Cash Flow Financing Decisions , and Alternatives!
Information on working capital financing in Canada . What type of commercial lending will deliver on business capital you need for growth and cash flow survival
Let's focus in on working capital financing and talk specifically about the type of cash flow solution that might best suit your business - which you haven’t even considered!
No one is disagreeing with you that Canadian business financing solutions aren’t difficult to achieve, yet alone envision. By itself working capital and cash flow financing is more unsecured from a finance firm or lenders position. So exactly how do you go about financing your business and determining what, in today’s challenging environment ( post 2008-2009 ) are the best solutions for business capital?
When you think about it, its really all about your cash cycle, how funds flow through your business and historically how your business has operated with this ' cash cycle ' in mind . Every business, or rather industry, seems to have a little bit of its own nuances.
And if you are a service focused business then the receivables you generated pose an even more of a required focus as we need to determine how you will use working capital financing to finance business operations. That is not to say that service type businesses cant be financed, it just becomes a question of securing financing that meets your specific needs - as the financial folks would say , you business is not capital or asset intensive - yet you still require cash flow financing - as your sales grow your receivables and operational needs grow also.
So let’s get to the nub of our discussion, what are the solutions available for working capital in the current Canadian commercial lending environment?
If you are more of a service business ( i.e. not capital intensive - example = mfg ) and can demonstrate on going recurring sales and receivables you are a prime candidate for a receivable financing facility . Our favorite and in fact recommending is a confidential invoice discounting/financing facility. This type of commercial lending facility is generally available through what we call non banks - i.e. private independent finance companies. It allows you to generate cash flow and working capital as you generate sales, and you can then focus on meeting your obligations of staffing and operations prior to collecting from clients. You also do this on a confidential basis, i.e. there is no notification to your client basis, as is the case with more traditional receivable financing.
Firms that are more asset intensive need to consider ABL facilities ( asset based lending ) that provide a combo of inventory, a/r and equipment financing that is margined ( on a daily basis !) to give you all the cash flow and business capital you need . Canadian businesses know only too well that lengthy collection periods can become the death of their business.
Also in many cases the amount of receivable financing you need simply isn’t always available from Canadian chartered banks - we meet many clients who have some commercial lending from banks, but it never seems to be enough when you are in growth mode or experiencing some sort of other business challenge. This then forces the Canadian business owner and financial manager to assess options that you don’t necessarily have to consider, i.e. getting in additional equity and diluting your ownership.
In summary , yes we agree its complicated - term loans, asset based loans, invoice discounting facilities, unsecured cash flow financing ... a lot of considerations . And which one is truly best for your firm. As we've said it might not be as complicated as you think .Speak to a trusted credible and experienced Canadian business financing advisor to understand the best solution and the cost and ramifications of commercial lending that makes sense for your firm.
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
<a href=" http://www.7parkavenuefinancial.com "> Click here for 7 PARK AVENUE FINANCIAL
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 .
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.