Cash Trapped? How a Working Capital Facility Unlocks Liquidity

 

Manage Cash Flow Efficiently With  A Working Capital Facility

 

Why Every Business Needs a Working Capital Facility

  

INTRODUCTION TO WORKING CAPITAL FACILITIES

 

A working capital facility can prevent a temporary cash-timing gap from becoming missed payroll, delayed supplier payments, or lost inventory opportunities. At 7 Park Avenue Financial, we help Canadian business owners assess financing structures against real operating cycles, with a focus on matching borrowing capacity to receivables, inventory, seasonality, and repayment ability—not simply pursuing the largest available limit.

 

What Is a Working Capital Facility?

 

A working capital facility provides short- or medium-term financing for operating expenses such as payroll, inventory, supplier invoices, and seasonal cash-flow gaps. It may be structured as a revolving line of credit, asset-based loan, receivables facility, or working capital term loan.

 

THREE UNCOMMON TAKES ON WORKING CAPITAL FINANCING

 

1. The "clean" balance sheet can work against you. Businesses with almost no debt sometimes get declined too — banks read a thin credit history as unproven, not as low risk. A working capital facility underwritten on receivables and inventory sidesteps that entirely, because the decision is based on asset quality, not years of borrowing history.

2. Facility size should track your operating cycle, not your revenue. Owners often ask for a facility sized to annual sales. The better question is how long cash is tied up between paying a supplier and collecting from a customer — that gap, multiplied by monthly spend, is the real number to finance.

3. A working capital facility can be a bridge back to the bank, not a permanent detour. Many businesses use a non-bank facility for 12–24 months to build a clean payment record, then requalify for cheaper bank financing at a larger limit. The facility's job is to buy time and build the track record, not to be the last stop.

 

 

The Opportunity Cost of Idle Collateral

 

Unfinanced accounts receivable represent cash trapped in the business. The real cost is not only interest—it includes missed supplier discounts, delayed orders, constrained growth and other opportunities the company cannot pursue while waiting for customers to pay.

 

Covenant vs. Asset-Based Thresholds

 

Banks typically emphasize financial covenants such as debt service coverage ratios, profitability and leverage. Asset-based lenders focus more heavily on marginable collateral, calculating availability from eligible receivables, inventory and equipment—even when conventional cash-flow ratios are temporarily weak.

 

Working Capital Facility: Why Canadian Business Owners Deserve Straightforward Cash‑Flow Solutions

 

Business cash flow in Canada. We see business owners and managers struggle to sometimes just grasp the term, let alone the solutions that are required to achieve a proper working capital facility that meets their needs around funding operating activities. Should there be a need to feel ' awkward ' about cash finances - we don't think so and here is why. Let's dig in!

 

 

Working capital facilities provide financial solutions to bridge the gap between short-term financial needs and the revenue inflows of a company.

 

This form of financing is critical for businesses aiming to manage their daily operations smoothly while also planning for future expansion. Leveraging a working capital facility allows a company to fund day-to-day obligations and finance key asset categories such as receivables and inventory.

 

UNDERSTANDING CASH FLOWS & WORKING CAPITAL IN YOUR BUSINESS

 

In any industry there are of course some specialized terms - the tech ones seem a bit overwhelming to us at times! In finance, the concept of ' cash flow ' mesmerizes' many owners/managers. 

 

And the additional reality is that lenders, bankers, and others will often judge you and your business on your grasp of that concept and ratios by looking at current assets and current liabilities. Short-term focus on your current business capital structure is key, as is asset turnover in receivables and inventory. It's all about financing the balance sheet as well as effective accounts payable management.

 

 

PROFIT DOES NOT ALWAYS EQUAL CASH FLOW - IN FACT IT RARELY DOES

 

 

So a lot of people talk ' cash flow ' (us included!). Not everyone has a handle on it. While the ' true' cash flow statement is in fact PAGE 3 of your financial statement ( right behind the balance sheet and income statement ), the term if very well confused by many because they somehow think its the same thing as ' profit', ' income', ' revenue', etc. It is not those!

 

The fundamental way to explain it is one that most businesses in the SME sector can relate to - payroll.  Your company has delivered a product or service, you are waiting to get paid, and there is not enough cash in the bank to pay salaries!  That's the crux of the business cash flow.

 

HOW DO YOU CONTROL INFLOWS AND OUTFLOWS OF FUNDS?

 

When the  Canadian business owner and manager are in fact in control of cash flow they have a strong handle on some of the most important aspects of their business- and when you can ' scorecard' your working capital situation and put solutions in place to accelerate cash inflows  ( and decelerate cash outflow!) you are truly mastering your business when it comes to focusing on the true picture in your financial statements.

 

 

YOUR BUSINESS HAS A CASH OPERATING CYCLE

 

You can feel a lot less awkward about the challenge we’re talking about today by simply understanding your  ' cash cycle ' and putting in finance solutions that match it. The cycle is managed and scorecarded  simply by spending time in understanding how your purchase products, when you pay for them, what credit terms you offer, and how diligently you enforce those terms.

 

As you can see, it's all about ' timing ‘ Businesses go under in Canada in many situations because business is in fact great - in fact it's so great they run out of cash. That pipeline of funds is simply blocked as the investment you have made in inventory,  accounts receivable and equipment intensifies.

 

BUSINESS CASH FLOW AND WORKING CAPITAL SOLUTIONS

Common facility structures

 

Facility type	Best fit	How it generally works

Facility type	Best fit	How it generally works
Operating line of credit	Established businesses with predictable cash flow	A revolving limit used and repaid as cash moves through the business
Accounts receivable financing	Businesses with creditworthy commercial customers and long collection periods	Eligible invoices support borrowing availability
Asset-based lending	Businesses with significant receivables, inventory, or equipment	Credit availability is tied to a borrowing base of eligible assets
Inventory financing	Wholesalers, distributors, retailers, importers, and seasonal businesses	Financing helps fund inventory before it is sold and collected
Working capital term loan	A defined liquidity need that should be repaid over time	A fixed advance is repaid according to a scheduled term
Factoring	Businesses needing faster invoice monetization	Receivables are sold or financed, often with a stronger focus on debtor quality

 

 

What are then the solutions to our conundrum of working capital financing?

 

They include:

 

A/R Financing

Inventory Loans

Access to Canadian bank 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

PURCHASE ORDER FINANCING

 

SHORT TERM WORKING CAPITAL LOAN / MERCHANT ADVANCE

 

 

 

KEY TAKEAWAYS

 

Types of Working Capital Facilities: Understanding the different forms of working capital loans available, such as lines of credit, invoice financing, and short-term loans, provides a comprehensive view of the options a business can leverage.

Benefits of Working Capital Facility: Recognizing the advantages, such as improved cash flow management, operational continuity, and financial flexibility, offers a substantial understanding of why businesses should consider this financing.

Application Process: Understanding the steps involved in securing a working capital facility, from documentation to approval, is crucial for effective preparation.

Eligibility Criteria: Knowing the requirements for qualification helps businesses evaluate their readiness and potential to secure financing.

Working Capital Facility vs. Business Loan: Distinguishing between working capital facilities and traditional business loans helps businesses make informed financial decisions based on their specific needs.

 

How Does a Business Graduate From Non-Bank Financing Back to a Bank?

 

Graduating from a non-bank facility means replacing factoring, asset-based lending or another alternative facility with a lower-cost bank operating line once the business can meet conventional lending standards in Canadian business finance 

 

The mechanics of business loans  typically involve five stages:

 

1. Correct the original lending weaknesses: Restore profitability, reduce leverage, clear CRA arrears and address the issues that caused the bank decline.
2. Build a clean performance record: Demonstrate 6–12 months of positive cash flow, reliable reporting and compliance with the non-bank facility.
3. Improve collateral quality: Reduce receivables over 90 days, customer concentration, disputes and dilution while improving inventory turnover. Banks generally apply more conservative advance rates than non-bank lenders.
4. Secure a bank commitment: Provide financial statements, interim results, borrowing-base reports, aged receivables, tax confirmations and forecasts. The bank confirms the approved limit, security and conditions before the existing facility is terminated.
5. Coordinate the payout and security transition: The non-bank lender issues a payout statement. At closing, the bank advances funds to repay that lender, obtains priority under the PPSA, replaces blocked-account arrangements and redirects customer payments where required. The former lender then discharges its security.

 

CASE STUDY - Business Finance Solutions

FROM THE 7 PARK AVENUE FINANCIAL CLIENT FILES

 

Company: ABC Company — Ontario auto parts aftermarket distributor, $9.2 million annual revenue

Challenge: ABC Company landed a large fleet-supply contract requiring $680,000 in upfront inventory purchases. Its bank declined a credit line increase, citing thin margins typical of the parts-distribution sector and an already-drawn existing facility.

How We Got There: 7 Park Avenue Financial reviewed ABC Company's receivables aging and inventory turnover and matched the file to a lender specializing in distribution-sector working capital facilities. A facility was structured against receivables and eligible inventory, funding within nine business days. It's a short-term borrowing option that businesses use to accelerate cash flow and  finance their daily operational expenses 

Results:

• The fleet-supply contract was fulfilled on schedule
• The facility scaled automatically as receivables grew with the new contract
• Within 14 months, ABC Company's payment record supported a return to bank financing at a larger limit

 

 

CONCLUSION - UNDERSTANDING WORKING CAPITAL LOANS

 

Make sure you spot the roadblocks we have talked about in business growth and success. Address those red flags with one or several of the solutions.

 

Call  7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you in feeling less ' awkward' about business cash flow!

 

7 Park Avenue Financial originates working capital facilities

 

 

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK  / MORE INFORMATION

 

What is a working capital facility?

A working capital facility is a type of loan designed to help businesses manage their short-term financial needs, such as payroll, inventory, and operational expenses.

 

 

How does a working capital facility differ from a traditional business loan?

A working capital facility typically provides short-term financing to cover immediate needs, while traditional business loans often focus on long-term investments and larger projects.

 

 

What are the benefits of using a working capital facility?

Benefits include improved cash flow management, flexibility in meeting operational expenses, and the ability to take advantage of business opportunities without financial strain.

 

 

What is required to qualify for a working capital facility?

Eligibility criteria usually include a good credit score, ideally a solid business plan, financial statements, and proof of consistent revenue.

 

 

How can a working capital facility impact my business credit?

Timely repayment of a working capital facility can positively impact your business credit score, making it easier to secure future financing.

 

How do I apply for a working capital facility?

You can apply through financial institutions or online lenders by submitting the necessary documentation, including financial statements and a business plan.

 

 

What are the typical interest rates for working capital facilities?

Interest rates vary based on the lender, the amount borrowed, and the creditworthiness of the business.

 

 

How long does it take to get approved for a working capital facility?

Approval times can vary, but it typically takes between a few days to a couple of weeks, depending on the lender and the completeness of the application.

 

Are there any fees associated with a working capital facility?

Yes, fees can include origination fees, application fees, and monthly maintenance fees, depending on the lender's terms.  Many small business owners rely on business credit cards as well -  businesses pay interest on funds drawn down on the card - Invoice discounting / factoring fees fund receivables as a subset of business working capital solutions

 

 

Can startups qualify for a working capital facility?

While it can be more challenging for startups to qualify due to a lack of established revenue, some lenders offer options specifically tailored for new businesses. A business owner's personal credit is also important for startup scenarios.  Merchant cash advances are available to early-stage firms who aren't yet eligible for a revolving line of credit or a working capital line but still need to fund a company's everyday operations. Long term assets should be financed via term loans or lease financing solutions with long amortization son debt payments.

 

 

 

What types of working capital facilities are available?

Working capital facilities come in various forms, including lines of credit, invoice financing, trade credit, and short-term loans, each catering to different business needs.

 

 

How does invoice financing work within a working capital facility?

Facilities such as Invoice financing or a working capital loan allows businesses to borrow against their outstanding invoices, providing immediate cash flow while waiting for customers to pay.

 

 

What strategies can help manage working capital effectively?

Effective strategies include maintaining a cash flow forecast, optimizing inventory levels, negotiating favourable credit terms with suppliers, and collecting receivables on time.

 

 

 

STATISTICS

 

• BDC reports approximately 40–50% of small business loan applications are declined by traditional lenders on their first submission
• A widely cited Statistics Canada figure puts the bank decline rate for small business financing applications at roughly 35%
• CFIB reports access to affordable financing remains a top-three concern for 42% of small business owners
• Bank business lending typically prices near prime + 1% to prime + 5%, versus 8–14%+ for many non-bank working capital facilities

 

CITATIONS

 

Business Development Bank of Canada. "Small Business Financing." https://www.bdc.ca

Canadian Federation of Independent Business. "Access to Financing." https://www.cfib-fcei.ca

7 Park Avenue Financial."Complete Guide to Working Capital Business Funding".https://www.7parkavenuefinancial.com/business-capital-working-capital.html

Statistics Canada. "Survey on Financing and Growth of Small and Medium Enterprises." https://www.statcan.gc.ca

Equifax Canada. "Canadian Entrepreneurship Declines, Challenges Build As Companies Fall Behind with Lenders." https://www.equifax.ca

Medium/Prokop/7 Park Avenue Financial."Working Capital Crunch? Business Cash Flow Solutions".https://medium.com/@stanprokop/working-capital-crunch-business-cash-flow-solutions-dd68572f0d4b

Bank of Canada. "Interest Rates." https://www.bankofcanada.ca

Working Capital: https://en.wikipedia.org/wiki/Working_capital

 

Top Strategic Working Capital Funding and Facility Solutions

Information for Canadian business owners on working capital funding and the type of working capital facility that will meet your firms needs. How to measure and recognize the need for a cash flow solution that meets your firms requirements.

Every Canadian business owner and financial manger wants to know that their firm has financial health

in the short term. Your company's ability to access working capital funding means only one simply thing - you have the ability to pay off your short term liabilities such as accounts payable, taxes, source deductions, etc.

So do you in fact need a better type or working capital facility today, and, if so, what are your options. We can't cure the patient unless we can confirm he is sick... so how in fact do you determine if that working capital need exists. It could not be simpler. Go to your balance sheet, add up cash, receivables and inventory, and if they in total don't cover your accounts payable, guess what... the patient has a problem.

Two points worth mentioning, we fully realize most successful business managers and owners know intuitively that they have a challenge in the area of cash flow. It's simply recognizing that on a day to day basis more and more time is devoted to working capital management - i.e. collections, invoicing, juggling payables, etc.

There are very specific cash flow solutions for your working capital funding requirements. But believe it or not many of them can actually be fixed internally. You ability to negotiate better terms with your suppliers is a critical cash flow factor. More importantly many business owners don't focus on turnover and quality of your current assets such as receivables and inventory.

By effectively measuring and monitoring your turnover in receivables and inventory can significantly improve cash flow. Technically we're talking about reducing day's sales outstanding and calculating inventory turnover. Your goal is to reduce the amount of time it takes for a dollar to flow through your company.

So we have identified the problem, and the measurement issues around that problem, let's focus on solutions.

In a perfect world, and we know its not, your Canadian chartered bank would financing all your receivables and inventory on an ongoing basis, and, when you need it offer up a bulge type facility to take you through a working capital rough patch. That type of working capital facility is generally referred to as a business operating line of credit.

As we said, it's not a perfect world apparently!... And thousands of firms, perhaps yours, don't have access to this type of facility. So the Canadian marketplace offers up a number of solutions, for medium sized and larger firms the alternative is an asset based line of credit that comes without the restrictions of a bank facility ( ratios, covenants, outside collateral, etc) but in fact provide you with more working capital than a bank could. For smaller firms a working capital facility term loan is available via the government related bank in Canada. For smaller and medium sized firm's receivable financing facilities, know as factoring, can turn your receivables into a constant ATM machine, albeit at a higher cost.

So whats our bottom line. Simply the right working capital facility will put life back into the patient, your company! Knowing what facility works best, what your options are, etc is really the only challenge, Speak to a trusted, credible and experienced Canadian business financing advisor to guide you through to the right cash flow solution.

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


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









Article Source: http://EzineArticles.com/expert/Stan_Prokop/432698

Article Source: http://EzineArticles.com/5364669

Asset Based Credit Line Solutions In Canada: Your Assets Make This Working Capital Facility Work

Tweet



The No Longer Not So Super Secret Business Credit Line ! ABL 101

OVERVIEW – Information on the asset based credit line in Canada. If your company needs a true working capital facility this just might be the solution – here’s why and how

Asset based credit line solutions are no longer that ' super secret ' answer to a working capital facility in Canada. It's the kind of solution that will help power your sales and revenue growth. Let's dig in.

It's tough to determine these days whether business owners/financial mgrs are in fact more optimistic about their future success and their ability to beat the competition in their industry. When they are in fact optimistic the reality is that they must always balance that optimism against their ability to finance both operations and growth.

Although financing continues to be one of the most serious considerations for business in Canada the alternatives are certainly not as available and obvious as they once were. That's what the Asset Based credit line in years past was quite either misunderstood or in fact unknown.

Working capital, cash flow, and cash conservation when it comes to capital expenditures top the lists of most owners/mgrs. Small and medium size business naturally has the greatest challenge, as they don't have the bench strength of larger firms. While Canadian chartered banks are certainly paying lip service and trying to, for the most part support small and medium business the reality is that the ability to finance basic growth of inventory, receivables and contracts is a challenge.

So what does the owner do when traditional bank financing can't be finalized? The reality is that more and more Canadian businesses are considering a financing solution that is becoming more developed every year in Canada - that solution is broadly referred to as an asset based line of credit, or a ' working capital facility '. The acronym for the facility is called ' ABL '.

Is there a special requirement for this type of financing - just one? Assets! Asset based lending is simply the provision of the maximum amount of cash flow and working capital that can be loaned against assets. We used the word loan. But this is not a loan or term loan, it is a revolving facility based on inventory and receivables, (and sometimes customer purchase orders) that your firm generates. The facilities only security is of course the A/R, inventory, and unencumbered equip that your company has available to finance.

The reader might be surprised to know that even the Canadian banks now have special divisions entirely devoted to ' ABL ' solutions; however some feel that their continued emphasis on balance sheet ratios, income statement ratios, and covenants and outside collateral is somewhat similar to traditional banking.

Asset based lines of credit, or working capital facilities as we have called them focus on only one thing, the collateral. These facilities are provided by independent commercial finance firms, and pricing varies by transaction facility size, the overall quality of your business risk profile, and, more importantly who you pick as a partner firm in this area.

We therefore strongly recommend that since this is a newer breed of financing that you speak to and work with a trusted and credible business financing advisor in this unique area of Canadian business financing.

So what is really happening in our facility - it is simply leverage the business assets you have on an ongoing basis to their maximum monetized value. That tends to be 90% of receivables under 90 days, as well as inventory advances of 40-80%, and on top of that unencumbered equipt is valued and advanced on if required. (Real estate is also a component, although less widely used.)

Our Nobel prize winner friend (Bob Dylan)

probably wasn’t talking about ABL lending when he wrote ' The Times They Are A Changing ' - as years ago a description of this financing would have come with terms such as ' lending of last resort ' but the new reality is that asset based lending is fundamental to thousands of businesses in Canada, and growing every day. Even large, well recognized public companies utilize the same facility.

Investigate, and consider the advantages, and benefit from the cash flow and working capital that can benefit growth of your Canadian business. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor and check out that not so super secret business credit line solution.




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

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

A Working Capital Facility . Feeling Awkward About Business Cash Flow

Getting Closer To Solving Working Capital Challenges


OVERVIEW – .Information on business cash flow solutions in Canada . How can the business owner/manager address the need for a working capital facility that meets operating and growth needs


Business cash flow in Canada in Canada. We see business owners and managers struggle to sometimes just grasp the term, let alone the solutions that are required to achieve a proper working capital facility that meets their needs. Should there be a need to feel ' awkward ' about cash finances - we don't think so and here is why. Let's dig in!

In any industry there are of course some specialized terms - the tech ones seem a bit overwhelming to us as times! In finance the concept of ' cash flow ' mesmerizes' many owners / managers. And the additional reality is that lenders, bankers, and others will often judge you and your business on your grasp of that concept.

So a lot of people talk ' cash flow ' (us included!). Not everyone has a handle on it. While the ' true' cash flow statement is in fact PAGE 3 of your financial statement ( right behind the balance sheet and income statement ), the term if very well confused by many because they somehow think its the same thing as ' profit' , ' income' , ' revenue', etc. It is not those!

The fundamental way to explain it is one that most businesses in the SME sector can relate to - payroll. Your company has delivered a product or service, you are waiting to get paid, and there is not enough cash in the bank to pay salaries! That's the crux of the business cash flow.

When the Canadian business owner and manager are in fact in control of cash flow they have a strong handle on some of the most important aspects of their business- and when you can ' scorecard' your working capital situation and put solutions in place to accelerate cash inflows ( and decelerate cash outflow!) you are truly mastering your business.

You can feel a lot less awkward about the challenge we’re talking about today by simply understanding your ' cash cycle ' and putting in finance solutions that match it. The cycle is managed and scorecarded simply by spending time in understanding how your purchase products, when you pay for them, what credit terms you offer, and how diligently you enforce those terms.

As you can see, its all about ' timing ‘ Businesses go under in Canada in many situations because business is in fact great - in fact its so great they run out of cash . That pipeline of funds is simply blocked as the investment you have made in inventory, receivables and equipment intensifies.

What are then the solutions to our conundrum? They include:

Bank commercial credit lines
Inventory financing
Receivable Finance
Asset based lending
Monetizing any tax credits
Purchase order/supply chain financing

Make sure you spot the road blocks we have talked about. Address those red flags by one or several of the solutions about. Seek out and speak to a trusted , credible and experienced Canadian business financing advisor who can assist you in feeling less ' awkward' about business cash flow!






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/working-capital-facility-business-cash-flow.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

Top Strategic Working Capital Funding and Facility Solutions

Every Canadian business owner and financial manger wants to know that their firm has financial health in the short term. Your company's ability to access working capital funding means only one simply thing - you have the ability to pay off your short term liabilities such as accounts payable, taxes, source deductions, etc .

So do you in fact need a better type or working capital facility today, and, if so, what are your options. We can't cure the patient unless we can confirm he is sick... so how in fact do you determine if that working capital need exists. It could not be simpler. Go to your balance sheet, add up cash, receivables and inventory, and if they in total don’t cover your accounts payable, guess what... the patient has a problem .

Two points worth mentioning, we fully realize most successful business managers and owners know intuitively that they have a challenge in the area of cash flow. It's simply recognizing that on a day to day basis more and more time is devoted to working capital management - i.e. collections, invoicing, juggling payables, etc.

There are very specific cash flow solutions for your working capital funding requirements. But believe it or not many of them can actually be fixed internally. You ability to negotiate better terms with your suppliers is a critical cash flow factor. More importantly many business owners don’t focus on turnover and quality of your current assets such as receivables and inventory.

By effectively measuring and monitoring your turnover in receivables and inventory can significantly improve cash flow. Technically we're talking about reducing day’s sales outstanding and calculating inventory turnover. Your goal is to reduce the amount of time it takes for a dollar to flow through your company.

So we have identified the problem, and the measurement issues around that problem, let’s focus on solutions.

In a perfect world, and we know its not, your Canadian chartered bank would financing all your receivables and inventory on an ongoing basis, and , when you need it offer up a bulge type facility to take you through a working capital rough patch . That type of working capital facility is generally referred to as a business operating line of credit.

As we said, it’s not a perfect world apparently! ... And thousands of firms, perhaps yours, don’t have access to this type of facility. So the Canadian marketplace offers up a number of solutions, for medium sized and larger firms the alternative is an asset based line of credit that comes without the restrictions of a bank facility ( ratios, covenants, outside collateral, etc) but in fact provide you with more working capital than a bank could . For smaller firms a working capital facility term loan is available via the government related bank in Canada. For smaller and medium sized firm’s receivable financing facilities, know as factoring, can turn your receivables into a constant ATM machine, albeit at a higher cost.

So whats our bottom line. Simply the right working capital facility will put life back into the patient, your company! Knowing what facility works best, what your options are, etc is really the only challenge, Speak to a trusted, credible and experienced Canadian business financing advisor to guide you through to the right cash flow solution.
--

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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_funding_working_capital_facility.html