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INFORMATION ON BUSINESS CASH FLOW FINANCING SOLUTIONS
business cash flow ? That's not an option for Canadian business owners and financial managers. That's why the analysis of their cash and working capital needs, in the context of solutions available is so critical in today’s business environment.
So are we all in agreement? We mean of course that no company has the ability to on a long term basis operate successfully without cash. That shortage is often the reasons why many companies fail.
However, the balance sheet and the income statement, as we always preach, dont necessarily tell you the full story of your company's goings on! A cash flow statement, that’s the third part of every financial statement package will, however, truth be told you can perform a fair bit of solid analysis way before your accountant or your accounting system delivers that document to you.
So why do you want to be so attuned to that cash flow anyway. Simply because whether it’s the short, intermediate or long term it’s a true measure of your solvency. And that solvency is what keeps your creditors and lenders and suppliers either happy or dissatisfied with your payment ability.
In more sophisticated firms a real measure of cash flow is often ' free cash flow '. Simply speaking it’s the true cash flow calc which then subtracts your capital expenditures to come up with that ' free cash flow '. Investors in public companies look at that one a lot, and quite frankly since the small to medium sized business in Canada doesn’t pay dividends or have to report earnings and cash flow we dont really consider that one quite relevant in the context of today’s discussion .
So what is important then? Several other great tools area available. Just one of those is the cash return on sales analysis tool. Take your cash flow from operations and divide that by your net sales over that same time period. Let's say the number works out to 10%. What does that mean? Simply that 10% of the sales you generate provide cash to the company. At the end of the day the number is relative to your company because it tells you how efficient you are in turning sales into cash.
Another great tool to check out is current cash debt coverage, which we'll leave for another day’s discussion.
At the end of the day there are ultimately 5 reasons why companies fair - they have too much debt, they are caught in a vicious cash flow cycle, they have current assets that aren’t turning, or fixed assets and too little capital come into play.
To solve these challenges Canadian firms have a variety of solutions - they include bank lines, asset based lines of credit, receivable and inventory financing facilities, tax credit monetization, and securitization. Oh and dont forget the proper use of equipment finance.
Speak to a trusted, credible and experienced Canadian Business Financing advisor on business cash flow analysis and solutions available to your firm today.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
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.
Stan Prokop
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