Business Cash Flow And Working Capital – Are You There Yet?

Are We There Yet ? Good At Managing Your Firms Cash Flows?


Information on business cash flow solutions an working capital management for Canadian business owners .



Business cash flow. A lot of business owners we meet are often thinking a lot about the long term for their company , sometimes forgetting the importance of working capital management and solutions for their business. Let's explain.

A better way to look at things might be to ensure your short term financing objectives and solutions are more closely tied into your long term goals for growing your business. So of course growth and profits are important, but ' keeping the books and finding the funds ' can never be overlooked. Those functions are important if you're growing your business or even considering buying a competitor or making a strategic acquisition.

We meet a lot of clients / business owners who feel somewhat overwhelmed at the financing management of their firm - to the point where they in fact are spending a lot of time on those things, but not really understanding their alternatives and potential solutions.

Business cash flow management arises from the fact that the business owner and financial manager recognizes the need to control cash, forecast it, and raise it through debt or asset monetization.

Remember also that cash flow is tied into your overall profits, sales, and your ability to monetize assets. Another good point to consider in your search for financing solutions is to have a strong handle on larger capital outlays if you are in a capital intensive business. Committing to larger cash outflows will always have a large effect on your business for a long period of time

It's probably somewhat of an over worked phrase but cash flow really and truly is the life blood of your business. That's not the biggest secret in town. The simplest way to look at this is to monitor and get a handle on the timing of your cash as it relates to outflows and inflows.

That's really the simple explanation for your ' operating cycle ‘, and not having Canadian business financing solutions in place for those outflows and inflows simply generates ... you guessed it .. a cash flow crisis. Time and time again we ourselves have been intrigued by great or growing companies that were profitable but failed due to that cash flow crisis.

A good way to get a handle on the ' big picture ' is to take a quick look at your balance sheet and consider ' gross working capital ' and 'net working capital '. The ' gross ' part is simply the sum of all your current assets. The 'net ' is the difference between current assets and current liabilities.

Where business owners go wrong is when they don’t understand the actual level of asset turnover in those accounts. So having a great, large current ratio might be in fact a prediction of failure down the road as your accounts and inventory are uncollected and not turning over.

Oh, by the way your suppliers and lenders look at that same issue as your ability to repay payables and make loan and lease payments.

Once you understand and focus on your flow of funds you are in a better position to assess business cash flow and working capital solutions. They might include:

Receivable finance
Inventory financing
Non bank asset based lines of credit
Commercial bank facilities
PO/Supply Chain Finance
Tax Credit Monetization
Commercial bank facilities

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor

on finance solutions that make sense for your company in managing your assets and growth.



7 PARK AVENUE FINANCIAL
BUSINESS CASH FLOW AND WORKING CAPITAL


















Stan Prokop