Tweet
How To Manage / Increase Business Cash Flow
Business cash flow! In times of economic or industry turmoil most business owners and their financial mgrs would probably be happy with 1 solid working capital financing solution for cash flow business needs. We'll beat that and give you 6 ways to improve your business finances going forward . All of these solutions are accessible immediately if you have the right help . How is that for alternative solutions to your working capital and cash flow needs? Let's get started.
The funding of working capital continues to be a large challenge for Canadian businesses of all size - The business owner/financial mgr wants to be able to comfortably run the company on a daily basis, as well as growing the company.
That requires funding of potentially different types, and along the way those suppliers and employees want to be paid on time also! That's called running a business.
What's Your 2nd Most Valuable Liquid Asset In The Business ?
The most liquid asset any business always has, (next to cash) is your receivables. Working capital financing is best generated by the collection, or financing of your receivables. This can be done by:
1. Faster collections - Many companies should consider offering a discount for prompt payment - a typical offer might be 1-2 % for payment on delivery or withing 10 days for example
2.Financing / selling your receivables as you generate sales revenues
This type of financing is called receivable discounting or factoring, and is becoming increasing popular every day. If your company qualified for bank credit, i.e. traditional bank financing, then setting up a business line of credit is optimal . When this type of facility revolves up and down based on your selling products and services and getting paid the facility is operating well
3.You've spent your valuable business capital - would you like to get it back ? Clients of 7 Park Avenue Financial
Sale Leaseback
That strategy, or a short term bridge loan with the equipment as security is exactly what our clients need to bridge the cash flow gap.
4. We spoke above about receivable financing - one of the best facilities for Canadian business is a combo working capital facility that finances, or ' margins ' both your A/R and your inventory. Since many firms previously couldn't finance their inventory either elsewhere, or via banks, the combined liquidity of borrowing against your A/R and inventory is a true power punch! Typical this type of financing is known as an:
Asset Based Lending Facility
This makes most sense when the facility is at least in the 250k range, and business owners/mgrs will be please to know there is virtually no upper limit in this type of business credit . The facility will grow as your sales and assets grow . Unlike bank lines of credit these are more flexible when it comes to growth business owners will probably recognize the most bank lines of credit are reviewed annually and place a heavy emphasis on issues such as personal guarantees, covenants, financial ratios, and outside collateral . Those issues are NOT the underpinnings of asset based business lines of credit.
5. Many clients are totally unaware the Purchase Order Financing is available in Canada. This is a strong potential cash flow saver, and generator, since your suppliers are paid for product when you order it, once you have received the P O. and entered into a P O finance facility agreement . The Purchase Order financier takes the inventory and receivable as security, but in effect finances your whole sale. While it is an expensive form of financing - typically 2-3 % per month companies that have good gross margins and could otherwise not facilitate the sale of large new orders and contracts it is a most welcome solution for large contracts, orders, etc.
Short Term Working Capital Loans - Where Did All These Loans Come From?
6. Canadian business owners are somewhat bombarded by potential short term loans that appear via online firms as well as some ' bricks and mortar ' companies.
Where did this type of loan come from ? The answer is ' from the United States . It originated via a "new" type credit card borrowing in 1995, which has morphed into what is know known as a working capital loan, aka a ' Merchant Advance '.
These loans were for mostly small businesses who could not get bank credit or had no personal ability to borrow money for purchasing assets, supplies, etc.
The loans were based on advances against future sales, and were originally focused on the credit card sales of the business . The industry grew and now services small and medium size companies , including having become very popular in Canada . A typical loan is paid back in 1 year in fixed installments, and the most common requirement is for loans to be approx 10-15% of your firms annual sales. This was a novel new way of lending and has become popular with many businesses.
SUMMARY/BOTTOM LINE :
Ensure you are aware of your Canadian business financing options. Working capital and cash flow are available if you have assets and orders. We have demonstrated that clearly to you via 6 separate solutions. Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success to to determine what works for your firm.
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.