How To Assess Business Loans & Alternative Financing Options In Canada ! Financing Cash Flow 101

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In Pursuit Of Business Financing Alternatives ? We've Found Them!
P.S. Traditional Business Loans Solutions Work Too !

Information on considerations owners/financials need to make in financing cash flow . Traditional business loans and alternative financing options abound in Canada . The catch ? Which ones work for your firm ?

When business owners and financial managers contemplate additional borrowing for their firm they must think it terms of whether the business does, or will have, enough cash flow to make the debt repayments. We can further assure business owners that the bank or lending institution is thinking the same way!

When businesses enter into bank loans or other institutional loans the payments are, 99% of the time fixed and specified. The business owner and financial manager must ensure those payments can be made. If the company has over relied on debt it is viewed as highly leveraged  by the lender.

So how can a business owner determine if the company has the cash flow to support the debt? More importantly how does the lender do that calculation?

The calculation that banks and other term lenders focus on is called 'Times Interest Earned '. The business owner (and the banker) can calculate that formula very simply.

The Times Interest formula is calculated as follows:

Net profit before taxes, plus interest expense / divided by interest expense

The calculation becomes an absolute number. If the number is in fact '1 'that means that the company has in act made just enough to pay the exact interest expense for the year. We would point out that this calculation is always usually done on an annual basis.

So is '1' the magic number? The answer is no, and the answer should be intuitive to the business owner. That is because a times interest of 1 means there is absolutely no cushion for anything going wrong, and all business owners no about Murphy's Law!

So if earning decline or if the company takes on additional debt our ' times interest earned ' number become unsatisfactory - that is to say that we have determined there is not sufficient cash flow to service the debt.

We have determined '1' is not a great number then, well what is? The answer, as in many facets of business, is of course 'that depends '. Many industries differ and there is not really any specific number that is viewed as the Holy Grail by lenders. What we have found though that higher is better than lower. When the number is hovering around 1 both the business owner and the lender, should and will, respectively, have some concern.

We point out also that income, as a key component in our calculation varies between companies in final calculation re tax rate and other accounting adjustments. Some lenders and business owners also add deprecation to the profit because it is not a real cash expense.

Another quick calculation business people can perform is to calculate the cash flow number as a per cent age of debt. This calculation is often done by lenders to ensure long term debt is not being miss-used. If a company has a high percentage of total debt to cash flow it should be a strong indicator to the company owners that growth will be constrained, as all cash is going to debt, not growth. Therefore new equipment, inventory, receivables, etc will suffer in terms of growth.

In summary, business owners, by doing actual current calculations, as well as projections, can easily calculate their 'times interest earned' and cash flow as % of debt. This will allow the business to position loan repayments positively with their lenders, at the same time providing them with insights into how the bank or other lender will view payment capability. Financing solutions available to your firm include, but are not limited to :

A/R Financing
Inventory Finance
Asset based lending
Non bank business lines of credit
SR&ED Tax Credit Loans
Equipment Financing
Unsecured Cash Flow Loans
Royalty Financing
Sale Leasebacks
Commercial Mortgages

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing needs.





Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com


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 '


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

Business Asset Finance Canada : Lose Your Insecurity On Financing Cash Flow

Is Your Cash Flow Financing Like A Bouncy Castle On A Patchy Power Supply?

OVERVIEW – Information on financing cash flow from sales in Canada . Managing business asset finance to make your company financially secure

Financing cash flow needs for Canadian businesses must often have many business owners/financial mgrs feeling as if they’re on a ' bouncy castle with a patchy power supply'! Talk about insecurity. When it comes to business asset finance it's all about ensuring you understand how your firms cash flow relates to your sales cycle. Let's dig in.

Do you really know where you cash flow and working capital comes from? Essentially it’s either from your balance sheet - i.e. your business credit lines and the amount of owner equity on your balance sheet. That is then complemented by the cash you generate from your sales cycle. Here it's about asset turnover and the proper financing of those assets - i.e. inventories, receivables, and fixed assets.

Your ability turn revenues into cash is all about timing and will ultimately determine the success of your business. Strong asset turnover will also limit the amount of borrowing you require in the areas of monetizing your assets or financing new equipment/technology needs.

So how much cash do you need to run your business? We could defer to our lawyer for an answer (' Well.. it depends') ,

but instead we'll say that it is in fact relatively easy to both understand , and plan your cash flow needs.

So how then does your revenue affect how you manage, and finance cash flow needs. Simply speaking any delays in the entire sales cycle (we’re talking from sale to collection of your goods/services) will slow down your cash flow. In effect, until you collect your money from clients you are a ' consumer' of cash, not a ' generator '.

There are 3 areas you need to focus on to ensure maximum cash flow and minimizing cash flow finance needs:

Solid financial controls around credit extension/collection

Understanding your client base - re payment discounts, terms, etc

Knowing which finance solution (Traditional or alternative) works best for your firm


These solutions include:

A/R Financing
Inventory loans
Lease financing/ sale leasebacks
Tax Credit Monetization ( sr&ed )
Business credit lines - bank or non bank revolving facilities
Royalty finance

Ensure you understand how these work what amt of financing they deliver on, what covenants or guarantees are required, etc

If you're focused on relieving that insecurity as it relates to business asset finance seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with financing cash flow needs.





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 CASH FLOW FINANCING 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.

Business Finance In Canada : Financing Cash Flow Allows Your Business To Take Off

How Much Should You Worry About Business Financing In Canada ?










OVERVIEW – Information on financing cash flow for Canadian businesses. Business finance solutions are critical to operating and growth success






Business Finance in Canada seems to come with a lot of worrying these days. Is that really necessary? Not if you’re financing cash flow needs properly. The benefit? Your business simply is now able to ' take off '. Let's dig in.


The ramifications of no cash are pretty obvious to the business owner / financial manager that struggles with day to day working capital challenges. Being unable to purchase or upgrade assets, pay employees, or meet loan and other debt obligations places a lot of stress on owners/mgmt.

There's a two lane road or journey that every business travels on - keeping the business alive, and growing revenues/profits. One of favourite mentors describes any business that isn’t generating cash and profits as simply ' a hobby ' - and most Canadian business owners don't think of their daily work as ' hobbies'.

The text books give us some clearly defined definitions around cash flow - it’s your net profits plus depreciation. Unfortunately most business owners can't run their finances with text book definitions - so paper profits on the income statement and cash flow ratios from their accountant mean little when every day is a struggle.

Payment from clients is the best example of shortages of cash. Since businesses sell on terms paper profits look strong and cash on hand looks... poor! Your ability to finance A/R properly (as well as manager client payments) is one major key to business finance success.

While inventory finance needs also complicate the problem even service companies who have heavy labor costs are also affected by the cash drain. But real pain occurs when the combination of inventory financing and accounts receivable investments drain cash.

It's not that ironic that both high growth as well as falling sales can exacerbate cash flow shortages.

Financing cash flow in Canada boils down to business credit lines via a Canadian chartered bank, or commercial A/R and financing facilities from commercial finance companies. Some of the solutions provided by non bank finance firms include:

A/R Finance

Inventory financing

SR&ED Tax Credit Loans

Sale Leaseback / working capital term loans (these two are debt strategies as opposed to asset monetization strategies

Asset based lines of credit

Banks place a significant emphasis on your ability to provide quality information to justify borrowing facilities. That includes historical accountant prepared financials, cash flow forecasts, other collateral available, and of course information on the owners.

How does the owner/manager decide on the amount and timing of financing Identifying key ' gaps ' in your future cash flow needs is the real key to success - as well as of course addressing these gaps with the right finance solutions.

Instead of worrying about business financing requirements seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help your business ' take off ' with solutions tailor made for your needs.




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

7 PARK AVENUE FINANCIAL = CANADIAN 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

Financing Cash Flow Needs : Raise Your Game In Solutions Via Finance Companies

Eliminate That Suspended Animation Feeling When It Comes To Canadian Business Financing

OVERVIEW – Information on solutions from finance companies and banks on financing cash flow in Canada . Solutions vary by industry and your firm’s overall financial position



Financing cash flow for Canadian businesses often has the business owner/financial manager having that ' suspended animation' feeling; not knowing where or how they can address their financing needs. So how does one ' raise the game ' in this critical aspect of business and what solutions do banks and finance companies provide to solve the challenge. Let's dig in.

If the owner/ manager aren’t managing his or her way through a cash flow crisis these days they probably are working on how to grow their company and out do the competition. Challenges often arise from several areas; they might include:

Taking on new larger contracts

Managing payables/vendors

Sourcing new equipment need to modernize or run the business

While your accountants can help pin point the problem they more often than not can't provide the solutions

Where does that badly needed cash flow in your business go then? Sometimes it relates to your firms ability to generate a profit. Remember also that paying your suppliers promptly actually is a negative cash flow, although it's a fine line in managing key vendor relationships.

When bank financing is not available in the SME COMMERCIAL FINANCE area the challenge is to look at solutions provided by a commercial finance company. That might be a specialized or alternative solution, or a traditional one - i.e. ' banking '.

A short summary of available solutions includes:


Receivable Financing/Confidential A/R Finance
Inventory Finance
Revolving bank credit facilities
Non bank asset based lines of credit
Equipment financing
Sale leaseback utilization re existing owned assets
Tax Credit Monetization
PO/SUPPLY CHAIN/CONTRACT Financing
Working Capital Term loans


The ability to prepare a simple cash flow forecast will often help highlight the type of solution you need - your business financials and over all health will further qualify what financing you are eligible for - either traditional or alternative.

Remember also that simply managing assets better - i.e. faster receivables collections, better inventory turns, etc will allow you to better qualify for external financing, as well as minimize the amount of debt you have to take on. Remember also that a commercial finance company can also provide solutions that monetize existing assets, so you aren't necessarily burdened with extra debt.

Raising your game in Canadian business financing can be achieved by monetizing assets and taking on loans / debt that make sense for your firm’s future path. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in eliminating that constant feeling of ' suspended animation' via an action plan for financing cash flow.



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


7 PARK AVENUE FINANCIAL = CANADIAN 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

Financing Cash Flow : A Fresh Look At Managing Working Capital

Behind The Scenes In Cash Flow Finance Solutions

OVERVIEW – Information on solutions for financing cash flow in Canadian business . Managing working capital is all about assets and solutions



Managing working capital and financing cash flow needs , like other aspects of business , often needs a ' fresh look ' when it comes to addressing the operating and growth needs. Let's dig in.

While a surplus in cash might always be the goal the bottom line for the majority of businesses in the SME (small to medium enterprise) sector the actual reality is that it’s a working capital shortage that is more often than not the challenge.

How the business owner / financial manager deals with that can often be the deciding factor as to whether you're winning or losing n Canadian business.
What business person doesnt relish the thought of putting capital to work to grow more sales and profits, right?

The worst case , of course , in both not managing your working capital, or being unable to access alternative or traditional financing is of course total business failure .

While we're the first to espouse ' alternative ' business financing solutions we're also the first to point out that even alternative financing solutions can be extended if your firm is perceived to be in a death spiral.

What then are some of the positive uses of managing working capital and have access to more cash? They include:

Expanding your business into new product or service areas

Being able to take out more funds for shareholders with the expense of a hit to your financials

Improving relations with suppliers and key vendors

Reducing debt and lowering financing costs


How then do owners/ financial managers address cash flow issues? While the most common is a Canadian chartered bank overdraft facility there are numerous other ways to access cash flow and finance assets. They include:


A/R financing

Asset based lines of credit (they monetize receivables, inventory and fixed assets all into one facility

Inventory finance

Tax credit monetization

Securitization

Sale leaseback

Working capital term loans


While bank financing is the ' go to ' solutions for almost everyone, ' go to' is often impossible if your firm can't meet bank criteria for lending.

Remember that with the exception of working capital term loans all the solutions we have referenced simply monetize assets and allow you to cash flow assets, with no new additional debt coming onto the balance sheet.

A/R financing is often the most comment and logical solution to working capital finance. That's because next to actual cash on hand that you have in the bank it’s the closest asset to cash that you have!

Our recommended solution to clients in this area is the CONFIDENTIAL RECEIVABLE FINANCING solutions. It allows you to bill and collect your own accounts and receive advances of 90% of all sales you generate into your business ledgers. And by the way, its your call as owner or manager to access how much you need and when ; similar to a bank facility you of courser only pay for what you are using , so it makes more sense than ever to manage your receivables efficiently .

If you're looking for that ' new way ' to address the problem of accessing cash to run your business seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can take you behind the scenes in real world finance solutions.





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

7 Park Avenue Financial = Canadian 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

Say Yes To Canadian Working Capital Solutions - Say No To Financing Cash Flow Obstacles !

Overcoming and Winning The Cash Flow Obstacle Game In Canadian Business


Information on financing cash flow in Canada. Understanding the root of your financing needs leads to effective working capital solutions .


Today the goal is fairly simple. We'll identify some of the obstacles encountered by Canadian business when it comes to financing cash flow, and, as importantly we'll demonstrate some traditional as well as new forms of working capital solutions for the Canadian business owner and financial manager.

One of the reasons we like talking to clients on this subject is simply for the fact that certain terms in financing, i.e. ' working capital' and 'cash flow' are often overworked and not properly understood.

Let's look at working capital as an example. Your accountant or your text will talk about that being the difference between current assets and current liabilities. We think a more clear way to understand that concept, and certainly a more ' real world ' one is to think of your business having hundreds of daily, weekly , or monthly ' incidents .

Incidents? Yes, incidents such as making a sale, recording a receivable, buying inventory, shipping inventory, finally collecting that receivable, etc. Those tens, hundreds or thousands of incidents change your balance sheet accounts every time, and their year end summary of activity reflects ' sources' and ' uses ' of cash flow - i.e. where it came, where it went!

Your ability to understand the ' turnover ' in your accounts will ultimately reflect your ability to address, and understand cash flow challenges, and our proposed ' fix’ re: solutions.

For a manufacturing company the process is, for example, well defined. Buy inventory... make products, sell and invoice those products, and collect your funds. It's a simple three step process right?

But what happens when your cycle of operations is long, or complicated. That's when financing challenges occur. Canadian business owners must be in a position to understand where profits went, why A/R and inventory might be done but not profits up, and where funds will be found to purchase new assets.

Misunderstanding of cash flow is rampant we feel. We read about it being a ' yardstick measure of success ' in investments. We note our financials have a ' cash flow ' statement. Our accountant gave us a ' discounted cash flow ' analysis, and we're working on a ' cash flow budget. Talk about a very convenient catch phrase!

So once we finally get a handle on understanding and addressing working capital solutions the financing of cash flow becomes a lot easier.

So what about those working capital solutions we spoke of, traditional, and otherwise. Options to enhance your cash flow needs are available to the Canadian business owner.

They include bank lines of credit, government SBL loans for new assets, which in turn save cash outflows for new assets. And don't forget equipment leasing as a solid asset finance vehicle.

Receivables and inventory can be financed via one working capital or asset based lending facility, or separately via boutique offerings through specialized commercial finance firms. More esoteric financing, yet 100% viable and effective are the monetizing of SR&ED claims, as well as purchase order financing.

So what’s our bottom line? Simply that there are achievable goals in addressing working capital expectations - but those goals must be appropriate to the specific cash flow challenge, in terms of structure and rates. Make a commitment to address financing cash flow, and speak to a trusted, credible and experienced Canadian business financing advisor on those very solutions.





Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/financing_cash_flow_working_capital_solutions.html