Are You Mismanaging Cash Flow? Fixing Working Capital Problems With Solid Financing Solutions

Getting The Bank Or Business Lender ' On Side  '

 

 Become A Good Manager Of Cash Flow Assets

 

As the Canadian business owner and financial manager well know it takes more than that to get lenders,  ( bank and non-bank) to get a good feeling about financing your firm and approving business credit for cash flow working capital finance solutions your firm might require. At the end of the day, it’s about  ' protecting ' their financing and collateral interests in your company.

 

Unfortunately, there are ways to be totally  ' not great ' at proving that you're a good cash flow business owner/manager.

 

  

ASSET TURNOVER HELPS DETERMINING WORKING CAPITAL HEALTH   

 

In financing, more often than not it’s about ' the assets '.   So while we can easily get caught up in fancy formulas are EBITDA and other calculations the reality is that it’s your assets and their turnover that determine your real working capital health. Mismanaging those assets makes you a great ' mismanager ' of cash flow and working capital.

 

One Of America’s great cash flow and investment managers ( Warren Buffett ) once said:

 

‘Does management think the tooth fairy pays for (future) capital expenditures'

 

Not all companies do the proper amount of planning  so when the inenvitable cash flow crunch happens a business is usually caught of guard for lack of that planning . Understanding your asset turnover will allow the business owner and financial manger to address needs  and identify proper business finance solutions.

Professional accountants and advisors call theis whole process the operating cycle, also called cash conversion . No secret to any business owner that  it takes a fair amount of time for a dollar to flow through the company coffers from the time that you created products or generated services all the way through to payment of your final invoice/contract.

At 7 Park Avenue FInancial we look at the whole picture and determine the critical relationships and timing betwee generating sales from inventory or providing services, to turnover in payable and receivables. Knowing the exact numbers in those relationships helps us dertmine financing solutions for our clients.

While our client might often view these calculations as complex, it simply know some basic formulas around how much days inventory is outstand, how long it takes to collect your receivables, ( thats ' days sales outstnading ' ) and finally days payable . Not all our clients understand that simply slowing your payables creates a positive cash flow - the actual formula for this is average payables multiplied by amount of time you are looking at , and then divided by your cost of goods.

If there is one very important number to keep in mind relative to some of the calulations we have shown it simply that there should be a commensute rise in certain accounts and relationships =

Example - if sales are stable or going down , and receivables you are carrying are up - that is a bad thing ! There should be a strong correlation to growht in sales and grwoth in receivables and inventories, as an example.

 

Naturally, term debt lenders focus on your long term viability to generate payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

 

So when profits and EBITDA calculations are positive we meet clients that still are having a challenge paying suppliers and meeting payroll obligations.

 

So what we are saying is that it’s important to understand that sales revenue and profits and the ' value ' of your company, if you're focusing on just those, have made you a great Mismanager of cash flow and working capital.

 

It's all about know how your firm can access cash from assets, as well as being able to plan for future needs.  That's where a bit of planning comes in - putting together a sales and receipts forecast, discussing these needs with a bank or non-bank lenders. The biggest mistake we see in this area from clients is they are not properly analyzing the cash timing of collections from accounts receivable.

 HERE ARE SOLUTIONS TO NEGATIVE CASH FLOW

 

If your cash flows are negative through this planning process the solutions are pretty clear, and limited:

 

 5 WAYS TO ACCELERATE CASH

1.Take on term debt

2.Have shareholders put in more money

3.Delay payments to suppliers

4.Really increase sales!

 

5. And finally - convert assets into cash via asset turnover focus

 

Converting assets into cash via :

A/R Financing

Inventory Loans

Access to Canadian bank line of credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

Government Of Canada Small Business Loan Program  - The Guaranteed federal business loan

 

CONCLUSION

Use our solutions and tips to avoid being a " MISMANAGER " of working capital solutions for your firm.

 

If you're looking for cash flow working capital finance solutions for short term or long term needs speak to a trusted, credible and experienced Canadian business financing advisor  at 7 Park Avenue Financial on how to achieve the right solutions for financing your firm for health, growth and success.

 

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

How Can Cash Flow Problems Be Solved ?

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Fixing The Cash Flow Problem

How To Correct Cash Flow Problems - Here at 7 Park Avenue Financial we aren't so sure there's a case for the regular blues, but if the challenges that come with working capital deficiencies and cash flow are ' top of mind' with your business it might be refreshing to know we have some solid solutions , tips and techniques to solve those key issues . We suppose you can call them a ' cure for the cash flow blues '.


When a company can properly address the issue of working capital, cash management and ensure accounts receivable and inventories are being managed properly that helps ensure daily and long term survival, while at the same time improving owners overall return on investment, aka ' R O I '. Proper management of the current assets on your balance sheet, relative to your sales growth simply brings a double whammy of benefits to your business.

So what about those ' current asset ' accounts on the company balance sheet that we have been talking about . Having a poor handle on receivables and inventory can severely impact your overall company performance. We're speaking of two things, how you manage those assets, and how to finance working capital. It's a dynamic situation, because those two asset categories - a/r and inventory literally change every hour - sales get generated, invoices are issues, receivables get paid and inventory gets shipped as more goods are purchased. Talk about ' dynamic '.


Canadian business owners and financial managers often have a poor handle on their current asset accounts - primarily of course receivables and inventory. We can forgive them for that, because those balances changes pretty well every couple hours. Talk about a moving target! .... Invoices get issues, receivables get paid, inventory gets shipped... and more goods are purchased.

How Do Cash Flow Problems Occur?

Simply speaking it revolves around the fact that if you are mismanaging these accounts, or not financing them properly you lose the ability to deploy funds more productively - i.e. growing your business. That’s when the total ' mix ' of your assets becomes important.


Clients of 7 Park Avenue Financial might sometimes tire of our focusing on the importance of isolating which type of financing is going to fix the company working capital problem. Solutions vary and they include:

Short Term Working Capital Loans

Long Term Loans

More Owner Equity

Asset Monetization ( We confess that's our favourite )


There is a very simple way of matching the financing you need to your assets. The solution - use financing of similar maturity to your assets. A quick example ?

Utilize leasing /equipment financing for long term more permanent assets. Another example? Utilize a receivable financing program for your Accounts Receivable

Why Do Cash Flow Problems Occur ?

Another solid rule of thumb is to always not forget that the longer it takes for a dollar to flow through your firm (your cash conversion cycle) the more working capital financing you will need). That is critical to identifying the long term solution for your business, which often is industry specific as industries vary as as to being asset intensive, service oriented, etc.


Business owners and their financial mgrs should focus on proper management and financing your accounts receivable in a manner suited to your business.

Here's a shocker - there’s a cost to carrying receivables and inventory . Receivable financing, aka ' factoring ' is a solid tool when you can get a good handle on net savings using this type of short term financing . Never forget (everyone else seems to!) that stronger sales, asset turnover, and more profits can easily justify the use of a receivable finance facility.

There needs to be a solid balance to the overall problem your firm might be facing. The ' text book answer ' is that if your are able to manage your working capital accounts properly you can better assess any financing risk and cost for the overall cure to cash flow shortages. That perfect balance is what your firm should constantly try for .


As we noted cash flow accounts change daily and require a lot of vigilance. Solutions to your business financing needs include:

A/R Financing

Inventory Finance

Purchase Order / Supply Chain Finance

Asset Based Non Bank Credit Lines

Unsecured Short Term Working Capital Loans

Tax Credit Financing

Sale Leasebacks


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 your business 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


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

SR&ED Financing : Your Cash Flow & Working Capital Solution For Your R&D Capital Investment Recovery

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Turn Your Sr&ed Claim Into Cash Today ? Here’s How!





OVERVIEW – Information on the benefits of sr ed financing in Canada . A Sr&ed loan allows companies to recapture working capital invested in the government tax credit program know as ' SRED'

SR&ED financing (also known as SR ED / SRED Financing) is a very positive working capital strategy to monetize now your SR&ED tax credit filing. Let’s dig in !

Canadian business owners who have filed SR&ED claims in the past are already aware of the great aspects of this program, under which the Canadian federal and provincial governments provide a non repayable grant to your privately owned Canadian company for your expenditures relating to improved products and processes.
The fact that you can recover a very significant portion of your salaries, materials, equipment and portions of overhead is in our opinion the best program in Canada as it relates to government actually really helping Canadian business.
Many clients approach us and ask about ‘government grants and loans ‘. While there are of course many such programs out there the SR&ED program is real money under a much defined process. And it is non repayable – that’s a good thing.

Let’s assume you are aware of the program, have filed claims, or are filing your first claim. The claim is of course filed at the same time you are filing you year end tax return. The claim can be prepared by yourself, but in our experience 99% of claims are best prepared by specialized consultants of your accountant.

So you have prepared a claim and you have filed it. Of course you can wait for your government refund cheque, but that process involves of course also going through the review of your claim by Canada Revenue and in some cases having a technical audit of your claim.

The government website indicates that depending on when you are filing, whether it is a first time claim, and if you are filing for multiple years that you can wait anywhere from 4 – 12 months based on some of the above noted factors. CRA in Canada has a specialized team that works in this area and clients tell us that the overall review of your claim is a fairly standardized process – naturally the overall quality and back up your provide to your claim helps finalize proper adjudication and approval .

Can you get cash and working capital now for your claim? Yes you can. Simply work with a trusted, credible and experienced business advisor in this area and immediate financing can be provided for your claim.


Clients ask what the basic process is over view to get your filed claim financed. It is a very basic process not unlike any standard business financing application. The basic steps are as follows “

-Complete an application – i.e. business details, your current company financials etc
-Provide details of your SR&ED claim

A term sheet can be provided in a matter of days, and claims are financed at generally 70% of the total value of what you have filed, i.e. the combo of the federal and provincial portions. Financing can take place, in our experience in a matter of 2- 4 weeks.

You can of course use your SR&ED loan funds for any general corporate purpose, and no payments are made during the loan period. The loan period ends when you claim is processed by Ottawa and you of course receive the other 30% of the claim at that time, less any financing fees.

Consider maximizing the Canadian SR&ED claim by turning your filing into immediate cash flow. That is a solid working capital strategy that assists your firm in growth and competitiveness.





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

How ‘ Not ‘ To Be Great At Mismanaging Cash Flow . Fixing Working Capital With Solid Financing Solutions

Become A Good Manager Of Cash Flow Assets



Information on cash flow and working capital financing solutions for the Canadian business owner / manager who is challenged by the right way to manage business growth and finances .



Cash flow and working capital solutions in Canada. If there is one myth about success with growth and financing solutions it’s that sales and revenue growth will get you there. It won't.

As the Canadian business owner and financial manager well knows it takes more than that to get lenders, ( bank and non bank ) to get a good feeling about financing your firm . At the end of the days it’s about ' protecting ' their financing and collateral interests in your company.

Unfortunately there are ways to be totally ' not great ' at proving that you're a good cash flow business owner/manager.

In financing, more often than not it’s about ' the assets '. So while we can easily get caught up in fancy formulas are EBITDA and other calcs the reality is that it’s your assets and their turnover that determine your real working capital health. Mismanaging those assets makes you a great ' mismanger ' of cash flow and working capital.

America’s great cash flow and investment manager, WARREN BUFFETT once said ‘Does management think the tooth fairy pays for (future) capital expenditures?).

Naturally term debt lenders focus on your long term viability to generate payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

So when profits and ebitda calcs are positive we meet clients that still are having a challenge paying suppliers and meeting payroll obligations.

So what we are saying is that it’s important to understand that sales revenue and profits and the ' value ' of your company, if you're focusing on just those, have made you a great Mismanager of cash flow and working capital.

It's all about know how your firm can access cash from assets , as well as being able to plan for future needs . That's where a bit of planning comes in - putting together a sales and receipts forecast, discussing these needs with bank or non bank lenders. The biggest mistake we see in this area from clients is they are not properly analyzing cash timing of collections from accounts receivable.

If your cash flows are negative through this plan process the solutions are pretty clear, and limited:

Take on term debt

Have shareholders put in more money

Delay payments to suppliers

Really increase sales!

And finally - convert assets into cash

Converting assets into cash via receivable financing, sale leaseback, or comprehensive asset based lending lines of credit is our personal favorite, mainly because they monetize assets without really creating new debt.
Use these solutions and tips to avoid being a MISMANAGER of working capital solutions for your firm . Speak to a trusted, credible and experienced Canadian business financing advisor on how to achieve the right solutions for financing your firm for health, growth and success.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS AND CASH FLOW FINANCE 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_working_capital_finance_solutions.html