What will cash flow financing cost your firm and what working capital cash facilities make sense?

Cash flow financing is typically what makes or breaks your company as your firm grows or struggles to overcome temporary challenges. Working capital cash finance is a top priority for small and medium sized business in Canada.
We hate taking the easy way out for an answer to those concerns, so we'll attempt to provide some real world immediate solutions for that working capital challenge that is always top of mind.

We haven’t found anyone who does not disagree that working capital management tends to be the single most important measurement for your firm on a daily and ongoing basis - its always comes back to that ' cash flow is king' fellow!

If your liquidity is limited you need to recognize that. Your accountant, with all due respect will easily and quickly calculate your working capital and potentially advise you that you're in a great position. He or she does that by going to your balance sheet and subtracting current liabilities from current assets. Let’s say he or she came back and gave you the great news - that you have 4 dollars of current assets for every one dollar of payables. Sounds great so far, right?

Wrong, because you might find that your actual cash on hand is only .30 cents for every dollar of payables due, and all your money is tied up in - you guessed it, receivables and inventory that are slow paying and slow turning, respectively.
So the reality is you have great working capital only if you feel very comfortable that you can pay bills, loans, leases, employees, etc!! .. as they come due . We don’t meet a lot of business owners in the small and medium size business category that have that level of comfort.

So, why do you have a cash flow financing need, and what is the cost of a working capital cash facility that makes sense.
Sitting down with clients and talking about their cash flow needs often revolves around the same key issues they are going through : temporary financial losses, lack of long term financing ( i.e. buying or leasing non current assets without good long term debt solutions ) , and , you guessed it , your biggest problem - growth ! Dramatic increases in sales, as great as they sound, lead to cash flow financing needs.

An internal solution that will not cost you a lot and solve your working capital cash challenge is simply better turnover of receivables and inventory. That’s easy for us to say and difficult for you to achieve, right? So, how does Canadian business address that - it’s by monetizing receivables and inventory and in effect your future sales, via a cash flow financing facility.
If you firm is in a great industry, has clean balance sheets, and makes money your bank facility for a revolving line of credit will typically be in the 5-10% per annum range for cost of financing.

If your firm doesn’t qualify for bank financing should you abandon ship? Definitely not. Working capital financing via receivables financing and asset based lending can solve all your problems and in effect turn your firm into a cash flow machine.

That new found cash flow comes at a price, as rates can be in the 1% or 2% per month range, but you are actually paying that now by carrying A/R and inventory and losing out on the opportunity cost of turning capital into new sales and profits.
Speak to a trusted, credible and experience Canadian business financing advisor for your cash flow financing solution that makes optimal sense for your company.

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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 7 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_financing_working_capital_cash.html

The Advantage of Lease Financing When You Have the Right Equipment financing Company As A Partner

In your lease financing needs wouldn’t you like to have what they call the ' home team' advantage? Advantages in business are great, especially when your competitor is on the other side of that advantage! That's why we feel the right equpment financing company in effect becomes your home team advantage, as it becomes a partner and solution provider for your lease financing needs.

You probably have already decided why you are going to lease, rather than buy and purchase outright. We start telling clients about things like the tax advantages of equipment financing in Canada, depreciation strategies that follow tax benefits, their ability to manage obsolescence, adding in install and warranty and maintenance into the lease , etc,etc,etc ..... but do you know what ? All those benefits are great, but firms such as yours more often than not are mostly concerned about cash flow and the concern of drawing down on bank credit lines, etc for equipment that ultimately depreciates or has to be replaced.

So yes, you do need to know all those advantages, and focus on the ones that make the most sense for your company, so you can maximize them - but the bottom line is that lease financing is mostly regarded as a cash flow tool. The textbooks call it the most efficient use of your resources when you have limited capital - we simply call it a great way to conserve cash flow.

One of the advantages of lease financing is simply clearly that it covers you from low tech to hi tech. What do we mean by that, simply that all assets can be properly financed if you partner with the right equipment financing company. That goes from computers and technology that seems to depreciate one second after you purchase it, to your shop floor and office equpment that might give you useful economic benefits for years.

And hey, what about that other advantage - leasing to own, or leasing to use? Many clients aren’t aware they can structure whats known as an operating lease whereby they use the asset, minimize their cash flow outflows, and have maximum flexibility at the end of the lease financing transaction. What is that flexibility? They can utilize one of three options at the end of the term - they can buy the unit, return it, or upgrade/extend the transaction. Tell us that’s not flexibility?!

So we've laid out all those great advantages, but it is easy to find the right lease financing company. Clients are surprised to hear that there are hundreds of lease finance firms in Canada - some are huge, some are small, some are geographic, some don’t want your type of business, some are dying to find you and get your business and provide you with great rates, terms, and structures.

If you don’t have the time to approach a few hundred firms, meet them discuss your needs, and give them your financial statements is there a solution. There is. Speak to a Canadian business financing advisor who is trusted, credible and experienced in lease financing. Flexible Terms, documents and credit approval come quickly when you have the right equipment finance company as a partner.

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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 7 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_financing_company_lease_financing.html

How The Cost of Factoring Finance Makes Sense In Accounts Receivable Financing

Is it possible to overcome the working capital and cash flow challenge you face with a confidential accounts receive financing and factoring facility? And another thing what is the true cost of factoring finance.

Let's weigh in on those two issues and try and help you solve your Canadian business financing needs - our comments are mainly addressed to small and medium sized companies in Canada, but we can assure you the big boys come to talk to us about these problems also.

Problems we said... so what is that problem really. It’s simply that the ability to maintain ongoing liquidity continues to be the largest challenge in business today - simply put, the recession is over _ (the government sent us an email confirming that!) and your business is on track to grow again.

The ability to get proper business financing credit and the perceived cost of factoring finance is always a discussion point we have with clients. Working capital and cash flow are needed to keep up to your day to day operations, let alone grow your business in the manner that you want to.

We don’t want to be perceived as naysayer, so lets address our real subject here, which is accounts receivable financing, the cost of factoring financing ( that’s what it is commonly known as ) as well as the benefits of what we feel is the greatest secret in Canadian business today, a confidential invoice and receivable financing facility.

First of all, what is the facility, and is it somewhat non traditional or alternative in nature? A true accounts receivable financing strategy is actually quite simply - you enter into an arrangement to sell your sales as you generate them - receiving cash, the same day! That of course is better than waiting 1, 2, and yes dare we say 3 months to collect your A/R. That brings us nicely into the area of the cost of factoring finance - which in Canada ranges typically to 1.5-2% per month.

Isn’t that expensive, asks clients. We don’t think so, but you decide based on these facts. This charge, which is known in the industry as a discount fee, not an interest rate per se, can be significantly offset by your new ability to take supplier discounts in the same amount, as well as purchase more effectively. The positive intangible around this is that you will build better supplier relationships than your competitors probably have, simply because suppliers love being paid.

And don’t forget what we said early, which is that you , instead of waiting 60-90 days to get paid have cash flow to sell more and creates profits to offset this financing cost . So in summary the combo of increased cash flow to reduce payables, as well as your ability to in an unlimited based generate immediate cash flow for profits very clearly offset any perceived ' high financing costs '. (We have met customers who have negotiated 5% better pricing with their suppliers based on their new found ability to pay cash.

The best type of accounts receivable financing facility in Canada is what we call a confidential invoice discounting facility. You bill and collect your own invoices, unlike your competitors who use traditional factor financing. And factoring finance cost is the same!

Intrigued? Interested? Hopefully not confused! Investigate the benefits of accounts receivable factoring finance with the use of a trusted, credible and experienced Canadian business financing advisor. It’s a cash flow 101 great strategy.

--


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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Canadian Film Projects Utilize Ontario Film Tax Credit Financing For Success

Most Canadian film projects (we’re referring to television and animation also) utilize Ontario film tax credit financing to complete their projects from a financial perspective. The proper use of these credits can enhance your overall ROI - aka return on investment.

The challenge for producers and owners of projects in our 3 named entertainment genres above is often quite simply to understand what the credits are - much less utilize them effectively. We'll try and address both issues.

Although we feel that film tax credits in Canada couldn't be more straightforward, things often become complicated probably simply because they are only one piece of your ' master plan ‘.
Again , we maintain the Canada film tax credits are very generous and the process for receiving them and financing is well defined, but , in defense of our clients they can be forgiven because some of the perceived complexity revolves around which province their production is domiciled in and what specify tax credits apply .And in the case of where you have a choice of utilizing one tax credit or another the question then becomes : ' What tax credit financing strategy brings my project the maximum benefits ?'

Clients seeking tax Ontario film tax credit financing, for example must ensure they have the puzzle solved. What's that puzzle - it’s simply what combo of equity, debt, and mezzanine type financing will maximize the tax credit. We hope that as business people you want to make the maximum profit possible on your project and venture. If you're the owner you will make less if you have to give up equity.

That is why using your tax credit as collateral enhances your overall return on investment and profit potential.

We read a great definition of mezzanine film financing awhile back - simply put it described the financing as the money in the middle between expensive equity or giving up ownership, and that other rock and hard place - paying interest and taking on debt for your project .

Ontario (we use that as an example - so our friends in BC, QUEBEC and Maritimes shouldn’t be offended) film tax credit financing uses your tax credit as the collateral for a large piece of your financing.

We've anticipated your next question - how large is large?! Realistically you can expect to recoup anywhere from 30-45% of your projects total costs in the form of a non repayable tax credit. And, when you know you are eligible for that tax credit then consider financing it to reduce the amount of real cash flow you need for your project. You in effect borrow against the value of the tax credit.

The ' reward’, if we can put it that way, for financing that 30-45% of your project is simply an interest rate charged on the value of the total tax credit due your project . 99.9% of producers and owners set up a separate legal entity for each project for financial and reporting reasons.

Using a quick example, say you had an independent production with a modest budge of 1 million dollars. If you have arranged 50% of that via equity in your project you need the additional 50% of that financing. If you were able to sell the rights for the project for 20% then the remaining 30% of your financing can be locked up quite nicely via film tax credit financing .

We don’t envy you around the challenges of raising equity, debt and mezzanine gap type financing for your projects. But take solace that Canadian film, TV and animation projects can be easily augmented with a significant amount of financing with the proper use of film tax credits.

Speak to a trusted, credible and experienced film tax credit financing advisor on your eligibility and the ability to finance your credits. Cut! That's a wrap.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Financing sr ed tax credit claims – Why a SRED Bridge Loan Make Sense

Purchased your lottery ticket yet? It's a 3 Billion dollar prize. That’s the feeling our clients have when they have secured their ticket (which is their sr Ed tax credit claim) to the three billion dollars the Canadian government provides each year for the Canadian SR&ED program. And the reality is with a properly submitted claim your odds of winning are much better than those lotteries - they approximate a 100% chance! We haven’t had those odds in our favor in awhile!

Let’s talk about why a sr&Ed bridge loan might make sense for the monetizing of the R&D non repayable grants that the government provides to Canadian firms who submit a claim for the program. Financing a sr ed tax credit claim allows you to cash flow, or monetize , however you want to call it your portion of the largest tax incentive program in Canada .

We have always told clients that the sr&Ed bridge loan makes sense, in our opinion, because it in essence fills the gap between your ability to get approved for the funds and receive those funds.

You have already made your commitment to R&D via your ability to innovate - so why no supercharge that innovation and turn those funds into cash. Financing sr Ed tax credit claim strategies provide your firm with the capital you need to further innovate and of course run your business.

We know by experience with our clients that many of the firms who participate in Canada's Sred program are whats known as pre revenue firms to finance professionals - in other terminology you're a start up, or very close to it. Accessing capital is hard when you are a start up - your firm simply doesn’t have the sales, profits, and the corresponding balance sheet and income statements to support the borrowing of capital.

If you're an established business and you have accounts receivable they can be financed of course. Well, guess what, you do have an account receivable that can be financed, it’s simply that it is known by another name - it’s your sr&Ed claim! A SR&ED bridge loan becomes an external source of capital that you otherwise might not be access based on traditional borrowing requirements.

A great strategy is simply to take advantage of financing sr ed tax credit claim and invest those funds in marketing the viability of your innovation that you achieved via the sr ed process . That is when a sr&Ed bridge loan makes total sense.

Capital is critical to any firm, whether you are the start up we just talked about, or an established firm simply desiring to grow your competitive edge and finance your business on an ongoing basis. Banks, venture capitalists, and private equity investors, etc don’t really finance sred claims.

In order to facilitate the financing of your calim seek an independent finance firm that specializes in this area. A trusted , credible and experience Canadian business financing advisor can have a sr&ed bridge loan completed in a couple of weeks with your firms full co operation . A simple application, a copy of your sred filing, and the normal due diligence associated with any business financing can be completed very quickly and efficiently.

Does it make sense to finance your sr&Ed claim - we think we’ve shown it has. The sred financing closes the gap between your innovation and the continued commercialization of your products and services, providing you with capital to maintain your competitive edge.
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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/financing_sr_ed_tax_credit_claims_sred_bridge_loan.html

How Much Will A Business Franchise Loan Cost When Financing A Franchise In Canada ?

The cost of a business franchise loan is often the first questions clients ask when talk to us about financing a franchise in Canada.
5.5% is the answer. So that’s it – end of story – you have your answer! Of course we're being a bit facetious because what we are referring to is simply the current interest rate on the most popularly utilized loan vehicle for franchise financing in Canada. Cost is of course one thing, getting approved, executing on your franchise financing properly, and finally not entering into the wrong type of financing strategy is another issue altogether.

Let’s examine the challenge and the reality of franchise financing as it relates to costs, methodology, and, as we said, doing it right.

If you aren’t aware of the specialized methods of franchise financing in Canada and that most popular loan vehicle we discussed then you certainly are a poorly informed and at risk entrepreneur in the franchise environment . Simply walking into a bank and asking for a franchise loan in Canada does not work , as the bank views a new franchise, as it does any other business frankly, as totally based on the 100% collateral and credit worthiness of you the borrow .

If that’s the case then, our clients ask, why have they heard that thousands of franchisees in Canada get bank financing? Good question! It’s simply that the majority of financing in Canada is done under a specialize program called the CSBF /BIL program, which is under the auspices of the government and administered by the banks. That key word is administered by the banks.
So what is the cost of that loan? In terms of a pure what is the interest rate? Question the answer is 3 over prime rate, which currently in Canada would bring the transaction to the 5 1/2% range. (As prime changes this rate might fluctuate).

But if you as a franchisee are looking for a business franchise loan and financing a franchise properly the other features of this specialized loan are even more compelling - they include a limited owner guarantee, a loan size of up to 350,000.00, and other enhancements. That cost, when financing a franchise in Canada is clearly the best deal in town if you accept that a franchise is a new business - which of course it is, but we acknowledge the franchise is of course built on a successful business model of the franchisor.

Remember also that the cost when financing a franchise in Canada is based on the amount you borrow - unfortunately it cant be 100% because business finance dictates it is both prudent and required that you put some of your own equity in the deal - the more you have invested personally the less financing cost you have, that’s understood of course .

In the U.S. We are told there are specialized tax strategies to take money out of RRSP type accounts without being taxed, to finance your business - that really doesn’t work in Canada and your cost of a business franchise loan will go up considerably when you add in the tax penalty bite of collapsing your savings vehicle.

So. in summary financing a franchise in Canada is achievable - however its specialized, and some of the programs utilized by franchisees are highly specialized to the industry . Finance your new business properly by speaking to an expert is strongly recommended - seek a Canadian business financing advisor who is experienced, credible, and trusted who will help you solve the cost dilemma of financing a franchise in Canada .

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/business_franchise_loan_financing_a_franchise.html

Looking for Business Financing methods? Tap into asset based lending in Canada Today – 1 2 3 You’re Saved!

There is one question we always seem to get from clients - ‘what are some business financing methods we might not be aware of?' ; and our answer is always the same : asset based financing lending is one of those alternatives that we can almost bet you have not heard of - and if you have heard the term we will bet a nickel that you aren’t fully aware of what it is or how it works.

Let’s examine asset based financing from the viewpoint of it being an alternative to a bank line of credit facility. Another way of describing this type of facility is to view it as the full service offering that is directly comparable to a Canadian chartered bank facility, commonly called an operating line of credit.

These types of facilities are of course not long term debt of term loan type scenarios. Can we put it any more simply than its your day to day business credit facility that facilitates payment to suppliers, employees, etc.

What we could call the ' full service ' asset based financing lending model is a facility that is usually a non bank financing arrangement with an independent finance firm that specializes in this type of facility .

It monetizes your current assets, which are typically receivables and inventory. However , there is often what we could describe as an upside kicker to the asset based line of credit because it can also easily margin, from a working capital perspective any unencumbered equipment and real estate that you have . Did you ever thing you could get working capital and cash flow financing and margining on equipment and real estate - we are pretty sure you didn't.

In discussing this financing alternative with clients we point out that the alternative to the full service type of facility (which is typically for larger firms) is an asset based financing lending facility that we call a working capital line of credit. It is generally under 250k and typically just finances receivables. Our favorite and in fact preferred type of facility is one in which your receivables are financed directly but you retain billing and collection control. More about that on another day!

So let’s get back to our asset based line of credit. What does it cost and how does it work, and, as business financing methods go, is it appropriate for your firm

Depending on the size of your facility pricing for asset based lines of credit can be very competitive to bank rates. Larger facilities take 30-45 days to fully set up properly. It should be no secret to the reader that a typical application would include a business credit application, financial statements, and aged asset lists of receivables and inventory.

How much can we get? Is our next most popular question from clients? The answer is lots. Asset based lending relies on the asset values, so typically receivables are margined at 90% and inventory, depending on your industry , can be margined from anywhere from 25-70% in our experience . Most firms could never get that financing on inventory from a bank.

So whats all the hoopla about this method of business financing. We can summarize it by saying its simply an alternative to bank financing when you cant meet bank criteria , its competitive if you have a solid asset base and business prospects , and it provides you with unlimited cash flow and working capital funding as your business grows . The size of the facility grows with your firm.

Confused? Hopefully not. Interested - hopefully so . Speak to a trusted , credible and experienced Canadian business financing advisor as to what business financing methods might alter your firms success and investigate asset based financing lending as a solid choice or alternative .
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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/asset_based_lending_business_financing_methods.html