Tried & Tested Working Capital Funding & Business Cash Flow Solutions

You’re In The Right Place For Cash Flow Information & Solutions

OVERVIEW – Information on working capital funding and business cash flow solutions for Canadian business

Business cash flow solutions are sought by thousands of Canadian businesses everyday. Which solutions are ' tried and tested' and will work for your firm? Let's dig in.

It's the finance function and structure of your business that will drive your need for working capital funding. Here we're talking about short term financing needs, not debt or equity capital. (Some businesses do take on working capital term loans if they can demonstrate solid cash flows) The type of industry you are in, as well as how you compete is also a key factor to consider.

Companies that aren't growing sufficiently or are operating at a loss have even more of a challenge of course - the question becomes clear - how does the owner/ manager transform this loser into a winner?

The management of your working capital revolves around 2 key issues:

Ensuring you have the right financing mix in place for inventory, receivables,

Ensuring your finance solutions come at a cost that makes sense relative to your overall credit quality

We find that many companies get caught up in the technical definition of working capital - defined simply as the relationship of current assets on your balance sheet to current liabilities. That definition is fine but doesn't take into account the movement of those assets and liabilities, especially when it comes to turnover of receivables and inventory. Bottom line?

Focus on mgmt and financing of your current assets, not the ratios!









For businesses that sell on credit the management of accounts receivable is where it's at. Financing of receivables can be achieved in a number of ways, foremost of which is simply collecting your A/R to your terms or even sooner. When external financing is needed your solutions include:

Bank revolving credit lines

Non bank A/R Financing (our recommended solutions is Confidential Receivable Finance)

Asset based lines of credit which consolidate your A/R and inventory assets into one borrowing facility. These are predominantly non bank solutions offered by commercial finance firms

It's important to note that while cash flow

comes out of the management of your current assets it also comes out of delaying payables to the extent that your firm can still maintain it's relationships with suppliers as well as staying solvent.

The type of financing you need for working capital and cash flow solutions also depends on the industry you are in, your cash conversion cycle, and the amount of gross margin your firm commands on product and services you offer.

If you're looking to maximize financing for your cash flow and working capital needs seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you with your needs.



Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com

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 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS CASH FLOW FINANCING EXPERTISE




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Top Strategic Working Capital Funding and Facility Solutions

Every Canadian business owner and financial manger wants to know that their firm has financial health in the short term. Your company's ability to access working capital funding means only one simply thing - you have the ability to pay off your short term liabilities such as accounts payable, taxes, source deductions, etc .

So do you in fact need a better type or working capital facility today, and, if so, what are your options. We can't cure the patient unless we can confirm he is sick... so how in fact do you determine if that working capital need exists. It could not be simpler. Go to your balance sheet, add up cash, receivables and inventory, and if they in total don’t cover your accounts payable, guess what... the patient has a problem .

Two points worth mentioning, we fully realize most successful business managers and owners know intuitively that they have a challenge in the area of cash flow. It's simply recognizing that on a day to day basis more and more time is devoted to working capital management - i.e. collections, invoicing, juggling payables, etc.

There are very specific cash flow solutions for your working capital funding requirements. But believe it or not many of them can actually be fixed internally. You ability to negotiate better terms with your suppliers is a critical cash flow factor. More importantly many business owners don’t focus on turnover and quality of your current assets such as receivables and inventory.

By effectively measuring and monitoring your turnover in receivables and inventory can significantly improve cash flow. Technically we're talking about reducing day’s sales outstanding and calculating inventory turnover. Your goal is to reduce the amount of time it takes for a dollar to flow through your company.

So we have identified the problem, and the measurement issues around that problem, let’s focus on solutions.

In a perfect world, and we know its not, your Canadian chartered bank would financing all your receivables and inventory on an ongoing basis, and , when you need it offer up a bulge type facility to take you through a working capital rough patch . That type of working capital facility is generally referred to as a business operating line of credit.

As we said, it’s not a perfect world apparently! ... And thousands of firms, perhaps yours, don’t have access to this type of facility. So the Canadian marketplace offers up a number of solutions, for medium sized and larger firms the alternative is an asset based line of credit that comes without the restrictions of a bank facility ( ratios, covenants, outside collateral, etc) but in fact provide you with more working capital than a bank could . For smaller firms a working capital facility term loan is available via the government related bank in Canada. For smaller and medium sized firm’s receivable financing facilities, know as factoring, can turn your receivables into a constant ATM machine, albeit at a higher cost.

So whats our bottom line. Simply the right working capital facility will put life back into the patient, your company! Knowing what facility works best, what your options are, etc is really the only challenge, Speak to a trusted, credible and experienced Canadian business financing advisor to guide you through to the right cash flow solution.
--

Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_funding_working_capital_facility.html

Surviving A Working Capital Financing and Funding Challenge

Did we really even have to mention it, but a major CFO survey, just released, stated that ' Cash flow is Top Concern Priority for 2011 ‘. When has working capital financing and working capital funding in general ever been more important.

Let's take a look at the Canadian situation and how you can solve some of those working capital challenges that were re iterated as concerns in the survey, which was done, by the way by TD. And by the way, putting ' surveys' aside, we'll offer some ' real world' solutions to some of the issues highlighted in the bank survey!

Intensity? The survey actually used that word when Canadian business owners and financial managers described their necessary day to day attention to working capital management. As a business owner you have to look at your overall structure and ensure you can manage cash flow on a day to day basis.

The survey intimated that although you could cut costs to manage and conserve cash flow most Canadian business owners don’t feel that’s the optimal strategy, only 7% actually.

Access to working capital financing and working capital funding was a major concern by respondents. We are reminded of headlines that say things like ‘90% of all jobs aren’t advertised”. Well, do you know what, when we sit down with clients we strongly feel that they often don’t understand that 90%of financing options aren’t generally known to Canadian business. Did you know there are hundreds of non - bank finance entities, all very unique in nature, that finance receivables, inventory, purchase orders (yes, purchase orders! tax credits (you can finance a tax credit? - YES you can!).

The survey indicated that technology is by far the top area of planned capital investment, and you should be aware there are a number of solid capital and operating lease solutions that provide you with total flexibility in acquiring, and more importantly, using technology .

Alternately the Canadian lease financing industry is back on its feet and numerous solutions for equipment acquisition via leases, loans, bridge loans, etc are available.

Want those real world alternative financing solutions we talked about - consider non bank asset based lines of credit or receivables discounting. Your cash flow is at risk if you aren’t properly managing your A/R and financing it in a manner that suits your firm’s business model and cash conversion cycle.

You could of course stop your life and spend a lot of time investigating these solutions but we strong recommend to clients that they simply seek a trusted, credible, and experienced business financing advisor to sour the working capital financing and working capital funding they need for short term liquidity and long term survival .
--

Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_funding_working_capital_financing.html

How To Decide if Financing Receivables Is a Solution for Your Working Capital Funding

We call it the R R factor. And we are not talking about rest and recuperation! The R R factor will give you a sense it its time to consider whether a newer, more popular method of financing receivables is your working capital funding solution .

We're going to provide you with a quick but easy and powerful tool to determine if your cash flow challenges need to be addressed in a more positive fashion. It's the receivables to revenue ration - hence the term R R . First, take you year end balance of A/R, which is of course your uncollected sales revenue at that point in time. Then determine how many weeks of sales that represents. Calculate this ratio historically and you have a method of determining whether your cash flow and working capital requirements are changing.

So how does business address the challenge of working capital funding when it’s as challenging as ever to borrow. Many companies are assessing factoring, or financing receivables. It’s a simple process that is only made complex and difficult when you don’t understand the pricing, how it works on a daily basis, or the important need to align yourself with a partner that offers and matches your business financing needs.

The process is actually quite simple --- On a daily, weekly, or monthly basis - it’s your choice, you sell your receivables. So what happens next? Simply that the day you generate that sale you have the same day cash for those receivables. Therefore the Canadian business owner and financial manager have created a true ATM machine out of the investment the company has in accounts receivable. Readers will also begin to immediately appreciate that they have just stumbled upon the ultimate cash flow solution, because every time they sale they have instant cash. So whats the catch?

We believe there are 2 catches, and when the business owner understands and addresses them the receivable financing solution becomes much more clear and common sense.

The first ' catch ' is the cost. The typical Canadian cost of financing a receivable is 1.5- 2% / month. The firms offering the service do not call that an interest rate, they call it a discount fee. You sold something, for cash, i.e. you’re receivable, and it was discounted by 1 or 2% for that privilege. Is that expensive. Absolutely ... maybe! That is because most business owners don’t pick up on the fact that they are in effect carrying those receivables already, which is a cost that is often not intuitively calculated by the business owner. Secondly, the term ' opportunity cost ' comes in to play, because the reality is that if your firm can generate a good return on investment you can use the cash flow from your receivable financing to generate higher profits .

So why isn’t factoring or receivable financing the choice of every Canadian business for working capital funding? The reality is, and this is a surprise to many, that the largest firms in Canada utilize this financing. They simply have a stronger ability, due to their financial strength, to determine how the facility works on a daily basis, the best type of facility we recommend to customers is one in which your firm is able to bill and collect its own receivables, which is not offered by 99% of firms in the Canadian marketplace. Search out that 1% solution is what we tell our clients - at that point you will have a competitive financing vehicle for working capital and virtually unlimited cash flow growth.

Speak to a trusted and credible business financing advisor who can assist you to put together a solid working capital funding solution.