We're not shocked - You wont be either - a recent U.S. survey by CFO Magazine stated that cash flow and working capital and accessing working capital funding sources was the biggest concern of any financial manager.
Welcome to Canada ! We are pretty sure we are in the same boat as we talk to clients who seek alternatives to debt financing and liquidity for their companies.
The other key item in the study was that business in general was dissatisfied with their banking relationships - again no real surprise.
So we all agree there is a gap in working capital solutions for Canadian business. Let’s discuss why that gap exists, and, more importantly is there alternatives to taking on more debt financing while at the same increasing cash flow in your firm.
As we have written in the past we always tell clients the best program in Canada, bar none in our opinion is the government small business loan program, which is underwritten by our good friends in Ottawa. Great rates, terms and structures, what more could you ask for. Well here’s the problem, the program only covers equipment, leaseholds and real estate - that’s called debt financing. So not working capital or cash flow is ever going to come out of that program for your firm. Let's move on then.
We can start by defining our working capital problem by simply saying it’s the day to day liquidity in your business that we are talking about - essentially the amount of funds you have in your company that could be liquid if you didn’t have them tied up in inventory, accounts receivable, and in some cases prepaid current assets. And of coruse the ' double whammy' comes in when you have your obligations on the other side of the balance sheet, i.e. accounts payable and term loans.
Working capital funding sources come from two areas, debt and the monetization of those current assets. We prefer monetizing and cash flowing things like A/R and inventory as opposed to debt financing, which infers a long term commitment.
So let’s get right to the point, what are your alternatives to cash flow success. The good news is there are a good handful of alternatives - they include operating lines of credit which can come from your bank or your non bank lender. Clients are increasing more interested in hearing about non bank lenders because these firms can more readily approve financing for your inventory and receivables. The ' buzz word' around this industry is asset based lending, and we advise clients to check it out, because in many cases it’s the ultimate solution to working capital success.
If you are a smaller firm you can employ accounts receivable financing, otherwise known as invoice discounting. If done properly ( and many times it is not ) it can turn your firm into literally an ATM cash flow machine, as you generate instant cash flow for all your sales . This type of facility comes at a cost and we find there are many misconceptions about the cost of this type of financing, and as importantly, how it works.
So lets summarize - you aren’t going to get working capital from our friends in Ottawa - if you qualify for bank financing employ it! Many of our clients don’t, so consider great alternatives for working capital funding sources such as asset based lines of credit, receivable financing, or in some cases even securitization.
So if your firm has a thirst for liquidity (!) speak to a trusted, credible and experienced Canadian business financing advisor who will work with you to solve your cash flow challenge .
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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 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_funding_sources_debt_financing.html
Our blog highlights Canadian Business Financing solutions via receivable finance , equipment finance, working capital financing, asset based lending, business acquisition financing,franchise finance, and tax credit monetization via SRED and Film Tax Credits. Our goal is to educate and assist Canadian businesses with their financing needs. You Are Looking For Canadian Business Financing! Welcome to 7 Park Avenue Financial Call Now ! - Direct Line - 416 319 5769
Wednesday, November 17, 2010
Tuesday, November 16, 2010
Is The Wrong type of Equipment Finance Company Bad For ( Business) Health?
They are all the same, aren't they? Absolutely, postively... Not! We are of course talking about the equipment finance company industry in Canada and how your selection of the right partner can determine which advantages and disadvantages you can enjoy... or suffer with. We prefer positive advantages that your business can benefit with, not Canadian business financing decisions that you will suffer via the wrong choice of a lease partner for your specific needs.
Ok, so what in the heck are we talking about? Essentially there are four types of asset finance partners in the equipment leasing industry in Canada. And you thought that a lease finance company was a lease finance company!
The first type of partner is the ' captive ' - no you are not the captive! The term refers simply to finance companies that are owned and literally situated within various manufacturing firms. When clients ask us about lease finance options and they mention specific equipment we are always reminding them to ensure they determine if the manufacturer captive finance firm offers asset financing. If they do we can assure you it is probably the best financial terms you will be able to come up with, as well as a better chance for overall approval re rate, structure and other general terms. Why is that?
It's to do with motivation - the captive finance firm is motivated to finance and promote the sale of products using financial options such as leasing to get the products out to the marketplace. Want to know a secret that should surprise most business owners and financial managers? It’s simply that captive finance firms in a competing industry will finance their competitor’s products, often at better rates, terms and structures. That is simply because the financial transaction will probably give the competing mfr a foothold into your business to promote and sell their own products. So don’t think that a great firm such as IBM CREDIT CORP. is the only firm that will finance your products you purchase through them. Others will also!
The second main group of asset finance firms in Canada is our chartered banks - Two major banks have leasing arms that are very significant, others employ lease finance to varying degrees. Our real only comment here is that the credit bar is high and more often than not you have to be a customer of the bank to enjoy the great lease and finance structures they offer.
The third main category of the Canadian equipment leasing company market is actually the largest and most robust. It also requires the maximum amount of knowledge and navigation by Canadian business owners and financial managers. This is the Independent lease finance market, where there are tens of firms that offer lease financing based on various criteria of asset size, credit quality, geographical preference, industry specialization, etc,etc,etc . R
You have a great choice with our category 3 partners, the independent finance companies. You can spend tens or hundreds of hours determining their credit criteria, additional collateral they require, the size of deals they do, the different lease structures they offer, or ... alternatively .. use our final category for lease provider , the independent lease finance advisor who are knowledgeable intermediaries who know the market, have a strong reputation with lease providers, and can match the advantages you seek in an equipment finance transaction to the right provider . Subtle nuances in your overall lease structure, depending on the size of your transaction, can save you thousands of dollars and untold grief at the end of the term of your lease.
So that’s your Canadian lease market overview. Speak to a trusted, credible and experienced Canadian business financing advisor who can successful guide you through the asset finance maze.
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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 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/equipment_finance_company_asset_finance_leasing.html
Ok, so what in the heck are we talking about? Essentially there are four types of asset finance partners in the equipment leasing industry in Canada. And you thought that a lease finance company was a lease finance company!
The first type of partner is the ' captive ' - no you are not the captive! The term refers simply to finance companies that are owned and literally situated within various manufacturing firms. When clients ask us about lease finance options and they mention specific equipment we are always reminding them to ensure they determine if the manufacturer captive finance firm offers asset financing. If they do we can assure you it is probably the best financial terms you will be able to come up with, as well as a better chance for overall approval re rate, structure and other general terms. Why is that?
It's to do with motivation - the captive finance firm is motivated to finance and promote the sale of products using financial options such as leasing to get the products out to the marketplace. Want to know a secret that should surprise most business owners and financial managers? It’s simply that captive finance firms in a competing industry will finance their competitor’s products, often at better rates, terms and structures. That is simply because the financial transaction will probably give the competing mfr a foothold into your business to promote and sell their own products. So don’t think that a great firm such as IBM CREDIT CORP. is the only firm that will finance your products you purchase through them. Others will also!
The second main group of asset finance firms in Canada is our chartered banks - Two major banks have leasing arms that are very significant, others employ lease finance to varying degrees. Our real only comment here is that the credit bar is high and more often than not you have to be a customer of the bank to enjoy the great lease and finance structures they offer.
The third main category of the Canadian equipment leasing company market is actually the largest and most robust. It also requires the maximum amount of knowledge and navigation by Canadian business owners and financial managers. This is the Independent lease finance market, where there are tens of firms that offer lease financing based on various criteria of asset size, credit quality, geographical preference, industry specialization, etc,etc,etc . R
You have a great choice with our category 3 partners, the independent finance companies. You can spend tens or hundreds of hours determining their credit criteria, additional collateral they require, the size of deals they do, the different lease structures they offer, or ... alternatively .. use our final category for lease provider , the independent lease finance advisor who are knowledgeable intermediaries who know the market, have a strong reputation with lease providers, and can match the advantages you seek in an equipment finance transaction to the right provider . Subtle nuances in your overall lease structure, depending on the size of your transaction, can save you thousands of dollars and untold grief at the end of the term of your lease.
So that’s your Canadian lease market overview. Speak to a trusted, credible and experienced Canadian business financing advisor who can successful guide you through the asset finance maze.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/equipment_finance_company_asset_finance_leasing.html
Monday, November 15, 2010
Real World Advice on Cost of factoring of receivables in Toronto – Board the Receivable factoring Bus!
Whether they are hearing about it from their business peers, reading about it, or being ' pitched' on the factoring of receivables, whether in Toronto or the rest of Canada is a hot topic in the world of Canadian business financing.
We think we can simplify the issue into some valuable basic pieces of information around what receivable factoring is, what it costs, and more importantly, how it works re benefits and solutions!
At its most basic it is simply the ' sale ' of your receivables as you generate the . Think of it - receiving cash flow and working capital the day you generate a valid sale and invoice. The cost of that service is a fee, generally between 1-3% which you as a business owner have to rationalize against the benefits of receiving that cash immediately and making use of it. That really is where the crux of our advice comes in, that the cost of the instant cash flow actually can be offset significantly, in some cases totally, by the effective use of those funds.
That is achieve in the following manners - more sales and profits, taking on orders and contracts you couldn’t even consider before, and finally, the less tangible but very real benefit of using that cash flow to purchase in larger and smarter quantities, as well as taking payment discounts which might e offered through suppliers . If those benefits don’t ring clear then we confess we will have to give up now to demonstrate the clear benefits of factoring of receivables.
Whether its Toronto factoring, or anywhere else in Canada the challenge for the business owner is really to get the best advice on what type of receivable factoring to get, who to get it with, and where to get it. In all businesses we rely on experts, and the financing of your business in Canada surely demands an expert - there is not a lot of room for error when it comes to how your business is financed. So seek the services of a trusted, credible, experienced Canadian business financing advisor who can set you on the right track.
It’s frankly all about the nuances, and as we speak to clients and determine they don’t really often understand how receivable factoring works it’s at that time they need advice. It's really about the day to day. We rarely get into debates with clients about ‘do they qualify ' because frankly if you have a business and are generating commercial receivables then, guessing what, you qualify.
So free up the cash flow, maximize on the working capital benefits of factoring of receivables, and whether it’s Toronto factoring or anywhere else in Canada feel free to board the receivable factoring bus! Just do it right though.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/factoring_receivables_toronto_factoring_receivable.html
We think we can simplify the issue into some valuable basic pieces of information around what receivable factoring is, what it costs, and more importantly, how it works re benefits and solutions!
At its most basic it is simply the ' sale ' of your receivables as you generate the . Think of it - receiving cash flow and working capital the day you generate a valid sale and invoice. The cost of that service is a fee, generally between 1-3% which you as a business owner have to rationalize against the benefits of receiving that cash immediately and making use of it. That really is where the crux of our advice comes in, that the cost of the instant cash flow actually can be offset significantly, in some cases totally, by the effective use of those funds.
That is achieve in the following manners - more sales and profits, taking on orders and contracts you couldn’t even consider before, and finally, the less tangible but very real benefit of using that cash flow to purchase in larger and smarter quantities, as well as taking payment discounts which might e offered through suppliers . If those benefits don’t ring clear then we confess we will have to give up now to demonstrate the clear benefits of factoring of receivables.
Whether its Toronto factoring, or anywhere else in Canada the challenge for the business owner is really to get the best advice on what type of receivable factoring to get, who to get it with, and where to get it. In all businesses we rely on experts, and the financing of your business in Canada surely demands an expert - there is not a lot of room for error when it comes to how your business is financed. So seek the services of a trusted, credible, experienced Canadian business financing advisor who can set you on the right track.
It’s frankly all about the nuances, and as we speak to clients and determine they don’t really often understand how receivable factoring works it’s at that time they need advice. It's really about the day to day. We rarely get into debates with clients about ‘do they qualify ' because frankly if you have a business and are generating commercial receivables then, guessing what, you qualify.
So free up the cash flow, maximize on the working capital benefits of factoring of receivables, and whether it’s Toronto factoring or anywhere else in Canada feel free to board the receivable factoring bus! Just do it right though.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/factoring_receivables_toronto_factoring_receivable.html
Sunday, November 14, 2010
Looking for Film Tax Breaks ? - Tax Credit Capital Can Be the Financing You Need
It's a challenge no matter which way you put it - If you are an independent in Canada and have projects in film, televison and animation tax credit capital, your own form of film tax breaks! will help eliminate what we can only describe as some of the 'guerrilla financing ' techniques that owners of projects must employ to complete an efficient and effective return on investment for owners .
The financing of a film or the project (we always talk in terms of the holy three, film, TV and animation) should of course be in place prior, not during or after your project. Future revenue streams will of course come from a potential theatre release, DVD sales, and release to cable and satellite providers.
Cash flows from your project are of course used to repay investors, and a significant portion of there cash flow and actual working capital of your project can come from tax credit financing in Canada.
Have the tax credits for the industry ever been so generous and the processes streamline - we certainly can’t remember.
Clients typically seeking tax credit financing (in their words ' film tax breaks’) usually have claims in excess of 200k to finance, and they are of course in possession of valid refundable credits.
How can these claims be monetized, and what type of financing is available. In general you can receive loan advances in the range of 70-80% of your total calim amount. The key collateral is of course the actual refund itself, and financing is offered and available to clients who wish to cash flow their claims either during or on completion of the project. It goes to say that if you cash flow your claim during the project the financing of the tax credit becomes a key part of the cash flow of the project.
Criteria that you might expect when you do a financing of this type would be things such as due diligence on the owners and their industry background, your ability to produce relevant financials and budgets on your project, and the further ability of owners to ensure all relevant filings and tax payments are being made and up to date . That’s just business 101 we would say to clients, and that type of info and due diligence would be part of any business financing.
For the financing of projects to attain the maximum level of... can we call it ' generousity' of the goverment tax credits its all about Canadian content. It is therefore important to work with a solid and reputable, credible, and experienced Canadian film tax consultant who can steer you towards the preparation and filing of claims that maximize Canadian content. For example one of the key credits is the Production Tax Credit and it can cover up to 25% of labor that qualifies as Canadian content when the labour maxes out at a total of 60% of your entire production budget. In fact there is a basis ' point system ' that your entertainment accountant would use to ensure you are qualifying for maximum refund. These so called ' points' include items such as Canadian ownership per cent age of the production, as well as focusing, for example, on where post production is completed... and on it goes.
But there is a very simple bottom line... you want ‘film tax breaks' in Canada. They are here, available, and generous. Speak to an expert advisor in the area who can assist you in qualification, filing, and the cash flowing of that tax credit capital.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/tax_credit_capital_film_tax_breaks.html
The financing of a film or the project (we always talk in terms of the holy three, film, TV and animation) should of course be in place prior, not during or after your project. Future revenue streams will of course come from a potential theatre release, DVD sales, and release to cable and satellite providers.
Cash flows from your project are of course used to repay investors, and a significant portion of there cash flow and actual working capital of your project can come from tax credit financing in Canada.
Have the tax credits for the industry ever been so generous and the processes streamline - we certainly can’t remember.
Clients typically seeking tax credit financing (in their words ' film tax breaks’) usually have claims in excess of 200k to finance, and they are of course in possession of valid refundable credits.
How can these claims be monetized, and what type of financing is available. In general you can receive loan advances in the range of 70-80% of your total calim amount. The key collateral is of course the actual refund itself, and financing is offered and available to clients who wish to cash flow their claims either during or on completion of the project. It goes to say that if you cash flow your claim during the project the financing of the tax credit becomes a key part of the cash flow of the project.
Criteria that you might expect when you do a financing of this type would be things such as due diligence on the owners and their industry background, your ability to produce relevant financials and budgets on your project, and the further ability of owners to ensure all relevant filings and tax payments are being made and up to date . That’s just business 101 we would say to clients, and that type of info and due diligence would be part of any business financing.
For the financing of projects to attain the maximum level of... can we call it ' generousity' of the goverment tax credits its all about Canadian content. It is therefore important to work with a solid and reputable, credible, and experienced Canadian film tax consultant who can steer you towards the preparation and filing of claims that maximize Canadian content. For example one of the key credits is the Production Tax Credit and it can cover up to 25% of labor that qualifies as Canadian content when the labour maxes out at a total of 60% of your entire production budget. In fact there is a basis ' point system ' that your entertainment accountant would use to ensure you are qualifying for maximum refund. These so called ' points' include items such as Canadian ownership per cent age of the production, as well as focusing, for example, on where post production is completed... and on it goes.
But there is a very simple bottom line... you want ‘film tax breaks' in Canada. They are here, available, and generous. Speak to an expert advisor in the area who can assist you in qualification, filing, and the cash flowing of that tax credit capital.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/tax_credit_capital_film_tax_breaks.html
Saturday, November 13, 2010
Get the Most From Your SRED refundable credit – Financing Your SR ED claim with a SRED bridge loan
Of the many questions clients ask around the sr&ed (sred) program in Canada a typical one, actually two, is ' can we finance and our sred claim... and how is financing sr&ed grants done?'
Let's work through a short sred loan primer and cover off the basics, allowing you to better understand the potential benefits of financing your sred refundable credit, and , more importantly determining if it makes sense to finance that claim .
Sred calim percentages actually vary by provinces, because they are a combo grant that is administered and funded by both your province and Ottawa. While percentages of the amounts you receive might vary a bit between provinces for the purposes of our discussion we'll speak in general terms, because we are pretty sure you aren’t going to move your company location to increase your non repayable sred credit!.
Sred claims vary but in general they do not go much more than over a million dollars. You have the ability to finance your claim if it’s eligible. We will also mention that if your company is perfectly willing to wait for your cheque that’s a good thing also, it just seems to us that if you can put non repayable tax credits to work to generate additional revenue and profits, well... that is a good consideration of financing our sred refundable credit.
A key to financing your claim is the quality of your claim. Three types of preparers are out in the marketplace - your company itself can prepare the claim, your accountant can, or you can use an expert, otherwise known in the industry as a sred consultant. Theoretically all three parties could prepare a claim that is financeable, but the reality is that your sred finance firm leans more preferably to the utilization of a sred consultant. That's simply because expertise in an area such as an R&D overview submission seems to make the most sense.
The government pays out billions of dollars each year to firms such as yours - so filing a claim, and considering the financing of that claim can be a key part of your overall company cash flow.
If your claim is a first time claim, and is less than straight forward there is a strong possibility based on current sred trends that you could wait close to a year for your refund. So the question then becomes, could your firm utilize effectively a sred loan as a bridge type financing for additional cash flow and working capital.
If you are answering in the affirmative then it’s simply a case of working with a trusted, credible and experienced Canadian business financing advisor to fast track a sred financing. Typical sr&Ed loans take a couple weeks or so to process; it’s a basic business application, with your sred refundable credit collateralized. Advances on your claim are in the 70% range and are typically structured as no payments, with the final 30% due your firm, less financing charges, at the time of final disbursement from Ottawa and your province.
A short summary of our shared info is very simple - if you qualify for sred then clearly use the program - if you don’t you are missing out . Want to wait a year for your money... great, keep us posted, the chq is in the mail. Want additional working capital and cash flow today out of your non repayable sred credit, then consider the sred loan financing program today. It’s as simple as that.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/sred_refundable_credit_financing_sr_ed_sred_loan.html
Let's work through a short sred loan primer and cover off the basics, allowing you to better understand the potential benefits of financing your sred refundable credit, and , more importantly determining if it makes sense to finance that claim .
Sred calim percentages actually vary by provinces, because they are a combo grant that is administered and funded by both your province and Ottawa. While percentages of the amounts you receive might vary a bit between provinces for the purposes of our discussion we'll speak in general terms, because we are pretty sure you aren’t going to move your company location to increase your non repayable sred credit!.
Sred claims vary but in general they do not go much more than over a million dollars. You have the ability to finance your claim if it’s eligible. We will also mention that if your company is perfectly willing to wait for your cheque that’s a good thing also, it just seems to us that if you can put non repayable tax credits to work to generate additional revenue and profits, well... that is a good consideration of financing our sred refundable credit.
A key to financing your claim is the quality of your claim. Three types of preparers are out in the marketplace - your company itself can prepare the claim, your accountant can, or you can use an expert, otherwise known in the industry as a sred consultant. Theoretically all three parties could prepare a claim that is financeable, but the reality is that your sred finance firm leans more preferably to the utilization of a sred consultant. That's simply because expertise in an area such as an R&D overview submission seems to make the most sense.
The government pays out billions of dollars each year to firms such as yours - so filing a claim, and considering the financing of that claim can be a key part of your overall company cash flow.
If your claim is a first time claim, and is less than straight forward there is a strong possibility based on current sred trends that you could wait close to a year for your refund. So the question then becomes, could your firm utilize effectively a sred loan as a bridge type financing for additional cash flow and working capital.
If you are answering in the affirmative then it’s simply a case of working with a trusted, credible and experienced Canadian business financing advisor to fast track a sred financing. Typical sr&Ed loans take a couple weeks or so to process; it’s a basic business application, with your sred refundable credit collateralized. Advances on your claim are in the 70% range and are typically structured as no payments, with the final 30% due your firm, less financing charges, at the time of final disbursement from Ottawa and your province.
A short summary of our shared info is very simple - if you qualify for sred then clearly use the program - if you don’t you are missing out . Want to wait a year for your money... great, keep us posted, the chq is in the mail. Want additional working capital and cash flow today out of your non repayable sred credit, then consider the sred loan financing program today. It’s as simple as that.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/sred_refundable_credit_financing_sr_ed_sred_loan.html
Friday, November 12, 2010
Financing A franchise? - Here's How Franchise Finance Works in Canada
Searchin' .. and Searchin.. for franchise finance in Canada ? The reality is that it's available, and we will share some common sense approaches to successfully financing a franchise in Canada.
Although you may have spent a significant amount of time in picking what you feel is the right franchise finance opportunity the reality is that we are hoping that you have spent, or will devote an equal amount of time to the financing of the purchase. Securing funding in any specialized field is clearly a challenge so working with an expert in the field is always advisable. This is no time to be a rookie when it comes to the successful financing of your business.
Many franchisees without any type of finance background might assume that traditional finance is available through institutions such as banks and credit unions. The answer to this assumption is actually no... And yes. Let's explain. We are not aware of any Canadian bank that will set up a specialized term loan for the full financing of your business. (This might happen if you have significant outside collateral, guarantors, pristine credit, etc - but generally no). But, the reality is that the banks in fact do indeed do most of the franchise finance in Canada - but it’s done under specialized program called the CSBF/BIL program.
This should be your first point of call in financing your business. However, here's where the ' expert' advice is needed, as the program only covers the financing of certain aspects of the business, and you will need to cover off portions of your purchased that wont be financing through this program . This would be things such as ongoing working capital, the franchisee fee itself, etc.
It's probably commons sense but aligning yourself with a franchisor that has a good brand and reputation and a successful share of their industry’s marketplace is in fact going to make financing a franchise in your case probably easier.
What category are you in? we ask clients . What we mean by that is that you might be opening a brand new franchise, or alternatively purchasing a business that is already a franchise and the existing owner wants to sell. There are advantages and disadvantages to both strategies, and there is certainly no cut and dry answer around what established or new business might be best for you. A quick example - it might be sometimes ' easier' to finance an existing franchise that is being sold because the assets and cash flow and profits are more realistically able to be demonstrated.
In certain cases some franchisees might want to expand their business via additional capital - that also requires a specialized focus.
In summary the key elements of financing a franchise in Canada revolved around your ability to source and successfully complete financing that suits your purchase. This involves your own investment, known as the ' owner equity ' a well as the financing through programs such as the BIL program. Financing specific hard assets and complementing the overall finance package with a working capital term loan or operating facility will also get you tot he goal line.
Pick your franchise carefully, and seek a trusted, credible and experienced Canadian business financing advisor who can help you structure the proper finance package that suites your overall acquisition and growth needs.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/financing_a_franchise_franchise_finance.html
Although you may have spent a significant amount of time in picking what you feel is the right franchise finance opportunity the reality is that we are hoping that you have spent, or will devote an equal amount of time to the financing of the purchase. Securing funding in any specialized field is clearly a challenge so working with an expert in the field is always advisable. This is no time to be a rookie when it comes to the successful financing of your business.
Many franchisees without any type of finance background might assume that traditional finance is available through institutions such as banks and credit unions. The answer to this assumption is actually no... And yes. Let's explain. We are not aware of any Canadian bank that will set up a specialized term loan for the full financing of your business. (This might happen if you have significant outside collateral, guarantors, pristine credit, etc - but generally no). But, the reality is that the banks in fact do indeed do most of the franchise finance in Canada - but it’s done under specialized program called the CSBF/BIL program.
This should be your first point of call in financing your business. However, here's where the ' expert' advice is needed, as the program only covers the financing of certain aspects of the business, and you will need to cover off portions of your purchased that wont be financing through this program . This would be things such as ongoing working capital, the franchisee fee itself, etc.
It's probably commons sense but aligning yourself with a franchisor that has a good brand and reputation and a successful share of their industry’s marketplace is in fact going to make financing a franchise in your case probably easier.
What category are you in? we ask clients . What we mean by that is that you might be opening a brand new franchise, or alternatively purchasing a business that is already a franchise and the existing owner wants to sell. There are advantages and disadvantages to both strategies, and there is certainly no cut and dry answer around what established or new business might be best for you. A quick example - it might be sometimes ' easier' to finance an existing franchise that is being sold because the assets and cash flow and profits are more realistically able to be demonstrated.
In certain cases some franchisees might want to expand their business via additional capital - that also requires a specialized focus.
In summary the key elements of financing a franchise in Canada revolved around your ability to source and successfully complete financing that suits your purchase. This involves your own investment, known as the ' owner equity ' a well as the financing through programs such as the BIL program. Financing specific hard assets and complementing the overall finance package with a working capital term loan or operating facility will also get you tot he goal line.
Pick your franchise carefully, and seek a trusted, credible and experienced Canadian business financing advisor who can help you structure the proper finance package that suites your overall acquisition and growth 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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/financing_a_franchise_franchise_finance.html
Thursday, November 11, 2010
Top Strategic Working Capital Funding and Facility Solutions
Every Canadian business owner and financial manger wants to know that their firm has financial health in the short term. Your company's ability to access working capital funding means only one simply thing - you have the ability to pay off your short term liabilities such as accounts payable, taxes, source deductions, etc .
So do you in fact need a better type or working capital facility today, and, if so, what are your options. We can't cure the patient unless we can confirm he is sick... so how in fact do you determine if that working capital need exists. It could not be simpler. Go to your balance sheet, add up cash, receivables and inventory, and if they in total don’t cover your accounts payable, guess what... the patient has a problem .
Two points worth mentioning, we fully realize most successful business managers and owners know intuitively that they have a challenge in the area of cash flow. It's simply recognizing that on a day to day basis more and more time is devoted to working capital management - i.e. collections, invoicing, juggling payables, etc.
There are very specific cash flow solutions for your working capital funding requirements. But believe it or not many of them can actually be fixed internally. You ability to negotiate better terms with your suppliers is a critical cash flow factor. More importantly many business owners don’t focus on turnover and quality of your current assets such as receivables and inventory.
By effectively measuring and monitoring your turnover in receivables and inventory can significantly improve cash flow. Technically we're talking about reducing day’s sales outstanding and calculating inventory turnover. Your goal is to reduce the amount of time it takes for a dollar to flow through your company.
So we have identified the problem, and the measurement issues around that problem, let’s focus on solutions.
In a perfect world, and we know its not, your Canadian chartered bank would financing all your receivables and inventory on an ongoing basis, and , when you need it offer up a bulge type facility to take you through a working capital rough patch . That type of working capital facility is generally referred to as a business operating line of credit.
As we said, it’s not a perfect world apparently! ... And thousands of firms, perhaps yours, don’t have access to this type of facility. So the Canadian marketplace offers up a number of solutions, for medium sized and larger firms the alternative is an asset based line of credit that comes without the restrictions of a bank facility ( ratios, covenants, outside collateral, etc) but in fact provide you with more working capital than a bank could . For smaller firms a working capital facility term loan is available via the government related bank in Canada. For smaller and medium sized firm’s receivable financing facilities, know as factoring, can turn your receivables into a constant ATM machine, albeit at a higher cost.
So whats our bottom line. Simply the right working capital facility will put life back into the patient, your company! Knowing what facility works best, what your options are, etc is really the only challenge, Speak to a trusted, credible and experienced Canadian business financing advisor to guide you through to the right cash flow solution.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_funding_working_capital_facility.html
So do you in fact need a better type or working capital facility today, and, if so, what are your options. We can't cure the patient unless we can confirm he is sick... so how in fact do you determine if that working capital need exists. It could not be simpler. Go to your balance sheet, add up cash, receivables and inventory, and if they in total don’t cover your accounts payable, guess what... the patient has a problem .
Two points worth mentioning, we fully realize most successful business managers and owners know intuitively that they have a challenge in the area of cash flow. It's simply recognizing that on a day to day basis more and more time is devoted to working capital management - i.e. collections, invoicing, juggling payables, etc.
There are very specific cash flow solutions for your working capital funding requirements. But believe it or not many of them can actually be fixed internally. You ability to negotiate better terms with your suppliers is a critical cash flow factor. More importantly many business owners don’t focus on turnover and quality of your current assets such as receivables and inventory.
By effectively measuring and monitoring your turnover in receivables and inventory can significantly improve cash flow. Technically we're talking about reducing day’s sales outstanding and calculating inventory turnover. Your goal is to reduce the amount of time it takes for a dollar to flow through your company.
So we have identified the problem, and the measurement issues around that problem, let’s focus on solutions.
In a perfect world, and we know its not, your Canadian chartered bank would financing all your receivables and inventory on an ongoing basis, and , when you need it offer up a bulge type facility to take you through a working capital rough patch . That type of working capital facility is generally referred to as a business operating line of credit.
As we said, it’s not a perfect world apparently! ... And thousands of firms, perhaps yours, don’t have access to this type of facility. So the Canadian marketplace offers up a number of solutions, for medium sized and larger firms the alternative is an asset based line of credit that comes without the restrictions of a bank facility ( ratios, covenants, outside collateral, etc) but in fact provide you with more working capital than a bank could . For smaller firms a working capital facility term loan is available via the government related bank in Canada. For smaller and medium sized firm’s receivable financing facilities, know as factoring, can turn your receivables into a constant ATM machine, albeit at a higher cost.
So whats our bottom line. Simply the right working capital facility will put life back into the patient, your company! Knowing what facility works best, what your options are, etc is really the only challenge, Speak to a trusted, credible and experienced Canadian business financing advisor to guide you through to the right cash flow solution.
--
Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_funding_working_capital_facility.html
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