Could You Put Some New Business Financing To Good Use?
OVERVIEW – Information on business financing in Canada . The right capital is accessed via debt finance & cash flow solutions that your firm can put to good use
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Business financing in Canada is important if only for the reason that the large proportion of businesses that fail do so because of poor finance practices as they relate to capital, and cash flow solutions. Could your firm put some new business financing strategies to good use? No doubt if could. Let's dig in.
While many owners/ mgrs and entrepreneurs in general focus on sales growth as key metric to success that motivation has to be complemented with good cash flow mgmt & financing.
Sales will drive a lot of your financing choices and will in many cases dictate or suggest what type of debt finance or asset monetization you will utilize. While it's important to be optimistic about sales growth that same revenue issue can be a source of stress when it comes to cash flow. One reason why? Simply because building inventories and receivables and investing in new assets are cash uses, not sources, as our good friends accountants would say.
While cash flow and sales budgets are important and reflect good mgmt the real world dictates that Murphy’s law will often kick in , which might mean huge bulges in sales or new contracts , or a decline in sales for a variety of reasons.
The best solutions to finance sales growth tend to be business credit lines. These can come from two sources:
1. Canadian Chartered banks
2. Non bank commercial finance asset based credit lines
It often also takes new/used assets to build and grow a business, i.e. equipment, machinery, rolling stock, technology a la computers, software, etc. In that case equipment lease financing is your best bet as it conserves cash flow and matches the benefits of the asset in question to cash outflows. From start up to mega corporations 80% of businesses of all size utilize lease based asset financing.
Newer businesses, mostly start ups should consider the ' SBL ' loan. That loan is guaranteed by the govt and only requires a 10% personal guarantee against the loan which can be anywhere up to 1 Million dollars depending on the asset you wish to finance.
Cash flow concerns boil down to liquidity. The 2nd most liquid asset you have on your balance sheet is receivables. Collecting them promptly and financing them properly is key to business success.
For those firms that can't access or get approval for the amount of business credit line they need numerous solutions are available, the most popular often being A/R financing via a ' factoring ' or 'Confidential Receivable Financing ' program. This solution monetizes sales as you generate revenues - instant cash. Key advantages include: instant liquidity and no additional debt on your balance sheet.
Businesses in the SME sector in Canada (small to medium enterprise) will never have too much cash. Increasing sales, buying assets, hiring people drains cash- sometime slowly, other time not so slow!
Some other solid real world solutions to cash flow and loan needs include:
SR&ED Tax Credit Financing
Sales Leasebacks
Unsecured cash flow loans
Working capital term loans
If your business can put good business financing to good use seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your capital, debt finance and cash flow 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 :
http://www.7parkavenuefinancial.com
7 Park Avenue Financial
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
' 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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