers is to be able to spot the tell tale signs of trouble... you guessed it... before they seriously begin. And the ultimate goal of course is to be able to have the knowledge to zero in on some solutions that make sense.

Let's over off our ' TOP TEN ' today, starting with general liquidity. While very few businesses of a small to medium sized basis carry, or are able to care a lot of cash on hand they should be able to have a strong sense they can convert the right assets into cash when they need them. Focus in on course on your working capital assets, but dont forget those ' treasures in the garage ‘... business assets that might be owned and have the ability to get refinanced if necessitated.

Tell tale sign number two is low cash flow, and that arises out of your ability to turnover working capital accounts properly. That can be more aggressively handled by utilizing bank lines of credit or working capital facilities that are a combination of receivable and inventory financing. Firms requiring larger facilities should explore asset based lines of credit.

Tell tale sign number four - shrinking profit margins. This is critical as your ability to monetize sales with good profit margins will ultimately lead to more positive cash flow, and profits.

Our 5th sign is more of a warning that you should be billing and recording your revenue properly, and promptly. Bill clients as soon as you are able to ... investigate programs such as cycle billing, allowing you to continually generate sales and focus on the collection of same!


Tell tale sign # 6 - debt load. Watch your leverage and manage your finances with a viewpoint of matching short term finance needs with short term assets - typically receivable and inventory. Debt is good and positive use of leverage even better, but focus on the amount of debt you can realistically handle.

When it comes to trouble sign # 7 we're talking about ensuring your accounting is complete and up to date. Investigate the proper and best method of showing inventory on your financials, and managing inventory as it flows through your business cycle.

Don't over expand - that’s a sure sign, # 8 in fact that you have a handle on your overall financials and borrowing ability. Dont lose the opportunity to acquire a competitor, or be taken advantage of one by your poor financial condition.

Tell tale sign # 9... It’s all about the turns, and we're talking about firms that have an inventory component to their financials. Monitor quality of inventory and the turnover of same. That inventory translates into revenue recognition and receivables, super charging your cash flow situation.

Trust us that slow paying clients are a sure sign of forthcoming business financing and funding problems. That’s # 10 on our list. Receivable financing and bank organization won't view slow paying clients as a great asset for future financing. It’s all about staying on top...of your clients.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in both spotting, and solving your company funding and liquidity issues.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING & FUNDING 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/liquidity_business_cash_flow_financing_funding.html

Recognize These Symptoms? It Time For New Business Financing And Capital Strategy Options !

Canadian Business Financing – Techniques and Solutions


Information on business financing options in Canada . Get the right capital and strategy for your company’s needs

Business financing in Canada. Or lack thereof?! Are there some symptoms for finance capital options we can look for, and fix? We think there are.

Here's one for you. How many business owners would associate overdue receivables, poorly moving inventory, or under used fixed assets as a symptom of too much financing. We're pretty sure that few business owners (or even their financial managers) would associate those symptoms with having too much capital!

Then of course there is the other side of the coin, which is what clients always are looking for - business financing solutions. So what would some of those symptoms be? They are pretty obvious more often than not:

Little or no cash on hand

Vendor payment issues

Manufacturing timing / shipment issues (You can't make ' em fast enough!)

Also, by the way, if you feel you are getting too little of a return on investment on all your assets its pretty clear that might be a symptom of a capital strategy problem.

It's safe to say that the right amount of cash flow, working capital, and other assets would probably fix any challenges your firm is facing. Naturally every business is different; for example a service company requires little fixed assets and tends to be more cash flow based.

Here is one for you. Did you know that some analysis around your fixed capital can actually help you solve your problems? Take a good look at your long term debt and equity on the balance sheet and measure that relationship once in awhile - yearly would be a minimum timeframe.

We're still looking for some other symptoms though, right. Here's some more. If you feel on an ongoing basis that you’re experiencing large increases in receivable and inventory growth you are strong candidate for some hard analysis of some new financing and capital options. It's those 'investments ' in receivables and inventory that devour your cash flow, forcing you to address new financing options. For the SME owner those large growths in A/R and stock actually mean you will probably be able to take less out of the company in the form of dividends, mgmt. bonuses, etc.

By the way, if you are looking at new purchases of assets ensure those assets will generate profits, not eat up capital or create losses. That's just common sense.

New Business financing options can be addressed if you have a strong handle on a very few basic calculations - those include some rudimentary things like expense per day, receivable turnover, inventory turns, etc.

Oh, and by the way, lenders of short term and longer term capital are looking at those same things in your balance sheet, so being able to talk to those issues will help you... a lot.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with capital options in the short or long term (and crisis) situations.

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_financing_capital_strategy_options.html

Here’s 10 Answers And Tips For Government Guaranteed Loans In Canada . The SBL Small Business Loan .. Works!

Government guaranteed loans in Canada seem to present a bit of confusion to many clients and business owners we talk to. The gov’t small business
Loan, commonly called the 'SBL ' is a solid financing mechanism, if, and only if, you understand the requirements and benefits of the program.

If we have to summarize where things go wrong in the program it pretty well comes down to key issues as follows:

What amount of equity does the borrower have to put into the deal?

How does the credit status of the borrower affect the loan approval?

What documentation is needed for the program?

Does your business or venture have to be profitable?

Where does the government actually fit into the loan process - P.S. It doesn't !

Is the program the same everywhere?


Lets highlight 10 key questions we're often asked and we’re e quite sure the above issues will be covered off nicely.

1. Is the loan in anyway a grant? Absolutely, positively not! While there are various ' grant ' programs in the Canadian business environment, the SBL loan program is a term loan, fully repayable. The concept of ' free money ' is titillating, but that’s certainly not what we're talking about today.

2. What exactly is ' SMALL ' when it comes to the program? Small in fact means for existing businesses or start ups that your revenues can't exceed, or be projected to exceed 5 Million dollars. Simple as that.

3. How does owner personal credit factor into the program? The answer is that the borrower, i.e. the owner or owners of the business must have reasonable personal credit history. Canadian credit bureaus rate us on a score basis, and in the case of SBL loans a score of 650+ is recommended.

4. What is required in a loan submission? From a documentation point of view you need a business plan or strong executive summary, and some solid financial projections. For non finance types these can easily be prepared by your accountant or an experienced Canadian business financing advisor.

5. Where in Ottawa do you apply? The answer is, you don’t. The program is underwritten by Ottawa, actually INDUSTRY CANADA, but the program is administered on a daily basis by Canada's banks. IF YOU CAN FIND A BANKER WHO KNOWS AND UNDERSTANDS THE PROGRAM!

6. How does the guarantee work? The loan is substantially guaranteed by the government, to your bank, and allows Canadian business owners and financial managers to access loans and financing they otherwise might not qualify for.

7. How does the program work? That’s a bit of an all encompassing question, but the quick answer is that you submit and work with a local banker to complete your transaction, and the loan is funded through your business operating account. The guarantee owner’s sign for on these loans is 25%, which is clearly a highlight and major benefit of the program.

8. What collateral is required? The collateral of the transaction is essentially what you're borrowing against, which is typically equipment, computers, software, and leasehold improvements. You can actually buy real estate under the program, but that's a bit rare in general.

9. What’s my rate? That’s the typical client question, and the good news is that the program has great rates for start up, young, or small firms. The rate is 3% over prime, which, as stated, rivals that of larger corporations in many cases.

10. What’s the repayment term? Typically its 5-7 years, and no prepayment penalties kick in if your loan is properly structured.


Who can help you achieve success under the government small business loan program? Your accountant or a Canadian business financing advisor can work with you to provide the right package, ensure that you qualify, and utilized industry and program knowledge to guarantee business financing success.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs around Canadian government guaranteed loans.

7 PARK AVENUE FINANCIAL
CANADIAN SMALL BUSINESS LOAN 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/government_guaranteed_loans_small_business_loan.html

Changing Times In Business Credit ! 10 Things You Should Know About ABL Asset Based Lending Finance

Changing Times In Business Credit ! 10 Things You Should Know About ABL Asset Based Lending Finance


Information on the newest form of business credit in Canada, the ABL Finance asset based lending facility


Business credit in Canada. Wasn't it Bob Dylan who chimed that the ' times they are a changin'.. and nothing could be further to the truth when it comes to ABL asset based lending in Canada as a new alternative for financing your business.

Asset based lending , similar to the term ' cash flow ' gets a lot of somewhat confusing definitions . So to be clear, we're talking about a true non bank asset based line of credit.

Confusion comes when business owners and financial managers refer to equipment financing, or just a receivable financing scenario. We're talking about the whole kit and caboodle! which is the ability to borrow, under one facility when it comes to a business credit line. So that of course gives you a revolving line that is margined against A/R, inventory, equipment, and even real estate, if that is part of the mix.

Historically, when ' times are good ' the good folks at Canadian chartered banks do a great job of business financing. Simple problem though, is that we find it more and more difficult to remember when times were great... they seem only constantly challenging to most of our clients.

So, enter ABL asset based financing, giving your business true cash flow generation ability.

Let's cover off 10 solid basics.

Who is using ABL? Quick answer, pretty well everybody. That covers start ups, turnarounds, firms in special loans, companies that, excuse us... are ' growing too quickly ' for traditional lenders, and yes, finally, some of the largest and most profitable and solid corporations in Canada . Enough said.

Does ABL finance really allow companies with challenges to actual work thru the turnaround? The answer is a resounding yes. Because cash flow and profits aren’t the total focus anymore, as they are with , say , our banks , the ABL solution allows you to use asset leverage to support your reorganization of emergence from a Special loans type scenario .

The question: Can Asset base lending support seasonality in business? Again, affirmative. In fact seasonality is completely covered in this form of business finance; you only pay for what facilities you use when you use them.

How important is ABL in Canada? How long has it been around? More and more Canadian business owners and financial mangers are exploring financial alternatives, and while the majority of Canadian business thinks of the banks as JOB ONE when it comes to financing, there are alternatives and it's prudent for you to know about them.

What are the clear advantages of an asset based line of credit? First of all it suits a very of business finance needs, it is not term debt, it allows for maximum borrowing against your assets, and it often provides a new discipline to your mgmt team as a bit more reporting on receivables, inventory and equipment is often required .

What are the requirements of a true ABL facility? First of all, you of course need assets; this doesn’t really work for a service business per se. Clients must have solid financial accounting to back up the reporting, and while owner guarantees are often taken, just as with our banks, lesser emphasis is places on the PG's. (Personal guarantees)

What doesn’t work in ABL? First of all, you have to absolutely ensure you're working with the right partner. Also, owner views on values of inventory, equipment, real estate, etc have to be realistic.

How are valuations on your borrowing calculated? The answer is that it’s the same manner as would a bank, i.e. a borrowing certificate formula applied typically to A/R, inventory, and equipment. A/R is typically 90% advance, while inventory ranges from 25-75% based on the nature of your inventories and their overall marketability.

Can you buy a company using an ABL strategy? Absolutely, positively, yes. Financing an acquisition using the assets of the firm you are purchasing is a creative way to finance a merger or acquisition type scenario.

Was Bob Dylan right about those ' times a changing....’? We think so when it comes to your ability to access a newer type of financing that gives you maximum borrowing power. Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can implement a better borrowing strategy based on your firms industry and circumstances.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS CREDIT AND ASSET BASED LENDING 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/business_credit_abl_asset_based_lending_finance.html

Are You In The Game ? Confessions Of A Cash Flow Manager On Time Tested Canadian Business Financing Solutions

Are You Happy Solving Your Firms Cash Flow Equation?


Information on cash flow financing alternatives in Canada . Business working capital solutions.



Call us biased but our preference on cash flow financing for Canadian business is to learn from an expert. The rookie thing never seems to work ..! One of the most famous industrialists of all time once said ' the only irreparable mistake in business is to run out of cash ... when you run out of cash they take you out of the game.

No Canadian business owner or financial manager wishes to be ' taken out of the game ‘. So lets look at some of the analysis, as well as ' the fix ' when it comes to financing your working capital.

We always are a little of wary in initial discussions with clients around how they are doing when they are only focusing on just profits and sales, which are great by the way . But the juggling act around sales growth and profits, to use one analogy, also revolves around the spinning knives of cash on hand.

Confusion reigns supreme around even the terminology on cash, cash flow, and working capital. Naturally actual real cash on your balance sheet, i.e. your bank account, is your business lifeline .Cash flow on the other hand revolves around the changes in your working capital accounts, which, by the way, includes payables also.

Your working capital, on the other hand, is really the value of our working capital accounts, ie receivables and inventory, and how they relate to your payables.

Financing solutions for Canadian business working capital are numerous.

Cash flow and working capital solutions include:

Bank operating lines of credit

Receivable Financing

Working capital term loans

Unsecured cash flow loans

Asset based lines of credit

Supply chain /P.O. Financing

Which of these solutions work best for your firm? Although sales generate cash it’s used to support your vendors, payroll, utilities, etc, and etc. ! Those sales however convert to receivables, and those can be easily monetized by all of the solutions we note above, with the exception of the working capital term loan.

Term loans are debt, and if you don't necessarily want to take on more debt and interest expense its more often than not best to use financing that converts inventory, receivables, and purchase orders to cash .

Oh and by the way, that sure beats putting more equity into your company, or selling assets. (Selling non performing assets or looking at a sale leaseback is not necessarily a bad thing by the way).

Remember today’s motto though, don't run out of cash or you ability to access cash. The most serious signs of cash flow doom are usually quite obvious: serious losses, inability to access traditional financing, lack of assets to finance new cash flows.

Can we learn anything else from those confessions of a cash flow manager? Understanding the past sometimes help, so knowing your historical peaks and valleys is a good thing, and your ability to plan and demonstrate future cash flow needs sure helps!

And the tools you'll need? Very basic: cash balance and aged receivables and payables. A look into future sales projections sure helps.

In summary, while stretching suppliers or bringing in new ownership and equity work, they aren’t desirable. Sales are good, in fact they are great, but focus on financing solutions and mgmt tools that convert working capital assets to cash.

Speak to a trusted, credible and experienced Canadian business financing advisor on your firms ability to achieve the right type of cash flow financing to compliment sales and .. hopefully, profits.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS CASH FLOW 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/cash_flow_financing_business.html

What’s Your IT Finance IQ? Technology Leasing And IT Computer Software Financing In Canada

Information on the IT Finance decision when it comes to technology leasing and financing of a computer system, software, and other tech assets such as software , servers, etc.


Here’s a free knowledge upgrade !



IT Finance and Technology Leasing. Whether you consider the acquisition of a computer system or other tech gear a cost or an investment it's important to know your ' INTELLIGENT QUOTIENT ' ( IQ) on what for many firms is a very significant either ongoing or one time expense.

There has never been a time when a competitive edge often is aided by a tech investment your company makes or needs. In the language of the people it’s all about the ' bang for the buck ‘, getting the most out of the minimum spend.

That’s where finance and leasing options around computer, software, and telecom type needs becomes a critical aspect of your overall decision. It's all about benefits you can achieve from the flexibility of a (proper) finance solution.

Naturally the benefits of a tech investment arent just financial, as we noted they are both operational in nature and in some cases might be a key part of your overall competitive strategy.

Numerous North American stats suggest that the majority of IT Computer solutions end up with a financing package attached to them. That is either driven by the vendor or your own expertise in the matter.

So what are those key reasons that Canadian firms choose to finance their technology. One major one is simply the fact that technology today seems to be a moving target, and your firm is often concerned with the ability to acquire the newest and the best at the lowest cost. A real irony in the industry is that in many cases cost goes down and benefits go up, not visa versa.

Secondly, a prudent busines owner, IT manager, and of course the finance manager want to be able to match benefits achieved over the long term with cash outflows. Yesterday we got a call from a corporate treasurer who had just found out his operational staff had ordered a 1.6 Million dollar ' simulator ' and delivery was forthcoming. (We’re of course assuming the operational staff had the authority to order that much?!). The Treasurers' challenge? How to finance and pay for the system !But our point is that based on a proper financial package of information that type of problem can be fixed in a matter of a couple of days via a lease financing approval .

Whether your firm is a medium sized or larger corporation it probably has a budget around the technology spend. Lease financing and proper structuring of a finance solution allows you to acquire and manage assets within that budget. For the SME business owner , whether there’s is a formal budget or not it always more often than not comes down to cash flow management .

In certain cases some firms certainly have the ability, or need to purchase technology outright. Proper use of any type of lease vs. buy analysis will usually guide the business owner, CIO, or manager to the right decsion.That when the investment should allow you to achieve competitive and operational efficiencies.

Never underestimate the power of a financing / leasing solution when it comes to IT and technology financing. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right financing decision around what arguably is one of your companies most important and asset acquisitions.

7 PARK AVENUE FINANCIAL
CANADIAN IT FINANCING AND LEASING 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/it_finance_technology_leasing_financing_computer.html

Turn $500,000.00 Of Promises Into Cash In 4 Hours . Financing Receivables Via Invoice Discounting And Receivable Lending In Canada

Canada’s Newest Cash Flow Financing Tool


Information on financing receivables in Canada . How invoice discounting via receivable lending turbo charges cash flow and working capital .




Financing receivables in Canada. Trust us, it's not magic . The concept of invoice discounting and receivables lending practices in Canada allows Canadian business owners and financial managers to turn sales into cash ,, pretty well in 4 hrs .. ! In case you haven't thought about that a lot, 4 hrs is better than waiting 1, 2, and yes sometimes almost 3 months for your sales to turn into customer receipts of payment . Talk about bridging the gap!

Surely business owners can't be surprised when they hear that the majority of firms tend to drag their feet when it comes to paying their bills . In the world of corporate financing slowing down payables is actually part of the formula for cash flow calculations ! And be honest, you cant be surprised about that one since the your firm is probably itself in that same majority of firms who in a calculated manner only pay suppliers at the last minute .

At the root of the matter though is the fact that the slow down in receipts from your clients creates a problem for your firm . Can it be fixed ? Absolutely .

We'll quickly add that your own firm can do a lot internally to accelerate cash - that can be done by stressing payment terms with clients and maintaining a focused ( but professional ) approach to collecting your accounts . That type of policy also prevents you from hearing about invoice or product or service problems much too late in the business cash flow cycle .

While many firms want a positive business relationship rather than have their valued customers on ' credit hold ' its safe to say this is a tough balancing act to manage . One U.S. survey, and we're pretty sure it is the same in Canada had 1000 of the largest corporations in America acknowledging they were paying suppliers more slowly . We already told you the reason why of course . Another survey indicated by the way that 50% of all ' small guys ' were experiencing cash flow ' concerns'! No surprise, right .

Naturally the concern of the SME business owner and manager revolves around ' will I lose a client if we have a strict credit policy '. We don't think so , but at the same time that is yours to decide . We would add by the way that profits of lack thereof rarely takes down a company, but running out of cash ... does .

So, our ' magic solution ' on turning , in our example 500k of promises into cash . Its invoice discounting. It's basically getting cash before your client pays you, and it’s done via legitimate receivable lending firms, typically non bank in nature in Canada.

Your receivable or receivables are purchased when you issue the invoice, and typically, 4 hrs or so later you have cash in the bank. In Canada a typical advance rate is 90%, so if you have 550,000.00$ in sales you would receive approx 500,000.00$ in cash. Oh and by the way, that remaining 10% is yours when your client pays, less the financing cost.

Accounting for all this is quite simple , using one invoice as an example you would CR a/r and DEBIT cash and invoice financing expense . Mission accomplished!

The largest corporations in North America use a more formal program that typically is called ' securitization ' whereby they move their a/r off the balance sheet to a third party in exchange for immediate cash . Boy does that balance sheet look good. No A/R and plenty of cash.

The benefits of financing receivables should by now be pretty obvious - it comes down to customer retention, not running out of cash, better supplier relations , and the ability to feel you have a sense on future sales and growth financing .


Speak to a trusted, credible and experience Canadian business financing advisor on how your firm can benefit from invoice discounting. It's not magic, just experience and knowledge!

7 PARK AVENUE FINANCIAL
CANADIAN INVOICE 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/financing_receivables_invoice_discounting_lending.html

Canadian Business Financing Options . Don’t Make These Credit Finance Mistakes

Information on Canadian business financing options . It’s all about timing and the right finance and credit choices.


Here’s How To Not Lose Control On Business Finance Options And Solutions






Canadian business financing options. Here's a question for business owners and financial managers. Do you really think you have made the right business credit and finance choices for your firm?

When we talk to clients it's often clear they are not sure they have the right finance mix for both survival and growth of their business.

Contrary to what many businesses think they actually do have a lot more choices than they think. Often times the owner/manager is focused solely on a final approval for ' any ' type of financing that seems to fix that days problem.

What the owner/manager doesn't realize is that as your business grows and matures different financing options are both required, and available. That of course covers us all the way from start up to mature!

So what are some of those mistakes that are being made... and more importantly how can you avoid them? Let’s cover off some basics.

The first point is that at certain stages of your business growth it’s all about ' collateral ' when it comes to business lending. Our point here is that different forms for finance require different forms of collateral, and in fact you quite often aren't required to put up as much collateral as you think.

One area is the personal guarantee, which in many forms of business financing is sometime very much required, and in other instances has little emphasis put on it. Quick example - in a start up environment there is going to be significant emphasizing of personal credit and net worth of the owners. However down the road your firm might be eligible for millions of dollars of asset based lending finance, and that type of financing does NOT place a large amount of emphasis on personal guarantees.

So it’s all about ensuring you don’t over pledge on collateral when you don’t need to, while at the same time recognizing that the type of financing you require is going to focus on the collateral aspect. But it might not be all of your collateral - its all about the negotiation process.

Receivable financing, which is a subset of asset, based lending in Canada and if you have solid A/R clients external collateral shouldn’t really be on the table for discussion.

A lot of business owners misunderstand how their personal finance and credit history can affect their ability to get business credit. At the same time larger firms with established collateral does not really overly focus on personal credit of owners. But we do caution the start up firm that banks and other commercial lenders view your personal credit as a signal as to how you might run your business finances. Enough said!

A third area of potential mistakes revolves around the fact that business owners are sometime poor at matching the financing they have access to with what they really need. Here it’s critical to understand how your cash flow and collateral fits into each different type of business financing, and what rates make sense for the type of financing you're trying to achieve. Quick example - for revenue generating assets solutions such as long term equipment leases make sense. Don't use cash or credit lines which typically give your working capital.

It's all about two simple choices - are you looking for debt in the form of long term loans, or are you wanting to monetize assets for cash flow and working capital . Once you understand your options its all about deciding which of these options works for you best:

Receivables finance
Bank operating lines
Equipment leasing
Working capital term loans
Non bank Asset based lending
Securitization


Our bottom line - it’s about access to knowledge and execution of the proper business finance strategy. Speak to a trusted, credible and experienced Canadian business financing advisor on your business finance needs.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS 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/business_financing_options_finance_credit.html

Business Financing . Are You Making Right Decisions On Borrowing And Collateral Leverage Loans?

Why Amount and Type Of Business Financing Should You Really Be Comfortable With ?


Information on business financing in Canada and factors to consider on leverage and borrowing collateral for loans and credit facilities



Your business financing in Canada. When it comes to priorities and important things on our ' to do’ lists borrowing and leverage, collateral loans, and credit facilities are surely at the top of our list - or at least we think they should be. Here's why.

Canadian business financing is all about financial decisions, ie when to make them, and making them properly with informed clarity. But what type of financing is in fact best for your firm, and will it allow you to both maintain and grow profitability, or even, dare we say it... get to a profit point.

We don't hear a lot of clients talking about ' leverage ' but it’s a simple key concept in business finance. They way that you lock into your fixed costs is in fact all about our term ' leverage '. As sales increase naturally your fixed costs don't -- they're fixed! So in the good times sales grow and profits grow quite nicely . (We all kind of vaguely remember the good times, right?)

On the other side of the coin when sales go flat or down those profits kind of disappear pretty quickly. We suppose that if you're highly leveraged and sales are great those profits look pretty good.

So at the end of the day , its about borrowing and locking into the right amount of debt - that’s the financial leverage, and on the other side its the operating type leverage related to your fixed costs.

Each business owner and financial manger tends to develop their own comfort level around the amount of debt they are comfortable with. In the case of the larger public companies there are some generally acceptable rules around debt ratios, etc

The thing that Canadian business owners must keep in mind that it’s all about borrowing for the right reasons and making sure that you get a good return on those borrowed funds.

Collateral is a key factor in the type of debt your company takes on. We always remind clients that your lender has no upside; ( the collateral you have makes them feel comfortable they won’t be participating in the downside !) he or she just has their collateral and agreed upon interest rate.

One of the big challenges we see all the time is the reality that in a lot of firms sales and profits are all over the place - that of course makes it difficult to know how much debt you can take on , or by how much you can comfortably increase your fixed costs if you’re expanding, etc. A quick common example is airlines - if they acquired/financed a lot of new planes and then had poor load factors... well you know the rest...! I guess we're saying in a perfect world that it might be good for you to conservatively assume ‘worst case ' scenarios and then take on an appropriate amount of debt you can repay .

In Canada business can take on debt in the forms of:

Bank loans
Equipment leases
Working capital term loans
etc.

But, and its important, they can also monetize assets without increasing debt - this is done thru :

Bank revolving facilities
Asset based lines of credit
Receivable and supply chain facilities,
Monetizing their tax credits if they have them .

So, our take away? Simply that you should get a handle on your debt leverage and your fixed cost leverage and borrow for the right reason with the right financing vehicle - loans, or asset monetization.

Speak to a trusted, credible, and experienced Canadian business financing advisor on whats right, and not right, for your company.

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_financing_borrowing_collateral_loans.html

Is ABL Financing A Solution For A Business Debt Restructuring Loan ?

Here’s A Solution To A Successful Turnaround


Information on how ABL asset based financing is a solid solution when it comes to a business debt restructuring loan facility .



A business debt restructuring loan. ABL financing (asset based lending) offers a strong solution for Canadian firms who require some sort of restructuring. Why does this type of financing suit the immediate needs of the business owner or equity investors? Simply because it takes a different look at all the assets of the remaining business, including inventory, receivables, and fixed assets.

By focusing on the assets of the business this typically provides significantly more breathing room for the business as it settles into a new stage of its life. The ability to leverage these assets provides more liquidity at rates commensurate with the current overall credit risk.

While a bank solution for such situations might significantly emphasize cash flow the ABL facility takes the posture that assets are the key collateral. This focus allows asset based lending to supersede a more traditional banking solution which often time simply is not available due to the businesses current state.

The other benefit of an ABL business debt restructuring loan facility is simply that it's available to the SME sector of the market. Larger or public corporations requiring restructuring tend to have access to business credit that only large capitalization corporate firms can access. Companies in that, for example 1-50 Million dollar ranges can view an ABL solution as their solution to restructuring.


Firms in restructuring mode quite often are focusing on getting back to breakeven and profitability. The ABL solution is simply more patient in allowing them to do that. Since other models of financing and business loans focus on cash flow/ebitda etc the asset based finance solution allows a firm with declining or lower cash flows to leverage the asset base for liquidity.

And by the way, although we refer to this financial restructuring vehicle as a loan in effect it’s a monetization of assets, so there is no ' pay down ' per se. ABL restructuring solutions are often paid out by a Canadian chartered bank when it comes to a return to profitability and growth and a stable balance sheet.

The challenges for the business owners and financial manager is significant when it comes to restructuring. It's all about cost structure, sales revenue, efficiencies, asset sales... or upgrades, and people issues. These challenges, safe to say, need time and an ABL financing solution can give your firm that time.

Are there some solid takeaways when it comes to looking at your restructuring finance needs? We think there are , and they include the fact that this type of solution needs time to take hold, sales volume takes awhile to regain stride, and the business owners and manager who are managing through the current situation need to be able to measure progress,

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in relieving the burden of a financial restructure scenario via an asset based ABL facility. It's a solid working capital and business survival tool that will provide significant improvements to your cash flow growth.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS RESTRUCTURING 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/business_debt_restructuring_loan_abl_financing.html

May The Force ( Of Business Cash Flow ) Be With You ! Focus On These 4 Working Capital Management Issues .

Understanding Business Cash Flow And Working Capital Dynamics

Information on business cash flow management issues and working capital challenges for Canadian business owners seeking financing success.



Business Cash flow management in Canada. That’s a very powerful force in the overall success of your business... as they said in the movie ' may the force be with you '.... and here's why and how!

Let's examine some of those forces and focus on what key areas ultimately are critical to your financing success when it comes to working capital, growth, and daily operational survival.

Every Canadian business owner or financial manager probably agrees on the fact that there is nothing more powerful in their businesses than ' cash on hand ', or access to cash via working capital solutions. Early on in business careers we mistakingly focus on the fact that profits = cash on hand / available. But it isn’t so, as we all quickly discover.

The reality is the cash generated from your business goes into purchasing fixed assets, paying suppliers, etc.

So what are those four key forces of business cash flow management? Simply speaking they are government liabilities, debt and repayment thereof, working capital access, and finally, last but not least, withdrawals of profits from your business.

It's critical that the business owner in manage those forces on an ongoing successful basis. Paying taxes promptly and ensuring debt is repaid in a timely manner are of course job #1 if we had to maintain a pecking order on these things.

A pretty reasonable rule of thumb is that your firm has a couple months of working capital to cover operating expenses outside your credit facility

Working capital, unfortunately, tends to be somewhat of an up and down business for the Canadian business. Is there a good way to get a handle on whether you're winning when it comes to the area working capital forces? There is, and it’s to focus on operating cash for your company, which is very easy to calculate.

How is that calc done? Using a month end calc as an example take your profit and add back the positive or negative changes in receivables , payables, and inventory . Example - if receivables went up in the current period that’s a negative number, if inventory went down that’s a positive number. All of this is in relation to sales of course.

When it comes to business cash flow management and working capital don't make the mistake of confusing term debt and lines of credit. Business credit lines are good things when they fluctuate - if you're always at the top of your bank or asset based credit line that’s basically not a good think and you're avoiding the issues of additional permanent equity in the business

Term debt is not a bad thing if it’s used for the right reasons. Equipment finance is a solid example of taking on term debt if you are profitable and can retire the lease as agreed, all the while using the asset to generate sales. Real estate debt, as large as it might be is actually good debt given you're building equity with repayment.


What then are our ‘take aways ‘? It’s simply that you need to understand your cash cycle, borrow in the right manner, and focus on taxes and equity take outs properly.


In Canada working capital and cash management solutions come from 6 key areas:

Receivable Financing

Inventory Financing

Asset based lines of credit that combine A/R and inventory

Tax Credit Monetization

Securitization facilities

Working Capital Term Loans

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can ensure the force (of cash flow and working capital!) is with you!

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_cash_flow_management_working_capital.html