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.
-

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

Why and Asset based line of Credit will simplify Your Business credit Needs for cash flow finance

Are you on board or close to falling off the track? We're of course talking about Canada's newest entrant into business credit financing, commonly called an ' asset based line of credit '.

Let's talk about what this type of business financing is, why is it different from what you may have come to expect, and what are the benefits for your business when you consider this type of financing.

It is all about one word - ' assets' - if you have them, you qualify, if you don’t have them, well, lets not go there...

An asset based line of credit loan in fact is not a ' loan' per se, that’s where we spend a lot of time talking to clients about what this type of financing really is - because they view it as borrowing and adding debt to the balance sheet.

In reality the asset based financing we are talking about is simply a revolving line of credit that is tied very specifically to the value of your assets - the most common asset categories under this line of credit are inventory and receivables, the other assets that can be thrown into the mix are unencumbered equipment, tax credits, real estate, etc . And again, at the risk of over repeating, we are not talking about loans, we are talking mainly about borrowing on a daily basis, as you need it, and using these assets as collateral .

We have seen countless examples of how this type of Canadian business financing has increased a company's borrowing ability by 100-200% or more. How can that possibly be, ask clients. It is simply because the borrowing you are used to, if you have been able to achieve it, is based on rations and covenants and credit limits, and your ability to achieve forecasts for institutions such as the Chartered banks. When you aren’t able to achieve that we will call traditional cash flow financing in Canada via a business line of credit the asset based facility is a solid solution.

Clients invariably ask ' How do we get approved - do we qualify?' - We have already talked about your qualifications- got assets? You're approved. That’s a simplistic answer, so let’s explain in more detail. Typically in Canada these types of financings work best for facilities in the 250k+ range. Facilities smaller than that tend to be receivable based financings only. In general the asset based lender prefers a higher ratio of receivables to inventory, but that is not always the case, depending on your industry and your asset categories.

Most Canadian business owners and financial mangers know the general cost of bank financing - asset based financing is more expensive, but offers you unlimited liquidity without the shackles of ratios, covenants, outside collateral, emphasis on personal guarantees. Many of the largest corporations in Canada use this type of financing, but it also covers what we call ' story credits ‘. These are cases where your firm is in a turnaround, perhaps it has new contracts, perhaps you are coming off a less than satisfactory year, etc. There are a multitude of reasons for choosing this type of financing.

So if cash flow finance is your challenge and asset based line of credit is your solution. Speak to a trusted, credible and experience Canadian business financing advisor who can demonstrate to you the benefits of this innovative form of a new breed of cash flow finance for your ongoing 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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

How To Obtain funding and best lease rates for Canadian Equipment Financing Needs

Getting the best Canadian equipment financing business funding and lease rates isn’t as difficult as you might think if you're well informed. Canadian business has always regarded business equipment financing as a solid choice for asset acquisition.

When you consider an asset finance decision your alternative usually tends to be a bank loan. Banks obviously have the best financing rates in Canada but did you know that the banks themselves don’t offer equipment leasing. A few have specialized subsidiaries that do offer this type of financing, but in general you need to know that if you are focusing on a great rate for equipment financing via a bank you're talking about a ' loan ', not a lease - and boy is there a difference .

In Canada a huge equipment lease industry exists, made up of literally tens of players who are small, large, Canadian, U.S., captive to their mfg parent, etc, and on it goes. We're going to help you demystify who's who and how you can focus on getting, in your terminology, ' a great deal '. And a deal that’s approved!

So what are the secrets to getting the best lease rates for your financing? You need to know how the lender thinks, and he or she is thinking about 2 things - they are cash flow and debt burden.

So when you approach a lease company you should have spent time to demonstrate in advance that you can pay for the equipment. This can be done via a historical cash flow analysis, or by the preparation of a go forward cash flow analysis for the next year or so. You are probably doing that anyway for your regular business planning. It has never escaped our amazement that lease companies analyze your old cash flow to see if you can meet their ongoing cash flow requirements a la your ability to make payments, but we'll leave that for another day.

Want another great tip? It's simply that Canadian equipment financing focuses on whether the asset you are buying is productive and will assist you to grow sales and profits, so be prepared to articulate that in some manner.

Most Canadian business owners already know the key advantages of leasing: allow you to acquire assets you need that you might normally not be able to afford otherwise, payment and term of lease flexibility, tax benefits, risk of ownership staying with your lessor, and finally great flexibility at the end of a lease to return, purchase, upgrade, or extend.

Getting back to best lease rates themselves we encourage all our clients investigate operating leases, especially when they are acquiring technology - this type of lease will drive your rate down dramatically, because the lessor assumes a hefty residual value based on your desire to return the equipment at the end of the lease - they then remarket the asset. Speak to a Canadian business financing lease expert to determine the true benefits of an operating lease.

Great lease rates also come with faster approvals in Canadian equipment financing - so on a normal transaction you should assume you will have a solid answer back on rate, term, structure, and credit approval in a matter of days. Naturally, as we have stated you should be positioning your case properly, focusing on ability to repay, providing a proper invoice or equipment description, and ensuring your financials are up to date.

Lease funding in Canada comes from, as we mentioned a number of players, some are small, many are large corporations, some are foreign owned, and some only do certain types of deal sizes and assets. Want to demystify that maze - Speak to a trusted credible and experience Canadian business funding advisor who can help you get the equipment funding you need at lease rates your transaction deserves.
--

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/lease_rates_funding_canadian_equipment_financing.html

How Receivable Financing and Factoring turns Cash flow for Business Challenges into Opportunity

The chance for business owners to turn adversity into opportunity comes around rarely. The ability of your company to turn cash flow for business challenges into a major win in working capital and cash flow might just come from one of Canada's newer forms of business financing, called ' receivable financing ' .. more commonly known as factoring .

For small and medium business it seems to always come down to two basics - getting the order, and then getting paid. The old ' cliché' of ' the order is not complete until it’s paid for ‘... as trite as that sounds, seems to hold true even today.

Many clients we meet with are in the enviable position of getting larger orders and contracts than they might have imagined based on their innovative products and services. But with that success, as we noted, comes the challenges of cash flow financing. During the past few years with all the economic turmoil it seems Canadian business financing options seem either limited or have disappeared - that’s certainly how many clients feel. The impact of accounts receivable growth is a huge challenge, not to mention inventory also of course.

So we have waxed eloquent on the problem- That’s easy to do . let’s talk about the solution. Receivable financing, also known as factoring addresses the issues of your customers paying you in 30.60, or dare we say it, 90 days. You can carry those receivables, or.... utilized factoring as a method to turn your sales into immediate cash.

Let's cover off some of the basic requirements around how this innovative method of business financing works. When you sold the product or service you hopefully had enough gross margins in your cost of sales to make the sale profitable. If you are able to sustain another 1- 3% of gross margin erosion you can use receivable financing to turn sales into same day cash, which is what this financing is about.

Let’s reveal and recap in a manner you can understand how this financing works. Your purchase orders or contracts must be ' clean ' from a viewpoint of being able to demonstrate you can recognize revenue on your shipment. We should interject at this point that the banks will finance your receivables also, but that comes with much stricter criteria and limits on the amount you can finance.

That is why factoring has risen in popularity, it provides unlimited... yes... unlimited same day cash flow for your sales. Your challenge is to work with a trusted, experienced and credible business financing advisor who can steer you to the right partner with the type of facility that works for you. Although traditional factoring along the lines of the U.S. model requires your customer to be notified we are in fact a fan of this type of facility that allows you to bill and collect your own receivables, for all the obvious reasons.

It's important for clients to understand at its most basic how factoring works. You are advanced, on the same day as you invoice approx 90% of funds for your invoice. The remaining 10% is a holdback which creates a reserve and also covers the financing charges. When you customer pays you or the factor you receive the remaining 10% of your invoice amount, less the financing charge.

In Canada cost of factoring ranges from 1-3% a month. It turns adversity into opportunity because you grow sales with larger gross and net margins, and if you utilize the financing properly you are actually in a position to reduce much, in some cases all of your financing costs by taking discounts with your own suppliers or buying smarter and in larger quantities . Reversing the cash flow for business problem - That’s a win win in the language of business.

--
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/cash_flow_business_factoring_receivable_financing.html

How to ace film funding and film incentives for film tax credits in Canada

No shocker to yourself – film funding doesn’t happen by itself. Film incentives offered by the government in Canada and the film tax credits themselves play can play a huge role in the successful completion and financing of your film, TV, and digital animation projects in Canada.

As a producer, director or owner of a film, television, or digital animation project related to Canada you may have noticed the successful financing of your project doesn’t happen magically. ! What an understatement that is.

We can't remember when any one of our clients made the claim that film financing is ' easy ‘. The reality is, though, that if you're looking for a great partner who simply wants to provide you with 30-40% of your total production budget we know a guy. A ' guy'. Well, not really, it’s the government of Canada, and under the proper circumstances who wouldn’t want a partner like that.

The film incentives provided by the federal and provincial government in Canada total in the many million of dollars. These film tax credits can generally, as we stated, be a significant portion of your overall financing budget and challenge. Typically film funding of this type is done by independent producers as opposed to major studios, but we're quite certain the big boys use the strategy also.

Who is surprised when we say that the film industry as a whole has a risk element to it, and when you can eliminate 30-40% of that risk right out of the gate then clearly you are on to a winning strategy.
Suffice to say a good director, cast, and story complement your strategy to win!

In film financing, as any business, it’s about money and return on investment. The interesting thing about film tax credits is that your project - TV, film and animation doesn’t necessarily have to be a commercial success - (naturally it’s nice when it is).

Can film tax credits reduce the overall risk of a project - our clients certainly believe so. Naturally those other components such as marketing, additional debt and equity financing, and pre sales and distribution round out your finance plan.

So what do you need to do to maximize on the utilization of film incentives in Canada. A ton of common sense helps. You need to be able to demonstrate to the lender that you have a project that can be fully financed (debt - equity-tax credits) and how the timing of these 3 financial components works.

Simply speaking the business side of your project has to align to the marketing and technical side of your plans. How is this done, ask clients. It is done by surrounding your self with a proper film tax credit advisor and accountant, who have the experience to guide you through the process.

Although we position the tax credits sometimes as ' easy money ' that’s certainly not the message we convey. You need to clearly demonstrate a realistic budget, how you will handle over runs, and your timelines. And we remind readers that has to do with all aspects of the industry, whether it be a movie or digital animation project a la Shrek.

The Canadian government has clearly demonstrated that they have committed millions to the tax credit film funding in Canada. Your job as a recipient of film tax credit financing in Canada is to demonstrate that budgets and schedules and other committed finances will ' come together . 'Generally independent projects come together over time, and go through a predictable phase of financing , shooting, and then post production and release .

To maintain some sort of financial conservatism around that challenging timeline the industry generally requires a completion bond, which is a financial instrument that insures the project if difficulties areas of committed funds aren’t received . This type of financing bond assures your equity, debt and tax credit financier that unforeseen events will be taken care of, rather than putting your project at risk.

In summary, investigate film tax credit financing in Canada by speaking to an experienced, credible, and trusted Canadian business financing advisor. You'll be show how film funding and the financing of your credits can be achieved on both a when filed or even on an accrual basis, assisting you further in day to day cash flow on your project .

So hopefully you have seen how using our ' guy “(aka government film tax credits) can help you ace your project for financial 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 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/film_incentives_film_tax_credits_film_funding.html

A Working Capital Breakthrough – Financing Your SR ED tax credit claims ( SR&ED ) makes Sense!

There is generally a limited number of ways to finance your company and generate working capital. Yet one of these ways is somewhat unknown to many Canadian firms who do any type of research and development under the SR ED tax credit program. And it is a pretty simple decision - finance your tax credit as soon as you have filed it!

Cash is flowing out of Canada's sr&Ed program - why not let it flow towards your company. Without a doubt this is the largest incentive for Canadian firms to fund research, because under the program you of course recover a significant portion of all you have spent, at the same time enhancing your firm’s competitiveness in its products and services.

So hopefully we have articulated to a certain degree the benefits of filing a sred claim... so how do we finance it. The answer is simply to contact a sred tax credit Canadian business financing advisor. The elements of a successful sred financing are quite simple: have your claim prepared by a sred consultant that has proper experience in your area or industry. As soon as the claim is prepared it is filed by your firm and your accountants, and you apply for a refund at the same time you file your financial statements.



Discussions with clients around sr ed , aka sr&ed research development tax credits focuses typically around two area, the actual benefits they attain from their r&d, and, as importantly the financial impact the sred cash has on their balance sheets and working capital .

So who is the sr&Ed candidate from a viewpoint of both maximizing the program, while at the same time benefiting from financing the claim? In a world, everyone, as long as you are filing. However if we had to profile the typical firm that both files and finances their sr&ed claim via a sred loan it would be a company that typically is in the technology industry and is in its early cycle of development, revenue, etc . But, that having been said many mature manufacturing or ' old economy ' type firms have been filing successfully for many years and reaping those same benefits.

So how does SRED translate into working capital in an innovative manner? It’s in the financing, or we can call it the ' monetizing ' of your claim. Think of it frankly as financing or monetizing any one of your receivables, in the same manner that you do with your bank or an independent finance firm. You are in effect ' discounting ' that receivable today to receive the benefits of cash flow and working capital now. Of your you can go to the mail box every day for the next 3-12 months and see if your sred cheque was ' in the mail ' , but why not one up your competition and finance your claim for that working capital breakthrough we are talking about it .

Think of the positive dynamics around that - you have accelerated R&D competitiveness, you have been re imbursed for those expenses under the sred program, and now you're taking that money that is non repayable - yes non repayable! And financing that claim to fund the on going growth and profits of your company.

Financing of the claim involves a very standard business application, with the focus of the sred as your collateral. You're not taking on extra debt remember, you are just monetizing your claim for cash flow.

The sred loan is a bridge type loan, and is liquidated against the final cheque from the government re your refund. In the meantime you have working capital to reduce payables, fund ongoing R&D again, or simply for any general corporate purpose. The whole process can usually be accomplished in a couple weeks. We're guessing it’s taken you that long sometimes to finance your new photocopier!

Speak to a trusted, credible and experienced business financing advisor on the benefits of cash flowing your sr&Ed claim for working capital now.
-
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/sred_tax_credit_claims_research_and_development.html

How to Succeed When buying a franchise store and financing its cost

It's a road you want to go down successfully. We're talking about your decision on buying a franchise in Canada, financing the franchise cost and being successful in the franchise store or business you have chosen.

Clients always ask us if it’s ' risky ' to buy a franchise. Our answer is somewhat facetious, in that if a franchise fails, we prefer to have someone to blame - that's you, the franchisor, or your franchise lender. It's rarely the lender, leaving you and the franchisor.

The reality is quite frankly the same as if you were acquiring any business, namely, Do your homework! And invest some time in solid due diligence. Make a good decision around who you are going to do business with.

After selecting a franchise opportunity the challenge of financing the business becomes even more bewildering to some of our clients. Let’s share some solid tips, info and suggestions around the successful financing of your franchise cost.

We often focus solely around your own financing challenge when buying a franchise ; we should add that its just as important to spend some time on understanding the general financing situation around the partnership you are about to enter into with your franchisor . Disclosure documents these days are fairly heavily weighted towards you as the franchisee understanding that you are entering into business with, so we encourage all clients to take a strong look at your franchisors profitability, its financial management, and any items of public record that might hint or portend of future problems.

Unfortunately many franchisees we talk to about franchise cost and how we will finance the franchise are under the misconception that there is 100% financing available for your new business. In Canada that is pretty well never the case, and you need to make a strong assessment of the maximum amount you can contribute to the venture from a personal equity basis. If you borrow too much and put too little in the financial folks call that being ' over leveraged'- therefore any little bumps in the economy or your ability to generate sales becomes a huge problem if you aren’t properly capitalized.

And we already know you next question, which is ' how much do I have to put in ‘. We would prefer to give you a clear final answer on that one, such as xx %, but the reality is that your own investment is tied to a couple factors... the size of the financing you require, how you will finance it, and whether initial ratio analysis will show that you meet all qualifications .

A ratio is just a ' relationship' of numbers. The two key ratios that you need to focus on in franchise financing are debt to equity, and working capital. Typically you want to have only two times more debt than your personal investment in the business, and from a working capital point of view you want to ensure you have liquid assets to cover at a minimum short term payables.

Do franchisors offer loan assistance - the answer is yes... and no. By that we mean simply that many franchisors have developed relationships with Canadian business financing advisors who assist franchisees in finalizing all aspects of the franchise cost financing - including business plan preparation, negotiations, sourcing debt, etc. You should rarely, if ever, expect the franchisor to supply direct loan financing assistance - they are selling franchises, not building a financial empire.

In Canada typical methods of financing a franchise are a BIL loan, a working capital term loan, and equpment leasing and financing.

Speak to a trusted, credible and experienced business financing advisor who will work with you to successfully finance your franchise store in a minimum amount of time with a maximum mount of 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 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/buying_a_franchise_store_franchise_cost.html