Inventory Financing in Canada

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What Would Happen If Your Company Had All The Business Financing You Needed To Finance Sales?

Information on business inventory financing and purchase order solutions benefit firms who have working capital and cash flow challenges relating to sales growth

Business inventory and purchase order financing in Canada is a much sought after yet widely misunderstood aspect of business financing in Canada. This type of financing is sought after by retailers, manufacturers, and wholesalers in all aspects of Canadian business products.

Business owners and financial managers know that maintaining inventory necessities the tying up, by necessity, of valuable working capital and cash flow. When your own resources, or the unavailability of Canadian chartered bank inventory financing do not meet your needs you need to assess, examine, and consider working with an independent commercial finance firm that specializes in inventory financing . This is a sub set of what is known as asset based lending in Canada, and the industry continues to gain broad appeal after the global economic crisis of 2008-2009.



To be able to finance your inventory is must be saleable, and a specialized firm that understands both your industry and the true value of inventory quickly becomes a valuable asset and ally. It goes without saying that the inventory lender must be able to properly secure the inventory asset via a proper lien registration on this component of your current assets.



Many clients we meet have bank financing in place, but quite often if cover receivables and only a small portion of inventory. Therefore inventory financing, and its ‘sister ‘– purchase order financing must be properly secured and broken out of your total current financing strategy. We have seen many cases where clients were receiving no, or modest advance against inventory, yet have then seen the margining on their inventory go to 50 – 80% in some cases when they have secured a true inventory financing program

The inventory of your firm becomes a clear identifiable and valuable asset in your overall financing strategy. In many cases bank financing treats inventory as simply bolstering up the overall bank security, but your true borrowing or margining power is somewhat insufficient based on your growth an customer fulfillment needs .

There is a combination of an art and science as it relates to inventory financing. Inventory is monitored regularly; usually a minimum of monthly, to ensure that is always can satisfy repayment of the loan. If you are a wholesale or distributor inventory is one of the largest assets you can leverage, and improving that leverage simply adds cash flow and working capital to your overall financing strategy.

Inventory becomes a receivable after it has shipped, so both your firm, and the inventory and purchase order lender want to understand your total cash conversion cycle – that is simply a financial phrase and formula that relates to how long it takes a dollar to go from product purchase, inventory, receivable collection, and back into true cash. Naturally this formula repeats itself over and over, and we encourage all business owners to understand their own cash conversion cycle. Even modest improvements in both inventory and receivable turnover can lesser your overall borrowing costs significantly.

The bottom line on inventory financing is that it is a specialized form of finance. Work with a trusted, credible expert. If your firm has a reliance on inventory to be successful you should investigate your ability to maximize and leverage additional financing on what is probably the largest asset on your balance sheet




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

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 .

' 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