Many Canadian business owners and financial managers are under the impression that equipment leasing and financing solutions for their asset finance needs are more expensive than other forms of financing.
However, at the same time thousands of businesses everyday flock to the lease finance solution when they are acquiring equipment. How can a finance solution perceived as ' expensive ' be one of the most sought after business financing facilities day after day.
It’s because it’s all about the benefits and flexibility. In pure theory if you were paying full price cash or entering into a term loan you could make a technical financial case that lease financing is more expensive.
But it’s never always about price in your personal life, and that’s certainly the case in business. The reality is that the additional benefits of a lease often over weigh any concerns about cost or interest rates. And quite frankly with interest rates at all time lows in Canada companies with fairly decent credit profiles can get equipment financing in the 7-8% range. And, on top of that, if your company doesn’t have a pristine credit profile you still can get approved because Canadian equipment and leasing and financing professions are experts in asset finance, and a lot of emphasis is placed on your company prospects and the asset itself.
Accounting isn’t one of our favorite subjects when clients ask us for leasing assistance, but the reality is the when you use lease finance effectively - for example operating leases, then you are in a position to increase overall return on assets and your banker or other senior lender isn’t overly concerned about that always omnipresent debt to equity ratio he or she is talking about.
When clients talk to us about leasing we can talk about ten or 15 different issues - but to be honest they only often have one - can we get approval for a rate, term and structure that makes sense for our firm ? That’s the essential question more often than not. And that’s more often when lease finance steps up to the bar! Lessors take, on balance greater credit risk than financial institutions, and in our words, they are more likely to ' buy into your story ' - whether that be a turnaround year, a new project coming up, etc.
Lease decisions from your point of view are often driven by the simple question - can the acquisition of this asset grow sales and profits. Asset finance firms understand that and they essentially become your business partner with the additional capital they put into your equipment financing needs. You on the other hand can use that additional cash flow and working capital for general operating purposes. You have matched long term debt - i.e. the lease, with long term capital - your lease finance strategy.
Speak to a trusted, credible and experienced Canadian business advisor in equipment leasing and financing. You'' be surprised at the financing approval turnaround and the benefits you didn’t know you could achieve.
--
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/equipment_leasing_and_finance_asset_finance.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
Tuesday, December 7, 2010
Monday, December 6, 2010
What’s the cost of confidential invoice finance and how does receivable factoring work?
Read all about it! Read all about it! Heard the news today? We're talking about the fact that thousands - yes thousands of Canadian firms are moving toward a working capital financing facility known as receivable factoring. But, what if you could get confidential invoice finance that would allow you to bill and collect your own receivables under this facility? Possible? Absolutely.
So what if you had a commercial business financing facility that gave you unlimited cash flow, and, unlike your competitors, you were in control of your facility. Most Canadian business owners and financial managers know a bit about how factoring, aka receivable financing works.
It’s a process whereby you sell your receivables and receive immediate, same day cash for those invoices. 99.9% of all the financing done in Canada under this business model has the factoring firm collecting your invoices and notifying the customer. They also follow up for collection and interact with your customer, because, as we said, you have sold them your receivable, or receivables in whole.
Like most of our clients, you like the end result, i.e. instant cash flow and working capital, but you aren't necessarily in favor of the factoring firm taking over your client relationship as it relates to accounts receivable. That’s why you should consider confidential invoice factoring. Under this scenario your receivables are billed and collected by yourself, and there is no third party interference with the relationship you have with clients when it comes to billing and collecting.
Maybe it’s just because we're Canadian, but we find out clients are very much in favor of that business model. The bottom line is that your financing relationship is not disclosed to your customers, and that’s a good thing.
So what has happened here? Simply that you have achieved all of the benefits of accounts receivable financing, but under the confidential invoice finance model your receivable factoring is in your control.
Under traditional U.S. And U.K. type receivable factoring your customers receives a letter from either yourself or the factor firm, notifying your clients about the issue of your firm having sold its receivables. If you don’t care about that, no problem...! But if you do care about what the perception of that letter might be then you should consider confidential invoice finance.
While factoring is a high growth area in Canada, the ability to get confidentiality around this process is not fairly well known . .So you know something others don’t, and in business that’s a competitive advantage . It therefore differs from bank financing, and is the alternative to the traditional factoring of invoices that we have talked about here. The bottom line is there is a world of difference in the facilities offered,
And oh yes, the cost? The cost of confidential invoice discounting is the same as traditional factor financing - so that’s a good thing!
Speak to a trusted, credible and experienced Canadian business financing advisor on who will assist you in closing this valuable type of working capital financing 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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.parkavenuefinancial.com/Confidential_invoice_finance_receivable_factoring.html
So what if you had a commercial business financing facility that gave you unlimited cash flow, and, unlike your competitors, you were in control of your facility. Most Canadian business owners and financial managers know a bit about how factoring, aka receivable financing works.
It’s a process whereby you sell your receivables and receive immediate, same day cash for those invoices. 99.9% of all the financing done in Canada under this business model has the factoring firm collecting your invoices and notifying the customer. They also follow up for collection and interact with your customer, because, as we said, you have sold them your receivable, or receivables in whole.
Like most of our clients, you like the end result, i.e. instant cash flow and working capital, but you aren't necessarily in favor of the factoring firm taking over your client relationship as it relates to accounts receivable. That’s why you should consider confidential invoice factoring. Under this scenario your receivables are billed and collected by yourself, and there is no third party interference with the relationship you have with clients when it comes to billing and collecting.
Maybe it’s just because we're Canadian, but we find out clients are very much in favor of that business model. The bottom line is that your financing relationship is not disclosed to your customers, and that’s a good thing.
So what has happened here? Simply that you have achieved all of the benefits of accounts receivable financing, but under the confidential invoice finance model your receivable factoring is in your control.
Under traditional U.S. And U.K. type receivable factoring your customers receives a letter from either yourself or the factor firm, notifying your clients about the issue of your firm having sold its receivables. If you don’t care about that, no problem...! But if you do care about what the perception of that letter might be then you should consider confidential invoice finance.
While factoring is a high growth area in Canada, the ability to get confidentiality around this process is not fairly well known . .So you know something others don’t, and in business that’s a competitive advantage . It therefore differs from bank financing, and is the alternative to the traditional factoring of invoices that we have talked about here. The bottom line is there is a world of difference in the facilities offered,
And oh yes, the cost? The cost of confidential invoice discounting is the same as traditional factor financing - so that’s a good thing!
Speak to a trusted, credible and experienced Canadian business financing advisor on who will assist you in closing this valuable type of working capital financing 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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.parkavenuefinancial.com/Confidential_invoice_finance_receivable_factoring.html
Sunday, December 5, 2010
Are Inventory financing lenders and P O Factoring solutions your best business financing bet ?
Your worst business nightmare has just come true - you got the order and contract ! Now what though? How can Canadian business survive financing adversity when your firm is unable to traditionally finance large new orders and ongoing growth?
The answer is po factoring and the ability to access inventory financing lenders when you need them! Let’s look at real world examples of how our clients achieve business financing success, getting the type of financing need to acquire new orders and the products to fulfill them.
Here's your best solution - call your banker and let him know you need immediate bulge financing that quadruples your current financing requirements, because you have to satisfy new large orders . Ok... we'll give you time to pick yourself up off the chair and stop laughing.
Seriously though...we all know that the majority of small and medium sized corporations in Canada can’t access the business credit they need to solve the dilemma of acquiring and financing inventory to fulfill customer demand.
So is all lost - definitely not. You can access purchase order financing through independent finance firms in Canada - you just need to get some assistance in navigating the minefield of whom, how, where, and when.
Large new orders challenge your ability to satisfy them based on how your company is financed. That’s why P O factoring is a probably solution. It’s a transaction solution that can be one time or ongoing, allowing you to finance purchase orders for large or sudden sales opportunities. Funds are used to finance the cost of buying or manufacturing inventory until you can generate product and invoice your clients.
Are inventory financing lenders the perfect solution for every firm. No financing ever is, but more often than not it will get you the cash flow and working capital you need.
P O factoring is a very stand alone and defined process. Let’s examine how it works and how you can take advantage of it.
The key aspects of such a financing are a clean defined purchase order from your customer who must be a credit worthy type customer. P O Factoring can be done with your Canadian customers, U.S. customers, or foreign customers.
PO financing has your supplier being paid in advance for the product you need. The inventory and receivable that comes out of that transaction are collateralized by the finance firm. When your invoice is generated the invoice is financed, thereby clearing the transaction. So you have essentially had your inventory paid for, billed your product, and when your customer pays, the transaction is closed.
P O factoring and inventory financing in Canada is a more expensive form of financing. You need to demonstrate that you have solid gross margins that will absorb an additional 2-3% per month of financing cost. If your cost structure allows you to do that and you have good marketable product and good orders you're a perfect candidate for p o factoring from inventory financing lenders in Canada.
Don’t want to navigate that maze by yourself? Speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you maximize the benefits of this growing and more popular business credit financing model.
--
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/P_O_FACTORING_INVENTORY_FINANCING_LENDERS.html
The answer is po factoring and the ability to access inventory financing lenders when you need them! Let’s look at real world examples of how our clients achieve business financing success, getting the type of financing need to acquire new orders and the products to fulfill them.
Here's your best solution - call your banker and let him know you need immediate bulge financing that quadruples your current financing requirements, because you have to satisfy new large orders . Ok... we'll give you time to pick yourself up off the chair and stop laughing.
Seriously though...we all know that the majority of small and medium sized corporations in Canada can’t access the business credit they need to solve the dilemma of acquiring and financing inventory to fulfill customer demand.
So is all lost - definitely not. You can access purchase order financing through independent finance firms in Canada - you just need to get some assistance in navigating the minefield of whom, how, where, and when.
Large new orders challenge your ability to satisfy them based on how your company is financed. That’s why P O factoring is a probably solution. It’s a transaction solution that can be one time or ongoing, allowing you to finance purchase orders for large or sudden sales opportunities. Funds are used to finance the cost of buying or manufacturing inventory until you can generate product and invoice your clients.
Are inventory financing lenders the perfect solution for every firm. No financing ever is, but more often than not it will get you the cash flow and working capital you need.
P O factoring is a very stand alone and defined process. Let’s examine how it works and how you can take advantage of it.
The key aspects of such a financing are a clean defined purchase order from your customer who must be a credit worthy type customer. P O Factoring can be done with your Canadian customers, U.S. customers, or foreign customers.
PO financing has your supplier being paid in advance for the product you need. The inventory and receivable that comes out of that transaction are collateralized by the finance firm. When your invoice is generated the invoice is financed, thereby clearing the transaction. So you have essentially had your inventory paid for, billed your product, and when your customer pays, the transaction is closed.
P O factoring and inventory financing in Canada is a more expensive form of financing. You need to demonstrate that you have solid gross margins that will absorb an additional 2-3% per month of financing cost. If your cost structure allows you to do that and you have good marketable product and good orders you're a perfect candidate for p o factoring from inventory financing lenders in Canada.
Don’t want to navigate that maze by yourself? Speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you maximize the benefits of this growing and more popular business credit financing model.
--
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/P_O_FACTORING_INVENTORY_FINANCING_LENDERS.html
Saturday, December 4, 2010
Your Competitors use SRED Financing to Cash Flow Their CRA SRED (SR&ed) tax credit claims for Working Capital
Your business success hasn’t been based on doing what your competition does, but if they are utilizing sred financing to grow their business doesn’t it make sense to investigate why cra sred claims, when financed, might put you a step ahead of the competition?
We think so , and if the Scientific Research and Experiment Development Program , aka " sr & ed ) pours billions of dollars into Canadian company coffers every year why wouldn’t you want to accelerate the access to cash for those claims and maintain your own competitive posture in your industry .
The financing of you sred claim, via what we could call a sred bridge loan is a recognized and solid manner in which to recover working capital faster. The very essence of having a sred claim filed of course means you will recover your funds, but doesn’t it make sense to recover them sooner, putting cash flow and working capital back to work for your company.
In business it’s all about timing, and in case you haven’t noticed things aren’t exactly moving slower in Canadian business today. So is it an advantage to get immediate cash for your sred calim instead of waiting several months, in some cases up to 9 or 12 months for your funds? You probably don’t need exactly cash flow these days - therefore we strongly recommend waiting for your cheque from the feds, it’s ' in the mail ' so to speak. However, if you're among the many clients that we meet that could actually use additional cash flow today, then you should be considering financing your claim.
What are the mechanics of having your claim financed, ask client such as yourselves? To say that SR &ED financing is a niche industry requiring knowledge and expertise is a bit of an understatement. That is why we strongly suggest you work with a trusted, credible and experience d business financing advisor who will walk you through a very basic process.
Sred financing will, 9 times out of ten, get you approximately 70% of your total sr&Ed filing as a cash flow bridge loan. Why 70%. It is simply because the remaining 30%, which of course still belongs to you, is held back as a buffer to cover both any adjustments the good folks in Ottawa might make to your claim, and it also helps to cover off the actual financing charges. However, it’s easy to see that if you have a claim, for example, of 300k that an immediate cash flow loan of 70% of that amount generates some real cash back into your firm. Which of course, per the program, is in effect a non repayable grant.
Could the benefits therefore be any clearer - The Canadian government is reimbursing you with your R&D funds and you are accelerating that re imbursement straight back into working capital. Use the funds for whatever general corporate purpose - pay payables, buy new equipment, re invest in more R&D, it’s your call!
The mechanics of sred finance are simple - have a claim prepared by a credible consultant or accounting firm. Complete a simple business financing application, go through standard due diligence as you would any type of financing, and execute a financing document which in effect collateralizes the sred for your sr&Ed loan. The entire process can be completed with a couple of weeks with the right amount of commitment on your part.
If your sred claim was prepared by a consultant who did it on contingency you can even pay them out of the financing - at that point everyone is happy!
Your competition probably finances their cra sred claim - why not increase your own cash flow and maximize your refund for the best uses your company can utilize. That’s a competitive financing strategy that works!
--
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_financing_cra_sred_sr_ed_tax_credit.html
We think so , and if the Scientific Research and Experiment Development Program , aka " sr & ed ) pours billions of dollars into Canadian company coffers every year why wouldn’t you want to accelerate the access to cash for those claims and maintain your own competitive posture in your industry .
The financing of you sred claim, via what we could call a sred bridge loan is a recognized and solid manner in which to recover working capital faster. The very essence of having a sred claim filed of course means you will recover your funds, but doesn’t it make sense to recover them sooner, putting cash flow and working capital back to work for your company.
In business it’s all about timing, and in case you haven’t noticed things aren’t exactly moving slower in Canadian business today. So is it an advantage to get immediate cash for your sred calim instead of waiting several months, in some cases up to 9 or 12 months for your funds? You probably don’t need exactly cash flow these days - therefore we strongly recommend waiting for your cheque from the feds, it’s ' in the mail ' so to speak. However, if you're among the many clients that we meet that could actually use additional cash flow today, then you should be considering financing your claim.
What are the mechanics of having your claim financed, ask client such as yourselves? To say that SR &ED financing is a niche industry requiring knowledge and expertise is a bit of an understatement. That is why we strongly suggest you work with a trusted, credible and experience d business financing advisor who will walk you through a very basic process.
Sred financing will, 9 times out of ten, get you approximately 70% of your total sr&Ed filing as a cash flow bridge loan. Why 70%. It is simply because the remaining 30%, which of course still belongs to you, is held back as a buffer to cover both any adjustments the good folks in Ottawa might make to your claim, and it also helps to cover off the actual financing charges. However, it’s easy to see that if you have a claim, for example, of 300k that an immediate cash flow loan of 70% of that amount generates some real cash back into your firm. Which of course, per the program, is in effect a non repayable grant.
Could the benefits therefore be any clearer - The Canadian government is reimbursing you with your R&D funds and you are accelerating that re imbursement straight back into working capital. Use the funds for whatever general corporate purpose - pay payables, buy new equipment, re invest in more R&D, it’s your call!
The mechanics of sred finance are simple - have a claim prepared by a credible consultant or accounting firm. Complete a simple business financing application, go through standard due diligence as you would any type of financing, and execute a financing document which in effect collateralizes the sred for your sr&Ed loan. The entire process can be completed with a couple of weeks with the right amount of commitment on your part.
If your sred claim was prepared by a consultant who did it on contingency you can even pay them out of the financing - at that point everyone is happy!
Your competition probably finances their cra sred claim - why not increase your own cash flow and maximize your refund for the best uses your company can utilize. That’s a competitive financing strategy that works!
--
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_financing_cra_sred_sr_ed_tax_credit.html
Friday, December 3, 2010
The Truth About New Business Loans for Your Franchise Investment
You can't handle the truth! We love that now famous movie line, but we are pretty sure you can handle the truth about one of your major life decisions, completing a franchise investment via new business loans.
When we talk to clients about their desire to finance a franchise it's clear they recognize that this is a specialized type of finance that and are unclear about how to go about completing the financing they need to both acquire the investment and then run the business for future growth and profits .
Let's cover off some of the basics around the truth behind how many hundreds, perhaps thousands of franchises are financed in Canada each year.
There are 3 or 4, depending on size and type of franchise, lenders that are key to completing your franchise investment. The good news is that you know one of them really well, and have some excellent negotiating strength with that person. That person is actually you! Why? Because one of the components of franchise finance is called the owner equity investment. Your part of the funds that you put in are generally recorded as a shareholder loan, and you become in effect a creditor of the business.
That might sound like accounting mumbo jumbo to most of our clients... the truth they are seeking is even more basic than that - ' how much do we have to put in' is always what their questions comes down to! And the truth on that one is that it depends. We can categorically say that over the last couple years with the credit crunch and other factors that you should be prepared to put down anywhere from 30 - 50% of your investment . That in many ways is a good thing because you are helping to shore up equity as opposed to taking on to much debt. If franchises were able to be financed on 100% debt we can assure you there would be many more business failures because of that same fact. If you business falters or stumbles on revenues or collections cash flow problems could set in.
Clients assume, incorrectly, that banks finance franchises outright. We haven’t seen that happen once yet - it may have, we just haven’t seen it. So getting back to the truth you are looking for, do banks provide new business loans for franchise finance in Canada? You're going to hate us for being vague but the answer is ' kind of ‘. The reality is that the banks do in fact provide most of the financing for new franchisees in Canada, but they do it under the auspices of a specialized loan called the BIL/CSBF. This loan is actually underwritten and sponsored by our good friends in Ottawa, the federal government. In the U.S. it’s called the SBA program; here we call it often an SBL - i.e. Small Business Loan.
The BIL/CSBF loan is a specialized loan with some basic requirements - many of our clients stumble and falter on their own because they are incapable of presenting a package that contains exactly what the banker and government wants to see. We therefore recommend that you seek the services of a trusted, credible and experienced Canadian business financing advisor who can guide you through that process, successfully.
Other ways to compliment the financing of the franchise are equipment financing and term working capital loans
So, did you handle the truth? We are pretty sure you did, and focusing on how things are done properly should assist you in the successful financing of your franchise investment.
--
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/new_business_loans_franchise_investment.html
When we talk to clients about their desire to finance a franchise it's clear they recognize that this is a specialized type of finance that and are unclear about how to go about completing the financing they need to both acquire the investment and then run the business for future growth and profits .
Let's cover off some of the basics around the truth behind how many hundreds, perhaps thousands of franchises are financed in Canada each year.
There are 3 or 4, depending on size and type of franchise, lenders that are key to completing your franchise investment. The good news is that you know one of them really well, and have some excellent negotiating strength with that person. That person is actually you! Why? Because one of the components of franchise finance is called the owner equity investment. Your part of the funds that you put in are generally recorded as a shareholder loan, and you become in effect a creditor of the business.
That might sound like accounting mumbo jumbo to most of our clients... the truth they are seeking is even more basic than that - ' how much do we have to put in' is always what their questions comes down to! And the truth on that one is that it depends. We can categorically say that over the last couple years with the credit crunch and other factors that you should be prepared to put down anywhere from 30 - 50% of your investment . That in many ways is a good thing because you are helping to shore up equity as opposed to taking on to much debt. If franchises were able to be financed on 100% debt we can assure you there would be many more business failures because of that same fact. If you business falters or stumbles on revenues or collections cash flow problems could set in.
Clients assume, incorrectly, that banks finance franchises outright. We haven’t seen that happen once yet - it may have, we just haven’t seen it. So getting back to the truth you are looking for, do banks provide new business loans for franchise finance in Canada? You're going to hate us for being vague but the answer is ' kind of ‘. The reality is that the banks do in fact provide most of the financing for new franchisees in Canada, but they do it under the auspices of a specialized loan called the BIL/CSBF. This loan is actually underwritten and sponsored by our good friends in Ottawa, the federal government. In the U.S. it’s called the SBA program; here we call it often an SBL - i.e. Small Business Loan.
The BIL/CSBF loan is a specialized loan with some basic requirements - many of our clients stumble and falter on their own because they are incapable of presenting a package that contains exactly what the banker and government wants to see. We therefore recommend that you seek the services of a trusted, credible and experienced Canadian business financing advisor who can guide you through that process, successfully.
Other ways to compliment the financing of the franchise are equipment financing and term working capital loans
So, did you handle the truth? We are pretty sure you did, and focusing on how things are done properly should assist you in the successful financing of your franchise investment.
--
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/new_business_loans_franchise_investment.html
Thursday, December 2, 2010
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
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
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
Subscribe to:
Posts (Atom)