Your Working Capital Prospects On A Train To Nowhere? Here’s The Fix

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Business Cash Flow Prospects Looking Hellish?

Here’s Some Solutions

OVERVIEW – Information on working capital financing . The ability to access cash flow and short to intermediate financing solutions is critical to growing and running your business

Working capital financing challenges sometimes have business owners/mgrs feeling they're on the proverbial train to nowhere. - What then are the issues and are their traditional or new innovative financing strategies available? Let's dig in.

The irony of the business owners concern is, many times, that business is great. We hate getting technical with clients, but finance has a term called 'sustainable growth '- very simply put it's the growth rate your firm can achieve without increasing leverage, or the amount of debt to equity in your firm. It's calculated as follows:

ROE X (1-dividends paid out)

ROE is of course return on equity, the amount of net income at the end of the year as a percentage of your firm's net worth.

Perhaps we have surprised some business owners by telling them the exact day that they will have to stop growing based on their inability or desire to borrow!

Anyway, our point is not that, it's simply that at a certain point you cannot grow your business any more without debt. No one likes taking on too much debt.


A better solution? An asset based working capital facility. This type of facility adds no additional debt to your firm but gives you maximum liquidity for receivables, inventory, and even equipment you already own.

So, we promise, no more technical financial discussion lets discuss the financing you need and the challenges you have. As we stated it is ironic that many times the stress of managing working capital is related to success - you have new orders, contracts, the need to build up inventory, or perhaps you have granted special payment terms to new or existing customers.

At the same time your firm has its own obligations to suppliers and term creditors such as the bank or equipment lenders, etc.

We can say that the problem is very obvious when you have suppliers that want to get paid either up front or in 30 days, but you have inventory buildup needs and your customers are paying you in closer to 60 days, despite your terms of 30 days.

The traditional solutions are always too obvious, Canadian chartered banks for term loans or operating facilities, or even consideration to giving up some equity in your ownership.


Those are solutions that are either desirable by many of our clients. The reality? Financial conditions and lack of collateral prohibit in many cases traditional financing.

Therefore those nontraditional, but getting less nontraditional solutions look more and more attractive every day. By sacrificing one of two points of gross margin true working capital asset based lending facilities can provide you with all the cash flow you need when it comes to financing inventory at aggressive loan to value, 90% of receivables, and , as we said in some cases equipment and even purchase orders .

So what is the final effect of a true working capital facility - it's financially much better than taking on term debt or selling equity ownership, etc. We have just shown you that by maximizing a true working capital facility you have increased sales, increased profits, and have not taken on additional debt or given away any portion of your equity stake.


Speak to a trusted, experienced, and credible business financing advisor for more information on how a true working capital asset based lending facility can help your Canadian firm grow sales and profits.




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 .







7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 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