Which Working Capital Finance Solutions Will Make Your Business Financing Challenges Go Away

Is Your Cash Flow Shrinking Faster Than Plane Seat Sizes?

OVERVIEW – Information on working capital finance in Canada. Business financing solutions must be tailored to your firms specific needs and ability to monetize assets




Working capital finance must, for many business owners/managers, must often feel like airplane seat sizes today - shrinking fast and almost always uncomfortable. Let’s put your business in a more 'comfortable' position by addressing some business financing solutions that will give your firm that cash flow ' comfort' feeling. Let's dig in.

There are not a lot of things more important than business cash flow - it's never good when you're in ‘ #HASHTAG FAIL’ mode in ongoing working capital needs. Many business people don't realize they can somewhat easily predict their cash flow crisis by simply putting together some realistic cash flow projections. They should realistically include any plans you have for growth, large revenue increases, new contracts, and predictive customer payments according to your pay terms with your clients.

That type of simple cash flow spreadsheet has saved many a business owner from the surprise of a financing crisis- the irony of which is often brought about by that great positive in business - sales revenue increases! It's the great irony of business that high growth leaves your firm with paper profits and no cash.

Depending on how your business is currently financed other issues that need to be addressed in your business projections include:


New personnel needs
Asset requirements/replacement
Ability to repay any current long term debt obligations

So bottom line it's all about cash inflows and outflows.

Naturally your ability to manage your current assets is also what working capital finance is all about. In this case we're talking about inventory turnover and A/R mgmt. Combined with your ability to get a handle on sales these current assets ultimately determine your financing needs.

Knowing when you have the proper financing in place is pretty easy to spot. You should strive for the following:

- Knowing you have the cash you need when you need it
- You have the ability to consider growth and investment
- Your A/R and inventories have acceptable turnover ratios
- You're comfortable with the costs of your financing - namely that those costs are achieving the return on investment


What then are the finance solutions that address working capital? While a cash term loan might be the answer (provides cash but takes on debt on your balance sheet) more optimal solutions include:

A/R financing
Inventory finance
Commercial bank lines of credit
PO Financing
Tax credit finance - (SR&ED)
Asset based lines of credit
Unsecured cash flow loans
Securitization
Sale leaseback of owned assets

Technically speaking if you can’t meet short or long term obligations - that infers insolvency or business failure.

While that is the extreme many clients we meet simply have ' bulge ' needs for one time issues or opportunities, and one of several of the above noted solutions fixes that .








Seek out and speak to a trusted, credible and experienced Canadian business financing with a track record of success and get back that ' comfortable ' feeling knowing you have accessible financing solutions for survival and growth.


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 :


7 Park Avenue Financial = Working Capital Finance Solutions



Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653


Email = sprokop@7parkavenuefinancial.com












Stan Prokop

Working Capital Finance. Untying Funding For Business Cash Flow Needs In Canada

Abandon All Hope Ye Who Enter World Of Canadian Business Financing . Not So Fast Though





OVERVIEW : Information on working capital financing in Canada . Funding for business cash flow solutions can be achieved in a number of ways via asset monetization


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

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.

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

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. If your firm qualifies rates are low and you're typically allowed to borrow 75% of month end margined receivables. The margining formulas pretty simple - you can draw down on your line of credit on any accounts under 90 days old. A/R over 90 days is typically viewed as ' uncollectible, as a result your bank is reluctant to finance those specific accounts.

Another solution, which gains traction everyday in Canada, is the RECEIVABLE DISCOUNTING financing that uses another method of financing your 2ND most liquid current asset - Your receivables. (Cash is most liquid ... inventory is 3rd!)

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 of 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.

The A/R Discounting model can also be combined with inventory and equipment financing, allowing you to maximize borrowing power on all you unencumbered assets. When combined in this manner it becomes what is known as an ' ABL ‘; an asset based line of credit working capital facility .

Both receivable discounting and asset based credit lines, or traditional bank credit allows you to reverse your ' slow growth ' policy if that’s because of a lack of funding 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.

In summary, it’s quite easy to feel ' tied up ' when it comes to cash flow financing. You have orders, projects, contracts... the only thing lacking is the capital to move forward. Get the breathing room you need in cash flow financing - seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of solving funding for business success.



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 :

7 Park Avenue Financial = Working Capital Finance Solutions





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

Understanding Canadian Working Capital Finance – Cash Flow and Institutional Loans & Private Lenders

Commercial Business Cash Flow Financing In Canada

Information on working capital finance options in Canada . What offerings are available from banks and private lenders when you need business loans or cash flow financing.



Having the right information simply becomes a small investment of your time and can turn into tremendous benefits... that are why your ability to understand working capital finance loans from both private lenders and other institutions is noteworthy.

When Canadian business owners and financial managers think in terms of capital typically Canadian chartered banks come to mind. That’s what business people tend to call traditional financing in Canada. But is it always readily available and possible to obtain? Many businesses find themselves in the position of needing to grow, or in some cases simply survive around the need for extra cash flow and liquidity.

The optimal solution is of course simple - have some sort of facility in place to access cash... when you need it! Two choices come to mind - a traditional working capital term loan from a bank - its essentially long term working capital with fixed monthly payments. Alternatively, and in many cases the better option, a non bank facility from private lenders is a better, if not more accessible solution.

And to be clear, let’s define ' private lenders' as that term is often mis understood in the context of a Canadian working capital loan. It may mean other things to you, but in our discussion today we are simply referring to a non bank entity, quite often a commercial finance firm that has a specialized niche in business lending and working capital.

What facilities are offered by these ' private lenders' if we can call them that? They include offerings such as receivables purchasing, working capital facilities that combine the borrowing ability of your inventory and receivables into one facility. Essentially a business line of credit from a non bank entity. Other offerings, somewhat more specialized include purchase order and contract financing, tax credit financing, and what we call the ' big kahuna ' of working capital cash flow financing in Canada - ABL (Asset based lending).

When we think of the facilities as describe above we're talking about the ' current assets ' part of your balance sheet - that’s where the liquidity lies.

Working capital outflows though can also be stemmed by utilizing lease financing or a sale leaseback strategy... that’s for your fixed assets of course.

Thousands of retail businesses in Canada often find themselves in the working capital finance conundrum. In recent years merchant cash advances, or loans against future sales have become a solution for the smaller retail business.

Advantages of a bank loan for working capital purposes are pretty clear - it enhances your commercial credit history, rates are the lowest and most desirable.

So the essence of your subject today is that you're in effect surrounded by working capital finance and loan options from both private lenders and Canadian chartered banks. It's a question of knowing what those sources are, and, most importantly... which one works best for your firm, whether you're a small retail business or a small to medium sized established corporations. (The big boys do quite well on their own, thank you).

Permanent or temporary solutions are available in many forms, as we have noted.Speak to an experienced, trusted, and credible Canadian business financing advisor who can ensure your working capital sources are just steps away.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

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

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

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

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 solutions has been tough to come by over the last several years.

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.

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 patients health will be and that patient is of course your company.
Canadian business owners and financial managers know that their balance sheet and income statement are related. Today we're focusing mostly on the balance sheet - The amount and relationships between those current assets such as A/R, inventory, and payables can let you zero in real quickly on what some of the problems might be. (We won't forget telling you about those solutions also!).

Yes, you do need positive working capital to ' stay healthy ' from a working capital and cash flow perspective. And talk about a balance 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.

We tend to review 6 major methods of addressing your working capital challenges. They are asset based lending facilities, their junior sister, working capital facilities, as well as solely receivable financing. And coming up the rear are inventory and purchase order financing, cash flow term loans, and for smaller businesses merchant advance loans on future sales. And, guess what? 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 alternative, 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.

If you want to investigate any of our 6 proposed solutions to both immediately and from a long term perspective fix your financing and cash flow issues seek a trusted, credible and experienced business financing advisor. Those solutions are just around the corner.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

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

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.
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Stan Prokop - founder of 7 Park Avenue Financial -
http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Your Executive Decision in 2011 - Working Capital Cash Flow! Working Capital Finance Is Easier Than You Think!

It’s resolved, all those in favor say aye! Doesn’t the timing to reassess your working capital cash flow needs heading into 2011 seem perfect? Working capital finance solutions are available, and they are not always what you thought they might be.

Let’s try and be realistic and positive here. The recession (we read this in the newspaper today, so it must be true) is over, your business is on the rebound, but, those same cash flow challenges still haunt your ownership and management on a daily 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. And yes, it’s always a balancing act that challenges you everyday, 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. You can 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.

Working capital finance inevitably focuses on the management of your receivables. 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 a.r.

In Canada several clear options are available, for smaller firms you have the ability to generate an unsecured business merchant cash advance against your future sales and receivables, credit card sales included! Medium sized firms in Canada can access the aforementioned working capital facility, aka the asset based line of credit. Larger corporations can entertain the securitization of their receivables via an off balance sheet financing.

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.

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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :


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

Working Capital Finance – Your Problem – Our Solutions for Solving Cash Flow Challenges

It would be great to hear our clients say they have no issues in working capital finance and challenges, and that solving cash flow problems is the least of their worries. Unfortunately we haven’t met one customer that seems to be comfortable sharing that with us.

Let's look at the root of some of those working capital challenges; what are the problems, what caused the problems and then talk about why you are probably reading this... you want working capital solutions.

It’s of course great to have sales - and sales and profits are even better. In general when you have those you have the essence of a healthy business. But those are in effect what we could call paper transactions and it always comes back to 100 year old clichés such as ' cash is king ' and 'the sale isn’t made until you’re paid '.

That cash is required for all those mundane things, paying suppliers, paying employees, and meeting your obligations on loans and leases.

Your challenge is typical, how you do create a flow of cash in the long term, as well as addressing short term bulges to ensure you have liquidity.

Naturally when you have a good handle on cash flow everyone views you in a positive light, most importantly your suppliers and lenders.

The solutions to cash flow challenges often come out of inability to plan or address the right type of cash flow solution. You run the risk of liquidity problems when you current assets aren’t able to be converted in a timely manner into cash - those assets are typically receivables and inventory.

There isn’t a day when we don’t run into a textbook type of working capital finance challenge - it’s as simple as requiring product to satisfy regular or new large orders, generating invoicing, and then waiting 30, 60 or 90 days for payment. That is the textbook challenge when we talk to clients asking us for assistance in solving cash flow problems.

So we have done a pretty good job of telling you what your problems and challenges are - let’s address some real world solutions.

At the core of working capital finance challenges are you inability to access business credit. We encourage all customers to seek Canadian chartered bank business credit when they are in a position to do so. Unfortunately many clients can’t meet business net worth, personal net worth, and liquidity ratios and covenants your bank might require. Also we strongly believe that inventory financing by banks in Canada is increasingly more difficult to achieve.

Don’t borrow - monetize. That’s the best advice and plan we set our with clients to solve cash flow problems. You could get a working capital cash flow term loan, but that just creates additional debt on your balance sheet. Instead, take those assets you already have on your books and monetize them - those assets are the previously mentioned inventory, A/R, and in some cases tax credits due your firm as well as unencumbered equipment.

Liquidity for those assets can be achieved by a receivable financing program, an asset based line of credit, or a short term bridge loan on an asset such as a tax credit or paid for fixed asset such as equipment. Many of these solutions are outside the chartered bank system in Canada and can be accessed by talking to a trusted, credible and experience Canadian business financing advisor.

Your ability to monetize your assets, keep suppliers paid and current and then having the ability to grow your business when you assess and consider monetizing assets into short term liquidity.
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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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