Interested In Understanding Business Working Capital in Canada ? Cash Flow For Operational Needs

Interested in finding out why business working capital and cash flow challenges for operational needs are a challenge for small and medium sized businesses in Canada? We are pretty sure you are even more interested in some solutions to that challenge!

A March 2011 report out of the U.S. noted among other things that small and medium sized firms are still having huge challenges in raising the working capital they need - even though in many sectors business is back to ' booming ' again . As a Canadian business owner or financial manager you would like some solutions to get that cash flow booming again, we're sure.

For firms that are mature in age, have good assets and strong operational cash flow those challenges are limited. However, if your company is on the opposite side of that spectrum you're living in a ' business hell ' if we can use that term - at least if it isn’t hell its purgatory!

How can you identify the best, what we can call ' straight forward ' options for working capital and business cash flow solutions? We think the answer is simply understanding and getting a handle around the traditional ( or conventional ) Canadian business financing techniques , but, even more importantly, understanding newer solutions that are becoming more mainstream in acceptance everyday . Without the resources of an experienced business financing advisor you might not even have heard of some of these solutions, let alone having considered implementing them.

We're the first to agree that Canadian banks are lending again, rates are close to all time lows, and credit reins and collateral and covenants have slowly loosened. But again, small and medium sized businesses aren’t feeling it. Another recent March2011 survey, albeit U.S. based said most business owners still experience temporary or severe cash flow issues, forcing them to delay payments to suppliers, and delay spending on new assets for business growth.

In order to implement better, or newer working capital and cash flow business operational strategies your firm must understand how you are managing your finances now, what assets are available to monetize, and, often forgotten, you must have a handle of what future cash flow needs will be.

As we noted, traditional bank financing is alive and well in Canada. For those that can't leverage the amount of operational credit that they require a better understanding of ' new ' solutions is required. And we know you've been waiting for what those new solutions are!

More recent and increasing widely accepted methods of generating working capital include the following - asset based lending , working capital facilities that margin a/r and inventory as a combo , confidential invoice discounting , securitization, cash flow sub debt loans, purchase order and contract financing, as well as bridge loans on already owned equipment . Our favorite - asset based lending... but more about that one on another day.

Any of the above solutions will allow you get your cash flow and working capital under control. Speak to a trusted, credible an experienced Canadian business financing advisor. Reclaim your business cash and operational financing!

-


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/working_capital_cash_operational_business.html

Cash Flow Restricting Your Growth? Let business Equipment Financing And Leasing Of Industrial Assets Do The Job

Can you count them? How many times have you felt your ability to grow your company with additional sales and profits was restricted by inability to obtain business equipment financing and leasing for industrial and other types of equipment? If you're one of the lucky ones that survived the 2008-2009 recession and your business is growing again (or surviving?!) let equipment financing and leasing move your business forward.

The scope of leasing for industrial and other types of business equipment is broad, and that’s an understatement. Canada's largest corporations utilize lease finance, and even small entrepreneurial start ups can utilize all the advantages of this type of Canadian business financing.

Most business owners and financial managers in Canada prefer certainty when it comes to business financing. Equipment financing and leasing brings that predictability. Why is that? Simply because if you have chosen your asset properly (we’ll leave that one up to you) and matched the asset with the right type of business equipment financing then you have just succeeded in closely matching the cost and cash outlays to the benefits you will receive from the asset - whether that be high end industrial equpment or the latest computer or telecom technology.

Again we come back to restrictions you face on acquiring those assets. And this time the evil doer is ' the budget ‘. In talking to clients about lease finance and their strategies they employ they are often stymied by the budget cycle. Again, this applies to every type of corporation, large and small, it’s just that the big boys probably have a bit better handle on the planning and documentation around a budget.

But does budgeting have to restrict your success. We don’t think so, and that’s why equipment leasing comes to your rescue. When your company budget doesn’t not allow for either the size of an asset or the timing of the acquisition to work the way you want it to then business equipment leasing should become the solution of choice.

Why? It doesn't get any simpler. You can acquire assets of a significantly higher size by focusing on monthly payment and not total expenditure, and there are tens of ways you can adjust payments to reflect beating that budget. Payments can be temporarily deferred, lowered in earlier term of the lease, and if you choose an operating lease then your asset doesn’t even get impacted by the budget cycle. That’s because the monthly lease payment is treated as an operating expense within your operating budget.

In summary, it’s a battle out there, and you shouldn’t let your competitors win the asset acquisition battle because your firm didn’t take advantage of the flexibility of business equpment financing. Whether your obstacle to innovation is cash flow, budget cycle, asset dollar value, etc we think we have shown that you now have the ' tool kit ' to combat the business growth challenges you face in acquiring assets.

Speak to a trusted, credible and experienced Canadian business financing advisor on lease strategies that will allow you to meet and achieve business financing goals.


-



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/business_equipment_financing_leasing_industrial.html

The Secret Of Commercial AR Factoring And An Accounts Receivable Financing Loan In Canada

Mind your own business! That's what a Canadian business owner or financial manager would prefer to do when they are considering accounts receivable financing, aka a commercial ar factoring loan. AR is of course accounts receivable, your second most liquid asset next to cash. Oh and by the way, the good news is it’s not a loan, per se, more about that later. Unfortunately current practices don’t allow you to ‘mind that business ‘.

So is there a way your company can obtain all the advantages of factoring , receive a competitive financing rate, and at the same time implement what is in effect a confidential invoice discounting program ? There is. First let’s cover off some basics.

You know the drill already. Your client base and investment in accounts receivable is taking up a huge part of your working capital. Sales are growing, or you have some major new contracts and business, forcing your working capital needs to go up.

The strategy. It's of course what thousands of business in Canada are starting to consider everyday - factoring. (Also called commercial invoice discounting). If you were going to implement this strategy in the manner that your competitors currently are then you would sell your receivables as you generate them , obtaining immediate cash flow to generate more sales, more profit , and of course cover all those operating costs you need to run your business on a daily basis .

But wait a minute. As commercial ar factoring and ar financing stands now in Canada, utilizing the U.S. and European model, your clients must be notified that you have sold that receivable to the finance firm.

Is there a way to avoid that somewhat ' sticky ' process and embrace the theme of our shared information here, which is ' minding your own business ‘? There is. The secret we are sharing is the availability of ' C I D' which stands for confidential invoice discounting. This is clearly the accounts receivable financing of preference for Canadian business.

Let’s examine what just happened as you have implemented this program. You have a bankable, liquid asset, your receivable portfolio. You now have the ability to in effect ' monetize ' that investment into working capital and cash flow today.

The costs of factoring are always a concern or subject of discussion when we talk to clients. The cost is in the 1-3% range per month. However companies such as yours need to understand that you can often cut those costs in half by effectively using your new cash to generate immediate sales an profits, take advantage of supplier discounts, and purchase more effectively and ' smarter ' from valued key suppliers .

So how does our ' secret ‘, i.e. confidential invoice discounting (factoring) work? It could not be any simpler. You bill and collect your own invoices, still receiving funds for them as you generate them. C I D rates are the same as ' regular ' commercial ar factoring, yet you are now in control of the process. And remember, important for you to understand this whole process is not a ' loan ' as we mentioned, you are just monetizing assets and turning them into working capital as you need them.

Let’s recap - the strategy = generate cash! The tactic - C I D - Confidential invoice discounting. Do you qualify? We are pretty sure you do, so why not speak to a trusted, credible an experienced Canadian business financing advisor on this valuable working capital concept.
-


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/commercial_ar_factoring_accounts_receivable_loan.html

Breakthrough The Canadian Equipment leasing And Financing Barrier - Business Leasing Strategies That Work!

Its official - your company is on the road to recovery in the Canadian business landscape. So how can you use equipment leasing and financing as a new economy strategy? Let’s share some tools and strategies for Canadian business owners and managers, allowing you to maximize business leasing dollar benefits.

The economic havoc that wrought business financing tension in 2008-2009 appears behind us. However, the cost of, and access to credit remain two key issues in Canadian business financing.

Equipment leasing allows you plan carefully for growth. Think of all the uncertainties you have in either replacing or purchasing a new asset. Those key uncertainties are things such as cost of the asset, the obsolescence issue, concerns around asset acquisition negatively impacting your working capital, as well as competitive pressure.

Any of those issues might seem insurmountable if you didn’t have a business leasing alternative for asset acquisition.

Many companies in Canada have not thoroughly investigated the use of operating leases as a business leasing and financing strategy. This strategy alone can give you a triple weapon to beat the cost of assets, the cost of financing, and, as we noted, that pesky ' obsolescence ' issue.

So how does the owner of CFO implement such a strategy? We're the first to admit it works best on technology related assets, i.e. computers, telecom, etc. Let your Canadian equipment leasing company take the risk by your careful creation of an operating lease. This transaction is very powerful... why? .. simply because your payments are lower, your monthly rentals are fixed , the overall cost to finance a depreciating asset is less, and last, but not lease, it you who make the call at the end of the lease term on owning, returning, or extending your transaction !

It should be obvious to any business owner or CFO that you can’t break through and business financing barrier if you don’t know who you are dealing with. There are tens, hundreds actually of business leasing firms in Canada.

Want to waste a lot of your valuable time? If you do then don’t investigate the type and size and credit criteria of the lease firm you are dealing with. That’s not our recommendation however! What you want to do is ensure your asset and your financial situation is matched with a firm that perfectly suits your equipment leasing needs. So that can be a small ticket item, a complex technology strategy, or a used piece of heavy construction equipment. Bottom line; know you lessor re asset type, credit criteria, and flexibility re structuring.

Hers a simple breakthrough strategy - simply make a list of whats important to you in your leasing financing decision - key items might be capital conservation, payment flexibility, enhanced structuring , a la off balance sheet, etc . Any one of those items, properly completed, can save you thousands of dollars on a transaction.

Business leasing is back in demand! Your competitors are for sure utilizing business leasing. Your company is unique. So whether your reasons to finance are technological, financial, convenience related, or hard core economic - (i.e. diversifying your borrowing) don't dismiss your ability to achieve breakthrough financing via equipment leasing in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor for some of the best business financing advice you will ever receive on business leasing.

-

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_leasing_business_leasing_financing.html

Secrets On How To Crack The Government Of Canada Small Business Loan Financing Program

Wouldn’t you agree a ' secret ' is something 'unknown to many others ‘... basically ' privileged information’? The essence of those two definitions involves our sharing of information on the Government of Canada Small Business Loan financing program. The bottom line... how could something so great in Canadian business be mis interpreted or not even heard of by so many ?!

Let's explore the mysteries surrounding the program and prove to you why a little expert knowledge can help you 'crack the code ' on the best loan financing program for Canadian Small Business.

And for a good start, what's ' SMALL ‘. The program actually defines small, so if you are in business and have revenues under 5 Million dollars then you are eligible, and if you are a start up or a new business then your revenue/sales projection should be carefully pointed to being under that amount . P.S. You wont be punished if you over achieve on revenues at some later point in times - Success is allowed!

You can call it a ' secret ' in our case, but its probably better call ' misinformation ' with respect to what the government of Canada Small Business Loan covers. 3 things and only three things. Those three are equipment, leasehold improvements and real estate. (Yes, one of our ' secrets ' we're sharing is that it is generally not known that you can acquire real estate with a government loan under the program.

Is the program popular? Well, you be the judge, as over 950 Million (yes that’s million) dollars of financing went into this program last year.

A recent major headline in Canada's financial press referred to the program as being highly criticized for having a lot of ' messy red tape ' and high costs. Want to know a secret? If you carefully follow a detailed simple process your transaction in our opinion will hardly be ' messy ‘. And, oh yes, about those costs. the rate on the program is 3% over prime . That would put you under 6% in the current early 2011 interest rate environment. If a Canadian business owner thinks he can get financing , with a limited personal guarantee for items such as leaseholds , software, etc at a better rate than that we would like to meet that person .

The program has been around a long time , so many people mistakenly believe the cap on the small business loan financing program is 250,000.00 - guess what, it was raised to 350k during the most recent recession, and our indications are that it will stay at that amount .

It's no secret of course that most business loans in Canada are guaranteed by the owners of the business. Let’s also crack the secret code on that one, since you will be pleasantly surprised to know that owners need only provide a 25% personal guarantee on the loan. That's a good thing!

And finally, the secret code # is 7 4 4 1. We repeat 7 4 4 1. That’s the number (7,441) of loans made in Canada last year under the small business loan financing program. Would you like to be 7442? Speak to a trusted, credible and experienced Canadian business financing advisor on sourcing valuable funds under this program.

Canadian Franchise Finance Isn’t What You Think! Financing a Franchise Business Properly

Misconceptions. They are all over the place when it comes to financing a franchise business successfully, and properly. Let's wade into some of the key factors that allow you as an entrepreneur in the Canadian franchise finance industry to complete a transaction that meets your business and personal goals.

As noted, there is a lot of poor information out there about the challenges of financing a franchise in Canada. Let's focus in on whats important, whats achievable, and what you don’t have to worry about.

We can relate to clients who are making a significant life change and personal financial investment to purchase a franchise. You have access to some funds but the challenge of financing their new venture properly seems somewhat daunting.

Is there financial assistance in completing a franchise properly? Absolutely, but you must be prepared in every sense of the word.

Step one is often simply to properly identify the total amount of borrowing you need. Unfortunately we meet with some franchisees that have completed a franchise closing, only to find they are quickly running out of working capital to run their business on an ongoing basis. So close, yet so far.

The costs to finance a franchise involve what we call the soft costs to set up your business; they typically include franchise fees and professional fees such as those for an accountant, lawyer, etc. In our experience it makes strong sense for the owner to finance those soft costs themselves, leaving the hard assets and working capital for the franchise loan itself.

Here's something that surprises clients, as it appears to be a contradiction in terms. Canadian business financing itself is a challenge, but franchise finance is not! That is because they are some excellent programs that focus specifically on financing a franchise business. If done properly, and don’t quote us on this, it’s almost a ' slam dunk! A huge and we mean huge portion of all franchises in Canada are financed by a guy named Bill.

So who is Bill? Actually we have spelled his name wrong, because B I L is the acronym for the Government federal loan program that typically finances most of the franchises in Canada.

So you thought franchise financing under the BIL might be difficult or onerous. If properly presented and prepared you have just been approved for , bar none, the best small business financing program in Canada - great terms of 5-7 years, limited personal guarantees, and , are you ready, great rates and structures on the financing itself.

Is financing a franchise business easy or hard? Our simple answer to clients on that is that if you are prepared its easy, if not, you are guaranteed to fail.

Key elements of being prepared a business plan and cash flow that demonstrates your experience, the business potential, and, what the lender wants to see, cash flow to show repayment of the debt.

OPM doesn’t work in Canada almost anywhere in Canadian business financing. OPM is other peoples money, simply signifying that your own investment must be reasonable and shared with the loan investment to represent the full financing. To put is even more simply, you need a reasonable down payment. Franchisees with poor or derogatory personal credit histories need not apply in our opinion. Why? Because the lender views a franchise business in the context of how you have managed your own personal affairs.

So is there a bottom line on your quest for Canadian franchise finance success. Yes, and its pretty simple - avail yourselves of financing that is geared toward this type of business , be prepared from a presentation perspective , and commit a reasonable amount of your own funds to the transaction, sharing the risk with the loan provider .
Speak to a trusted, credible and experience Canadian business financing advisor on moving forward successfully, avoiding unnecessary surprises, and allowing you to finance the franchise dream successfully.

Canadian ABL Lending vs. Bank Loans - Which Offers The Best Financing Facility ?

Your mission, should you choose to accept it, is to determine the difference between abl lending in the Canadian marketplace vs. similar business financing loans offered by chartered banks .

A significant amount of confusion exists in the Canadian business financing arena around the definition and use of ABL lending. In the context that we are talking about we're focusing on a comprehensive business financing credit arrangement that provides you with a total borrowing facility based on primarily receivables and inventory, but also equipment and real estate when that comes into play .

There are many subsets of abl lending in Canada. The two dominant factors that play a role in theses subsets are size of facility, and single focus financing, such as receivables only. Additional the overall credit quality of your firm (i.e. good, bad and ugly) ultimately drives what type of facility you choose/obtain.

Can anyone raise their hand and answer why abl loans (by the way they are not loans per se) are deemed by many to be the savior of Canadian business financing. We sure can - its because they have the simply ability to offer financing when traditional bank financing is not available ,and, even to a stronger point, abl loans don’t discriminate when it comes to size of the facility . Generally these facilities range from 250k on the small end to tens of millions of dollars at the high end. Oh, and by the way, many of Canada's largest corporations use this type of financing, unbeknownst to the average follower of Canadian business financing.

So again, whats better for your firm ? We have got nothing against traditional bank operating loans, they have served Canada well for a hundred years, however , they can be restrictive when it comes to size of facility, renewals of your facility on different terms, and , most importantly limiting on what can be financed and for how much .

Quick example based on a real world scenario. Manufacturing company 'A' has a bank financing operating facility that margins their receivables to 75% of total value, and inventory to a cap of, let’s say 750k. However, manufacturing company 'A' is growing quickly, requires additional inventory, and has receivable growth commensurate with sales growth. The challenge in a traditional banking arrangement is that the company is restricted in ability to grow commensurate with their working capital needs .Would banks step in. Maybe, possibly, who knows ?

However, we can almost guarantee this same type of problem or challenge our company 'A' is facing would be met head on in an ABL lending scenario. Why , simply because abl financing is based on assets, so as the firms inventory and receivable investment grows so does the facility, pretty well automatically .

Many Canadian firms that are smaller and medium in size unfortunately don’t qualify for what we call a true pure play ABL, simply based on deal economics , size of facility, and asset categories. Does it end there?

Definitely not, as working capital facilities, mini ABL’’s we could call them, are available that finance a combo of A/R and inventory, accounts receivable only (typically called factoring financing), with potential to add on purchase order financing when that makes sense. Our mini ABL’’s, aka working capital facilities are priced significantly higher that true asset based lines of credit, but offer the same flexibility and access to capital .

So, is there a bottom line? The old saying ' the trend is your friend ' is applicable - more and more firms are investigating abl lending and benchmarking it against bank loans. Do not, we repeat, do not investigate this type of financing if you have all the business credit you need and have no challenges in working capital financing and business growth! If that’s not you, speak to a trusted, credible and experienced Canadian business financing advisor who can help you benchmark abl loans vs. bank financing facility.