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Information for Canadian business owners on working capital funding and the type of working capital facility for a small or medium sized company that will meet your firm's needs. How to measure and recognize the need for a cash flow solution that meets your firms requirements.
What Is A Working Capital Loan
Those larger companies have access to a lot of other means of capital, venture capital, private equity, etc. Our focus is on SME Canada , those small and medium sized enterprises that are the backbone of the economy, in good times, and those less than good times !
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 the 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.
What Is A Working Capital Loan? Who Are The Working Capital Lenders
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. Your ability to negotiate better terms with your suppliers is a critical cash flow factor. More importantly, many business owners don't focus on the 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. It is all about managing those ' working capital ratios '.
So we have identified the problem, and the measurement issues around that problem, let's focus on solutions and the financing of working capital.
In a perfect world, and we know it's not, your Canadian chartered bank would be financing all your receivables and inventory on an ongoing basis, and when you need it to 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, known as factoring, can turn your receivables into a constant ATM machine, albeit at a higher cost.
So what's our bottom line. Simply the right business loans via a 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 13 years - Completed in excess of 100 Million $$ of financing for Canadian corporations. Core competencies 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
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
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
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