Confused About Canadian Working Capital Finance? Cash Flow Financing Techniques That Work

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You Are Looking for Working Capital Finance Assistance! 

You've arrived at the right address!  Welcome to 7 Park Avenue Financial 

Mastering Working Capital Finance: Financing Cash Flow Solutions

        Financing & Cash flow are the biggest issues facing businesses today

               Unaware / Dissatisfied with your financing options?

Call Now! - Direct Line - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

 

Email - sprokop@7parkavenuefinancial.com 

 

Boost Your Business's Cash Flow with Smart Working Capital Finance Tactics

 

Clear answers... no, even better, clear real-world solutions. That’s what Canadian business is looking for in working capital finance. And that type of financing and cash flow solution has been tough to come by over the last several years.

 

 

INTRODUCTION 

 

Working capital finance solutions are necessary for the money a business needs to fund day-to-day operations. It typically covers business expenses such as wages, rents, inventory purchases, and variable expenses. 

 

Small and large companies need effective working capital finance

 

Let's dig in on key issues the business owner needs to know -

What is working capital finance and what is it made up of

What are  financing options from traditional financial institutions such as banks

What alternative finance options are available for companies not able to access traditional financing

What is effective working capital management and what best practices should a business use

How can a business choose the right financing options based on cash flow forecast business needs

 

  

  

WHAT IS THE DIFFERENCE BETWEEN CASH FLOW AND WORKING CAPITAL?   

 

 

Cash flow is in effect a summary of the cash holdings of the business and indicates the inflows and outflows of cash over time - Companies with good income and profit with good asset turnover will have positive cash flow.  The  ' cash flow statement ' that is part of a business financial statement will show how much cash was used during the year and will reflect overall liquidity. Operating cash flow and cash flow from financing activities are also key parts of those financial statements.

 

Working capital is a measurement of the relationship of the difference between current assets and current liabilities on the balance sheet  - It can be positive and a company can also have negative working capital  - If the current assets of the business are higher than the current liabilities working capital is positive.

 

 

WHAT ARE THE COMPONENTS OF WORKING CAPTIAL? 

 

 

Let’s examine why your understanding of working capital and your ability to measure the need and the solution is as critical as ever in the competitive environment you fight every day.

 

Current assets on balance sheets are those assets convertible into cash within a year - Most common assets include accounts receivable and inventory. Current liabilities such as accounts payable are obligations the company has that are payable within the current year. 

 

Payables, Receivables and Inventory are the main components of the working capital.

 

  

Efficient Cash Flow Management Via Working Capital Finance  

 

Let's focus on some of the hard facts first. If you don’t have working capital key issues such as payrolls, loan and lease payments, inventory purchases, etc. can become big issues pretty quickly!

 

So how can you change assets and sales into the financing of cash flow? It's a one-word answer - monetization! You need to use a razor-sharp focus on monetizing (i.e. changing!) receivables, inventory, and sales into working capital to address those key issues we just mentioned above.

 

The better you do this you will find the better the patient's health will be and that patient is of course your company.

 

Canadian business owners and financial managers know that their balance sheets and income statement are related. Today we're focusing mostly on the balance sheet - The amount and relationships between those current assets such as accounts receivables, inventory, and payables can let you zero in real quickly on what some of the problems might be. (We won't forget to tell you about those solutions also!).

 

Working Capital  Mastery: The  Solution for Financing Cash Flow

 

Yes, you do need positive working capital to 'stay healthy' from a working capital and cash flow perspective.  And talk about a balancing act, if you are growing too quickly your investment in A/R and inventory hinders cash flow, and if sales are shrinking then your receivables shrinks also.

 

So, we've done the usual pretty good job (we think) of telling you what your problems are. But that’s not why you came here, right? Let’s address solutions.

 

Are there in fact real solutions that allow you to fix today’s financing of cash flow challenges, and at the same time address these issues in a long-term manner? Here's the good news. There are!

 

 

TRADITIONAL FINANCE OPTIONS 

 

Traditional financing options for working capital include:

Bank loans,

Business lines of credit

Business credit cards

Bank loans are typically long-term in nature with longer amortizations and they are repaid over a period of years. Lines of credit are short-term financing solutions that are used to cover short-term cash flow needs. Credit cards are another option for financing cash flow, but they typically come with high-interest rates and are often used for incidental emergency purchases.

 

 ALTERNATIVE FINANCING OPTIONS 

Alternative financing options for funding cash flow include:

 

Invoice financing / Factoring

Supply chain finance

Asset-based non-bank line of credit

SR&ED tax credit financing

Purchase Order Financing

Sale leasebacks

Short Term working capital loans/merchant cash advances

 

Almost all of these solutions are non-bank independent finance company solutions! We bet you did not know that.

 

All of these solutions have different levels of criteria for approval and success. Some are size-based, and some are viewed as alternatives, but boy do they work! Pricing is a factor also, and each of those solutions brings a different level of financing cost to the table.

 

WHAT ARE BEST PRACTICES FOR EFFECTING WORKING CAPITAL FINANCE MANAGEMENT

 

Good asset turnover is key to effective cash management - Inventory turnover, and a focus on days sales outstanding are solid methods of optimizing cash flows.

 

Common pitfalls to avoid include overtrading ( expanding too quickly ) poor management of inventories,  and lack of a credit and collection policy. All of these can lead to a situation where it is difficult for a company to meet business obligations.

 

 

KEY TAKEAWAYS 

 

Working Capital relates to money a business needs for financing day-to-day business operations

A/R, Inventory and payables are key components of working capital

A business can access short-term working capital or permanent working capital

 

  

 CONCLUSION     

 

Effective cash management practices are key for all businesses. Understanding what makes up working capital and the business financing options available allows a company to be well-informed about cash flow management strategies.

 

Regularly review the business working capital finance situation and adjuting to ensure adequate fund area available allows a business to operate in a smooth manner, Talk to the 7 Park Avenue Financial team to help address issues and solutions to cash flow needs.

 

Businesses that are proactive in focusing on healthy finances will always have a solid advantage over the competition as they achieve financial stability and a focus on long-term business success. 

 

If you want to investigate any of our proposed solutions to both immediately and from a long-term perspective fix your financing and cash flow issues call 7 Park Avenue Financial, a trusted, credible and experienced business financing advisor.  Those cash flow working capital solutions are just around the corner.

 

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

 

 What Are The Types of Working Capital Finance 

There are two types of working capital finance: permanent working capital and temporary working capital. Permanent working capital is the minimum amount of working capital that a company needs to operate on a day-to-day basis and meet financial obligations via the company's liquidity. Temporary working capital is the company's working capital required to finance its seasonal or cyclical activities and maintain a company's financial health around the company's ability to succeed and grow.

 

 

Click here for the business finance track record of 7 Park Avenue Financial

Funding For Business Via Working Capital Finance Solutions

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YOUR COMPANY IS LOOKING FOR BUSINESS CASH FLOW FINANCE!

WORKING CAPITAL LOANS AND FUNDING SOLUTIONS

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769

EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

 

DON'T LET WORKING CAPITAL FINANCE CHALLENGES BE THE SCHOOL BULLY!

 

Working capital finance in Canada.  Talking to clients about working capital on some days feels like they have entered the world of Dante's Inferno, via his famous quote 'Abandon All Hope Ye Who Enter'!

 

Talk about the feeling of the entrepreneur who is unable to take advantage of critical business opportunities and growth projects leading to business success now and in the long term!

 

WHY WORKING  CAPITAL FINANCE?

 

Working capital financing is financing your business can use in addition to any business credit lines - It allows you to purchase materials and fulfill sales orders to generate sales revenues. If your business has strategies around growth initiatives which might involve launching new products into new markets or conducting research and development under Canada's SR&ED program.

 

The ability to utilize working capital solutions to improve profit and asset turnover allows a business to maintain good supplier/vendor relationships as well as being able to utilize short-term financing for new employee hires.  Businesses that are service industries and not capital intensive/asset intensive can access business financing solutions without the need for further equity injections into the business.

 

Cash flow needs  revolve around your company's everyday operations - that's the need to pay wages and salaries, supplier and vendor obligations and managing the gap in payables and receivables - the working capital cycle / cash conversion cycle. Business success is all about the knowledge around access to necessary funding to operate and grow your company.

 

 

HOW DOES YOUR COMPANY UNLOCK SALES AND ASSETS FOR FINANCING 

 

So when it comes to funding for business in Canada does it seem to you that you’ve got that 'tied up' feeling when it comes to unlocking sales and assets and turning them into cash flow?  That doesn’t have to be the case, so let's dig in on the role of working capital in ensuring business success.

 

IT'S ALL ABOUT ASSET MONETIZATION

 

The concept of assets ' tied up ' is key to understanding working capital financing solutions. Ultimately you want to monetize current assets and allow those funds to flow through your business - growing your company.

 

HOW DOES THE BUSINESS ACCESS CASH IMMEDIATELY

 

Two types of what we can call ' instant cash ' immediately come to mind.

 

The first is of course assigning your receivables to a bank via a Commercial business line of credit via revolving credit facilities.

 

If your firm qualifies rates are low and you're typically allowed to borrow 75% of month-end margined trade credit receivables. The margining formulas are simple - you can draw down on your line of credit on any accounts under 90 days old.

 

Accounts receivable over 90 days is typically viewed as 'uncollectible', as a result, your bank is reluctant to finance those specific accounts as part of a receivable working capital facility for a small business. Maintaining your working capital ratio and focusing on good asset turnover is key to the success of any business advice you may receive!

 

  

LET RECEIVABLE FINANCING GIVE YOU CASH FLOW TRACTION  

 

 

 

 

  

THE WORKING CAPITAL REVOLUTION - ARE TRADITIONAL BUSINESS FINANCING MODELS OUTDATED?

 

  

Lender approval for accounts receivable financing is one of the quickest forms of business credit approval. Invoice financing funding options are among the fastest-growing funding solutions for Canadian companies.

 

At 7 Park Avenue Financial Confidential Receivable Financing is our most recommended solution - allow firms to invoice and collect their own receivables with no third-party notifications. It is one of the best small business lending options available to firms looking to monetize growth.

  

 

HOW DOES RECEIVABLE FINANCE WORK   

 

This method of working capital finance differs from the bank solution in Canada. Instead of pledging your receivables essentially the same security agreement is used to denote the sale of your receivables on a one or ongoing basis. While this method has a different pricing model, (it’s higher!)  It allows you to borrow 90% of your A/R value, which is significantly better than bank limits.

 

It goes without saying, but we'll say it anyway! .. that proper management of current liabilities such as accounts payable as a key part of your business expenses is also a key part of your business's overall funding.

 

 

YOU CAN COMBINE ALL YOUR ASSETS INTO ONE BORROWING FACILITY - IT'S CALLED ASSET-BASED LENDING!

 

 

The A/R Discounting model can also be combined with inventory and equipment financing for any small business as well as larger more established companies, allowing you to maximize borrowing power on all your unencumbered assets. When combined in this manner it becomes what is known as an ' ABL ‘; an asset-based line of credit working capital facility. It's a solid solution for small business funding needs. Even a real estate component can be added into your facility for company-owned premises - thereby creating even more borrowing power.

 

MORE  WORKING CAPITAL FINANCING OPTIONS

 

Both receivable discounting and asset-based credit lines, or traditional bank credit allow you to reverse your ' slow growth ' policy if that’s because of a lack of working capital funding for business - and they are solid alternatives to a business loan. At 7 Park Avenue Financial, we call it ' monetizing the balance sheet.

 

  

THE BENEFITS OF SHORT-TERM FINANCING OPTIONS FOR BUSINESS  

 

All of these types of facilities do one thing - they reduce the time gap between building or selling something, and collecting your cash from clients. It is important to note that in all these facilities described, you are only paying what you are using, so the ability to draw down on working capital is always there.

 

 OPTIMIZING SHORTER-TERM WORKING CAPITAL FOR MAXIMUM EFFICIENCY 

 

In some cases a cash working capital loan for working capital needs might be the best solution for your firm - it might be a short-term business working capital loan that typically has 12 months to 2 months term and less stringent approval requirements ( these are an outgrowth of merchant cash advances ) - in other cases, it might be a permanent term loan based on the cash flows of the business. A solid owner credit score is typically required here.

 

These solutions have repayment schedules that are typically tailored to your funding needs and will hopefully ensure your overall capital ratio of debt to equity is maintained within reasonable guidelines for your industry.

 

Interest rates in the asset-based lending environment are typically higher - at 7 Park Avenue Financial we caution clients to focus on access to capital when considering the necessity of taking on a higher interest rate. That additional access to capital will typically help generate sales and profits.

 

While a business plan is not always required for the types of financing and small business loan we are discussing they certainly can help in many cases. Business plans prepared by 7 Park Avenue Financial meet and exceed the requirements of any bank or commercial lender and are cost-effective and delivered in a timely manner.

  

 

  

KEY TAKEAWAYS - UNDERSTANDING WORKING CAPITAL FINANCING OPTIONS

 

     

The working capital requirements of a business are all about cash flow

 

All types of business and sizes of businesses require working capital financing solutions to fund day-to-day operations

Long term asset and major investments should not be made with working capital - long-term debt should be financed by term loans and other long-term initiatives

Businesses with any level of cyclical or seasonal aspects to sales require good working capital alternatives

Small businesses accessing working capital funding must be able to demonstrate good personal credit/credit score of the business owner

 

Working capital loans help companies manage cash flow around short-term expenses

Different types of working capital funding are available

Managing working capital effectively is key to business long term growth

 

CONCLUSION - WORKING CAPITAL FINANCE FUNDING FOR BUSINESSES

 

It’s quite easy for small businesses to feel ' tied up ' when it comes to cash flow financing around your business needs for more capital and appropriate business loans.

When it comes to working capital finance funding for the business you have orders, projects, and contracts... the only thing lacking is the capital to move forward!  Get the breathing room you need in cash flow financing -

 

Call 7 Park Avenue Financial,  to a trusted, credible and experienced Canadian business financing advisor with a track record of solving funding for business success.

 

" The only place where success comes before work is in the dictionary" - Vidal Sasson

 

 

  

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

 

 

  

What are the benefits of working capital financing?

 

The benefits of working capital financing include the ability of the business to manage current liabilities such as accounts payable and fixed overhead expenses. Businesses with working capital funding in place can ensure they have funds on hand for operating capital to purchase materials and inventory required in the business. Business liquidity is a major benefit of effective working capital management and a company will pay interest only on funds borrowed or drawn under a facility.

 

What is working capital financing and why is it important for businesses?

 

 

Working capital finance is a method of financing a business that allows a company to fund day-to-day business expenses and helps a business achieve growth capital goals for business growth and business expansion.  Businesses have short-term fluctuations in cash due to the timing of cash inflows from collections and cash outflows.

Business sustainability is enhanced with effective cash management that allows a company to maintain acceptable financial ratios around debt financing and capital expenditure. Understanding the impact of inventory turns and days sales outstanding is key to the successful management of the working capital cycle in business finance.

 

What are the different types of working capital finance, and how do they differ from each other?

 

The different types of working capital finance include:

 

Working capital term loans/merchant cash advance

Business lines of credit / revolving credit facility

Invoice factoring/accounts receivable financing

Tax credit financing

Business credit cards

Sales leasebacks

PO financing

 

Each financing option has different terms of repayment and interest rates and financing costs - In some cases, some form of business collateral or personal guarantee might be required - Effective short-term debt financing solutions eliminate the need for additional equity financing by owners

 

How do businesses determine their working capital needs, and what factors influence those needs?

Businesses determine working capital needs are determined by the examination of the relations between current assets and current liabilities on the company's balance sheet.  Additionally, an effective tool for determining working capital is the ongoing preparation of cash flow and sales projections. Depending on the business model and industry factors that affect working capital loan needs and cash needs include the cyclicality of the industry, general economic conditions,  and the cash conversion cycle of a business.

 

  

What are some best practices for managing working capital, and how can businesses optimize their cash flow?

 

Best practices for managing working capital include a focus on effective credit extension and collection policies as well as ensuring maximum payment terms are negotiated with key suppliers and vendors.  The use of and granting of Trade credit is an effective business tool in reversing negative working capital situations and maximizing working capital efficiency

Business owners should also focus on the relationship between short-term working capital versus long-term capital expenditures related to long-term growth goals. The role of revolving lines of credit accessed from banks or non-bank alternative financing lenders plays a key role in successful business financing strategies,

Business owners and financial managers should monitor key financial ratios on the balance sheet and income statement which helps determine working capital loan requirements. 

 

What are the risks associated with working capital financing, and how can businesses mitigate those risks?

The risks associated with working capital financing include the financing costs and interest rates associated with business borrowing.  Businesses should be prepared to potentially provide additional capital for the financing and excessive use of financing negatively impacts key financial ratios viewed by business lenders.

 

Business owners and financial managers can mitigate financing risk by ensuring they are aware of the appropriate working capital loan solutions, and by also considering diversification of business lenders. In certain types of financing the business owner's personal credit can be negatively impacted by the overuse of small business loans.

 

 

Click here for the business finance track record of 7 Park Avenue Financial

Working Capital Finance Solutions & Bank Alternatives !

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Benefits Of  Financing Alternatives Vs. Traditional Bank Loans

What Is Working Capital? How To Find Alternatives To Bank Financing

Canadian business owners and financial managers seeking working capital finance by banks or other sources are generally experiencing growth in sales and profits. That's the good news, which is of course offset by the fact that this type of success requires additional working capital and newer ways to finance your business. Putting working capital to work enhances your firms value when return on capital is higher than your cost of financing!


Liquidity has become the name of the game and ' cash is king' even today never seems like a worn cliché.  Past studies by the Conference Board of Canada indicated that the key worries of business owners were working capital cash flow. (Also referenced were ' regulatory issues and competition'). The bottom line is: business owners and their financial managers want options


So you have sales and assets... but can those assets generate working capital finance by banks or other alternatives?

The ability to secure funding at critical times is always challenging for entrepreneurs, even in established companies. That one of the biggest reasons that alternative funding has risen to so much prominence. A wide variety of finance solutions is now available to the Canadian business owner - solutions that involve cash flow financing via the monetizing of current assets such as inventory and receivables, monetizing future sales ( merchant advance/short term working capital loans), equipment financing and sale-leasebacks, and traditional cash flow term loans, also known as ' mezzanine financing '.


Somewhat remarkably many businesses have even turned to online borrowing solutions in Canada. Canadian chartered banks have also participated in the online borrowing industry, although reviews of customer experiences in business journals such as the GLOBE &  MAIL and NATIONAL POST have met with some lacklustre customer experience. Although approvals are relatively fast interest rates and borrowing costs and terms of repayment have left many customers wanting better solutions.

In online borrowing models, including peer-to-peer loans significant emphasis is based on owner personal credit history. Alternative funding options are continually changing in the digital space and borrowers are well advised to speak to a business financing consultant in this area. It is safe to say that business owners can't be expected to call and interview all the different online lenders as it relates to loan info, cost of financing, and loan criteria.

The main appeal of short term working capital loans is the emphasis on fast approval, no requirement for additional collateral, and less emphasis on personal credit scores and net worth.


The bottom line is that businesses who choose to grow and that require external funding want to deal with reputable lenders/financing partners. Unfortunately many Canadian firms can't meet the criteria under traditional bank lending policies , even though financing needs are critical to their business.



For working capital purposes it's all about ' current assets ' which include typically receivables and inventory. As you invest in those two assets to generate sales your working capital needs go up, and your ability to manage and turn over those assets plays a key role in the sourcing of working capital by banks, and non-bank institutions.


You should not be afraid to enter into traditional or alternative working capital solutions if you have properly managed current assets - you are simply monetizing for liquidity, and that's rarely a bad thing.  Business owners know cash goes down when you are expanding sales as you invest in assets and resources.


So are Canadian chartered banks the solutions to your working capital needs. Probably, possibly, maybe is our answer, meaning that if your firm is capable of meeting bank criteria for a revolving line of credit your needs typically can be met. Of more and more concern to our clients is their ability to not be able to generate sufficient financing for the sister of receivables, aka inventory!


That then takes us into an alternative for bank financing, which is the fast growing area of asset based financing, in particular asset based lines of credit. These facilities cost more, but give you total margining of the market value of your receivables, inventory, and , guess what, we'll throw in equipment and real estate if you want to temporarily margin them for working capital. And remember, your balance sheet is not taking on debt when you enter into either a bank or alternative asset based line of credit, you're simply monetizing your financials for cash flow.

The reality is that alternative methods of financing are growing more popular - yes they are more expensive, but if your firm generates sufficient margins and return on equity your ability to tap into virtually unlimited working capital can prove to be a very positive experience.

The reality of working capital finance by banks or alternative methods is always the same - you need to determine your asset turnover, there will always be times when you need a bulge in inventory and A/R to fund your growth.

Solutions for alternative working capital cash flow include:

Non bank asset based lines of credit  - These facilities help to smooth out what the pro's call the 'operating cycle ' of your business , assisting those times where cash inflows don't match outflows based on a/r and inventory turns. As you invest in current asset categories of receivables and inventory you experience a decline in cash reserves. Businesses with seasonality or ' bulges' of sales activity require solid business credit lines. 'ABL' ( Asset Based Lending ) lending is true collateralized lending.




The operating cycle may cause businesses to experience shortfalls for a specific period. There are numerous reasons why this can happen, but one underlying reason is that a business may extend credit to its customers to attract more business. The more credit a business extends, the less cash is available during that time. That’s why a line of credit can help these businesses with their cash flow management.

A/R Financing/ factoring (We recommend Confidential Receivable Financing) - 

Accounts receivable finance is one of the most highly utilized and successful forms of non bank working capital financing. This type of financing allows you to, in effect , sell your invoices to generate cash flow. Many business people don't understand this type of funding is not a loan, in effect its a transfer and cash flowing of your asset - A/R! 

So pricing is not an interest rate per se, but a discount to the total value of your invoice, typically in the 1-1.5% range.  We recommend confidential a/r financing, allowing you to bill and collect your own accounts with no intrusion of any finance firm into your customer relationship.



Sr & ed Tax Credit Bridge Loans

Sale leaseback solutions

Inventory & Purchase Order Financing

Loans for professional practices ( Doctors/Dentists/Lawyer/Accountants, etc )  - These loans may involve financing needs around equipment, marketing,  or in some cases acquiring another practice. Expansion for business real estate is also a common need in this area.




Short Term Working Capital Loans ( aka ' Merchant Advances ) - As we have discussed to a certain degree these online/peer-to-peer solutions became ultra-popular after the 2008 recession and became a strong competitor to invoice discounting finance. Loans are typically based on a percentage of annual sales, typically between 10-20%. Although readily accessible we consult to clients around the pros and cons of this financing, one issue being higher interest rates.

It is important to understand the financial concept of matching when it comes to working capital finance solutions. These sources of capital should be used for day to day operating needs.  Serious mistakes occur when these types of solutions are used for long term need such as investments in equipment, r&d,  marketing, etc.

At 7 Park Avenue Financial we find that many new clients are confused around some of the terminology around the ' working capital loan '. Also noted is that certain loans in this category are secured, others are not.

Is Alternative Financing Right For Your Firm?

Business financing is a challenge, so owners must invest their own time, or work with a trusted advisor to evaluate options. Companies with good sales revenues, profits and clean balance sheets will have more options, but we have demonstrated that commercial lenders providing alternative finance options are plentiful and offer numerous cash flow solutions to your short term needs. If your firm has sales, and or assets you have non bank funding options.


Liquidity, that's what it's all about. Speak to a trusted, experienced and credible Canadian business financing advisor in order to ensure your traditional and alternative business financing options are first, clear, and second, available!





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.









Stan Prokop
7 Park Avenue Financial/Copyright/2020

Working Capital Finance Loan Advice – What Business Credit Is Available For Your Firm

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Working Capital and Cash Flow Mechanisms for Canadian Business

Information on working capital finance requirements and solutions for business credit for Canadian businesses . Your business doesn’t need a 'loan ' Do you really need a ' loan ' and are there are alternatives to monetize assets into cash flow . P.S. Yes there are!

Have you checked the patient recently for oxygen and blood status? We're talking of course about your business, i.e.
working capital finance which is a true key measure of business credit health. Does a working capital loan need seem like a necessity as your business grows? Let's examine the why and more importantly the ' how ' of cash flow financing in Canada.

It is not hard to determine why there is such a focus on working capital finance in Canadian business - its simply because your ability to both manage, and access cash flow alternatives become the ultimate measure of short term financial health . We say short term because your overall capital structure and debt / equity relationship are of course the other piece of the business finance puzzle. Today we're focusing on short term health!

You know you are in good shape from a business cash flow perspective when you are in a position to meet your short term obligations - typically those are payables and any loan payments becoming due on a monthly basis within the year. If your cash on hand, receivables and inventory turnover are unable to meet those obligations consistently ... well ... its clear you need a working capital solution.

The reality of course is that cash flow fluctuates, and there are times when you have what is known to bankers as a bulge requirement - it is those times you need that access to working capital we spoke of.

So how do you determine what type of business credit financing you need, and, as importantly, how much. Sophisticated larger firms use the capital budgeting process to determine asset needs and why type of investment is required. It’s essentially the mix in the financing of your company - i.e. owner equity, debt, and financing of current assets, which is our focus - ' working capital'!

The good news about working capital finance is that if it is done properly it doesn’t incur debt, or reduce your owner equity - it just increases cash flow and business credit access. To some extent the term ' loan ' in working capital actually reflects a line of credit scenario, not taking more debt on to your balance sheet.

It is possible though in Canada to get a working capital term loan, for larger and medium size companies this is known as sub debt. Payments are fixed and in general the loan is unsecured and based on your cash flow ability to repay, both historically and projected.

If that is not the solution for your firm, what is then? The other solutions are a true bank operating facility, if, and sometimes that’s a big if, you meet bank criteria for lending. Other real world and more probable solutions for working capital finance business credit are asset based lines of credit , working capital facilities of a non bank nature around your inventory and receivables, or simple receivable financing via an invoice discounting facility.

In summary, working capital cash flow financing is not necessarily a ' loan ' per se, but there are options available for business credit financing in Canada. As we have shown you need to determine when you need that capital and why it’s important to have stand by facilities available. Speak to a trusted, credible and experienced Canadian business financing advisor on sourcing your proper working capital and cash flow 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

5 Smart Simple Canadian Working Capital Cash Flow Financing Loan Techniques !

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Making Working Capital Actually Work !

Information on Working Capital Solutions on cash flow financing for Canadian firms . What type of loan or asset monetization do you need ?

Working capital Cash Flow - A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time. That’s one of the better definitions we've seen lately. And could that emphasis on ' financial health ' be any truer? - We don’t think so.

Canadian business owners and financial managers want to... wait a minute, need to! understand cash flow concepts . And by the way cash flow solutions wouldn’t be bad also, and we'll shortly be identifying some of those!

We all agree that cash flow financing forces the business owner to address some really key issues, i.e. dealing with banks, borrowing from other independent finance firms, etc. When we sit down with clients that bring in their balance sheet and income statement its clear to us that there is a true mis understanding often... in the business owners eyes about what that incomes statement is telling us. It's those changes in the balance sheet they should be focusing on instead, in particular our working capital accounts, receivables and inventory.

Are there real world Canadian made solutions for managing cash flow financing , and what type of ' loan ' is best suited to address your cash flow needs, or crisis!
?

When you think of it , it all comes down to managing your billings, aka receivables, granting terms to clients, and of course managing payables which many business owners omit in their ' cash flow analysis '.

We can also add that a great concept we use is often overlooked , and that’s the quality of earnings , Simply speaking, your net profits don’t always ( in fact rarely ) equal your cash flows. The closer you can bring those two together, at a reasonable financing cost, will be the solution to working capital cash flow financing. A quick example would be giving customers extended terms and booking larger sales and profits... for awhile!

So, great job so far on all the technical jargon, right? Not what you were looking for?! Let's jump into the real world, our favorite place. We're identifying 5 working capital cash flow financing ' loan' techniques. And guess what, 4 of them aren’t ' loans ' per se.

If you want to fix, better, or change your cash flow financing consider one of the following - C I D receivable financing, a cash working capital term loan - injection permanent working capital into your firm, a full fledged ABL facility , a junior working capital facility, and , our most esoteric but real solution, inventory and purchase order financing .

Any of these 5 solutions will better your cash flow existence. Want information on what they are, how they work, what they cost and where to get them... seek out and speak to a trusted, credible and experienced Canadian business financing advisor.

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

Bank Working Capital Finance Solutions & Alternatives !

Liquidity Financing Alternatives : Available Now!

OVERVIEW – Information on working capital financing offered by banks and commercial alternative finance providers

Canadian business owners and financial managers seeking working capital finance by banks or other sources are generally experiencing growth in sales and profits. That's the good news, which is of course offset by the fact that this type of success requires additional working capital.


Liquidity has become the name of the game and ' cash is king' even today never seems like a worn cliché. Past studies by the Conference Board of Canada indicated that the key worries of business owners were working capital cash flow. (Also referenced were ' regulatory issues and competition')


So you have sales and assets... but can those assets generate working capital finance by banks or other alternatives?


For working capital purposes it's all about ' current assets ' which include typically receivables and inventory. As you invest in those two assets to generate sales your working capital needs go up, and your ability to manage and turn over those assets plays a key role in the sourcing of working capital by banks, and non bank institutions.


You should not be afraid to enter into traditional or alternative working capital solutions if you have properly managed current assets - you are simply monetizing for liquidity, and that's rarely a bad thing.


So are Canadian chartered banks the solutions to your working capital needs. Probably, possibly, maybe is our answer, meaning that if your firm is capable of meeting bank criteria for a revolving line of credit your needs typically can be met. Of more and more concern to our clients is their ability to not be able to generate sufficient financing for the sister of receivables, aka inventory!


That then takes us into an alternative for bank financing, which is the fast growing area of asset based financing, in particular asset based lines of credit. These facilities cost more, but give you total margining of the market value of your receivables, inventory, and , guess what, we'll throw in equipment and real estate if you want to temporarily margin them for working capital. And remember, your balance sheet is not taking on debt when you enter into either a bank or alternative asset based line of credit, you're simply monetizing your financials for cash flow.

The reality is that alternative methods of financing are growing more popular - yes they are more expensive, but if your firm generates sufficient margins and return on equity your ability to tap into virtually unlimited working capital can prove to be a very positive experience.
The reality of working capital finance by banks or alternative methods is always the same - you need to determine your asset turnover, there will always be times when you need a bulge in inventory and A/R to fund your growth.

Solutions for alternative working capital cash flow include:

Non bank asset based lines of credit

A/R Financing/ factoring (We recommend Confidential Receivable Financing)

Sr&ed Tax Credit Bridge Loans

Sale leaseback solutions

Inventory & Purchase Order Financing

Liquidity, that's what it's all about. Speak to a trusted, experienced and credible Canadian business financing advisor in order to ensure your traditional and alternative business financing options are first, clear, and second, available!


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

Working Capital Finance In Canada : The Rise of Cash Flow!

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Your Executive Decision : Improve Cash Flow & Access To Business Financing ! Here’s How

OVERVIEW – Information on working capital finance solutions in Canada. The ability to properly fund and finance your cash flow needs makes .. or breaks.. your business future

Working capital finance in Canada is all about the need, and the rise of cash flow solutions to run... and grow your business. All those in favor of making an executive decision in improving your Canadian business financing access say aye. It's resolved! Let's dig in.

Doesn't the timing to reassess your working capital cash flow needs seem appropriate? Working capital finance solutions are available, and they are not always what you thought they might be.

It's rare that any business, especially those with SME COMMERCIAL FINANCE needs, doesn’t, at some time, have cash flow challenges that haunt the business owner/financial mgr. on a daily, intermediate, or even a long term basis.
Your ability to put together effective techniques and solutions around working capital financing always goes back o the management of your short term assets such as cash, receivables, and inventories.

The reality? It’s a balancing act that challenges you every day, we know that. The cash requirements come out of the need to meet your day to day expenses, pay employees, and make payments on any debt obligations you have.

In talking to clients inventory levels that allow you to run your business, minimize constant re ordering, and taking advantage of price and volume discounts continue to be a main challenge.

Can this challenge be addressed? It sure can, and in a number of ways.

Here's a solution to consider:

Arrange a long term unsecured working capital loan to address product needs - alternatively you can blend the borrowing power of your receivables and inventory on a combo basis via a working capital facility that margins receivables and inventory. This facility, called an asset based line of credit when it's for a larger amount will turn your company into a constant cash flow machine if you manage it properly.

We point out to clients that this type of working capital cash flow facility we just described is offered by a non bank private finance firm, so we encourage clients to speak to a Canadian business financing advisor as to how these facilities work.

Are there internal steps you can take to accelerate cash flow? There are. You can amend credit policies, shorter your payment terms, extend those terms, or simply collect your receivables more efficiently and aggressively. Those are all measures of how you identify your credit policy. The other side of that coin is how you finance that huge investment you more than likely have in receivables.


In Canada several clear options are available, They include:

Short term working capital/cash advance loans

Sale Leaseback financing

SR&ED tax credit bridge loans

Securitization of receivables - (primarily for larger firms)

There is only one bottom line in working capital cash flow - its simply that you need to understand your cash flow challenge, and then investigate the proper options to remedy that challenge, allowing you to fuel long term growth and profits .

In some cases traditional bank financing, via the right bank and banker will work. When it doesn't consult a credible, experienced and trusted Canadian business financing advisor who will help you identify real world solutions for cash flow success. Time to make that executive decision?


7 Park Avenue Financial :

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 .



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