Business Finance Solutions For Cash Flow : Why Your Working Capital Seems To Be Staying Put

You’ve Got Sales, Working Capital, Assets And No Cash – Here’s Why!

OVERVIEW – Information on business financing solutions in Canada . Why the cash flow conundrum exists and what how business owners and financial managers can understand and manage it






Business finance solutions arise out of the necessity that your company typically has revenues, working capital (on the balance sheet), assets, and... you guessed it... no cash on hand! Let's examine why that is the case, and what your company can do about it. Let's dig in.

To many business owners it's somewhat of an irony that they have what their accountants ( and the finance text books ) tell them is a good ' working capital ' position yet are sometime or always finding themselves constrained when it comes to cash flow generation itself.

It's difficult to avoid at least some of the accounting lingo on why that situation exists - at the heart of the matter is the simply fact that profits on the income statement, and receivables and inventories on the balance sheet are really what is creating the problem.

The business owner/managers ability to analyze, understand and address cash flow is the ' make or break' of business success.

Cash flow is essentially all about timing. Unless you are in retail, or operate an online business your cash will almost never equal your sales/profits. And more importantly, the amount of cash you generate more quickly allows you to continually re-invest.

We've always found it somewhat ironic that the definition of ' working capital ' by your accountants and the text books tells us that it refers to current assets that can be liquidated into cash within a one year period ! Naturally more working capital is better, but you can have all the working capital in the world and still be going broke quite quickly - simply because you aren't either turning your assets into cash or monetizing them in a manner that makes sense for your company.

Your ability to move a dollar faster through your entire operating cycle, or to monetize a/r and inventories allows you to consider other options such as investing in more equipment and technology, paying owner dividends, or paying down any ' term debt' your company has.

We spoke about either turning assets over faster - i.e. higher inventory turns, better collection of receivables. But what are the external financing methods you can utilize to eat the working capital/cash flow divergence.

Those business finance solutions, when it comes to cash flow include:

A/R Financing

Inventory finance

Commercial bank lines of credit

Asset based non bank lines of credit

SR&ED Tax credit financing

Purchase order finance

Working capital term loans (term loans that provide cash on a fixed repayment schedule - typically 3-5 years)


We have found over the years that most businesses, certainly in the SME Commercial sectors rarely look at ' PAGE 3' of their financial statements. Clients we talk to can be forgiven for this as the accounting world has done a great job of presenting this page ' The Cash Flow Statement ' in a very technical matter, breaking it down into 3 different analyses of cash . The ' operating cash flow' portion of this part of your financial statement is often key to understanding what’s happening to cash as it flows through your business.

If your business has sales prospects, assets, and not all the cash you need seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success in business financing solutions that address working capital challenges.


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 :


7 Park Avenue Financial = BUSINESS CASH FLOW FINANCING EXPERTISE



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CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop