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Get out of that ‘ Horses And Bayonets’ Mindset When It Comes To Working Capital Finance Solutions & Approaches
Information on financing working capital in Canada . Business owners/managers must understand the implications of their actions when it comes to cash flow finance . Here is why!
And excuse that ' guns and bayonets' comment about being old fashioned and out of touch... we just made it up...
Working capital management is a critical success driver for any business. And it not really overly necessary to focus on the word management, it’s simply about adopting a style or consistent manner in which you run your business on an on going basis.
So how do you know when you are successful at financing working capital properly? Are there some benchmarks? There are and some of them might include the fact that you actually have positive cash balances on hand most of the time, although we point out that if you have a bank or non bank line of credit that revolves properly positive cash balances arent always necessary. But what is key is that your working capital facility revolves up and down, a lot, and regularly!
Two other very solid bench marks for knowing you are doing the right thing (or not) is to ensure you understand and have acceptable receivables turnover and inventory management. (If your firm does maintain inventories)
Accounts receivable are your next closest asset to cash. So make sure you know how to measure A/R success or failure, and one of the best ways is to perform a simple ' days sales outstanding ' calculation on an ongoing basis, typically monthly. Bench mark that result against your stated terms to clients and voila! you'll vey quickly know whether you are winning or losing.
You also want to ensure you have access to short term borrowing facilities based on current assets.
Bank business lines of credit
Comprehensive asset based lending facilities
Receivable finance / Invoice financing
Inventory finance programs
Purchase order/supply chain financing
Monetization of tax credits - i.e. your SR&ED claim
When you don't have solutions in place and are unable to meet your general obligations serious problems ensue - at their most extreme you can be judged unable to meet your liabilities - i.e. bankrupt!
How then do cash flow problems present themselves or happen? It's not as complex as the Canadian business owner or financial manager might think. You might be in fact enjoying the double edged sword of ' fast growth '. That typically means you're carrying more inventory and receivables than ever... and exhausting your actual cash resources.
And the ultimate irony? Your accountant tells you that you're actually profitable! It just doesnt feel that way... mainly because cash flows only eventually catch up to profit . Key word: eventually!
Speak to a trusted, credible and experienced Canadian business financing advisor on how you increase liquidity when sales, receivables and inventory demand it.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
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 .
' Canadian Business Financing With The Intelligent Use Of Experience '
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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