Saturday, June 13, 2020

Need Turnaround Financing Or A Restructuring Loan ?















Turnaround financing and business refinance
solutions are often required when your company has been on the rise... and then, unfortunately, a fall situation. Turnaround finance typically requires restructuring loan, or loans, of some type, in combination with performance changes in your business. It's all about fixing a business! Let's dig in.

Well managed companies that have a proper business plan and cash flow forecasts are rarely caught totally off guard in a liquidity crisis ( pandemics excluded ! ) and often can reverse very negative financial results. If your management team is not seasoned your company has to get help on how to survive a potential insolvency crisis.

The ability to successfully complete your business turnaround via restructuring and turnaround financing will put your firm back on solid ground. Financial recovery is ' time-sensitive ' to say the least so our ability to select and work with the right firm is ' job 1 '! Every industry has unique financing needs and you need a firm with a track record of business financial success to deliver on restructuring loans that will work to your benefit.

Leading experts such as KPMG, world-renowned for turnaround advise that turnaround and restructuring is really a 3 step or 3 phased approach for the restructuring of a company - addressing the strategic crisis, addressing the sales and profit crisis, and then the fix on your liquidity crunch for funding a business.


Challenges in the turn around abound, especially since in a turn around .especially when it comes to SME COMMERCIAL FINANCE needs, new equity/owner capital is often difficult if not impossible to acquire. So that lack of money must come from operating assets and sales. The ability to maintain sales and increase profits is of course also key to your cash flow problems.



Safe to say that owners/mgrs have to recognize the issues that arose prior to a turnaround need - they include issues such as costs in the business, mgmt/employee performance, or lower sales. Naturally, those types of issues, combined with a poor asset and sales finance strategy are typically the key issues.



Key signs of a poor finance strategy being in place are your inability to buy new needed assets , inability to meet fixed cost commitments, and loan and lease default scenarios.

Typically owners and management will notice trends in costs and sales revenue that require some sort of corrective action. In many cases, timely attention to those areas will save any sort of formal insolvency steps being taken.

This is when a hard look at your business needs to taken, and quickly. That's a look at the overall structure of the company, and that typically involves your vendors, all owners, and any other stakeholders such as key employees and of course your current lenders. You are looking for ' the fix ' and may possibly need outside help.

A good management team can often take informal internal steps to save a good business, but as we have stated, outside help should probably be considered. The ability to have time to restructure your firm on your own is always less costly and allows you to have maximum flexibility in negotiation with third parties such as banks, etc.



Implementing a Restructuring Plan and a Corporate Restructuring 

 


During this time owners and financial managers must address all the operating issues within the business, such as accounting, administration, and the management of working capital. Never has the role of financial and administrative staff been so crucial as the ability to provide financial results and cash flow forecasts for owners and lenders.



There has never been a more critical time to accelerate collection of receivables and taking a hard look at inventory turns, and the overall value of inventory, which in many cases can be in various stages of production. This entire process in well run or financially distressed companies is called the ' cash conversion cycle ' and measures the travel of money as it flows through your firm. Solving cash flow problems and timing of asset conversion to cash is key.

If a company is managing the turnaround internally on its own outside lending has to be evaluated, either through existing lenders or new sources of business capital. One of the quickest methods to accelerate cash is considering an accounts receivable financing facility, sometimes known as factoring, although the word ' FACTORING' has many versions. At 7 Park Avenue Financial we recommend CONFIDENTIAL RECEIVABLE FINANCING, allow your firm to bill and collect your own receivables while generating immediate cash flow on all sales.

An internal focus on fixing the problem allows your company to avoid formal restructuring, especially when a bank has put your account into the ' special loans ' category, often requiring a forbearance agreement to give you the much needed time we have been talking about. Those formal proceedings such as CCAA, RECEIVERSHIP, PROPOSAL TO CREDITORS, DEBTOR IN POSSESSION, etc. all involve very costly and time-consuming measures. It goes without saying, but we will say it, that negotiating financing during formal types of insolvency is highly difficult!




In some cases companies that have made an investment in r&d capital should consider factoring their SR&ED claim. Another solid strategy we've implemented is the sale-leaseback finance process, allowing you to generate cash flow from owned assets while at the same time retaining the use of those assets. Cash conservation should be a key management focus, evaluating all possible options.



Many businesses get to the ' crisis ' situation without ever having prepared a proper business plan and cash flow plan. Suffice to say that now is the time to do that! That financial forecast and plan will determine where turnaround finance is needed and how it could be achieved. Those types of efforts will determine where cash will come from and how and when it will be used.



There is a great story around a fellow named Henry Frick - In 1871 he borrowed through good and bad times to acquire and grow businesses. His secret? It might well come from the actual bank notes from Thomas Mellon of Mellon bank - a bank U.S. money center bank. Those notes? They read ' land is good ... the ovens are well built, manager on the job all day... keeps books in the evening... knows his business’!



There often emerges a clear ' pecking order ' in who or what needs to be paid and addressed in a business refinancing. That list of key players is pretty short - government obligations, key suppliers, and utilities/rent!



For those customers with bank facilities in place, they are of course forced to address the turnaround when a demand loan is called. An asset loan is often the solution that ' takes out ' the bank and provides an interim financing solution. At the end of the day it's all about being able to leverage assets via asset based lending type solutions that will allow you to put an operating plan in place while still retaining some balance sheet strength.

Asset based lending facilities which typically come from non bank lenders allow your refinance assets and move to recovery. ABL financing works in all scenarios, whether a firm is restructuring or not , and provides your firm with maximum liquidity for all assets as well as the ability to monetize sales.


SUMMARY OF TURNAROUND FINANCING SOLUTIONS :


Turnaround finance Solutions that are available are diverse - They include:



Asset based bridge loan on assets



Asset-based revolving credit facility - combines A/R, inventory and equipment and real estate into one business credit line



Tax credit finance



A/R financing


Purchase Order Financing
/ Contract Finance



Sale leaseback lease/loan on unencumbered assets



Sales/Royalty finance



Restructuring Advisor Assistance


At 7 Park Avenue Financial, we focus on the turnaround task at hand, helping you plan and facilitate a restructuring that works for all vested parties. That might include cash flow planning and financing, negotiating with current senior lenders and other secured lenders, as well as vendors/suppliers. Raising business capital and funding through this process requires experience and the ability to move quickly when your firm needs it most. Many firms and industries have different needs and circumstances.

At the end of the day it's all about the preservation of the true value in your company and it's future, ensuring the company transformation process works. That comes from your work on implementing costs and sales analysis, as well as ensuring you have a financing partner in place to optimize cash flow and working capital. Your ability to take action in turnaround planning to address lower sales or cash flow generation is key to the turnaround.



If your business is facing operating losses and other issues requiring business refinancing seek out and speak to a trusted, credible and experienced Canadian business financing advisor and restructuring consultant for help in asset loan and cash flow needs. Welcome to the turnaround plan !




7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769


Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !




7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 '


ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

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 financing 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.







7 Park Avenue Financial/Copyright/2020































Need Turnaround Financing Or A Restructuring Loan ?






Need Turnaround Financing Or A Restructuring Loan

























































































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