Time Runs Out In Business Financing – Working Capital Management Analysis & Strategies

If you're like most Canadian business owners you're somewhat skeptical of either the press or perhaps the agenda's of financial institutions you deal with or borrow from .

Yesterday we got one of those newsletters from a bank - the content was mixed... We’re quoting here : ‘Automotive industry rebounds .... Business confidence down... business barometer mix down sharply...business credit trending up ...'

Talk about some mixed signals... and how do we interpret those type of messages in our own business situation and needs when it comes to working capital management and the analysis of that all important business life blood... cash flow?

How you manage your working capital, and how you borrow for it are one of the most important aspects of running and small and medium sized business in Canada. Simply things like billing and collecting your A/R promptly and matching those payables outflows make or break any business.

What are the factors that affect your need for cash flow and what are some analysis and financing techniques to accelerate working capital management. That’s effectively called the cash flow cycle. Did you know for example that many larger firms actually manage their growth, they use simple formula's that any small and medium sized business owner and financial manager can use to determine how fast they can grow based on their operating profits and their ability to manage receivables and inventories without over borrowing . Frankly, you should be doing what the big boys do also, and it’s not as hard as you think.

The three things that affect your need for working capital are your profits, how fast you collect from your customers, and the ability to control operating costs and overheads as you grow. The big corporations call this formula - the ' Sustainable Growth Rate ' - as a business owner you need to accept that growth can often mean running out of cash.

So how do business owners ' accelerate ' working capital management strategies to optimize growth. First, as we said they can use some basic formulas to determine how fast they can growth without outside financing. When outside financing is required a number of options are available - probably more than you thought.

They include receivable financing, working capital facilities that are non bank in nature and combine inventory and a/r financing , and true asset based lending which monetizes on a daily needs basis our current and fixed assets .

External cash flow can also be provided by lesser known, but very viable vehicles such as purchase order financing, securitization and even the financing of any SR&ED tax credits if you're in the manufacturing or tech space. Capital can also be conserved by effect lease financing strategies that finance assets you need on a short term or long term basis.

So, we've been told business is about a bottom line. What's ours today? Pretty simple. Use tools to measure your cash flow needs, plan for growth with working capital management and analysis in mind, and take advantage or cash flow techniques that are traditional and non traditional in nature . Speak to a trusted, credible and experienced Canadian business financing advisor on what it takes to implement strategies that work for your firm.




Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Technology Financing – Options and Strategies for IT And Solar Assets In Canada

Financing technology, whether it be IT ( information technology ) assets, or the new kid on the block, solar finance , requires a combination of access to capital and solid expertise . Let's examine some key options and strategies in tech finance that will provide your firm with the growth potential you need. Oh, and by the way, this pertains to whether you are a user or a vendor of these assets.

Key issues that come into play are valuation of assets, useful economic life (ouch! isn’t that an accounting term?!) and types of financing available in the Canadian marketplace.

Clearly tech financing covers a variety of industries, we're focusing today primarily on computing and solar industries, but our comments are broadly applicable to a number of other asset types.

One of the key challenges in financing technology is simply the fact that the majority of goods and services provided and utilized by your firms either depreciate rapidly, or , unfortunately slowly become obsolete. There is a great analogy that tech assets are like a mines assets, they are depleted and are ' replenished by development '. A true analogy!

Financing tech assets must take into consideration the obsolescence factor - a good example of course if pc's, laptops and servers which easily can depreciate 30% per annum. Creative financial arrangements around these types of assets is critical and we'll discuss that a bit also.

Software and services, often financeable, are other solid examples of high technology assets that require specific options and strategies. These products are high gross margin to the seller and when financed properly provide both benefits to the user and profits to the vendor/lessor. Factors that drive software financing are upgrade cycles, continued proliferation of PC'c and mobile products into all facets of business, as well as the obvious productivity gains these products provide.

Tech and Solar assets can be either finance or purchased. When these assets are financed key issues for financial and credit scrutiny include interest coverage and cash flow, valuation of the technology re type of financing desired.

In the U.S. Surprising almost half the country's employed work in IT and other emerging tech areas such as solar, wind, etc. We're quite sure Canada's numbers would be too far off that.

For computer IT assets typical lease and other financing terms rarely go over three years... it’s simply a question of the useful life of these types of assets. Solar projects require alternative strategies, since they typically have a longer payback.

Financing transactions in IT and Solar industries tend to be cash flow, and not asset based when it comes to lending and financing transactions. These type of transactions clearly aren’t ' asset based lending ' in its traditional form. Upgrades are common in computer, they aren’t in Solar.

It is important for both borrowers and vendors and lessor to separate financing from licensing and technology issues - the intellectual property in the asset being financed rarely, if ever transfers to the borrower.

Key options and strategies in technology financing typically include operating leases, providing the user with significant flexibility.

When either financing tech and solar sales, or utilizing and acquiring such assets consider working with an experienced, credible and trusted Canadian business financing advisor who should be selected on the basis of experience, knowledge, and references .


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 .Info re: Canadian business financing & contact details :

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