Business Finance Solutions For Cash Flow : Why Your Working Capital Seems To Be Staying Put

You’ve Got Sales, Working Capital, Assets And No Cash – Here’s Why!

OVERVIEW – Information on business financing solutions in Canada . Why the cash flow conundrum exists and what how business owners and financial managers can understand and manage it






Business finance solutions arise out of the necessity that your company typically has revenues, working capital (on the balance sheet), assets, and... you guessed it... no cash on hand! Let's examine why that is the case, and what your company can do about it. Let's dig in.

To many business owners it's somewhat of an irony that they have what their accountants ( and the finance text books ) tell them is a good ' working capital ' position yet are sometime or always finding themselves constrained when it comes to cash flow generation itself.

It's difficult to avoid at least some of the accounting lingo on why that situation exists - at the heart of the matter is the simply fact that profits on the income statement, and receivables and inventories on the balance sheet are really what is creating the problem.

The business owner/managers ability to analyze, understand and address cash flow is the ' make or break' of business success.

Cash flow is essentially all about timing. Unless you are in retail, or operate an online business your cash will almost never equal your sales/profits. And more importantly, the amount of cash you generate more quickly allows you to continually re-invest.

We've always found it somewhat ironic that the definition of ' working capital ' by your accountants and the text books tells us that it refers to current assets that can be liquidated into cash within a one year period ! Naturally more working capital is better, but you can have all the working capital in the world and still be going broke quite quickly - simply because you aren't either turning your assets into cash or monetizing them in a manner that makes sense for your company.

Your ability to move a dollar faster through your entire operating cycle, or to monetize a/r and inventories allows you to consider other options such as investing in more equipment and technology, paying owner dividends, or paying down any ' term debt' your company has.

We spoke about either turning assets over faster - i.e. higher inventory turns, better collection of receivables. But what are the external financing methods you can utilize to eat the working capital/cash flow divergence.

Those business finance solutions, when it comes to cash flow include:

A/R Financing

Inventory finance

Commercial bank lines of credit

Asset based non bank lines of credit

SR&ED Tax credit financing

Purchase order finance

Working capital term loans (term loans that provide cash on a fixed repayment schedule - typically 3-5 years)


We have found over the years that most businesses, certainly in the SME Commercial sectors rarely look at ' PAGE 3' of their financial statements. Clients we talk to can be forgiven for this as the accounting world has done a great job of presenting this page ' The Cash Flow Statement ' in a very technical matter, breaking it down into 3 different analyses of cash . The ' operating cash flow' portion of this part of your financial statement is often key to understanding what’s happening to cash as it flows through your business.

If your business has sales prospects, assets, and not all the cash you need seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success in business financing solutions that address working capital challenges.


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 - 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 :


7 Park Avenue Financial = 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

Growth Financing Challenges Shouldn’t Be A Meltdown: The Right Business Finance Solutions Are Key

Is The Ability To Grow Your Company Falling Apart Due Lack Of Or Improper Business Finance?

OVERVIEW – Information on growth financing strategies when it comes to which business finance solutions meet the goal of the Canadian business owner/financial manager



Growth financing in Canada usually revolves around 2 key issues: Business finance solutions that are available and managing those solutions relative to their cost and structure. Those issues should not be the cause of your firms ' meltdown ‘.

Let's dig in.

While every business in Canada isn’t obsessed with growth we can make a reasonable assumption that business owners and their financial managers do in fact want to increase the size and value of their business. We supposed the balance of the owners and entrepreneurs in Canada are obsessed with managing even worse matters, sales decline, operating losses etc. So we're all for a focus on growth.

When it comes to financing and specifically in terms of growth the status quo rarely works. We constantly meet with clients who find themselves challenged as they strive to increase revenues - the old ways of financing their firm aren't working. In some cases, remarkably, they have been self financing and didn’t even need external capital solutions.

What are those capital / cash flow/ and working capital solutions needed for. Typically they are for purchase new assets (equipment lease financing) and current asset growth in receivables and inventory. (Bank credit lines, non bank asset based lines of credit).

Any new capital or working capital resources is going to come from 1 , or a combination of 3 things - new owner equity, some sort of debt financing, or one our recommended favorites - monetizing assets .

Monetizing assets can come in the form of the bank and non bank credit lines we have mentioned. Other current assets that can be monetized are SR&ED tax credits. Two other options to consider are sale leaseback strategies of assets you have purchased and owned, but not subject to any liens or encumbrances; the final strategy is to explore a PO/Contract financing scenario.


All of these 3 different capital sources should come with the usual pros and cons analysis. That’s simply because of the following:

Debt financing is a long term permanent obligations that must be addressed with future cash flows

Equity financing and ownership dilution is expensive

Bank and commercial financing companies offer different rates terms and structures all of which must be assessed relative to cost and the obligations that come with them (ratios, loan covenants, external collateral, etc)

When it comes to both debt financing and bank and commercial finance company solutions the dreaded owner personal guarantee is always going to be an issue. Often it can be negotiated in some manner, but not always.

The general rule of thumb of course is that debt and asset monetization strategies are always going to be more expensive than equity, especially in the early years of your business when you're building value.

When we sit down with a client to assess business financing alternatives the key issues on the table are as follows:

Asset valuation and quality
Profit and Loss status
Sales prospects
Operating issues relative to asset turnover


If you don’t want your firm to face the growth meltdown challenge seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist in ensuring the ability to grow your business, without falling apart, with the right financial solution, is key.


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 - 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 :


7 Park Avenue Financial = Growth 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


Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Business Finance Solutions And Assistance? Don’t Come Up Short In The ABC’s Of Financing Assistance In Canada

Looking For Clear ABC’S of Business Financing In Canada?



OVERVIEW – Business finance solutions for the Canadian business owner and manager . Financing help and assistance gives your business a solid footing for growth and profits .



Business Finance Solutions. Quite frankly, we knew it all the time. At the risk of sounding like know it alls,

there it was, yesterday, in one of Canada's two leading newspapers.

What was it? It was a full page; yes a full page article entitled ' THE DEFECIT OF FINANCIAL ABC’S’. In it , the author , an executive with the Canadian Federation of Independent Business maintained , with real life examples, that Canadian business owners, certainly in the SME sector , are uncomfortable with ' financial lingo ' , referring to it as a foreign language to many!

Truth be told, we find Pirate Lingo the worst ! Johnny Depp films have made my wife a master of that genre

Another example pointed to in the article - only 2 out of ten could provide proper commentary on things such as balance sheets and cash flow management.

It's of course what we have been preaching ( like a broken record all along?)

on the importance of getting some help in financial solutions, whether that be knowledge assistance, or in our case, financing .

One of the final main points in the article was that the business owner recognizes that they need help and need to invest a bit of time in what is actually a critical factor to long term survival, let alone success.

Canadian business owners and financial managers need to determine how much capital they need both currently and in the intermediate to long term. At that point they can start the search, on their own, or with a trusted advisor, to access those sources of financing.

In Canada some basic financing solutions include the following:

Receivable financing facilities

Equipment leasing

Working Capital Term Loans

Asset Based Lines of Credit

Commercial Canadian chartered bank lines of credit

Franchise financing solutions

Government business loans

Tax Credit Monetization

Contract /PO/Supply chain financing

That's a lot of solutions, and we assure the beleaguered business owner that, unfortunately, each comes with its own lingo.

All of these solutions can apply to both start up and established businesses. Larger corporations of course have access to more esoteric and sophisticated business finance solutions - including securitization, Mergers, Capital pool, IPO's, Mezzanine financing, etc.

It's not only important to determine that you need capital or cash flow in a certain amount, its also important to understanding the timing and various structures of each of the many financial solutions that we've noted above .

Bottom line is that understanding cash flow needs, and solutions will power your business into the next stage of success. Oh, and by the way, some of these solutions might work for all your financing needs, and in certain cases it might be a ' mix and match'

Our bottom line today? Simply that seeking the financing assistance you need might not be the toughest challenge you think it is. Seek out a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and asset monetization needs.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS 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-finance-solutions-assistance-financing.html







7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com













Stan Prokop