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Working Capital and Financing Options
Small business financing in Canada ' should ' mean that your company has access to all the working capital you need to both run, and grow, your business .
At 7 Park Avenue Financial we believe that is not impossible, but the business owner and his or her financial manager must have a solid understanding of the options and your company's ability to qualify for and execute on the option or options that make the both sense . Note that in some cases it might make sense to cobble together more than one option to achieve that ' cash flow nirvana' you are looking for .
The business reality is that cash flow doesn't discriminate - both companies in looking for SME COMMERCIAL FINANCE solutions, all the way up to the largest corporations need access to cash flow options. The challenge for smaller firms is that business finance loans are often more limited to the smaller company. So it's therefore important to know what those options are!
Accessing the cash flow challenge might be easier than you think . More often than not smaller firms though have the challenge of locating the expertise and resources they need to evaluate the business finance conundrum.
Two key elements of your first step to what we call 'working capital assessment 'are your gross margins and your turnover. That’s the big problem we have with text book / academic solutions to working capital - they point you to the text book calculation - give you a formula which essentially has you subtracting current liabilities form current assets, and voila ! the inference is you have working capital . However, our clients have never paid a supplier or completed a company payroll with a ratio!
Many firms have an ' inventory component ' to their business - These companies are typically non service type firms , which often are less capital intensive.
To properly assess your working capital needs focus on understanding your turnover - how much inventory do you carry, what are the days outstanding in inventory, and as importantly, or more importantly, are your receivables turning over .
Business experts tell us that for many firms 80% or so of the total of all the business assets you have are tied up in A/R, inventory, and, on the other size of the balance sheet let’s not forget accounts payable .
It is possible to have financial business financing success based on your new found knowledge and analysis of your cash flow and asset turnover.
Canadian business financing solutions to small business finance loans really revolve around a couple viable solutions. Typically, in our experience Canadian chartered banks cant satisfy your business working capital needs - if only for the reason that they rarely finance inventory and require significant merit in your overall financials, profitability, external collateral, personal credit worthiness, etc .
Solutions To Business Finance In Canada
There are very viable options that have the potential for a 100% turn around in cash flow :
A total working capital solution can be achieved by a they working capital finance solutions such as a non bank asset based line of credit. This solutions monetizes your accounts receivable and inventory into one borrowing facility .
This is commonly called an asset based line of credit that provides high leverage margining on all you business assets.
Other solutions, still as viable , yet somewhat misunderstood are securitization, and purchase order financing of new contracts and orders. (Your suppliers are paid directly for the orders you have in hand - what could be better than that?)
One of the most active types of ' instant small business financing ' Finally, coming up the road at lightening speed is factoring and invoice discounting. We mention them lastly but they are probably the most popular method, gaining traction everyday. Our favorite is confidential invoice financing, allowing you to control your financing .
Recommended A/R Small Business Financing :
Confidential Receivable financing, allowing your company to bill and collect your invoices in a normal fashion , turning current and future sales into instant cash flow.
We have identified several ways to determine the need for proper business financing ; we have outlined a number of solutions that will take the guess work out of working capital.
These loan and financing options are available with a bit of research and/or help from a trusted , credible and experienced Canadian business financing advisor who can provide you with timely and valuable assistance in your cash flow needs .
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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