Thursday, February 23, 2023

Struggling With Cash Flow Issues ? Working Capital Financing Solutions Can Help Unlocking The Secrets To Business Cash Flow Problems !

 

YOUR COMPANY IS LOOKING FOR WORKING CAPITAL SOLUTIONS!

CASH FLOW MANAGEMENT STRATEGIES AND SOLUTIONS TO IMPROVE CASH FLOW

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the biggest issues facing businesses today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

 

WORKING CAPITAL SOLUTIONS THE COMPETITION DOESN'T WANT YOU TO KNOW ABOUT

 

 

 

Solutions to working capital problems for Canadian entrepreneurs work best when they come from the real world .. we can call it  ' main street financing '.

 

Yes, you're right - this isn't the time for ' crowdfunding ' !... what a concept that is  .. having a million people send you $1. We wish we had thought that one up.

 

THE MOST COMMON CASH FLOW PROBLEMS IN SMALL BUSINESS



What then do the Canadian business owner and financial manager do regarding cash flow problems and working capital solutions when cash flow shortfalls are tightest? Even well-operated companies require cash flow solutions for their profit and growth objectives; clients of 7 Park Avenue Financial tell us they just want to know how to get there.

 

We will discuss the common causes of cash flow shortages and what is at the root of these poor cash flow problems - Obvious issues are typically slow-paying customers or the seasonality that might occur in any business or industry - Many businesses also encounter unexpected expenses.

 

IS YOUR BUSINESS EXPERIENCING  ANY OF  THESE  COMMON  CASH FLOW PROBLEMS AND CHALLENGES?

 

Inability to pay bills and  meet vendor/supplier obligations

Unable to meet obligations around long-term debt financing

Missed opportunities for growth

Excessive reliance on the owner's personal funds to avoid a cash flow crunch

Inability to meet  payroll obligations

Reduced vendor and employee satisfaction and morale

High growth leads to lower cash flows as profits do not equal cash in a business - Expaning and a focus on growing quickly will always lead to a loss of cash flow as additional staff and investments will require external business financing

 

 

BOUNCING  BACK TO POSITIVE CASH FLOW 


Cash flow is of course 'fuel' that will drive the combinations of growth and more profits, and allow you to run day-to-day operations with greater ease. Your working capital is tied up in the current asset accounts on the balance sheet - that includes cash on hand,  accounts receivable and inventories for those businesses selling products versus services.

 

It's all bout cash going out versus cash coming in! Liquidity problems will lead to the ineffective running of the business and cash flow is always seen by business lenders as a key financial indicator of business financial health - Fast-growing and profitable businesses can easily have cash troubles.

 

 

 

2 WAYS TO ACHIEVE THE OPTIMAL BALANCE IN YOUR CASH FLOW

 

Cash flow problems and growth goals are usually tied together in some manner - problems for small businesses can be solved by a business owner by focusing on two key areas :


SALES .. AND ASSET TURNOVER!

 

Asset turnover is sometimes a bit of a surprise  to business people that aren't necessarily grounded in finance, but the issue of turning over your assets, in fact, opens up a wide variety of potential solutions, most notably:



MONETIZING AND CASH-FLOWING YOUR BUSINESS  ASSETS

 

 

By financing your assets and at the same time focusing on better turnover your overall profit/growth situation improves, almost immediately.  It’s all about ensuring your cash reserves :


Turning Inventories

Collecting Receivables Faster

Financing Long Term Assets Profitably

 
 
 

SOLUTIONS TO WORKING CAPITAL & CASH FLOW NEEDS - TRADITIONAL AND ALTERNATIVE FINANCING OPTIONS




Working Capital Facilities

Short Term 12 Month Working Capital Loans Paid From Future Sales

Receivable Financing / Factoring / Confidential Receivable Finance

Asset Based Lending / Non Bank Asset Based Business Lines Of Credit

Chartered Bank Solutions

Leasing / Sale Leaseback

Tax Credit Monetization

P O Financing / Supply Chain Financing



All these key solutions can be structured from both traditional and alternative finance firms. Even better, certain solutions, structured properly can be cobbled together to increase your firm's total access to credit.  It's all about monetizing the balance sheet, and your sales!


So how does the business owner/financial manager actually figure out how much to borrow, and then whether for it's short-term financing needs? And don't forget the overriding question which is knowing how to balance the eternal questions of more debt or adding equity as examples of cash flow problems that must be addressed. 

Remember that many of the cash flow solutions here monetize assets and sales and don't require ANY dilution of equity! That's a good thing from the business owner's point of view.


For companies that have inventory, it all starts at some sort of production cycle...  but even service industries in technology or other areas have their own flavour of a working capital cycle.


A very simple rule to address working capital problems is that whenever your receivables and inventory grow you are going to have to address more working capital solutions... it's as simple as that.

 
 

28% of small business owners say they lose sleep over cash flow problems; 48% say they pay others before paying themselves; and 28% had experienced cash flow problems such as postponing hiring - SOURCE: STAPLES

 

 
 
CONCLUSION - CASH FLOW MANAGEMENT STRATEGIES FOR WORKING CAPITAL

 

There are many different types of working capital solutions for your business - as in all aspects of business financing, there are advantages and disadvantages to each solution - Making the right decision around the best solution for your company is job #1 for small business owners.

 

Cash shortages have numerous negative effects on a business and 'cash-strapped' businesses have problems that must be addressed.

 

The ability of a business to achieve positive cash flow and positive net working capital becomes the lifeblood of the company. Liquidity shortages are common in the majority of small businesses in Canada - Planning around effective cash flow management empowers your business to grow and succeed.

 

 

A Small business cash flow problem can devastate a business.

 

Speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success. Discover how you can address cash flow challenges... the right way. That is of course if your crowdfunding strategy doesn't work... and you can pretty well count on that one! Talk to our team about your business survival plan via healthy cash flow!

 

 
FAQ: FREQUENTLY ASKED QUESTIONS /  PEOPLE ALSO ASK  / MORE INFORMATION 

 

What are cash flow problems, and how do they affect businesses?

Cash flow problems arise when inflows of cash into the business exceed current obligations - That's when a business is challenged to pay accounts payable and meet payroll obligations - Naturally growing the business in that situation is very difficult. Common causes of funding shortages include:

Low profitability - price rises won't always discourage clients and may also lead to perceived value for products and services

Overinvesting

Rapid expansion without financing in place - Uncontrolled business growth leads to cash shortfalls for businesses over-forecasting growth and expenses, it is important to distinguish between profitability and cash flow.

High fixed costs

Unexpected expenses

The owner draws from the business

Poor inventory and a/r management

Seasonal fluctuations in sales

 

 

What is working capital, and how can it help businesses solve cash flow problems?

 

Working capital is the funds that a company has available to fund day-to-day operations - Key balance sheet accounts such as inventory and accounts receivable are key components of working capital. Companies should review trade credit payment terms and focus on enforcing sound credit and collection policies.


If a business improves its working capital it can cover day-to-day operations and consider growth opportunities - Numerous small business financing solutions can be addressed to fix cash flow challenges - they include short-term working capital loans known as merchant cash advances, as well as other solutions such as invoice financing/factoring - Business lines of credit are the optimal solution. Cash flow statements in business financial statements outline the sources and uses of cash in a business.

 

How do different working capital solutions work, and what are their advantages and disadvantages?

 

Different working capital solutions work in different manners - for example, businesses utilizing factoring financing have the ability to sell invoices to third-party commercial financing companies, enabling the business to achieve immediate cash as sales revenues are generated. Inventory financing to fix cash flow problems can be combined with numerous asset-backed lending solutions with inventory being used as collateral for a borrowing base in combination with accounts receivable.


What can businesses do to prevent cash flow problems in the first place?

Businesses can prevent cash flow problems around poor cash flow management via financial planning in a variety of ways, including the preparation of proper cash flow forecasts and projections around cash flow management and funding needs for a healthy cash reserve based on sales and timing of receipts from customers.

Creating a short-term business survival plan should be a priority - focusing on issues such as profit and expense reduction. In certain situations, a scaling-back plan should be initiated.

In some cases, payment terms can be negotiated with key vendors and clients. Expense reduction around variable costs can also be addressed to ensure enough cash on hand. The goal is to be proactive from a prevention point of view.

Businesses also have the ability to refinance existing debt, allowing the business to achieve lower payments and lower financing costs. High-interest loans should be avoided if possible - Supplier financing can also improve the cash cycle.


  

How do you manage cash flow and working capital?  



 

 

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.