Your Business Financial Statements Know A Lot About You!
OVERVIEW – Information on the use of financial statements for the purposes of business financing and loans . The key to the successful finance of your company revolves around understanding your financial limitation and capacity
Business financing in Canada for loan and cash flow purposes requires a basic solid understanding of your financial statements. And you would be surprised at what those financials know about your company! Let's dig in.
One top expert describes your financials as being a ' customer factory ‘, literally a machine that helps you ' create and keep customers'. Your ability to get the' factory ' funded is job #1. The profit and cash flows that come out of that job create long term success in your business.
If your company has challenges in both created profits and cash flow the long term value of your company is jeopardized to a certain extent. How then does the business owner/ financial manager successfully manage different aspects of the business that affect cash flow? Understanding those ' cash flow drivers' we've talked about in the past is key.
Company gross margins create stronger profit potential and in some cases affect the type of financing you can access. As an example thousands of firms utilized A/R Financing, aka ' Factoring' as a method to access business credit lines they require. Strong gross margins allow you to absorb the cost of this financing, which is typically, if not always more expensive than Canadian chartered bank financing.
Firms that require an investment in inventory require different types of financing. These might include:
Bank revolving credit lines
Non Bank Asset based lines of credit
Inventory Loans
Your financials will tell you how much inventory is on the balance sheet, how fast it turns, and will ultimately prove your gross margin / profit assumptions on the products you sell.
While many business owners/ clients we meet have an ' intuitive' feeling about the financial health of their receivables and inventories the fact is that some time spent calculating your receivable and inventory turnover will ultimately prove whether your assumptions are in fact correct... or wrong.
By the way, those ‘ratios" (we call the business relationships!) are the same ones used by bankers and other commercial lenders to determine business financing approval.
Business lines of credit are key to feeding your working capital and cash flow need. Your balance sheet ultimately dictates what amount of cash you need on an ongoing basis to satisfy working capital needs. The right type of business credit line will then affect your balance sheet payables, payroll needs, investments in the future, etc. Those firms that invest in R&D are encouraged to both file and finance their SR&ED claims, allowing you to bring that cash investment back onto the balance sheet.
Understanding your financial statements allows you to determine cash needs, understand your profitability and asset turnover, as well as determining the amount of debt your firm can take on and manage. In some cases utilizing a SALE LEASEBACK strategy will allow your financials to generate cash flow on existing owned assets.
If you're looking to maximize business financing through the proper use of financials and matching financing appropriately seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your loan and finance needs.
Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FINANCING EXPERTISE
7 Park Avenue Financial
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
' Canadian Business Financing with the intelligent use of experience '
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
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