Equipment Finance – Sale and Leaseback Solutions Canada

Equipment Finance is one of the most popular and widely used financing strategies used by Canadian business owners and financial managers. It is a unique financing opportunity because it is kind of the opposite of a normal lease financing strategy. Why is that? Normally your firm has the need for equipment, and has cash flow and working capital to make the payment.

In a sale and leaseback financing the opposite is true. You have equipment, it’s paid for, and the capital is of course tied up in the fixed asset account of your balance sheet. How can you unlock that capital and put it to work to generate sales and profits? The answer is the sale leaseback strategy.

You should consider a sale leaseback strategy when you have a need to improve your liquidity. What is the sale leaseback – very simply speaking it’s the re financing of equipment you own under a lease strategy, so it is not a loan per se. There is one key accounting issue that we should point out though, and it’s simply that if you refinance that equipment and the financing is more than you are carrying the asset for on your balance sheet (you have depreciated the asset over time) then the excess you receive over book value might be taxed as a profit. Bottom line, talk to you accountant on that point.

Implementing a sale leaseback strategy for your Canadian firm is easy – along with the normal business lease application you will need to generate a bill of sale to the lease company that transfers title back to them and title will once again revert back to your firm when the lease is repaid.

Depending on the size of your transaction, or the number of assets involved it might be advisable to get an appraisal , in fact one might ever be a requirement, as opposed to a ‘ nice to have ‘. We point out to clients that often work in your favor as it gives you a sense of what the true value is of the equipment and it might increase the amount you receive under the sale and leaseback strategy.

Another benefit of a sale leaseback strategy is that it potentially will make your balance sheet look better. In many cases your current ratio improves because you use the funds to reduce payables. You are more liquid and can use funds for such things as buying more inventories and taking discounts for prompt payment

In summary, a sale leaseback strategy is a great way to improve working capital and your balance sheet. Speak to a trusted and credible leasing advisor and determine if you can take advantage of those benefits.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/equipment_finance_sale_leaseback_solutions_canada.html

Equipment Financing – Toronto Area

Canadian business wants and needs equipment financing. As the Canadian economy continues to improve your business has the need for new or replacement equipment.
You naturally want to do that in an efficient and economical manner. In general, all types of equipment can be financing – Some of the main categories of equipment that can be financed are:

Computers (‘Information technology” ‘IT ‘ )
Plant and production equipment
Software – (Yes, software!)
Rolling stock – i.e. trucks, trailers, etc
Specialized Equipment

Etc!

The challenge for the Canadian business owner is to understand the Canadian leasing landscape and determine which lease partner suits their needs.

Many of our customers focus on ‘rate ‘, or in effect the price. It goes without saying that your firms want a competitive rate, and clients are surprised when we say they get to pick their own rate! What do we mean by that? We simply mean that your company’s overall credit quality will always determine the rate and structure and term of the lease. However, in order to achieve that best rate or ‘ pricing ‘ you need to ensure your company is presented in the best light possible .

In order to achieve both a prompt approval and a solid structure we strongly recommend that you work with a trusted, experienced and credible lease advisor in your area. The ability to properly understand your needs, and to present them in the best light possible is critical.

What is involved in a solid lease equipment financing submission? In Canada many, in fact the great majority of leases under 50,000.00 can actually be approved without financial statement disclosure. You should clearly expect to be providing financial statements on transactions over 50k.

How is lease approval decisions made? No one factor determines an equipment lease financing approval. It’s quite frankly what our firm likes to call the ‘weight of evidence ‘. That simply means that several key factors such as your financials statement health, the current state of your industry, the asset quality, and your ability to demonstrate re payment are the key factors in any lease financing approval. Depending on the size and nature of the asset any one of those indicators might carry a bit more weight. From a technical point of view the ability to show cash flow repayment is very important.

Clients looking for lease financing often are surprised about a few things – examples are as follows –

-You don’t have to be an established business – lease financing can be for a start up or emerging company also
- Your equipment doesn’t necessarily have to be new, it can be used if you can demonstrate its value and that it has been maintained and still has a useful economic life
- You might already own an asset – let’s say it is not financed, you can lease it back to the lease firm and generate cash flow and working capital from that transaction!
- Banks in general in Canada do not provide lease financing – two of the Canadian banks have lease financing operations but credit quality must be quite good to achieve bank type lease financing
- Being declined does not necessarily mean that you can’t get the equipment financing – we simply re structure the transaction to meet the approval criteria – that might mean a down payment of a shorter term, etc

There! You just learned 5 interesting and valuable facts about lease financing!

If you are looking for Canadian lease financing speak to an experienced professional in the industry and ensure you take advantages of this great type of financing.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see:
http://www.7parkavenuefinancial.com/equipment_financing_toronto_area.html

Invoice Cash - Working Capital Now for your Receivables

Invoice cash - How can Canadian companies address the problem of growth and lack of working capital. The majority of any firm’s liquid assets are tied up in accounts receivable. Over the years customer that paid in 30 days now take 60 or 90 days to pay your firm. This then places tremendous pressure on working capital. Thats the problem - is there a solution.

As a Canadian business owner you in fact feel that pressure every day - one business owner I know who has had his business for over 30 years says you aren’t an entrepreneur until you have ’ sweated a payroll ’ - which of course meets rising to the challenge of meeting that key payroll requirement for your employees .

How can a Canadian business owner of financial manager determine when working capital is tightening? They are some very basic calcs you can perform. There are a number of great indicators you can monitor - here is one - it’s the ’ Collection Period ‘. Simply take your accounts receivable and divide you your average daily credit sales the longer your Collection period number is the greater attention you need to pay to working capital. Receivables are a huge component of working capital. So what if you had a solution to obtain all the working capital you needed based on current and projected sales growth?

That solution is invoice cash, or the immediate factoring or discounting of your accounts receivable. If you have no bank line with a Canadian chartered bank, by sacrificing a couple of percentage points in your gross margin, you can immediately monetize your accounts receivable.

The ’ challenge ’ - if we can call it that, in the Canadian marketplace is simply setting up the right invoice cash facility. We advise our clients on focusing on a ’ non notification ’ facility. Factoring , or invoice cash, or accounts receivable discounting, came to Canada via the U.S. and Europe , where the process has been in practice hundreds of years . Canadian business owners are less willing to turn over their accounts receivable function to a third party finance firm.

We therefore focus on non- notification solutions for clients - a financing facility where you can bill and collect your own receivables, and still get daily, weekly, or monthly advances ( It’s your choice ) on your accounts receivable .

An ever better option is to marry an invoice cash facility with an inventory financing facility - you’ll be able to finance your inventory also. That means only one more thing - additional cash flow and working capital.

Speak to an experienced, trusted business financing advisor on your options for Invoice Cash, also known as factoring, in Canada. Putting together the right type of facility will allow you to generate needed working capital and cash flow to run ( and grow!) your business .

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/invoice_cash_immediate_cash_for_AR_2.html

Invoice Cash – Immediate Cash for accounts receivable

Invoice cash – What is the problem and what is the solution? The problem or challenge is a classic one for Canadian business owners and financial managers. It is that sales are growing fast, but, guess what? The receivables associated with those fast growing sales and converting into cash. In fact they are tying up your working capital for 30, 60, and sometimes 90 days. How can you tell if this is happening? Well we are sure it’s fairly intuitive to most customers, but you can actually do a very basic calculation on this to verify. We also tell our clients there is one easy way to fix the problem,

We advise our clients to track something as simple as the ‘ Turnover of Working Capital ‘ – Take your sales for the time period, example, month, or year , and divide by you working capital which is calculated by current assets minus current liabilities . If your ratio is trending higher you will find that you are having more working capital challenges.

Our clients often ask for solutions though, not a financial ratio as we have presented above! Invoice cash, also known as factoring or receivable discounting is one solution to the above working capital challenge. This solution also assumes you have been unable to get any, or enough, bank financing to fund your business.

How does this solution work – it’s a simple process of generating your invoice as you sell your product, and then on a daily, weekly, or monthly basis (it’s your choice) sending these invoices to the factoring or invoice discounting firm. They will on a same day basis send you approx 90% of those funds immediately. You have just generated IMMEDIATE cash flow for your business. The other 10% of the invoice is paid to yourself when your customer pays, minus a ‘ discounting fee ‘ , which is a carrying or financing charge for the factoring firm .

Canadian business owners need to ensure they have the right facility. We encourage clients to get the type of facility where they continue to bill and collect their own receivables during the factoring process. Also, the Canadian business landscape relative to invoice cash/ factoring firms is much different than in the United States.

As a Canadian business owner or financial manager contemplating a factoring facility you should consider the following key points:

-What fees are you paying – ensure your fee is clearly understood and has no miscellaneous costs

- Ensure you can bill and collect your own receivables – many factor firms will want to take over to some degree your invoicing and collection function

- Ensure you are dealing with a firm that understands the Canadian landscape – many firm are simply branches of U.S. organizations

- You should ensure that your capital requirements can be met and that the firm can fund companies in your facility size range. More cash flow means more growth, more profits, and more competitive success for your Canadian company. That is a good thing!

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/Invoice_Cash_Immediate_Cash_for_Ar.html

Inventory and Purchase Order Financing in Canada

Inventory and Purchase Order Financing in Canada are two of the key elements of Asset based lending and financing. What do Canadian business owners and financial managers need to know about this type of financing?

Inventory financing is unique – we say that simply because unless you are working with a specialized lender most financiers, bankers, etc do not understand inventory – naturally if you don’t understand something it is difficult to lend against, which limits financing of course !

You need to work with a lender who will take the time, and already has the expertise to assess the critical element of your inventory, which is very simply what is it worth on an ongoing basis. As a business owner looking for additional working capital and cash flow you want to maximize the amount of financing you can extract from inventory. Your inventory and receivables are huge components of your on going working capital needs.

What are some of those key elements in inventory financing? They are as follows – first of all you want to always ensure that you don’t enter into an inventory finance facility that requires your to store product at a third party warehouse . That becomes cumbersome and adds some additional cost to your facility.

When we discuss client inventory financing needs we also try to ensure they are bundled into an asset based facility that includes accounts receivable – this certainly is not necessarily required, but simply makes the entire ‘ cash conversion cycle ‘ run more smoothly . As you know your cash conversion cycle is simply the ongoing process by which cash becomes inventory which becomes receivables which becomes cash again!

When you establish a solid inventory financing facility you simply are maximizing working capital on an ongoing basis by having pre negotiated a maximum loan to value of your inventory – What do we mean by this and how does it work? Well simply explained its putting in place a facility, which, as an example, allows you to draw down on a certain per cent age of your inventory on hand. You simply provide a list of your inventory, as an example, on a monthly basis, and draw funds against that summary listing. A quick simple example – lets say you are selling shoes to Big Box retailers, and you have 400, 00.000 of shoes on hand every month to satisfy customer needs. If your inventory financing facility is margined at a pre agreed upon 60%, (as an example) you can draw on working capital $4000.000/00X .60 = $240.000.00.
In many circumstances we run into your firm either had no or limited inventory financing, so you have just created 240k or additional working capital for your firm.

Let’s discuss Purchase order financing also! It’s a case of drawing working capital out of orders from customers who are deemed sound. You use the funds to satisfy those orders, gain additional revenue, and increase your overall competitive presence.
P.O. Financing is a gap or bridge financing allowing you to take on larger orders/contracts... With your suppliers paid you can convert inventory into receivables and start the process all over again.
. Your suppliers are paid in advance by the p.o. financier, which frees up your working capital. Key requirements of a good P.O. Financing facility are good reputable customers, PO financing facilities of 100k and up, and your ability to demonstrate you can offer the P.O. as collateral. In some cases insured receivables might make sense also
Not everyone knows about or understands these two types of financings; speak to an expert who has credibility and experience to maximize your use of this type of financing.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/inventory_and_purchase_order_financing_in_canada.html

Film Tax Credit Financing Canada – Cash Flow Tax Credits Now!

Financing Film, television and digital multimedia productions in Canada is less of a challenge whenyou have access to interim capital to assist in completing projects and of course moving on to the next one!

There are a number of excellent new programs at government levels that allow you to monetize tax credits which in many cases now come in the form of a rebate - that rebate can now be monetized to recover a significant portion of expenses related to offerings in various media sectors .

Whether a Canadian business is manufacturing nails or shoes, or created digital content for the entertainment masses cash flow continues to be king. As Canada emerges from the worldwide liquidity debacle of 2008-2009 business seems to be getting better in all areas, and media and entertainment projects are again emerging and flourishing.

Accessing interim capital through strategies such as tax credit financing allows your team to complete projects and access additional capital in the form of equity or gap financing as an example.We are the first to admit that most media and entertainment people quickly realize that in Canada there are certain limitations to chartered bank financing, term loans and subordinated debt for media and entertainment productions.

Recognizing this challenge, while at the same timeseeing potential revenue and economic benefit from this industry, the government has stepped up to the table and developed programs to refund a healthy portion of production expenses back to the industry .

And to make matters even better, by working with an experienced , trusted, and credible advisor in this industry you canmonetize, orlets call it ’ cash flow ’ these refunds into working capital and .

So how do you achieve that cash flow? You do that by simply ensuring that the proper costs associated with your production and the intellectual property are documented, certified, and approved under your project. The rebate or tax credit is then financed as a short term discounting or in effect a ’ factoring’ of the claim. There is only one bottom line, which is you get your funds now and can place them back into the project to both recoup costs and also of course to complete the project.

As various parts of government have committed millions of dollars to these rebate credits why would you not want to accelerate the benefits immediately?!If the government and the industry are breaking new ground in this area of financial assistance you want to be able to take advantage of it - that surely is for certain.

The interesting part of this whole scenario is that the credits now virtually cover all aspects of media, and now also include video-game development and interactive media.There is also a breakthrough in the new legislation which doesn’t have the government entities in a position to choose between what projects might work and what projects might not be successful.

Most business people outside the industry often wonder why these rebates our offered, but more and more data is emerging that reflects the fact that thegovernment and economy as a whole benefitsten times over from such investments .Ten times over is great R O I.

Speak to a trusted and credible film tax credit advisor to ensure you are able to access this great funding strategy.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/film_tax_credit_financing_2.html

Film Tax Credit Financing in Canada – Accelerating Payment of your Tax Credits

Film, television, and digital multimedia financings are always a challenge to Canadian based productions, but recent trends in the industry allow for a number of new and aggressive ways to finance your ongoing productions . For many participants the playing field is somewhat complex, as it is a mixture of industry, government and private sector financing that ultimately bring financing and cash flow to the success of your work . No one seems to be disputing the tremendous growth in the industry , particulary in Canadas major entertainment centres of Toronto, Vancouver , and Montreal .

Canadian content is king when it comes to financing strategies . As the industry if financed on a much larger scale in the U.S. there is always a challenge for Canadian productions in all entertainment sectors to find both short term working capital and significant long term capital and equity . The support the industry is getting from both provincial and federal sectors continues to be quite overwhelming .

The financing of tax credits in film, tv , and digital media , either through the Scientific Research and Experimental Development program, of the various other supported programs is one of the strongest ways to achieve interim working capital and help to balance your debt/ equity investments in any particular production .
The good news is, that with the experience of a trusted and credible financing advisor in this area even accrual financing can be applied to these sorts of tax credits . That only means one thing of course – getting your funds immediately, and not waiting for the ultimate tax credit refund under the particular program under which your production is domiciled .

We are often asked if Canadian chartered banks play a role in these types of financing, and the answer is – yes, but very selectively . We have met and worked with specialized personnel from the banks in the area, and they clearly are ‘ boutique functions ‘ of the bank as a whole . Naturally though access to funds themselves is not a problem, as Canadian banks continue to be a world leader in liquidity, tier one capital levels, and access to funds .

So how do entertainment entrepreneurs access this capital . We simply believe that you must seek and search out experienced, trusted and credible advisors in this area . Financial people tend to be somewhat unable to predict ‘ hits and misses ‘ in the entertainment and media sector, we’ll let the creative type do that , but if there is access to financing available through areas such as tax credit financing, gap financing, accrual financing, etc its safe to say lets let the financial people handle that!

In our experience tax credit financing tend to be a minimum of 200k+ and up in Canada, and can of course go into the millions of dollars , so access to capital and who you are working with is very important . Naturally since out tax credit system and the financing of those credits infers a ‘ Canadian content ‘ ‘Canadian Equity ‘ requirement the additional pressure of having to finance just in Canada by virtue of the tax restrictions places just a bit more challenge of financing .

When does tax credit financing work best – In our opinion its when current programs are maximized and monetized simply from a timing perspective, accessing your capital now, not at some later point in time .

Your ability to discount now that future receivable or revenue stream is one of the greatest tools you have in financing prodcutons and content from a debt perspective . Actually its not even really debt, because you are simply monetizing or discounting an asset such as a tax credit receivable . You are raising cash flows against current receivables .

In Canada there is several billion dollars of tax credits awarded annually to the industry, so the ability to monetize these prior to final approval and audit , subject of course to your certification eligilbility , is one of your greatest assets from a financing and cash flow perspective .

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see:
http://www.7parkavenuefinancial.com/Film_Tax_Credit_Financing_in_Canada.html