Business Cash Flow Solutions: The Other Side Of Cash Flow Financing And Working Capital Problem

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Business Cash Flow Problem Working Capital | 7 Park Avenue Financial

How To Recover From Cash Flow Shortage Shock

Your business cash flow problem seeks a solution. The age-old situation of a working capital/cash flow shortage often is a ' shock ' situation to many Canadian business owners and financial managers.

 

CASH MANAGEMENT AND ASSET TURNOVER HELP CREATE PROFITS

 

Every business goal pretty well revolves around creating profits.  As that process works itself through your business you should be constantly trying to both manage cash and improve asset turnover.

 

The business owner's ability to manage, and finance working capital allows it to generate equity, pay taxes and employees, keep supplier short term relations positive, etc.

 

Calculations around working capital cash flow typically revolve around the relationship of current assets and current liabilities on your balance sheet.

 

WHAT IS THE OPERATING CYCLE

 

A great way to look at your business is to constantly be focusing on what we call the ' operating cycle '. It's essentially the ' journey ' that a dollar takes as it travels through your business.

 

Two drivers in understanding your cash and working capital are your:

 

1. Revenue recognition

 

2. Accounts payable management

 

Business owners should also check out their cash flow statement which is a key part of business financial statements allowing you to see cash from a ' where got /where gone ' perspective.

 

DON'T FORGET PAYABLES MANAGEMENT

 

While not often directly understood, most business owners /managers understand that managing payables is a key part of the cash cycle. You increase your cash from operations by delaying payables to the extent that you can, given you don’t want to damage supplier relations. Delaying payables, your major ' current liabilities ' asset is working capital management to the extent you can given vendor payment terms, etc.

 

FINANCING YOUR INVESTMENT IN  A/R AND INVENTORY

 

If your business isn’t a retail or online business you have an investment in accounts receivable. Numerous financing solutions exist to allow you to better access real cash, as opposed to the A/R and inventory build-up on your balance sheet that is not liquid.

 

Those solutions include:

 

A/R Financing

Inventory Loans

Access to Canadian bank credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

 

Purchase Order Financing

 

Short Term Working Capital Loans/ Merchant Advance

 

Securitization

 

WHAT THOSE TEMPORARY CASH FLOW CRUNCHES!

 

If our businesses were a straight line with totally repeating ongoing transactions a lot of cash flow shortage shock would go away. Unfortunately, that is rarely the case, so seasonal and bulge situations often occur, often along the lines of the ' cash flow shock' we talk about.

 

The owner /manager's ability to forecast seasonality and bulges in business will always alleviate working capital shock .

 

WHAT TYPE OF BORROWING FACILITY DO YOU NEED?

 

At the end of the day, the most common solution to the business cash flow problem is the ability to ensure you have a borrowing facility in place that allows your company to address future cash flow uncertainty.

 

If your firm has profits, historical cash flow and acceptable financials chartered banks and business credit unions are the solutions for the long term.

 

FINANCING THE BALANCE SHEET

 

As long as you have business assets (receivables, inventories, equipment, orders/contracts) numerous non-bank solutions exist to allow you to feel that you have cash flow availability. Funding current assets is a key part of addressing a cash flow crunch.

 

CONCLUSION

 

If you're looking to avoid small business cash flow problems shock and ensure you have access to financing solutions that address the right stage your company is in ( start-up, mature, high growth, turnaround, etc ) to grow products and services, so seek out and speak to a trusted, credible and experienced Canadian  Business Financing Advisor who can assist you with your financing needs. It's all about the amount of cash you need to satisfy enough cash for funding your company.

 

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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Exploit Your Business Cash Flow Problem ! Financing Your Balance Sheet

Do You Know How To Mine Your Financials For Cash?


Information on solving a business cash flow problem and implementing financing for the Canadian balance sheet



Your business cash flow problem. A lot of times it can be avoided and or fixed by examining your balance sheet and implementing solutions either traditional or alternative that address that problem and challenge.

Canadian business owners and financial managers have a tendency to always look at their income statement, not the balance sheet. We suppose it’s the entrepreneur in them that drives that focus - the idea of generating more sales and lowering or maintaining their costs. That sales number in effect becomes their ' business scorecard, one that seems easily measured and one that facilitates compensation, and egos!

But when you business is all of a sudden facing a business cash flow problem all of a sudden those assets on the balance sheet will often be your only savior , if managed and financed properly . When you understand how to manage and scorecard those balance sheet assets you're going to win at the cash flow game.

Getting converted! That's what balance sheet finance is about - turning those assets in a manner that generates cash flow and managing and arranging your liabilities so that they don't consume that cash.

In reality those assets on the left hand side of the balance have already arranged themselves in the proper order. By that we mean they are listed in the same order always that reflects their ability to be liquidated for working capital. Of course that order is cash, inventory, receivables and equipment. That's the pecking order of cash we could say.

Cash is cash on your balance sheet - not exactly a prolific statement and most businesses in the Canadian small and mid sectors don't typically show a lot of cash on the balance sheet. It's therefore time to move on to the A/R - here where your credit extension to clients becomes critical in the entire process.

Inventory and equipment make up the balance of the balance sheet, with inventory varying in nature - it might be raw materials, work your firm has in process, or goods ready to ship.

If you are fortunate enough to have the balance sheet and income statement that meets a Canadian chartered bank approval your savior in a business cash flow problem is a bank line of credit. The bank secures your assets and you borrow against them, based on agreed upon borrowing margins.

But what if your firm doesnt not have the ability for financing balance sheet assets. That’s when the overall financial health of your company becomes critical - in effect: The patient is at risk!

When sales are growing and receivable and inventory is building cash flow challenges become readily apparent. And as your company gets older some of that A/R and inventory is, respectively, uncollectable or unsellable.

The business owner has a tool, or tools to measure cash flow and operating performance. We have always called them ' relationships' - the text book calls them ' ratios '. It’s the relationship between certain balance sheet items that allow you to keep score in business. Simple tools such as days sales outstanding, inventory turnover and debt to equity are great scorecards for your business.

In Canada you have a solid handful of solutions in financing your balance sheet and preventing those cash flow problems that can bring the patient to near death mode if not managed properly.

Those solutions include bank facilities, and when they can't be attained other solutions include receivable financing, inventory finance, asset based non-bank lines of credit, tax credit monetization, and supply chain finance, aka purchase order financing.

Don't focus solely on the income statement - properly exploit and manage that balance sheet! Speak to a trusted, credible and experienced Canadian business financing advisor on cash flow problem solutions.






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_problem_financing_balance_sheet.html