3 Ways To Manage And Accelerate Business Cash Flow Via Solutions And Management Techniques

Getting Your Funds Flowing?

Information on business cash flow solutions and management . Accelerate working capital and timing with these tips and business finance methods .




Business cash flow wouldn’t be required if we could all sell on cash to our clients. However, unless your business is 100% retail that of course can't be the case. So let's examine 3 ways to address management of working capital solutions in Canada.

Sales growth is good... right? Well kind of, because those sales require financing, and management of your current debt. So at issue today for our purposes is the discussion around managing that liquidity issue, and solving problems via financing solutions...

The longer your receivables go unpaid creates two issues - first of all there is a chance the sales might be at some point uncollectible, and secondly you are going to have higher financing costs. And that’s whether you are financing through a bank or non bank solutions. (Yes, there are non bank solutions when it comes to financing A/R)

It's therefore important to continually assess your asset turnover - one basic tool being a days sales outstanding calculation. Also, at the heart of the matter is your firms overall philosophy to granting credit and setting limits with clients. Oh... by the way... the largest corporations in the world do that also, its one way in which they get large and successful! So why shouldn't your firm?

Naturally there is a potential cost in addressing a new credit policy as not all clients will want to pay within your stated terms and may consider other vendors. One way to address that issue to offer a prompt payment discount - which typically is called ' 2 % 10 '. That simply means that you are giving up 2% of your gross margins for the ability to collect A/R faster and generate business cash flow. So that is clearly on management solution you can consider.


That brings us to the actual financing of your receivables. This is an overall critical part of every company’s finance strategy and success. The hear of the matter is simply financing your sales with a cost that your firm can bear, while at the same time generating the maximum amount of cash that you require .

One of the fastest growing and popular methods of financing A/R is called ' factoring’... aka ' invoice discounting'. To clarify how this works let's use a simple example - If you have 100k in receivables you receive 90k as soon as you generate your sales. That's instant cash. You receive the balance, i.e. the 10k, less financing costs, when your client pays.

And those financing costs? They are very similar to your strategy of offering a prompt pay discount as we noted above. While this cost seems high to many the reality is that you are already incurring it by carrying receivables, or offering discounts, and not being able to take discounts with suppliers. Our recommended solution to clients is a ‘ confidential invoice financing facility ‘ that allows your to bill and collect your own receivables without intrusion from any third party .

So one key point today is to evaluate the criteria under which you can finance your sales via a receivable factoring arrangement. The costs may not be what you think!

Finally, the alternative to factoring A/R is simply bank financing via commercial lines of credit. Canadian chartered banks offer A/R credit lines that are generally based on the quality of your A/R as well as the overall quality of your financials -- so caveat emptor here - you need to demonstrate profits and a balance sheet that meets bank criteria. Under bank credit lines 75% of receivables are generally margined.

So, here we are - it's decision time. Use our information to address business cash flow solutions via internal management, credit policy, and financing solutions such as factoring and commercial bank facilities. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the right solution.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS FINANCING 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 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/business-cash-flow-solutions-management.html





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

Email = sprokop@7parkavenuefinancial.com







Stan Prokop

What’s The Difference Between Not Having A Cash Flow Financing And Having A Business Finance Management Strategy?

Effective Working Capital and Cash Flow Solutions and Management

Information on business finance and cash flow financing management . Implications of a losing strategy.

Cash flow financing. The potential failure of your business... that’s most likely the final result of not have a business finance cash flow strategy with appropriate solutions and financing in place .

So what are some of those solutions; but even more importantly can you recognize when cash flow is decelerating, and can you accelerate it via internal and external means. That's the conundrum facing Canadian business owners and financial managers today.

We're often surprised , even shocked when we meet clients to have a great business and entrepreneurial sense, have great services and products, yet at the same time have no real focus on cash management and working capital solutions.

They seem to have a solid plan for their company's future, but no real plan on the cash flow. So, yes, they are growing, but also heading into cash flow crisis 101!

Hindsight is great in business, however when the business financing challenges get to big in the present it’s because they quite often weren’t addressed, right about now.

In general the SME (small to medium enterprise) in Canada fails to recognize that growth is bad. Of course it's great also, but its ' bad ' only because you're now using and requiring more cash than you ever did. So all of a sudden that need for working capital, coupled with slower receivables or bulging inventories are moving you to crisis mode.

Naturally your failure to address these issues then enters you into a world where you're potentially unable to pay existing lenders, and the last thing you’re
able to focus on is expansion capital. So being smart on growth and dumb on cash flow and working capital is... you guessed it, not a good thing.

Cash comes into your company via product and service sales and the accounts receivable that result. The outflows are as tough to manage - they include salaries, a/p, fixed asset additions, lease and loan payments, etc.

The key factors that result in a cash flow crisis are numerous - they might include overextending sales to poor credit risks, slow collections with no key focus on a/r management , financial losses to due low or negative margins, or serious declines in sales .

Can the Canadian business owner accelerate cash? Yes, he or she can. Along with solutions such as receivable financing, asset based lines of credit, bank credit facilities, and inventory financing and tax credit monetization you can monetize your balance sheet without additional debt.

Even smarter solutions exist within your company walls, they include managing A/R better, invoicing promptly, slowing a/p to maximum extent possible without offending key suppliers, or encouraging pre payment on larger orders or contracts.

You can also set up very simple data points to measure your progress or problem areas. That includes monitoring cash to sales ratios, cash on hand to ending receivables, etc

So, growth? We're all or it. Just remember though that hand in hand should come a solid cash flow financing and business finance management strategy that you can work internally and externally.

Speak to a trusted, credible and experienced Canadian business financing advisor for solutions to your firms finance needs.



7 Park Avenue Financial
Canadian Business Financing Expertise




Stan Prokop - founder of 7 Park Avenue Financial –
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

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

Fixing 3 ( More ) Parasites Of Business Cash Flow . Solutions For Management Financing Challenges In Canada

Power Up Business Cash With These Solutions and Tools!


Information on business cash flow . Fixing management financing challenges so your firm never runs out of cash and working capital .



Parasites of Business cash flow in Canada. We wrote recently on 2 specific parasites concerning management financing challenges for your business. They were, specifically, mismanagement of your cash flow cycle, and... Secondly, poor use of operating leverage.

That word parasite conjures up an image of a ' leech ‘...or ' sponge ‘. It seems somewhat appropriate then to perhaps address 3 more of those parasites of your business cash and working capital challenge.

We'll start with # 1, which is the concept of ' Financial Leverage '. A good way to think of that is that it’s the idea of how different types of financing affect you use affects your net profit. To finance your firm it always comes down to the fork in the crossroads - ie debt or equity. If your firm can pull off acquiring and managing as much debt as possible in a solid manner you naturally restrict outside ability to dilute your equity position.

Essentially that’s a good thing. The only problem is that your lenders want to get paid, either periodically or on a revolving basis. Ultimately its one of the most important ' big picture ' decisions you have to make in running and financing your business.

Potential parasite #2 in our analysis today is the concept of maturing debt. Along with that comes another business decision (boy, there seems to be a lot of important decisions to be addressed today!) which is the idea of taking on debt on either a short term or operating basis. You also don't want to be caught in the additional common situation of having to guess where interest rates must go

Potential parasite # 3 is the idea of current asset management. Here's where things can really go wrong, and generally speaking, fairly quickly.

Did you know that as a business owner and financial manager you have minute by minute access to one of the most powerful tools in business analysis... we think, in the world. Simply speaking, it’s the understanding and analysis of your ongoing receivables and inventory. Your ability to track sales and inventory should have bells going on in your head when things feel like they are going awry. Simply monitor over time your sales to receivables ratio, and in the case of inventory ensure your inventory isn't trending up when your sales are not!

The real ' quality ' of your profits / income is ultimately related to your management of these 3 potential parasites.

In Canada you can fix, eliminate, or control these parasites in a variety of ways. They include a term cash flow loan, receivable and inventory financing, true asset based lending facilities, or the monetization of tax credits such as the SR&ED credit.

Speak to a trusted, credible and experienced Canadian business financing advisor on how you can find and deliver on solutions to management financing challenges.



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

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

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