Tweet
OVERVIEW – Information on how to achieve a cash flow solution for working capital financing as you head into 2017 . How to assess the need and type of solutions you require for cash flow financing for growth and profits
Working capital financing... on demand? What if... just what if you could eliminate your working capital financing issues via a cash flow solutions that work as you run and grow your company ? That surely is the wish of most, if not all Canadian business owners and financial managers. Let's dig in.
The reason you need that working capital is of course to pay of all your short term obligations in a timely manner. Typically those are accounts payable and items such as lease or loan payments, and of course we're including payroll and salary obligations in there. That growth in sales and thus inventory and receivables can really drain cash flow!
As a business owner you need to be aware of whether your overall working capital position is stable, declining, or even increasing. There are some very simple measurements to assess overall situation. One of the most basic measures is simply to monitor sales growth against those current assets. Simple as that.
Example ? - Your sales are growing by 20% per annum but you determine your receivables and inventory have grown to 35% of their former values, then, guess what, you have a working capital solution need . No surprise there, as most business managers intuitively know the strains that working capital needs place on a business.
Unlocking ! That's the key to a cash flow solution.
What do we mean by that? Simply that you have to do two things to unleash the cash flow that is invested in your business in the form or receivables and inventory. First, you have to improve turnover. That's an internal thing, and we can't help our clients on that one, you have to do it yourself. Collect receivables faster, be more diligent in extending credit terms, and control your inventory.
Secondly, and here's where are clients do ask for external help, is the need to ' monetize ' working capital accounts. How is that done ? The most common solution is bank financing via an operating line of credit for A/R and inventory that would address working capital financing needs.
Many businesses though, certainly those seeking SME Commercial Finance loans can’t access all the bank financing they need. Or in some cases, any at all!
In business you achieve positive working capital financing via profits which fund growth, borrowing on a long term debt basis ( not our favorite!), or selling assets .. The latter not our favorite.
What is our favorite then?! It is, as we said, monetizing current assets. You do this via a working capital facility that margins A/R and inventory properly. These facilities, when combined with the inventory component, make sense for firms with monthly A/R and inventory balances in excess of 250k. When that amount is less than 250k a receivable financing strategy is required.
Our recommendation? Confidential invoice financing or discounting, which we feel is the ultimate cash flow solution. It allows you to bill and collect your own receivables and turns your firm into a cash flow machines readily able to handle all manner of sales growth.
Speak to a trusted, credible and experienced Canadian business financing advisor - that's your final hot tip!
7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations . Info/ Contact
7 Park Avenue Financial
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.