Time Runs Out In Business Financing – Working Capital Management Analysis & Strategies

If you're like most Canadian business owners you're somewhat skeptical of either the press or perhaps the agenda's of financial institutions you deal with or borrow from .

Yesterday we got one of those newsletters from a bank - the content was mixed... We’re quoting here : ‘Automotive industry rebounds .... Business confidence down... business barometer mix down sharply...business credit trending up ...'

Talk about some mixed signals... and how do we interpret those type of messages in our own business situation and needs when it comes to working capital management and the analysis of that all important business life blood... cash flow?

How you manage your working capital, and how you borrow for it are one of the most important aspects of running and small and medium sized business in Canada. Simply things like billing and collecting your A/R promptly and matching those payables outflows make or break any business.

What are the factors that affect your need for cash flow and what are some analysis and financing techniques to accelerate working capital management. That’s effectively called the cash flow cycle. Did you know for example that many larger firms actually manage their growth, they use simple formula's that any small and medium sized business owner and financial manager can use to determine how fast they can grow based on their operating profits and their ability to manage receivables and inventories without over borrowing . Frankly, you should be doing what the big boys do also, and it’s not as hard as you think.

The three things that affect your need for working capital are your profits, how fast you collect from your customers, and the ability to control operating costs and overheads as you grow. The big corporations call this formula - the ' Sustainable Growth Rate ' - as a business owner you need to accept that growth can often mean running out of cash.

So how do business owners ' accelerate ' working capital management strategies to optimize growth. First, as we said they can use some basic formulas to determine how fast they can growth without outside financing. When outside financing is required a number of options are available - probably more than you thought.

They include receivable financing, working capital facilities that are non bank in nature and combine inventory and a/r financing , and true asset based lending which monetizes on a daily needs basis our current and fixed assets .

External cash flow can also be provided by lesser known, but very viable vehicles such as purchase order financing, securitization and even the financing of any SR&ED tax credits if you're in the manufacturing or tech space. Capital can also be conserved by effect lease financing strategies that finance assets you need on a short term or long term basis.

So, we've been told business is about a bottom line. What's ours today? Pretty simple. Use tools to measure your cash flow needs, plan for growth with working capital management and analysis in mind, and take advantage or cash flow techniques that are traditional and non traditional in nature . Speak to a trusted, credible and experienced Canadian business financing advisor on what it takes to implement strategies that work for your firm.




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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Discover Business Software Financing Options For Canadian Systems & Projects

No secret that in today's competitive environment any advantage business has over the competition is valuable - that’s an understatement. So, if you accept that software of all types’ runs grows and operates your business, doesn’t it make sense that you are up to speed on business software financing options for your systems? We think it does, so let’s explore what you might not know about software finance lease and loans in Canada.

The reality that comes as a surprise to many clients is simply the fact that technology can be leased. In today’s terms that covers hardware systems (servers, pc's, laptops) as well as software (our subject today) and the new leasing asset on the block: solar, wind and cleantech assets.

There are some key issues that differentiate software financing in Canada. Issues that you have to consider and take into account are the types of leases offered in business software financing options, the doc's that come with that lease, and probably of prime importance to our clients, how these leases are priced .

Software itself is a broad term, we refer to software you are developing (yes it can be financed) as well as the applications you purchase. Many transactions in Canada are software only leases and loans. A present surprise to our clients is often the fact that the actual software licenses can be financed also (remember, you use the software, you dont own it).

Many great technology financing occur when you utilize the concept of ' bundling ' - that is to say you acquire hardware and then bundle in numerous soft costs, including software to achieve a blending pricing and maximum financing of your transaction .

In technology finance when it comes to hardware you should often consider an operating lease for the hardware component of your transaction. The software and other soft costs (training, licenses, maintenance, install, etc) are financed at what the industry terms as ' full pay out ‘. By combining the
rates on both parts of the transactions you achieve a blended rate which makes your overall business software financing attractive from the lease and loan perspective .

Let’s use a quick example to illustrate -

You buy a 100K server and related ' hardware ' and agree to finance it a 3 year term. Additionally you require, and acquire 50k of software. What would the monthly payment be on this transaction?

We maintain it could well be in the 4.1k range per month on a 36 month term. That interest rate works out to about 1% or less, because the operating lease subsidizes the software financing.


Want this and other advice on proper tech financing and business software financing options on your systems and technology assets. Speak to a credible, experienced and trusted Canadian business financing advisor with software and tech finance experience. Options you thought you never had will become available, immediately.





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :


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

Instant Financing Access To Canadian Equipment Leasing Company Solutions !

Canadian construction, heavy equipment , transportation , and medical lease financing that works for your firm, today!

You're in for a pleasant surprise if you think it’s impossible to quickly and properly access financing via an equipment leasing company in Canada.

But what does it exactly take to be in a position to know what firms offer what type of financing , who and where are they, and what you need to know to ensure you have access to the proper rates, terms and structures that your Canadian firm deserves . Let’s update you on the current lease ' landscape' in Canada, because it's a whole brave new world out there!

Some of our clients seem to find this tough to believe, but there are lessors out there who are very interested in getting your lease finance business. Therefore you need to know who they are and what type of financing they provide based on the asset type that you're financing. We're going to show you one simply, easy solution shortly that will take care of that quite efficiently.

In Canada banks have traditionally exited and entered the leasing market on a number of occasions over the last number of years. Currently in the 2011 environment you can safely say ' they are in! '

Bank leasing is done through separate divisions and companies of the bank, with the major benefit being their very low cost of funds (after all they are the bank, right?!). Challenges to access bank leasing are simply that the credit quality they are looking for must be quite strong, so if your transaction needs to be structured, i.e. due to your firm’s financial health, then bank leasing might not be for you. Also, two types of leases dominate the Canadian marketplace, capital and operating, and the banks don’t offer operating leases , so if you need a ' lease to use ' ( as opposed to a ' lease to own' ) don’t waste a lot of time talking to a bank lease co in Canada .

Your 2nd best bet, bar none (We’ll share the absolute best bet shortly!) are independent lease companies in Canada. They are non bank in nature, are extremely motivated to get your business, and come in all shapes, sizes, and ownership (many firms are doing business in Canada but U.S. based).

The top characteristics of independent lease Co’s in Canada are they are flexible when it comes to structuring a transaction that makes sense for them... and your company! And you'll find often that when you bank can't, your equipment leasing company can in fact provide the financing you need.

The other segment of equipment leasing in Canada you need to be aware of and maximize are the ' captive ' firms. Captive? as in prisoner? Not exactly. Well perhaps, because captive denotes they are a prisoner to their parent company, meaning that many large corporations set up their own leasing and finance firm to lease their own products. I guess in business it’s known as the double, whammy! They make money on the product, and the financing. Think GMAC as an example as it relates to General Motors.

So, minor problem. How do you as a business owner wade through tens and hundreds of lease companies with respect to where they are, who they are, how they do business, what asset type they prefer to finance, and what credit quality they demand ? !! Want an instant solution and access to an equipment leasing company for your financing needs.

The solution is to seek and work with a trusted, credible and experienced Canadian business financing advisor who knows and has access to the entire lease landscape in Canada. The benefits? Save time, get prompt approvals, and get the best rate, term and structure for the asset you are financing. As the guy says on TV ' we urge you to act at once’!





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Best Rates In Transportation & Rental Leasing In Commercial Trucking In Canada

Is it possible for business owners, financial managers, or owner operators themselves to ensure they have the best rates in transportation and rental leasing in Canada? Commercial trucking continues to be a large part of equipment leasing and financing in Canada: Lets examine some key issues around rates, structures and approvals for maximum flexibility and success.


Asset value plays a huge part of the relationship to winning from the viewpoint of a quick approval and a rate, term and structure you can live with. In many cases the Canadian marketplace does not offer as robust and offering as in the U.S. There we find there are all sorts of financial offerings around transportation leasing - these include full payout capital leases, operating leases, ' Trac ' Leases, etc.

We can safely say in Canada that the majority of leases are full payout capital leases - that is to say ' lease to own '. Typically your lessor will be on the ownership title, leasing the vehicle to you as the lessee

In Canada, or anywhere for that matter, the asset value plays a key role, as we said, in both lease approval and structuring. The bottom line - transportation assets depreciate in value and determining the value at the end of any lease term early in your transaction negotiations is difficult. This is compounded when you are acquiring used transport and rental assets, which play a huge role in the lease financing industry.

Physical condition therefore plays a key role in the financing decision, and in some cases an appraisal might be required. So, as ironic as it seems, some key factors in your final credit decision and approval might well include mileage, tires, safety checks, and maintenance stats. You therefore need to understand as an owner operator or commercial fleet manager that these factors may well affect your payment and play a key role in your lease vs. buy decision.

Some of the high level points of interest you should focus on to understand how pricing is determine in commercial truck financing are the manufacturer and model, the expected useful life ( again, either new or used ) as well as the ability to finance any soft costs associated with your transaction .

Working with a specialized expert in transportation is key to achieving a prompt approval that makes sense in terms of your financial obligation. Not all lessors in Canada have the capability to service and finance transportation rental & leasing that you require in commercial trucking.

A combination of knowledge, financing services that suit trucking, and value added advice are key. Speak to a trusted, credible and experienced Canadian business financing advisor to assist you in achieving and approval and rates that make sense in commercial transport finance in Canada.





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :


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

Get The Lowest & Best Accounts Receivable Financing Loan Rates In Canada – Factoring Demystified!

We wish. If only pricing and ' rates ' around accounts receivable financing loan rates were more easy to understand, and not so confusingly (is that a word?) presented to clients look for a/r financing, commonly know as factoring. We're quite sure that thousands more Canadian business owners and financial managers would look at this unique for of business financing quite differently.

So if it’s not for the industry itself to explain how things work... you guessed it, it’s up to us!

You're looking at accounts receivable financing because of the value you perceive in both growing, and yes surviving from an operational and growth perspective. Using growth as an example the financial reality is that as your firm does grow you require a greater investment in inventory and accounts receivable.

That investment hampers cash flow and working capital, unless you have discovered a way to get your clients to pay your firm before you have to pay your suppliers and employees. Most of our clients haven’t yet found that magic formula, so factoring has become one of several solutions.

In the majority of cases A/R finance is going to be more expensive than traditional financing you could obtain through a Canadian chartered bank. But no matter what pricing you achieve in Canadian A/R finance you can still offset this cost via supplier discounts you can now take, as well as the reality that you can now compete on equal footing with all your competitors. Bottom l line, you're financed to grow!

But let’s get back to pricing and rates, which is why you came today! In order to be able to afford and use effectively accounts receivable financing factoring you must be in a postion to have solid, at a minimum reasonable gross margins. This can be achieved financially of course via pricing well to your clients, and having respectable overheads.

So what are the key factors that you need to wrestle down when trying understanding factoring pricing?

First of all you need to understand the advance rate. That’s the amount of funds you receive on your invoice that's able to be provided to you immediately after you generate a sale. Typically you want to enjoy the maximum advance rate, which is 90% more often than not. Advances rates less than that are not advisable in our opining, and affect your overall pricing in a negative manner. So don’t ask the question ' whats my rate?’ make that instead whats my advance rate?

In accounts receivable loan financing its all about the discount fee. To most clients that that’s what they think the ' interest rate ' is on the deal. The reality , and this is difficult to understand , is that in factoring financing there is not interest rate, because the transaction is a ' sale ' of your a/r between you and your finance partner . Your receivables are ' bought ' at a discount that discount effectively being your carrying cost on the transaction.

We talked about the advance rate on your financing being an optimal 90%. But what about that 10% holdback? Ensure you get that holdback back when your client pays, immediately. That’s the facility you want to strive for, as the reserve plus the advance rate can significantly impact your overall financing cost in A/R finance.

We're the first to agree with clients that factoring pricing can be complex. One of the reasons is quite simple; the firms that offer it to you make it complex. If you take the time to understand how this financing works, and is priced we're quite certain the benefits will appeal much more clearly to your firm .

Want clarity and simplicity on your accounts receivable financing loan rates. Speak to an expert... seek a trusted credible and experienced Canadian business financing advisor who can assist you in making the right decision s in A/R finance.




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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7
parkavenuefinancial.com/accounts_receivable_financing_loan_rates_factoring.html

A ‘ How To ‘ Primer On Canada’s Government Loan . SBL Small Business Financing Makes Sense

Industry Canada sponsors, but does not administer the SBL small business financing government loan program. Government initiatives are solid source of start up and growth capital for thousands of start up and medium sized firms in Canada. The government small business loan is suited perfectly to provide you a source of funding you might otherwise not be able to achieve.

We also might add that many clients approaching us for assistance and info on financing often ask about ' grants ‘, or info on Community Futures funds . These two programs are also a source of Canadian business financing, but not one we'll be discussing today.

First things first in our ' how to ‘... and that’s simply that Canadian business owners and financial managers need to understand the government is the guarantor of the loans, but not, we repeat ' not' the administrators of the ' SBL' (Small Business Loan) program. That clears up a lot of confusion for our clients, who often mistakenly perceive having to deal with the government on a loan as potentially being somewhat bureaucratic. That’s not the case.

So who does administer and run the program - you might have guessed by now that is our Canadian chartered banks, and some other miscellaneous institutions, but primarily the banks. Adding to the confusion is often the perception that the government crown owned business bank, commonly know as ' BDC ' offers the program. Would make sense right? Guess what, they don’t have anything to do with the program.

The basics of the program are simply that your firm can finance up to $ 500,000.00 under the government guarantee to the bank. (In actuality the government guarantees 90% and the bank assumes a 10% risk scenario) However, you need to understand the500k limit pertains only to real estate; typically the cap on the program is 350k.

What can be financed under the program? It's not as broad as you think. Items financed are essentially equipment, leaseholds, software, etc; the bottom line is assets and software .A major mis conception we often have to explain to clients is that cash and working capital is not part of the program.

Terms? They are great. Really great. Rates are only several points over bank prime , terms can be up to ten years, and oh yes, guarantees, only a limited guarantee is required by the business owner, you in fact are not required to co sign or guarantee all of the loan . We can categorically assure you that thousands of others business in Canada do have the owners personally signing for the full amount of the loan.

Pre payment? Although we find many business owners in Canada ask us about pre payment the reality is that most loans probably run to maturity. But if you did choose to pre pay this is one of the only business financings in Canada that you can pre pay without a penalty.

To qualify for the loan the business owner must have a reasonable personal credit history, some element of a down payment to cover the 10% which the bank is on the hook for, and of course a solid executive summary or business plan that is typical of any business financing request. These can be prepared efficiently for a low cost by a trusted , experienced and credible Canadian business financing advisor, who can steer you through the ' how to's ) of the Canadian government loan for small business financing . You'll want to investigate the SBL!




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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Failure & Success – Let Mezzanine Financing & Canadian Subordinated Cash Flow Loans Be The Difference !

Mezzanine financing and subordinated debt and cash flow loans are a solid alternative to many firms who are searching for capital in the ' grey area ‘. Whats the grey area? Simply speaking it can be the ' high ground ' between debt and equity in your firm, both of those having their own challenges to rise. Let’s take a Canadian walk through the high ground!

There are some typical situations in Canadian business financing that strongly lend themselves to ' mezz ' financing. Typically the word ' growth ' will come up often! ... Simply because that’s one of the drivers all too often of the need for cash flow loans financing.

Business financing in general, certainly when it comes to lending is very tuned to ' ratios ‘. We have always tended to call them ' relationships ‘... a lot nicer term we think! But the reality is that a lot of the debt and cash flow and interest coverage ratios your firm currently may possess simply prohibit you from raising the capital you need... today! Naturally as we all know those ratios, covenants, etc, tend to be Canadian chartered bank driven.

Typical mezzanine and cash flow loans tend to be 3-5 years max... from a term perspective. The mezzanine and cash flow loans solutions you consider should be considered as an intermediate option, not a long term one. Sandwiched in between debt and equity subordinated cash flow loans are usually taken out by one or the other of those at the appropriate time.

Given the general nature of security, i.e. your cash flow, and your projected cash flow it seems to therefore make a lot of sense to ensure you have a management team that can convince the cash flow and mezzanine financing lender that ability to repay the loan is there. Common sense 101, right?

So what can cash flow loans be used for? Typical reasons include buying another firm, a buyout by the management team, simply growing the business, and working capital to fund ongoing and projected sales.

There are instances when the owners of a firm wish to recapitalize with mezzanine financing simply to recoup some of their investment... we would offer up that loading the company up with debt requires a strong case to do that. By inference to what we have talked about cash flow loans of this type are rarely for start up or early revenue firms, as those cash flows are somewhat unpredictable to say the least.

Speak to a trusted, credible and experienced Canadian business financing advisor who can determine if this types of financing suits your current profile. A successful mezzanine financing simply compliments and rounds out your full financial package, and provides the middle ground between our two friends, long term debt and equity.




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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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