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