5 Working Capital Options for Canadian Business
OVERVIEW – Information on working capital financing in Canada. Various finance options exist that compliment your business cash flow needs without the need to take on additional debt
Working capital financing in Canada comes with a number of finance options for the business owner/financial manager. When, and which of these options makes sense for your business. Let's dig in.
There's not a lot of argument that that premier type of cash flow financing for your business is bank financing - but let's be frank and agree that bank credit is not always available in the amount and nature of what your business needs. Goes without saying that the other attractiveness around bank credit is the fact that it is always the lowest cost of financing vis a vis interest rates, etc.
When you firm is outside the scope of borrowing from Canadian chartered banks what then are the options? The reality is that a large number of commercial finance companies have filled the gap when it comes to alternate cash flow
In many cases you can actually duplicate the style of bank offerings, with the only drawback typically being higher rates. Additionally these offerings tend to be ' asset ' based, focusing on one or a group of assets to provide you with the financing you need. Further comfort comes from the fact that these financings can almost always provide all the capital you need.
It's important to distinguish between working capital needs and debt, as the solutions we're talking about are cash flow focused - i.e. your business operating needs.
Here are the 5 Working Capital Options you may wish to consider for your business:
A/R Financing
Inventory Finance
Asset based business revolving credit facilities
Refundable Tax Credit Financing
PO Financing / Sales Royalty finance
Probably the most popular solution used by thousands of firms is Receivable financing. By immediately cash flowing your sales, at your option, your firm replaces receivables on your balance sheet with cash. As your business grows your facility can be adjusted at any time to increase the amount of borrowing. Advances under this method of financing in fact are even more generous than the bank - typically they are 90% of all receivables under 90 days.
By considering and exploring such options as CONFIDENTIAL RECEIVABLE FINANCING you're in effect mirroring exactly the same type of facility as a bank line of credit. Only the paperwork is different and you're able to bill and collect your own accounts without any notification to any other party. It's ' business as usual ' financing!
Asset based lending, also called ' ABL ' takes your business credit line one step further. It takes into account your A/R, inventory, and equipment and puts these all under one liquid borrowing facility. As we have noted inventory financing is now a part of the borrowing mix! The higher cost of this financing can easily be justified when it comes to covering your operating needs, maintaining relationships with key suppliers and vendors, and of course , job #1 - growing your company.
If you're focused on taking your company to the next level and are currently unable to negotiate traditional bank financing seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you on the exploration trip of working capital options for your business.
Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
7 PARK AVENUE FINANCIAL = CANADIAN WORKING CAPITAL FINANCING EXPERTISE
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Email = sprokop@7parkavenuefinancial.com
' Canadian Business Financing With The Intelligent Use Of Experience '
Stan Prokop
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