Solvency Finance : Taking Your Company From Slow Decline To Rise In Business Liquidity Solutions

Don’t Take This The Wrong Way: Do You Know The Difference Between Business Solvency And Liquidity

OVERVIEW – Information on business liquidity and solvency finance solutions for Canadian business financing strategies for growth and operations

Business liquidity , we've found, means different things to different people. So... don't take this the wrong way, but do you really understand ' solvency finance issues when it comes to your firm's current and long term cash flow needs? Let's dig in.

The challenge around understanding the overall liquidity of your business essentially revolves around long term commitments, recognizable by the term ' solvent'. As all business owners and financial managers know only too well business also operates in the short term, requiring ' real cash ' to make its commitments.

Another way to explain the situation is as follows - when lenders as well as investors look at your firms overall financial status they view it in terms of all your assets versus your liabilities. More assets are better!

Your goal? To insure your company has long term health as well as meeting its daily commitments. Although it shouldn’t be the case (but unfortunately is) many owners/ managers are ' distracted' by paper profits and sales growth, not foreseeing the ' liquidity ' crisis coming down the road.

Having those assets we spoke about, and knowing how to finance them is the key to liquidity - you're 'solvent' on paper and liquid in the bank. Assets, both current and fixed, give you ' financing power' to become more liquid.

However, we're the first to mention that assets poorly managed, valued, or the lack of current asset turnover again brings us back to our point - you're solvent on paper but facing failure in liquidity .

Canadian chartered banks are the best when it comes to providing capital when your business, as well as the economy, is in ' good times'. When does that change? Banks are rightfully not prepared to finance financial losses, downward spiraling sales, etc.

How then does the business owner/mgr finance itself properly and avoid the dreaded ' cash crisis' that almost all businesses , large and small, face at one time or another. One solution is ensuring that your available cash is augmented by a business credit line. Canadian business can access either bank revolving facilities, or if they don't qualify ' ASSET BASED LINES OF CREDIT - ' ABL'S are available from commercial lenders.

Typically combinations of mgmt activity are required to ensure proper liquidity - that includes structuring credit lines that make sense, managing payables, and addressing key profit/margin issues.

Bankers, as well as those friendly Bay street guys, and other commercial lenders have various time test tools to quickly assess your solvency and liquidity. These ' ratios’ include net working capital calcs, debt to equity tests, interest coverage, and asset turnover.

Knowing how these tools measure your company is a great asset for any owners/mgr.

Financing mechanisms that help you to both manager liquidity and solvency include:

A/R Financing
Inventory loans
Bank revolving credit lines
Non Bank asset based lines of credit
Tax credit finance
Equipment Financing/ Sale Leasebacks
Royalty Finance
Unsecured cash flow loans

If you're focused on ensuring you've got both the tools ( to measure ) and the solutions ( to solve ) liquidity and solvency issues seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist your firm .





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


7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS LIQUIDITY FINANCE EXPERTISE




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

Debt Financing And Business Liquidity For Canadian Companies

Canadian business financing debt solutions – Is Now The Time?


Information on debt financing and business liquidity solutions for Canadian companies . Assessing and managing debt load.



Debt financing for your Canadian business. Should you... and when? That’s the key questions the Canadian business owner and financial manager takes a look at when assessing business liquidity.

No one is going to argue that the focus should not be on profits, but the reality is that if you have too much business debt, or aren’t properly monetizing current assets you're going to be in a situation where the last of your concerns are going to be profits, you'll in fact be fighting for business survival.

Notwithstanding the type of debt your company needs it’s in fact the level of that debt that is going to be the key focus of any financing partner you're looking at. That partner’s focus is very clear: getting repaid!

So are there in fact some ways you as a business owner or manager can determine what the right amount of debt is? Ultimately it's a case of ensuring that business liquidity is there to properly augment future business success.

We point out to clients that there is not magic formula for the right amount of debt; there are some industry standards though and that relates to the fact that different industries and business models require different amounts, and types, of debt financing.

The average business owner thinks of ' the bank ' when it comes to measuring debt. They are of course the masters of ratios (we have always preferred to call them relationships) and the covenants that come with those ratios. We're also not necessarily in agreement if some of those rations and calculations accurately reflect whats going on!?

Case in point? The proverbial ' current ratio ' which many bankers and lenders focus on as a key measurement of debt and business liquidity. By going to your balance sheet and taking current assets and dividing them by current liabilities we're told that a 2:1 ratio is generally desirable, and that higher is better. But our point? It's simply this in fact might be a poor measurement if receivables and inventories are growing... BUT NOT TURNING!

Debt financing in Canada brings interest repayment. That's where interest coverage comes in - you want to be in a position to generate enough positive cash flow, at a minimum, to repay that debt. The quick formula if net income plus deprecation divided by interest expense. Here to the bankers tell us that 1:25 to 1 is a desired ratio that reflects positive business liquidity.

The total debt you carry in relation to your equity in the company is a very valid discussion point when it comes to your ability to achieve the amount of debt financing you need. And how you use that borrowed money, via leverage, is also key.

So whats our take away today when it comes to accessing the right amount of debt via business liquidity solutions Simply that you do need to understand how debt financing is score carded , by your lenders and yourself as an owner .
Using debt properly won’t put you in a cash crunch and will allow you to grow your business.

Speak to a trusted, credible and experienced Canadian business financing advisor on sourcing debt financing that makes sense for your business liquidity needs. That might include bank debt, cash flow loans, equipment financing, subordinated debt, or merger and acquisition financing. It's score carding and measuring that’s the trick!

7 PARK AVENUE FINANCIAL

CANADIAN DEBT 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/debt_financing_business_liquidity.html

Here’s One Method To Increase Liquidity . A Canadian ABL Asset Based Finance Co Solution

A ‘ NEW ‘ Canadian Business Financing Solution ?


Information on how Canadian firms can achieve greater business liquidity via an asset based finance co ABL facility . Asset based lending … works!



Business liquidity. We were watching a U.S. bank TV commercial the other day and they were talking about ' accelerating cash flow '. Many but not all Canadian business owners and managers are aware that the Canadian banking system is dramatically different from the U.S. one. Hundreds of U.S. banks focus very directly on commercial lending to the point that it's actually the largest part of their portfolios - that’s hardly the case in Canada of course where there is a major focus by banks on savings, mortgages, investments, securities work, etc.

So the asset based finance co (company) in the U...S is a very large part of the commercial landscape. That's not the case in Canada; however that is slowly changing as thousands of firms investigate ' ABL ' facilities as their new alternative to accessing business liquidity and capital.

Let's take a look at how and why the asset based lending facility is a cash flow accelerator. For a starter, what are the reasons a firm would want to consider what we term a ' non bank' facility in Canada. The reasons are diverse - they include acquiring a firm, recapitalizing a firm, or simply monetizing their current and fixed asset base to accelerate cash. A true ABL financing doesnt necessarily bring any debt to your balance sheet - it a simple ‘monetizer ' of assets.

So when your firm considers such a solution it’s simply a case of understanding and of course sharing your current financial position, and focusing on how the specific use of funds will enhance cash flow.

What are some of the reasons a firm fails to recognize the need for a better business line of credit? They can be diverse, but they include not understanding some of the external pressures facing their company , operating on a belief that the old ways in business finance will always work, or even having undertaken a project or strategy that failed, thereby severely impacting your working capital and cash flow,

In order to understand the benefits, as well as implement a solution via an asset based finance co partner you need some basics under your business belt. They include knowing your days outstanding for both your A/R and payables. If you company has an inventory component, which is certainly the case in many manufacturing and wholesale firms in Canada the amount you are carrying , its turnover, and the amount requiring financing is key .

Why then does ‘more ' business liquidity come from ABL solutions. That’s the easy part to explain to a client, because it simply involves combining the total amounts of receivables, inventory, fixed assets, and real estate into one basic ' pot of assets ' that is monetized into a business line of credit.

Don't be surprised if your new ABL facility doubles your current borrowing power! That’s because it margins receivables at 90%, inventory anywhere from 30-70%, and then throws in additional borrowing power via a constant drawdown and revolving of funds based on equipment and real estate if n fact the latter is applicable.

Speed... and acceleration; that’s what the TV commercial for U.S. business banking was talking about .. and it’s available in Canada via an asset based finance ABL solution .Now you know!

Speak to a trusted, credible and experienced Canadian business financing advisor on this great method of increasing financing for your firm.






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_liquidity_asset_based_finance_co_abl.html