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Getting That Don Quixote Tilting Against The Windmills Feeling When It Comes To Business Financing?
OVERVIEW – Information on commercial business financing in Canada. Getting the frustration out of the search for loans and cash flow solutions is all about being well informed on your firm’s choices & alternatives
Commercial business financing in Canada gives many business owners / financial mgrs a certain feeling. Unfortunately that feeling during the search for loans and cash flow alternatives leaves them feeling a lot like our friend Don Quixote - that gentleman who flailed against the windmills in a vain effort against adversaries - in this case funding challenges. Looking to improve on that journey? Let's dig in!
Forever a challenge is the funding search for start up, small and even medium sized businesses with hundreds of employees and respectable sales. Yes the ' big boys' have those challenges - they just have a lot more assets, resources and expertise working with and for them!
As a business owner or financial manager the level of working capital that you need, and the method in which you achieve that financing is really what drives the solution to your challenge. It is important , in understanding your cash flow needs and solutions, to determine if your working capital financing is required due to the capital intensive nature of your business - or if you in fact simply need to ' monetize' , or 'cash flow ' your assets in an effort to generate more working capital and faster turnover of those funds .
Despite all the good news and great feelings around your increasing sales and profits the working capital requirements under this level of success increase substantially. Bank financing has become more difficult to acquire, and many firms are looking at nontraditional or alternative sources of financing to secure the funds they need for working capital.
Another hard reality of working capital financing is that most small and mediums sized business are searching for more cash flow on an unsecured basis. This type of financing is very difficult to achieve in the Canadian marketplace, certainly in the Chartered bank environment.
So what are the sources of financial capital that Canadian business owners and financial managers can investigate and potentially utilize? Let's cover off some of the basic options - These include:
Personal savings (not high on a business owner's priority list!)
Business Credit Cards
Factoring / Accounts Receivable Financing
Government Working Capital Term Loans (These are cash term loans with fixed payments and rates)
P O / Contract Financing
Asset based non bank lines of credit
Equipment Leasing
Sale Leasebacks
Unsecured cash flow loans
Merchant Advances
Inventory Loans
When you are looking for working capital financing one of the key areas you can start with is your own key financial metrics. You don't need to be a seasoned financial analyst to determine at what rate your receivables are turning over. The bottom line if you haven't realized it yet (we are sure you have) is that receivables and inventory ' eat ' cash.
One key point needs to be made here, if your sales are growing at 15% and your receivables are growing at 15% that's not a bad thing. (To calculate simply measure the ratio of these two data points) However, if your sales are growing at 15% and receivables are growing at 30% your cash flow and working capital is being consumed by the investment you have made in A/R and inventory that is not turning over. Collections and inventory turnover are a key aspect of working capital financing.
Commercial financing from a bank is the optimal solution for small and medium sized business - as have noted that is difficult to achieve.
Funding a business can be complex and we urge clients to seek the advice and guidance of a respected, trusted and experienced commercial financing expert to ensure they pick the right tools to solve working capital challenges.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you reverse that Don Quixote feeling!
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
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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