Working Capital Headache Cures?
OVERVIEW – .Information working capital credit credit solutions for Canadian business . How does the business owner/manager understand and access funding needs from lending sources that make sense.
Working capital credit challenges seem to give Canadian business owners a lot of headaches.
Do cash flow lending and funding solutions need to do that? We don't think so and here's why... maybe even some cures!
Whether your firm is a start up, maintaining a status quo, or focused on growing like crazy it’s important that you utilize and match assets to the right amount of financing. The principle of matching is very important in business financing; it’s a simple concept - finance your short term assets, i.e. receivables and inventory with short term financing strategies. They include in our case:
Commercial bank lines of credit
Receivable financing via non bank solutions
Inventory financing
Purchase Order/Supply Chain finance
Tax credit monetization
Securitization
One thing business owners/managers should also remember is the importance of supplier trade financing. Let's use the example of a shoe store owner as an example - if he or she can get 60 day terms from a vendor and sell the shoes within thirty days the need for working capital and cash flow diminished significantly.
However, when you are financing fixed assets and your company infrastructure (telecom, computers, machinery, etc) that’s when a term loan or lease financing solution makes the most sense.
Start ups have a larger challenge quite often when it comes to working capital credit needs. Financing operations becomes difficult, mostly because traditional lenders focus on track record, excess collateral, personal guarantees, etc. That's when alternative solutions most often make sense - they might include factoring, non bank asset based lines of credit, etc.
As your business gravitates through the different stages of start up, high growth, mature etc, it becomes more important than ever learn how to analyze your financial position. When you are good at managing that whole process you minimize liquidity issues and maximize profit and returns on your company investment in assets.
The challenge though is that working capital credit is a constant moving target. And if your assets are ' over built ' that might also signify poor quality - i.e. poor inventory and collections resulting in a loss of sales and client /vendor relationships. The one thing that is constant though should be your realization that the longer time it takes for a dollar to ' travel' through your company will always signify the need for more focus on cash flow funding and lending solutions.
There are though numerous ' internal ' methods of addressing working capital credit without external solutions. They include:
- Billing promptly as you sell
- ask for client deposits if applicable in your industry
- charge (and enforce!) interest on past due receivables
- Offer discounts for prompt payment
Creative business owners have long found ways to delay outflows also! They include stretching payments to vendors, not paying items before they are due, negotiating special terms, etc. All of those must be used with the right amount of ' PROCEED WITH CAUTION'
of course!There shouldn't always be just ' excuses ' for your funding needs. Remove the headaches of cash flow challenges by seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor - for working capital credit prescriptions that work.
7 PARK AVENUE FINANCIAL = WORKING CAPITAL CREDIT 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 :
CONTACT:
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
