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Want To Solve your Canadian Working Capital Crisis – Today ? !
Information on how to identify sources of cash flow when Canadian business owners want to finance working capital . How do these financing solutions fix your cash flow challenge
As we head into the 2011 business year we're clearly coming out of a time when for many firms such as yours sales were down, margins eroded, and most importantly cash flow financing seemed to dictate where your firm was heading from a success point of view .So how can you assess how profits and growth can be managed from a viewpoint of cash flow financing.
The answer - your scorecard! What do we mean by that ?Simply speaking knowing where your working capital is tied up, and what is the cheapest method of unlocking sources to cash flow financing . And, although it’s a surprise to our clients more often than not, ' cheapest ' doesn’t necessarily mean ‘whats my interest rate '.
Can you point to your working capital? We can. It's tied up out back, in the form of inventory, receivables and equipment you've invested in, via fixed assets.
So business owners can hopefully start to see now that the secret or ‘holy grail’ to that unlocking of cash flow is freeing up cash you've got tied up in those assets. We will point out as a side note that you also have to manage those assets for prompt turnover - that comes with billing promptly, collecting receivables when they are due , and ensuring you have financing mechanisms in place, if you need them , for inventory and equipment .
Many business owners don’t realize that the inventory and equipment can be turned into sources of working capital. Those two assets can be combined as a part of a working capital operating facility , which for larger transactions is known as an asset based line of credit .
The hallmark of being able to finance working capital, more often than not, is managing your receivables. We can categorically say that although the majority of clients have 30 day terms to customer’s typical collection periods actually seem to be 60 and, yes, even 90 days.
How can you monetize that critical asset? In a perfect world (by the way its not) you access receivable financing via your bank. That comes with obligations though, including your need to maintain clean financials, show a profit, and meet ratios and covenants. So it’s agreed. What's plan B!
Plan B can also bring you closer to finance working capital solutions. Plan B could involves the following - securitizing your receivables if you are a mediums size or larger firm . Smaller firms and start ups and monetize A/R via selling their receivables, taking them off the balance sheet, and receiving cash flow today that can be re invested in the business. Terms for this type of financing are invoice discounting, factoring, confidential invoice discounting, etc. If your firm has decent gross margins, good clients, and can you're able to increase sales and profits by having additional cash on hand these solutions are for you.
The long term solution for cash flow could be more equity in your business, or borrowing via term loans for cash flow. Those as viable, possible, but consider your short term options first - giving up equity or taking on debt are not fabulous working capital strategies.
In summary, to keep you business running you must asses your cash flow needs and priorities .We have named 5 or 6 immediate and available solutions to consider. Speak to a trusted, credible and experienced Canadian business financing advisor on cracking those sources of cash flow financing.
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
Click here for 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 .
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
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