Business Cash Flow Financing : Here’s Your Patch Fix On Real World Growth Finance Solutions for SME Finance Needs

Tweet



Looking To Get Creative On Business Financing Cash Flow Solutions ? We’ve Got Ideas & Solutions !

OVERVIEW – Information on business cash flow financing in Canada. The growth finance funding you’re looking for come from traditional, alternative and even internal solutions that are used by … your competitors

Business cash flow financing , in the minds of many business owners and financial mgrs often would seem easier to fix with some sort of ' patch ' - that unfortunately probably isn’t available ! So it's sometimes necessary to get creative, as well as researching your growth finance options. Let's dig in.

The important thing to remember is that depending on what type of lender you choose there are in fact a lot of both viable and, more importantly accessible funding possibilities.

One more thing - Are you looking for either debt capital, aka ' loans’, or would cash flow / asset monetization solutions get you to the goal line.

While we might seem like we constantly preach ' capital solutions ' from the Canadian SME FINANCE marketplace owners/mgrs should never forget how to generate internal cash. That’s done by managing your receivables and inventory and payables to the point where you're collecting A/R promptly, turning inventory, and slowing payables (without alienating suppliers).

Depending on what industry you are in you also have the ability to ask clients to prepay, or, as effective, get special payment terms from suppliers.

Companies that have an R&D investment can utilize SR&ED tax credit financing as a bridge loan to cash flow their refundable tax credits.

Debt solutions for business financing include:

Govt Guaranteed Small Business Loans

Term Loans

Equipment Loans / Sale leasebacks


Cash flow solutions include:

A/R financing / factoring

Asset based non bank business credit lines

Inventory Financing

Tax credit financing

Unsecured Cash Flow Loans

Merchant Advances

Equipment Leasing / Sale leasebacks

The advantage of many non traditional financings include flexibility, non dilutive nature of your equity, as well as many prepayment provisions that do not come with traditional bank type financing

Knowing how much funds you need and for what purpose goes a long way toward ensuring you can cover your cash flow and growth finance needs. Here the ability to plan for times of ' bulge ' needs or fixed asset investment is the key to ensuring right financing/right time.

Rarely will firms in the ' SME ' space be able to boast they have ' too much cash ‘ !

A more realistic goal is to ensure you have business credit access when you need it and for the right reason. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business cash flow financing needs.


Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
http://www.7parkavenuefinancial.com


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 '


ABOUT THE AUTHOR
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

Business Cash Flow Financing In Canada: Improving & Understanding Loan Access & Availability

Tweet



Unlocking Business Cash Flow Financing

OVERVIEW – Information on business cash flow financing solutions in Canada. Understand loans and working capital solutions is all about these key cash flow drivers

Business cash flow financing often requires some ' straight talk ‘. The ability to finance your company properly is one of the most powerful success forces in Canadian business. But how does the business owner/financial mgr determine where new cash flow and working capital will come from, and where it went? Let's dig in.

There is in fact a very harsh and simple reality around your business cash flows. The answer ? You've simple bought assets, or generated new assets such as receivables and inventory via monies spent.

There is a natural flow in business - it's all about paying down your debt, keeping taxes up to date, building working capital assets, and generating and taking profits

How does the owner/mgr make the right choices in raising funding for your business and keeping your financials understandable - i.e. understanding where the cash in your business is ' flowing '.

Many firms are challenged by low owner equity, which compounds the owners ability to take cash out of the company.

Is there a simple secret to managing and financing your cash flow? The pros call this whole process ' operating cash flow ' it’s simply your profit or loss for the month plus or minus your changes in working capital accounts - we’re back to those receivables and inventories again.

External financing for your business will come from either term debt of business credit lines. By the way those business revolving credit facilities will come from either a bank or alternately a commercial finance company offering asset based credit line facilities.

When it comes to business credit lines the facilities that are most manageable are those when the credit line fluctuates significantly. Banks or finance firms will always look more favorably on your ability to constantly draw done and replenish the facility via your receivable and inventory turnovers.

Assets that need to be financing in your business might include plant and equipment assets, vehicles, as well as technology / software etc. Here a term debt options such as lease financing will almost always make the most sense.

What's the bottom line in accessing outside funding and managing your balance sheet properly. We summarize as follows:

- Develop a strong sense of how cash flows in your business- a good cash flow forecast based on your historical inflows and outflows helps

- Ensure your provincial and federal taxes are paid on time- If you have tax arrears they can often be consolidated into a new re-financing of your business

- Determine your business line of credit needs - this is a critical area of business cash flow financing. Remember that Canadian chartered banks are NOT the only credit line providers

- Finance long term assets with long term leases or loans

- Focus on building equity in your business via good gross margins and profits
If you’re focused on accessing the right finance solutions for your business seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your long term funding and working capital needs.


Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
http://www.7parkavenuefinancial.com

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 '

ABOUT THE AUTHOR
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

Business Cash Flow Financing : Which Commercial Loans & Which Lenders?

Does Your Firm's Cash Flow Support Additional Borrowing? 1 Is The Magic Number!

OVERVIEW – Information on business cash flow financing in Canada . Commercial loans come from a variety of lenders. Does your firm have what it takes?

When business owners and financial managers contemplate additional borrowing for their firm they must think it terms of whether the business does, or will have, enough cash flow to make the debt repayments. We can further assure business owners that the bank or lending institution is thinking the same way!


When businesses enter into bank loans or other institutional loans the payments are, 99% of the time fixed and specified. The business owner and financial manager must ensure those payments can be made. If the company has over relied on debt it is viewed as highly leverage by the lender.
So how can a business owner determine if the company has the cash flow to support the debt? More importantly how does the lender do that calculation?
The calculation that banks and other term lenders focus on is called 'Times Interest Earned '. The business owner (and the banker) can calculate that formula very simply.

The Times Interest formula is calculated as follows:

Net profit before taxes, plus interest expense / divided by interest expense


The calculation becomes an absolute number. If the number is in fact '1 'that means that the company has in fact made just enough to pay the exact interest expense for the year. We would point out that this calculation is always usually done on an annual basis.
So is '1' the magic number? The answer is no, and the answer should be intuitive to the business owner. That is because a times interest of 1 means there is absolutely no cushion for anything going wrong, and all business owners no about Murphy's Law!

So if earning decline or if the company takes on additional debt our ' times interest earned ' number become unsatisfactory - that is to say that we have determined there is not sufficient cash flow to service the debt.


We have determined '1' is not a great number then, well what is? The answer, as in many facets of business, is of course 'that depends '. Many industries differ and there is not really any specific number that is viewed as the Holy Grail by lenders. What we have found though that higher is better than lower. When the number is hovering around 1 both the business owner and the lender, should and will, respectively, have some concern.
We point out also that income, as a key component in our calculation varies between companies in final calculation re tax rate and other accounting adjustments. Some lenders and business owners also add deprecation to the profit because it is not a real cash expense.


Another quick calculation business people can perform is to calculate the cash flow number as a per cent age of debt. This calculation is often done by lenders to ensure long term debt is not being miss-used. If a company has a high percentage of total debt to cash flow it should be a strong indicator to the company owners that growth will be constrained, as all cash is going to debt, not growth. Therefore new equipment, inventory, receivables, etc will suffer in terms of growth.


In summary, business owners, by doing actual current calculations, as well as projections, can easily calculate their 'times interest earned' and cash flow as % of debt. This will allow the business to position loan repayments positively with their lenders, at the same time providing them with insights into how the bank or other lender will view payment capability.


Seek out and speak to a trusted , credible and experienced Canadian business financing advisor who can assist you with your business loan , cash flow financing and asset monetization needs.


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 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
http://www.7parkavenuefinancial.com

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 '


ABOUT THE AUTHOR
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

Business Cash Flow - You're Forgiven For Misunderstanding The Term ! Funding & Financing 101

You're Forgiven !

Information on business cash flow financing in Canada. Funding your company requires a basic knowledge of this of used term!

We find that the term, or concept ' cash flow ' is widely misunderstood - having different meanings to different parties.

There are at least 7, if not more, methods in which the term is utilized in a number of areas of finance.

First of all the term is of course just a general term used in finance literature and textbooks relating to investments, etc.

When we see a company financial reports in the press there are often references to cash flow in the financial reports of the firm.

Getting even more specific, there are three parts to any financial statement, the balance sheet, the income statement, and the Cash flow statement. In older times this cash flow statement was called the Sources and Uses statement - simply indicating where a company got the money, and where they spent the money.

Some financial analysts refer to a company's ' funds statement ' and designate the total funds provided by operations as ' cash flow '.

Confused? We're not there yet. Financial managers and business owners use various types of analysis when making long term investments for the company. They use sophisticated financial analysis known as rate of return, payback analysis, and, guess what ' discounted cash flow ' analysis.

When a business owner is planning he will often prepare, and refer to, his ' cash flow ' budgeting.

And finally, business owners and financial mangers refer to; cash flow;
controls as they monitor the flow of funds and the control of those funds inside any company, small or large.

Financing business cash flow needs comes from solutions such as :

A/R Financing

Inventory Loans

Tax Credit Financing

PO Financing

Bank lines

Asset based non bank business lines of credit

Working Capital Term Loans

What becomes clear is that ' cash flow ' has become somewhat of a ' catch all ' wording and is somewhat confusing as more often than not it does not reference actual ' cash ' on hand, or evens the flow!!

Most financial people would probably agree the purest form of ' cash flow ' is in fact one of the items we have mentioned above - that is to say its the cash referred to in the company’s CASH FLOW STATEMENT - we referred to it as one of the three pillars of any financial statement . The common calculation of this number is the net income of the company, plus the depreciation, which was not an actual cash outlay.

In summary, we have seen that the term cash flow means a lot of different things to different people - Business owners, and financial managers should know what method of cash flow they are utilizing, its uses, and how it will be interpreted by lenders, financial analysts, shareholders, etc. Looking for help ? Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success .
And yes, you are forgiven for misunderstanding the term!



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 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
http://www.7parkavenuefinancial.com


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 '


ABOUT THE AUTHOR
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

Getting Enough? Business Cash Flow Financing!

Are You Managing For Sales Or For Cash Flow And Profits?


Information on business cash flow financing in Canada . Cash management and Financing solutions for Canadian Business


Business cash flow financing. Is your firm getting enough? It's probably just us but we have never met a client who, unlike larger corporations, has just too much ' cash on hand'!

The whole idea of having enough cash flow and working capital is to allow you to have enough liquidity for your daily operating needs while at the same time allowing you to grow your firm.

The challenge therefore becomes how much cash do you need, and where do you get it. (There are only 2 places to get this cash).

If the Canadian business owner and financial manager has a good handle on his or her cash flow needs you're in a position to pay back any secured debt and run your firm.

So what factors in fact determine if you're ' getting enough '? Well, first of all it’s about the level of risk you want to take in running your firm on a daily basis with either just enough cash, OR ACCESS TO CASH, or with a buffer that you're comfortable with.

While your debt payments might be fixed... in fact they probably are, the reality is that there are circumstances that occur to all firms that make your cash inflows fluctuate.

So how can you ensure you have access to capital for short term operating needs? That's the $50,000.00 question. You can of course access bank financing if you qualify for a Canadian chartered bank business credit line, but that might come with commitment fees for unused balances, compensating balance requirements, and the challenge of dealing with the bank when sales and financial performance declines.

We referenced only two sources of business cash flow financing previously. In essence they are first of all internal profits and operations, and secondly external working capital financing. It's as simple as that.

So can the business owner / manager actually accelerate cash, ensuring you’re ' getting enough' from an internal perspective. You sure can!

That can be done by accelerating collections, understanding your ' float time ' re cheque processing, lock box operations, etc.

We actually think there are firms out there they invoice once a month. Nothing could be worse... so invoice your clients as soon as you have earned the right to do that by shipping your products or completing your service delivery.

In some cases you should revisit customer terms and perhaps require deposits for work to be done.

Delaying payments requires a fine line of management thought. You should of course pay creditors to terms, but not before then - stretch them as long as possible without altering vendor relationships which can be valued highly. If you have a sales force compensation plan you could adjust commissions relative to receivables collected, not sales made. We fully realize we've just made an enemy of the sales force by the way, but it’s a cruel world!

Business cash flow financing externally consists of bank lines of credit, working capital facilities that are non bank in nature which secure receivables and inventories, and don forget the new kid on the block, asset based business credit facilities. In some cases the business owner can consider sale lease back or tax credit financing where appropriate.

So, getting enough? If you aren't speak to a trusted, credible and experienced Canadian business financing advisor for assistance on working capital needs for business cash flow financing.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS CASH FLOW FINANCING EXPERTISE





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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/business_cash_flow_financing.html