3 Ways To Manage And Accelerate Business Cash Flow Via Solutions And Management Techniques

Getting Your Funds Flowing?

Information on business cash flow solutions and management . Accelerate working capital and timing with these tips and business finance methods .




Business cash flow wouldn’t be required if we could all sell on cash to our clients. However, unless your business is 100% retail that of course can't be the case. So let's examine 3 ways to address management of working capital solutions in Canada.

Sales growth is good... right? Well kind of, because those sales require financing, and management of your current debt. So at issue today for our purposes is the discussion around managing that liquidity issue, and solving problems via financing solutions...

The longer your receivables go unpaid creates two issues - first of all there is a chance the sales might be at some point uncollectible, and secondly you are going to have higher financing costs. And that’s whether you are financing through a bank or non bank solutions. (Yes, there are non bank solutions when it comes to financing A/R)

It's therefore important to continually assess your asset turnover - one basic tool being a days sales outstanding calculation. Also, at the heart of the matter is your firms overall philosophy to granting credit and setting limits with clients. Oh... by the way... the largest corporations in the world do that also, its one way in which they get large and successful! So why shouldn't your firm?

Naturally there is a potential cost in addressing a new credit policy as not all clients will want to pay within your stated terms and may consider other vendors. One way to address that issue to offer a prompt payment discount - which typically is called ' 2 % 10 '. That simply means that you are giving up 2% of your gross margins for the ability to collect A/R faster and generate business cash flow. So that is clearly on management solution you can consider.


That brings us to the actual financing of your receivables. This is an overall critical part of every company’s finance strategy and success. The hear of the matter is simply financing your sales with a cost that your firm can bear, while at the same time generating the maximum amount of cash that you require .

One of the fastest growing and popular methods of financing A/R is called ' factoring’... aka ' invoice discounting'. To clarify how this works let's use a simple example - If you have 100k in receivables you receive 90k as soon as you generate your sales. That's instant cash. You receive the balance, i.e. the 10k, less financing costs, when your client pays.

And those financing costs? They are very similar to your strategy of offering a prompt pay discount as we noted above. While this cost seems high to many the reality is that you are already incurring it by carrying receivables, or offering discounts, and not being able to take discounts with suppliers. Our recommended solution to clients is a ‘ confidential invoice financing facility ‘ that allows your to bill and collect your own receivables without intrusion from any third party .

So one key point today is to evaluate the criteria under which you can finance your sales via a receivable factoring arrangement. The costs may not be what you think!

Finally, the alternative to factoring A/R is simply bank financing via commercial lines of credit. Canadian chartered banks offer A/R credit lines that are generally based on the quality of your A/R as well as the overall quality of your financials -- so caveat emptor here - you need to demonstrate profits and a balance sheet that meets bank criteria. Under bank credit lines 75% of receivables are generally margined.

So, here we are - it's decision time. Use our information to address business cash flow solutions via internal management, credit policy, and financing solutions such as factoring and commercial bank facilities. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the right solution.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS FINANCING SOLUTIONS


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 10 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-solutions-management.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com







Stan Prokop