What's Alternative Financing In Canada ? Capital & Cash Flow Sources

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Alternative Financing Options For SME Commercial Finance Needs

Alternative financing options and sources is all about the right capital and cash flow from sources you can depend on to grow your company's sales and profits.These lending options tend to come with fast approvals although non bank lenders demand a higher rate of return based on the flexibility of their capital and the eligibility requirements .

Any current economic upheaval notwithstanding, it's safe to say that after the 2008-2009 recession businesses in the SME ( small to medium enterprise ) sector in Canada had greater difficulty in obtaining proper traditional bank financing . The ability do do business and raise business credit had many firms wondering what the commitment was to this key segment of Canada's economy.

Bank lending guidelines focus on key elements such as accountant prepared financial statements, personal guarantees, outside collateral, and performance ratios / covenants your company must abide by . That can be a challenge.

Alternative Financing Canada

 

The business line of credit is typically a major necessity for any company . when access to credit lines dry up your company is more often than not able to support ongoing sales and daily operations.

So what can small and medium sized businesses do ? Whether its start up funding, or growing a business the landscape of Canadian business financing has changed. Experts tell us that the reasons alternate capital sources are growing is a combination of regulations in commercial lending and technology. Many new lenders can provide access to financing previously only offered by Canadian chartered banks.

While in some cases banks are pulling back to certain types of lending new technologies and many new commercial finance companies are providing complementary financing to run and grow business.

At 7 Park Avenue Financial  we talk to new clients about the differences and benefits of traditional versus alternative finance solutions . Many firms have to utilize non-traditional business credit and business loans.

Though these sources of credit may not be perfect for every business, they are at least options to keep your company going through rougher economic times when you have been, as the saying goes ' de-banked'

Alternative Sources of Business Loans

 

Asset based loans - These facilities rely heavily on the hard collateral in your business, typically equipment, rolling stock, real estate, etc.

Non bank revolving credit lines - These business credit lines, often called ' ABL's " are used to manage the cash flow gaps that arise out of the need to carry inventory, collect receivables, pay employees and suppliers, etc. Similar to bank lines the carrying cost is calculated on the ongoing balance . The best way to operate these type of facilities is to make sure they ' revolve ' - hence the term ' revolving line '.

Another key benefit of the non bank asset based line of credit is that they can easily be increased as your sales and working capital needs grow.

Inventory Loans - Using inventory as collateral is often best facilitated in the context of the asset based credit line . The facility combines inventory and a/r financing to create an important source of ongoing cash flow.

Sale Leasebacks - Equipment your firm owns can be leased back to create valuable working capital,with your firm still maintaining full use of the equipment.

Equipment Financing - 80% of all North American businesses ( that includes Canada !! ) utilize lease financing to minimize capital outflows for new and used assets. Yes, used equipment can be financed !

SR&ED / Film Tax Credit Financing - Tax credits for the Government Scientific Research and Experimental Development program can easily be monetized to recoup valuable investments your company makes in R&D

Receivables Financing / Factoring - The ability to cash flow your receivables on an ongoing basis is one of the fastest growing parts of the alternative finance area . Our recommended solutions to clients of 7 Park Avenue Financial is Confidential Receivable Financing, allowing your firm to bill and collect your own a/r and be able at the same time to cash flow sales immediately as you generate revenues.

Royalty Finance - Royalty finance is quasi form of equity financing and allows your firm to raise funding based on sales

Purchase order financing - P O Finance is similar in many respects to a/r financing, but takes the whole process one step further , allowing the P O lender to pay your supplier for products related to legitimate purchase orders / contracts.

Working Capital Loans/Cash Flow Loans - Technology has allowed many firms to apply to short term working capital lenders who offer loans, typically 12 months in duration based on only your sales volumes. This type of financing is a key part of the whole wave of what the experts call ' FINTECH '. These loans fill a short term void and are typically based on loan amts equivalent to 10-15% of your annual sales volume. Other names for this type of loan is ' peer to peer / B2B ' financing.

These shorter term working capital loans/advances arose out of Merchant Advance industry in the U.S. , having spilled over into Canada . Those loans, called " MCA's " typically work best for retailers . In effect this area is a ' shake up ' of ' old school ' traditional financing. While these solutions are available to both public and private companies the majority of these types of financing revolve around private firms who want to both survive and grow their business.

We're not 100% sure that banks are abandoning small and medium sized lending - although many of our clients certainly feel so! But post the 2008 global recession it's safe to say business financing in Canada has changed. That's why the amount of capital available via private alternative finance firms should be often appealing to business owners and financial managers.

To explore the numerous capital and cash flow sources available via commercial alternate finance sources seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success, who can assist you with business loans that makes sense for your company / industry.



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


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.
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

What Is Alternative Financing For Business In Canada ?

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Alternative Financing Options From Non Bank Business Lenders In Canada

Alternative financing isn't something that most business owners and their financial mgrs equate with ' shopping ' , but the reality in today's environment is that it's a requirement for your company to know what traditional, and non traditional business financing solutions are available to your company . More and more companies everyday are looking at ' non bank ' solutions from credible lenders who can assist their business with cash flow, debt and working capital financing .

In some cases it's somewhat of a ' forced ' situation as some companies find themselves in what the banks term as ' special loan ' situations due to any number of events that have triggered a default in bank covenants, loan payments, etc. There is one immediate bottom line :

Turnaround Financing Is Required !

We'll take a look at different aspects of alternative finance solutions in Canada, as well as a re-focus on key issues within that damaged bank relationship that sometimes happens in the world of banks and traditional financing.


It's no real secret that interest rates for commercial business financing are at all time lows . Even bank fees associated with business lines of credits are not all that unreasonable. Nevertheless damaged relationships with your bank can exist, in certain scenarios that might even be about ' personalities ‘, i.e. the human side of business.

Clients sometimes feel that Canadian banks or their own banker specifically does not ' understand ' their business. In fairness to Canadian bankers they are sometimes just challenging a client and should often be viewed as a ' sounding board ‘for challenges your business might face

The limited amount of choice that owners/financial mgrs have when it comes to banks in Canada is of course a limited number of banks in a highly regulated environment . That's a good thing for banks and the health of Canada as a whole, but not so good when it comes to your business or your industry being able to achieve it's financial and sales goals with the right amount of financing.

That is of course unlike the U.S. which has different tiers of commercial and business banking, with hundreds if not thousands of individual bank lenders.

In certain cases your industry might be ' out of favor ' and traditional lenders are looking for ways to end relationships in certain economic sectors. With all due fairness to there being two sides of the story, we at 7 Park Avenue Financial can commiserate with the Canadian firms who suddenly find their total future and destiny in the hands of a third party.


As a short aside, probably the best advice we can give a client is to choose a banker that is relationship oriented and had internal credibility within her or his bank. Our belief - all banks are the same; all bankers are not the same.

What Then Are The Alternatives For Canadian Business Finance Solutions From Alternative Finance Lenders ?

Using our ' shopping analogy ' there's some solid choices when it comes to business funding .

Alternative Financing For SME'S In Canada:


Solutions include:

Asset Based Finance Firms

Equipment Lessors - Sale Leaseback Specialists

Accounts Receivable Financing

Inventory Financing

Purchase Order Financing / Alternative Sales Financing For Procurement

Royalty Financing

Tax Credit Loans ( Primarily SR&ED )

Key Point: Any of these alternative finance solutions can be combined in a variety of manners to allow for full scale financing of your sales revenues.

Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business financing success, who can assist you with achieve refinancing needs.



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


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.
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

How To Finance A Business In Canada

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Traditional and Alternative Debt Financing Solutions To Run - Grow - Or Start Your Company In Canada

How to finance a company in Canada - It is not secret that the ability to start a business, fund it for operations, and , as importantly , grow the company is a key challenge facing business owners, financial mgrs, and start up entrepreneurs.

There are basically only 3 ways to finance your company -

Equity


Debt


Cash Flow Financing Assets/Sales

Lets take a look at some key basics surrounding how these solutions can be accessed , and in some cases ' cobbled together' to identify the right source of business capital for your firm. Our comments will not focus on the ' equity ' component of your business ; private and public equity is a subject for another day .

In business the old adage ' timing is everything' is critical . Naturally financing your business in a healthy economy when your company is firing on all cylinders is much easier than a faltering economy or with your company experiencing financing challenges. The right amount of debt and cash flow is often the life blood of any firm . Companies large and small go out of business due to their inability to get the proper mix of financing in place.


Banks and commercial finance companies are of course your ' financial partner ' when it comes to generating financial support for your firm. As companies growth they need additional cash flow financing to support sales, a/r and inventory levels, etc. It should not, but it might ! come as a surprise to many that companies can fail when they grow too quickly.

As we noted the main providers of business financing in Canada are our chartered banks and commercial finance firms . Some of these commercial finance firms offer traditional financing - many of them are 'bank alternatives ' ,providing capital to firms who cannot access bank credit.

Debt And Cash Flow Financing Options in Canada

Banks are often the first ' go to ' when it comes to business looking to access financing solutions in Canada. When companies have the right amount of owner equity, corporate and personal assets and collateral the rates, terms flexibility, and amount of capital is virtually unlimited.

Unfortunately the banking system in Canada does not support the many thousands of firms who have basic or specialized needs and can't qualify under bank criteria. These companies just don't have the ' secondary repayment sources' and outside the business collateral often required by the SME COMMERCIAL FINANCING sector in Canada.

So what then are the options to finance a company . The options are asset based lenders and other ' alternative finance ' firms that provide

Non bank lines of credit,

A/R financing,

Inventory financing,

Purchase order financing

Tax credit finance solutions.

Sale Leaseback financing

Short Term Working Capital Loans

And it is safe to say that these firms do not require the same qualifications required by banks . It's a bit of an over simplification but the two main requirements for alternative financing are

Sales


Business Assets


Equipment financing, aka leasing your key assets is also a very effective method of financing your firm. It also relieves the larger cash outlays your business needs when it acquires assets.


Start up and small businesses have access to the Government SBL loan program - This is a government guaranteed loan which has great rates, terms and structures when it comes to acquire assets and even financing leaseholds and real estate. Many franchises in Canada, as well as business acquisitions in the SME sector are financed by the Industry Canada govt loan program .As stated the majority of the loan is guaranteed to the bank by the Federal government. A partner you might not have known you had !


Cash flow financing, or ' Asset Monetization ' can be accomplished by utilizing receivable financing, inventory finance, and even selling your tax credits such as those under the SR&ED program . The SR&ED program provides billions of dollars in non refundable credits and these credits are easily financed.


One of the best methods of cash flow financing comes your a partner you know only too well - yourself and your firm. By managing your assets such as inventory and A/R you can generate internal cash flow through your business operations.


Speak to a trusted, credible and experienced Canadian business financing advisor who has a track record of business finance success on those debt and cash flow financing options when it comes to how to finance a company in Canada.



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


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.
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

Looking For A Solution To Business Cash Flow Problems ? Solved !

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Business Cash Flow & Working Capital Solutions

Business cash flow problems are encountered at numerous stages of growth in a company's existence . The good news that numerous solutions, both ' traditional ' and ' alternative' are available to fix the problem and set your company back on the right course.

One solution to the working capital conundrum is of course to stop growing ! That's a tough one for any business owner,financial mgr, or entrepreneur to accept . If they did that though they would not need to maintain a higher level of inventory, investment in accounts receivable, or to purchase new equipment/software , etc. It then makes sense that financing solutions around those asset categories we must mentioned might just be the answer you're looking for, right?


In some cases firms might find themselves in a crisis or turnaround situation - it is very difficult to grow and expand your company when you're in the throes of daily financial type issues that deter owners and mgmt from moving forward with growth plans. Quite often these situations are accompanied by pressure from secured lenders , banks, suppliers, etc. Those situations are never comfortable.

Many firms that are growing to quickly will often find that costs and other finance issues are being masked or hidden due to the apparent success of sales. But higher sales can't hide financial flaws forever.

Obviously those sales also create the need for more working capital and the required investments in those current assets on the balance sheet - a/r , inventory, etc. As we said stopping the growth frees up cash flow and some of those creditor issues. Efficiencies around collecting your a/r faster, managing better inventory turns , etc always create more cash flow . So it shouldn't always be about volume - that old adage ' We'll make it up on volume ' somehow seems to never work!

In some cases raising prices to increase cash flow might be considered , but that's rarely the focus of many business owners.


We think you can see the point, in that the optimal solution is to ensure your cash flow / working capital availability must be measured and managed around sales growth


Many businesses in Canada, (perhaps not tech type business) would be very happy with a ten percent year over year sales growth. Let's say you were focused on growing at 25% this year, a huge increase by any measure. However, profits and cash flow and working capital don't move lock step with those sales.

What then are the actual financing solutions to those changes in your current assets in the sales growth strategy. Traditional solutions such as bank financing for business lines of credit will work - Firms that cannot access any or all the bank credit they need should consider alternative financing solutions such as asset based business credit lines. These 2 types of business credit facilities allow you to better finance and manage extending credit to your clients.

No one solution is applicable to every company in every industry - so the ability to access financing assistance from an experienced 3rd party is key .

Solutions For Cash Flow Problems In Canada:

ASSET BASED LENDING

RECEIVABLE FINANCING/FACTORING

WORKING CAPITAL TERM LOANS

SHORT TERM WORKING CAPITAL LINES

PURCHASE ORDER FINANCING

INVENTORY FINANCE

TAX CREDIT FUNDING ( SR&ED LOANS )



Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success who can assist you in the need for proper business working capital and cash flow solutions that match your company needs.


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


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.
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

Canadian Commercial Business Bank Financing - What’s Right ( And Wrong ) With Your Banking Strategy

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INFORMATION ON BUSINESS BANKING SOLUTIONS IN CANADA

Canadian business owners and financial managers assess their commercial business banking and financing needs at different times in their company's life.

As in many other facets of business it's a little difficult to develop a solution and fix a problem if you don't understand the fundamental problem.

The need to grow your business and be profitable usually drives a bank financing need. A growing business consumes, and needs more cash, if only for the fact that you’re building up receivables and inventories.

In Canada business operating lines of credit are offered by our chartered banks. These facilities finance your A/R and inventory via specific margin calculations.

Most Canadian firms that have this type of credit facility submit monthly financials and aged receivables, which in turn create a new borrowing base under which you can draw funds. Companies that are having challenges ( i.e. they are in special loans ) or who are in breach of covenants may in fact be required to submit almost daily cash flow and receivable reports .

Although the basic arithmetic around bank financing and commercial banking is simple in reality there are a lot of other factors that might end up affecting your bank facility.

What are some of these? In the continuum of time certain industries fall in and out of favor. No better example of this is offered up than the auto industry. Other factors that you as a business owner might not like that affect your bank financing are issues such as your profits ( or lack thereof!) , they quality of business and outside collateral, and your banks insistence on personal guarantees.

Bank financing works best under the following condition - your company is expanding, but at a reasonable rate. One of the greatest ironies of Canadian business financing is that a hyper growth business, even if its generating profits, is often viewed as financing challenged by a Chartered bank.

Business banking utilizes a very basic concept that is often misunderstood by the Canadian business owner. That's simply the fact that with a commercial bank line of credit you're drawing on assets of your growing business to pay older items. But wow, when your business ceases to grow, or profit your ability to draw cash flow out of your A/R and inventory business line of credit stops. But you still have operating and fixed term payment obligations and it now becomes difficult to pay suppliers.

Companies that have a solid handle on cash flow needs and their historical working capital inflows and outflows are in the best position to manage their firms and access bank financing.

Time and time again we meet with clients that tell a very similar story - business grew, expansion plans were put in place, fixed and operating costs grew, and .. you guessed it .. sales started flattening or going down. The result - a recipe for financial disaster!

The ability to manage your cash flow, or, alternatively, slow down your business is key. Speak to a trusted, credible and experienced Canadian business financing advisor for commercial bank financing that makes sense from where your firm is now.






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


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.
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

Carrying On Without Cash Flow Is Not An Option ! Analysis and Solutions For Canadian Business

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INFORMATION ON BUSINESS CASH FLOW FINANCING SOLUTIONS

Carry on?
business cash flow ? That's not an option for Canadian business owners and financial managers. That's why the analysis of their cash and working capital needs, in the context of solutions available is so critical in today’s business environment.

So are we all in agreement? We mean of course that no company has the ability to on a long term basis operate successfully without cash. That shortage is often the reasons why many companies fail.

However, the balance sheet and the income statement, as we always preach, dont necessarily tell you the full story of your company's goings on! A cash flow statement, that’s the third part of every financial statement package will, however, truth be told you can perform a fair bit of solid analysis way before your accountant or your accounting system delivers that document to you.

So why do you want to be so attuned to that cash flow anyway. Simply because whether it’s the short, intermediate or long term it’s a true measure of your solvency. And that solvency is what keeps your creditors and lenders and suppliers either happy or dissatisfied with your payment ability.

In more sophisticated firms a real measure of cash flow is often ' free cash flow '. Simply speaking it’s the true cash flow calc which then subtracts your capital expenditures to come up with that ' free cash flow '. Investors in public companies look at that one a lot, and quite frankly since the small to medium sized business in Canada doesn’t pay dividends or have to report earnings and cash flow we dont really consider that one quite relevant in the context of today’s discussion .

So what is important then? Several other great tools area available. Just one of those is the cash return on sales analysis tool. Take your cash flow from operations and divide that by your net sales over that same time period. Let's say the number works out to 10%. What does that mean? Simply that 10% of the sales you generate provide cash to the company. At the end of the day the number is relative to your company because it tells you how efficient you are in turning sales into cash.

Another great tool to check out is current cash debt coverage, which we'll leave for another day’s discussion.

At the end of the day there are ultimately 5 reasons why companies fair - they have too much debt, they are caught in a vicious cash flow cycle, they have current assets that aren’t turning, or fixed assets and too little capital come into play.

To solve these challenges Canadian firms have a variety of solutions - they include bank lines, asset based lines of credit, receivable and inventory financing facilities, tax credit monetization, and securitization. Oh and dont forget the proper use of equipment finance.

Speak to a trusted, credible and experienced Canadian Business Financing advisor on business cash flow analysis and solutions available to your firm today.





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


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.
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