How To Untangle Your Business Financing Via ABL Capital

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Overcome Business Line Of Credit Finance Hurdles! It’s Changing Times In Business Finance. Here’s One Reason Why!
 

Is ABL capital a solid or maybe your ‘best choice’ when it comes to untangling the challenges your business faces when it comes to a comprehensive business line of credit?  We think it's a solid finance solution and many industry experts agree. Here is why!

 

WHAT IS  ' ABL' IN  BUSINESS FINANCING?

 

What is ABL? .... which of course stands for asset based lending. We ask that question only because it, and other terms such as ' cash flow ' mean different things to different people. In our terms, it is a total solution business line of credit that allows you to borrow against your  accounts receivable, inventory, equipment, and even real estate, all within one revolving facility. It is as simple as that.

 

THE ABL BUSINESS FINANCE SOLUTION VERSUS BUSINESS BANKING CREDIT VIA A CHARTERED BANK

 

It's really a total solution that, in effect, is an ' evolution ' in the concept of the asset-based line of credit.  For the asset based lending company, your new partner in business banking it's all about the balance sheet. That is of course compared to Canadian commercial business banking, where it’s all about the balance sheet... and your cash flow statement, and your income statement... and your personal guarantees.  In  ABL it's all about accounts receivable, inventory, fixed assets, and real estate.  Purchase order finance solutions can also be combined into a total overall financing solution for those firms taking on larger orders and contracts that otherwise might not be financeable.

 

Those of course are what drive Canadian business banking rates to be so low and so great... if you can access them! The asset based loan solution comes with a higher cost of financing via interest rates but provides you with that much more liquidity.

 

IS YOUR FIRM CURRENTLY ' UNBANKABLE' FOR YOUR BUSINESS CREDIT NEEDS?

 

If we had to line up the different companies that access ABL capital via asset based lending  it's a diverse group - its larger firms that are very bankable but can access more capital at better rates, all the way down to startups with a more limited financial history, at the same time having assets that can be financed.

 

We are pretty sure this doesn't exist in Canada, we certainly haven’t seen it yet, but in the U.S. there is a huge ABL capital market known as ' Second Lien '. Under these facilities, the asset based lender sits on top of the senior bank facility, in 2nd position, and advances even more against the total assets already being financed by the bank.  Surely that is one reason why our banking and lending practices are much more conservative in the world marketplace - we don't lend twice against the same asset!!

 

FIXED ASSETS AND EVEN REAL ESTATE CAN BE INCLUDED IN YOUR CREDIT LINE!

 

When we sit down and talk with clients about what can be financed and how its often practical to finance current asset accounts such as a/r and inventory via an asset based lending ' ABL' line of credit, while at the same time financing the equipment and other fixed assets under a separate facility with a finance partner/lender who has an appetite for those type of assets. That total combination of two facilities gives our client a lower ' blended cost ' of funds and at the same time increases borrowing power - talk about a ' double whammy '! Asset-based lending rates are higher thank bank financing but it becomes a question of access to capital versus cost of capital for funding and growing your business.

 

 

WHY IS THE ABL CREDIT FACILITY SO POPULAR

 

What made asset-based finance popular in Canada when it comes to business owners and financial managers seeking solid biz credit facilities?  A lot of it revolves around 2008/2009 when financial markets went awry and thousands of Canadian businesses started to investigate alternative methods of financing their business. And ABL sure was one of them. And let's not even talk about Pandemics.

 

And the irony in the above? Simply that companies that even theoretically qualified for more traditional financing could not get it... enter the ABL facility! It's a new kind of line of credit.

 

So is there a trend emerging in the  Canadian business line of credit offerings? We think there is. In the U.S. experts confirmed that even back to  2011 and continuing in popularity to today asset-based credit lines almost doubled. We think it did, perhaps somewhat less so, but clearly the emergence of a new trend via asset-based lending banks and independent non-bank commercial finance companies

CONCLUSION

If your company is looking to grow (or just survive) investigate the benefits of ABL capital and asset loans for working capital,  making you a more effective competitor. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision with the right type of facility.

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

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5 Things You Didn’t Know About Asset Based Lending in Canada

Asset-based lending in Canada – We’re discussing 5 things you didn’t know about ‘ABL Financing ‘ in Canada.

5 THING YOU DID NOT KNOW ABOUT ASSET BASED FINANCING

1. What is Asset Based Lending?
2. What does it Cost
3. How does it Work
4. For what type of firm is it perfect for
5. How to get such financing!


LET'S DEFINE ASSET BASED LENDING 

Asset-based lending and financing for your business is simply the utilization of your business assets for maximum business financing based on your business needs. Business owners and financial managers should understand that this is a replacement or specific financing as an alternative to either traditional financing ( via a Canadian chartered bank ) or to a firm that is unable to get financing that might otherwise be called traditional.  Firms in that category might include start-up operations or firms that have had business challenges. 

ABL financing is the utilization of your current and in some cases your long term business assets for the leveraging and monetization of working capital and cash flow. The current assets are almost always accounted receivable and inventory, and longer-term assets in some cases might include equipment or real estate that your firm may own – for example, owner-occupied premises.  

All assets must be unencumbered, that is to say that they should not have any liens or registrations against them, otherwise it would be difficult, if not impossible, to structure an asset based loan.
Typically the asset-based lender pays out any existing creditors and takes a charge against the assets being financed.

WHAT DOES ABL COST?

Does asset-based financing differ in cost to traditional financing? We have to use your lawyer’s typical answer (it depends) but the reality is that in Canada the costs of asset based lending are all over the map. In some cases they are actually lower than chartered bank financing; in most cases, they are more costly.


When we indicated to clients that financing of this type is more costly we point to clients that they have to balance any additional costs against what they are receiving. And what they are receiving quite often is simply the maximum working capital they need based on their asset and growth needs. That can rarely be achieved these days in the current challenging economic crunch - pandemic issues included.

THE EVERYDAY WORKING OF AN ASSET BASED CREDIT FACILITY

 So how do asset based loans work? A few simple key points will help you better understand how this type of financing might work for your firm on a day to day basis, and, as importantly, for long term growth.   The ‘key word’ here is ‘Asset’!  ABL financing focuses on the real true market value of your assets.

 Many other traditional types of financing, i.e. a bank line of operating credit, etc, is in fact focused on many other metrics such as the lender's perception of what industry you are in,  and typical financial ratios and metrics such as cash flow coverage analysis,  debt to worth ratios, etc, etc, etc!


Asset based lending puts those items aside. Using specialized industry experience, analysis, and in some cases appraisal of your assets you are provided with the maximum amount of capital those asset categories can achieve.

So, as an example, if you have  500,000.00 in account receivable you can borrow against that  $500,000.00. That typically is not how traditional financing works. We often point out quite frankly that asset based lending is in fact becoming a traditional financing method for Canadian businesses of all sizes.

WHO IS ' ASSET BASED ' ABL FOR ANYWAY?

So who is this type of financing for? The answer becomes very simple. It is for industries of all types in Canada – Typical transaction on the small side are $250,000.00 and deal sizes are in the multi-millions when it comes to large facilities. 

In some cases, sky is the limit and some of Canada’s largest corporations have adopted this financing method.  Asset-based lenders are specialists in understanding what your business is about, what are its cash needs and cyclicality, and what type of optimal structure works for your firm.

 HOW CAN MY FIRM ACCESS ASSET BASED LENDING ?   SPOILER ALERT - CONTACT '  7 PARK AVENUE FINANCIAL '

 How does your firm investigate asset-based lending on the Canadian business scene? Since the financing is rarely front-page mainstream news then it is highly recommended that you work with a trusted, credible and experienced advisor in this area. The Canadian landscape is cluttered with small firms, mega-corporations out of the U.S., as well as boutique divisions of other well-known institutions you know of but was not aware this type of financing was being offered to Canadian business.


So what’s out bottom line – its simply be informed, work with an expert, understand your cash needs on an immediate and long term basis, and consider structuring such a facility for your growth and benefit. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your asset-backed finance 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

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

The ‘ 411 ‘ On Working Capital Finance In Canada - Cash Financing Loans And Solutions

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Canadian Working Capital Financing Alternatives


Information on working capital finance solutions in Canada . How can you measure your cash flow financing needs and why types of loans and facilities work to solve working capital challenges

You're a Canadian business owner or financial manager... you've just dialed ' 411' for info on working capital financing ! What alternatives, types of loans and cash flow financing are available for your firm?

Let's discuss your question, with a focus on ' solutions ‘! Before getting to our answer let’s all agree it’s important to understand the question and subject. Our terms of reference are simple today - operating liquidity - it's the other half of working capital, balanced also by your fixed assets as part of your total equity structure.

But enough finance and accounting lingo... as a business owner you well know that you have have lots of sales, assets, and still be struggling everyday to meet your current obligations of payables, salaries and wages, lease and loan payments, etc. I

If you weren’t struggling you've solved your working capital and cash flow challenges, but we're assuming you haven’t, that’s why you're here.

If you have access to bank credit ( many small and medium size firms either don't , or don't have enough ) you r banker defines positive working capital finance as the difference between your cash , receivables, and inventory subtracted from your payables and other short term obligations .

But can a firm or business have negative working capital... actually yes. If you are a retail oriented business, or have very short credit terms and turn inventory and sales quickly you actually are winning, not losing. You have negative working capital but have won the cash flow game... essentially you collect quicker than you owe, so to speak.

We encounter many clients that have retail or service oriented businesses but still have cash flow challenges, mostly around growth. A unique new working capital loan solution called the Merchant Cash Advance small business loan is a great way to solve that cash flow financing challenge - so check it out.

What are the solutions to the management though of positive working capital - its a bit of a misnomer because when you think about it the more positive working capital you have ( i.e. inventory and receivables are growing ) the more cash strapped you are

The more common solution clients consider is simply ' bank credit ' - i.e. traditional financing. If you want to know if you qualify for bank financing for operating lines of credit financing you should ensure your firm is profitable, is perceived as stable and growing .. and your balance sheet ratios should be in order . Thousands of firms cant meet those fairly simply tests. Whats the solution?

If your cash conversion cycle (the time it takes a dollar to flow through your company) is high you need a working capital facility that finances both your inventory and A/R. For large firms an asset based line of credit is a working capital operating loan that makes total sense. The majority of these types of facilities are non bank in nature, and offered by specialized finance firms that specialize in cash flow solutions. Oh, and by the way, a lot of those ' bank requirements' we spoke of don’t apply when you consider an asset based line of credit - Why... simply because the focus is on your assets - inventory, receivables, and in some cases your ability to borrow against fixed assets.

The main offerings of Canadian working capital financing are asset based lines of credit, inventory and A/R working capital facilities, as well as receivable financing, augmented in some cases by purchase order or inventory financing. These solutions typically are outside of bank financing, come with a higher cost, but provide thousands of Canadian firms with all the financing they need to grow sales and profits . If utilized properly you have the ability to significantly reduce the costs associated with these types of financing.

So whats our bottom line advice on the information you asked for on working capital and solutions available in the Canadian marketplace. Simply that you need to understand your firms unique operating and cash flow requirements, you have to be able to have some sort of measurement on whether you are winning or losing (the cash conversion cycle formula works best - check it out) and finally you need to be able to seek out and work with a trusted, experienced and credible Canadian business financing advisor to keep you falling off the slippery slope of working capital financial pressures.

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


Click here for 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 .

' 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

Finance Challenges ? Why An ABL Lender Has Your Canadian Financing Challenge Solved ! An Asset Lending Loan

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Business Line Of Credit ? – Why ABL is the Answer !

Information on ABL lending and financing in Canada . Why this type of finance loan is saving thousands of companies everyday . An Asset based lender can solve your cash flow challenges

Seems strange, don’t you think ? That the same type of financing that could be a solution for taking your company out of special loans might be the same one that can handle your growth financing needs ?

We are talking about ABL - the finance acronym for ' asset based lending ‘. ABL lending is a powerful financing loan (not really a loan per se) but we will get back to that) offered by a unique type of lender in the Canadian marketplace.

How unique are those lenders - we think very! And we're going to demonstrate why, right about now!

ABL lending and financing is a financing facility that is set up to monetize or cash flow your assets. The closest comparison we can offer you to this type of financing is that it is comparable to a Canadian chartered bank operating line of credit and financing facility. But boy are they different.

Your ABL lender sets up a monetization of all your business assets, but typically the key assets are receivables, inventory, and occasionally complimented by equipment and real estate if those latter two are applicable. We can hear you already, because we have heard it from clients a thousand times ' But why is that different from a bank line of credit?"

The answer is simply, the total focus and amount of the facility is actually based on your total assets, and their current values. Bank operating lines on the other hand are pre set limits that are significantly focused on financial ratio, loan covenants, tangible net worth, and outside guarantees and equity. What a difference, right?

So is ABL lending better? Ours is to inform, yours is to decide - but abl financing optimizes the amount of financing you can achieve to the max. It is set up as a base of all your assets, with yourself drawing against those assets on a daily basis. That of course matches perfectly the needs of your company, i.e. the daily inflows , outflows, special bulge needs, large new contracts, overcoming slow collection challenges, etc .

Because the abl solution is always focused on your total asset picture it in effect optimizes your total available working capital. We think you're getting the picture. And getting back to that always comparison against a chartered bank facility your borrowings on a daily basis are managed much in the same way - you use those same established ' borrowing base certificates ' that allow you to drawn down on cash flow and working capital on an ongoing basis.

The bottom line -as sales grow and you generate receivable sand inventory your abl loan financing fluctuates to turn your company into a true cash flow machine.

Some of the key issues you need to address in choosing the ' perfect ' ABL lender are as follows - the size of the facility, what information is required of your firm to set up the facility ( appraisals and operating audits are required ) , the timeline to set up the facility ( typically 2- 7 weeks depending on size and your reporting capability ) and issues such as cost and ongoing reporting and monitoring .

In the U.S. stats show that almost 30% of firms use some form of abl lending and loan financing to finance their firms. We are pretty sure the numbers in Canada are lower, but we sure do think you should determine if this type of financing is your total solution to business finance challenges. Speak to a trusted, credible and experienced Canadian business financing advisor about solving your cash flow challenges - today!



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


Click here for 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 .

' 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

New Ways To Achieve Accounts Receivable and Inventory Financing - The Working Capital Finance Loan Facility

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Canadian Inventory Finance Loan Solutions

Information on inventory financing in Canada . What are the best ways to finance inventory and accounts receivable via a loan arrangement that works ?

Successful business owners and financial managers are always looking for a new... no wait, ' better ' way business financing success. No where that is more obvious than in the quest for

accounts receivable and inventory financing

, the actual monetization, if you will, of your balance sheet current asset accounts.



So we have dubbed the solution as W/C solution if you will . What's W/C - Why working capital of course, and a variety of ' flavours of this type of financing loan facility are available to your company. It's just that they are not well known - Until now!



Is it unique, or novel to be looking for way to raise cash flow and working capital out of your receivable and inventory investments? Absolutely not, its just that its become a lot more difficult in the past several years - and we're talking from the start up right up to major corporations - No one has been exempt from the pain challenge of raising working capital, that works!



So what sort of ' cash flow products ' if you will, are available? Many clients are skeptical that it is difficult, or impossible to generate a stand along inventory finance facility. There is some truth in their belief, in that the collateralization of your inventory is in many cases tied to the overall collateral that your company offers up, usually in the form of a blanket General Security Agreement given to your lender, in some cases Canadian chartered banks.



However the hard reality, even harsher since the 2008-2009 recession, is that inventory financing in Canada has been difficult to achieve.



So let’s cover off your options in this regard, one of them might well be the option you are looking for. At the top of our order is of course straightforward bank financing that is margined against your collateral, typically the A/R and inventory we mentioned. That’s probably optimal, but the requirements that come with that facility are significant, they are good financials, owner guarantees, strong operating performance... well you know the drill.



However, did you know that there are independent finance firms that offer a working capital facility along the same lines as that chartered banking arrangement we mentioned. The most valuable facility is the asset based loan, a financing arrangement that in many ways is similar to a bank deal, but significantly margins your inventory financing needs simply because real value and appraisals are made on your inventory. There are numerous situations where clients have been able to double, and even triple their overall working capital loan facility with this type of transaction.



A number of what we call ' second tier ' firms step in for many small and medium size transactions, for facilities that generally range from 250k - to 3 Million dollars. These facilities are more expensive, but again give you very solid borrowing power.



And back to our main theme, is it possible to achieve a pure inventory and contract financing in Canada. This solution is more expensive, but non bank in nature, and provides a method in which you suppliers are paid directly , with your rights in inventory and contracts being assigned to the lender an independent finance firm, somewhat boutique in nature . You are simply leverage the actual inventory prior to it being sold and generated into a true receivable, which of course itself can then be monetized.



So, whats our take away here? Pretty basic, yet giving you hope. Various forms of direct inventory, non bank financing, and contract and purchase order financing do exist in Canada. They are becoming more mainstream everyday. Intrigued? Got questions? Have a unique situation? Speak to a trusted, credible and experienced Canadian business financing advisor real world solutions to an inventory financing loan facility 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

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Click here for 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 .

' 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

Unique Canadian Cash Flow Financing & Working Capital Loans & Finance Options

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Cash Flow and Working Capital – Today’s New Alternatives !

OVERVIEW – Information on cash flow and working capital financing solutions for Canadian business. Types of loans and finance strategies that can save and grow your business

The Gap. That was the essence of a business story in Canada's national business newspaper regarding business financing optimism in Canadian business.At the core of business finance is financing working capital, generating cash flow and being aware of loans and finance solutions that make sense for your firm from a cost and benefits manner.

The incredible part of the article was that although Canadian business owners and financial managers were more optimistic about their business these days, dramatically so, the incredible part being that 70% of respondents said that access to ' cash ‘ and capital was still a challenge . Wow. do we ever envy that other 30% who seems to have all the cash flow and working capital financing they need!

There are some unique working capital loans and strategies that work for you, it’s simply a matter of understanding what your current needs are, assessing your financial position, and most importantly, understanding your financial alternatives.
When we think of financing working capital you need to focus on the following, receivables and inventory, other assets, as well as your ability to re structure and re organize your firm if in fact that’s required .
In many cases a simple re financing of existing, owned assets is a unique strategy that often makes sense. This can be done via a sale leaseback strategy, or, not as commonly used, a short or intermediate bridge loan of refinanced assets such as equipment, real estate, etc.

At the core of looking at either traditional or more alternative or unique cash flow and finance solutions is simply to understand the cost and benefits of these strategies. Those costs vary with your overall credit quality and can range from a point or two over prime to 1-2% per month, depending on your current financial position.

Many business owners wrestle with how to simply understand working capital, which allows them to then determine their needs. Unfortunately the text book or your accountant doesn’t do a great job of that... in that they tell us go to the balance sheet, subtract current liabilities from current assets, and that’s supposedly your magic number. We wish!

So we tell clients to look at some very rudimentary but useful tools and allow them to assess their cash flow and loans strategies. One is simply the metrics of the operating cycle - understanding how fast you collect your receivables, how your inventory turns, and the average number of days you take to pay your key payables. Simply tally up the total amount of days in your A/R and inventory and you will find you can’t finance that excess just by stalling suppliers/payables.

The shortfall brings us to those solutions you are looking for. You could finance all your working capital if you paid your suppliers every half year or so, but they won't really buy into that plan!

In Canada the traditional solutions for working capital are bank lines of credit - the only caveat being you have got to have decent financial strength, profitability, good owner credit and assets, etc.

Failing bank financing in Canada you have the ability to access just receivable financing - our favorite facility is called CONFIDENTIAL RECEIVABLE FINANCING - a method in which you receive cash for your receivables immediately, and bill and collect under your own control.


Other more robust solutions are what we term working capital facilities or asset based loans. These finance loans (they are not loans per se) combine your receivables, inventory and fixed assets into one revolving line of credit. The more sophisticated a facility you utilize brings you maximum margining of your assets.

Alternatively a more esoteric candidate on the horizon is purchase order financing and contract financing - your suppliers are paid by the lender. It’s more costly, but boy does it work to allow you to generate sales you may never have been able to entertain on your own.


So what's our bottom line - we guess it’s simply don't despair! Understanding your operating cycle , assessing the amount of capital you need, and then weighing those needs against the best solution, traditional or alternative, is clearly your recommended route.

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

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