Break The Shackles Of Canadian Working Capital Financing Challenges – Proven Methods To Finance A Business

Give your business the working capital and cash flow it deserves

Information on Canadian working capital financing techniques and strategies . How to finance a business via traditional and alternative solutions that work !



We're the first to admit that any Canadian business, from start up to established company often has the feeling they are somewhat shackled in working capital financing options. So how do you finance a business from a cash flow perspective and how one measure does and evaluate the options. Let's dig in, as usual!

A good start is to simple differentiate between short term cash needs (that’s working capital by the way ) and long term debt and financing solutions . That short term cash flow we're talking about is the cash flow you use on a day to day basis to finance a business - those mundane things like payroll, purchasing inventory, covering your fixed costs, etc!

As that cash flow deteriorates or goes down you not only don’t meet those short term obligations but you run the risk of failing to meet long term debt such as leases, loans, etc.

There are essentially three reasons your firm ends up needing working capital financing - they are of course if you are a start up , secondly if you are growing rapidly, and thirdly if your firms basic situation is such that your current operations cant finance day to day activities . This typically arises out of your growth and management of receivables and inventory.

When smaller businesses in Canada borrow for working capital purposes a significant amount of emphasis is placed on the owner’s personal credit .As your company grows the focus turns and it’s now up to you to properly position your businesses financial situation - that means proper presentation of your balance sheet, income statement and projected cash flow.

The good news about working capital financing is that it is not debt in the true sense of the word - it’s simply the monetization of your current assets, typically receivables and inventory. The challenge though it to ensure you don’t over borrow on those assets , that you manage them properly, so that your borrowing doesn’t become what one writer recently described as an ' addiction '.

Quite frankly we agree, and the reality is that the best line of credit is one that goes up and down all the time, and doesn’t stay maxed out at the top of the facility. If in fact you are always at the top of your working capital financing facility you might well be close to some sort of financial challenge or catastrophe.

Of course there are times when it makes perfect sense to borrow and incur debt outside the working capital needs - a good example might be the need for more equipment. Paying for a long term asset out of current operating capital is not recommended. If the equipment generates profits and has a longer term useful life you have made the correct financing decision.

In Canada working capital options range from traditional to alternative. A bank working capital facility will margin 75% of receivables and potentially, but certainly not always, a portion of your receivables. Larger firms have access to non bank asset based lines of credit that provide a very healthy margin of cash flow by utilizing 90% of your receivables and anywhere from 30-70% of your inventory. A subset of asset based lending is accounts receivable financing, which monetize your invoices... on a daily basis. While more costly your firm has just turned itself into an ATM machine for constant cash flow as you grow your business.

Other alternative methods of cash flow financing including monetizing (that’s financing) your government tax credits, or even financing your purchase orders or contracts.

Still feel shackled? Canadian business owners and financial managers shouldn’t feel prisoners due to lack of working capital financing. Don't over borrow; ensure you know what facilities are available. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in identifying immediate solutions... unleashing those shackles!




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 . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

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

8 Reasons You Need To Know About Canadian Business Equipment Leasing Companies & Financing Providers

Over 80% Of All Canadian companies lease assets – Do you know why?



Information on business equipment leasing companies in Canada and what you need to know about financing providers to achieve true benefits of lease finance.




100% comfortable? We're talking about dealing with business equipment leasing companies and the financing of business assets. Equipment financing is simply a tool to achieve the acquisition of assets. Canadian business owners have different reasons to enter to an equpment lease finance transaction - those reasons might be cash flow oriented, tax oriented, or financial measurement oriented.

Let’s examine 8 key basics around which successful lease financing is based in Canada. Most business people appreciate the fact that leasing often covers off anywhere from 90-100% of the cost of the asset, but did you also know that numerous ancillary costs can be bundled into your transaction? They include delivery, installation, maintenance, warranty, etc. Those additional costs can add up.

Pick you term .That’s our # 2 reason. Prudent business owners and financial managers will give thought to the term of their lease, optimally identifying the useful life of the asset with cash outflows. In Canada typical lease terms range from 2- 5 years, shorter terms are almost impossible, longer terms are possible when the asset and credit quality of your firm permit.


Our 3rd Reason - simply flexibility around payments and your cash flow . Your monthly payments on an equipment lease can easily be structured into step payments ( paying more later ), skip or seasonal payments, etc. In business it's all about cash flow and cash flow benefits count big in Canadian equipment lease finance.


Reason # 4- Lease vs. purchase and cash flow considerations. The majority of business owners will find that if they run some analysis around their cost of funds as well as what they would be able to do with funds otherwise not spent on the purchase of assets . In the 2011 business environment rates are low and leasing is ultra competitive, so the overall rate environment simply enhances your lease vs. buy decision.


Reason #5 - loan covenants and financial measurements. Many Canadian businesses, especially those with bank financing in place may find it challenging to acquire assets without breaching loan and ratio restrictions imposed by the bank. Carefull structuring of lease transactions can eliminate this challenge. As well many firms measure their management and owners on financial criteria such as return on assets and return on equity. Business equipment leasing companies can help you win when these measurement scenarios are in place.

Reason # 6 - You can more often than not expect approval on a lease financing decision much more quickly than a loan or other type of financing solution. It is certainly very typical to obtain a full lease finance commitment within days of submitting a proper request (key word = proper).

Reason # 7- the ultimate value of your asset can be a significant financial benefit to your company. You might be acquiring assets that have a useful life beyond the term of the lease. This asset can be either sold or re financed at the end of the term, enhancing your firm’s cash and working capital.

Reason # 8 - The Paperwork. In general we can make the comment that documentation in Canadian equipment financing is efficient. Whether you have a master lease in place or if you are simply acquiring a small business asset lease docs are simple and easy to understand when you've dealing with business equipment leasing companies. In Canada the industry is broken down into small, mid and large ticket transactions. Small deals can be approved in hours, larger transaction takes a bit, but not a lot more time... again, if properly document and presented.

Speak to a trusted, credible and experienced Canadian business financing advisor on the benefits of dealing with business equipment leasing companies for financing of assets. It's clearly a win win scenario!



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 . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

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

Study : Can Financing Receivables Via A Confidential Receivable Factoring & Funding Solution Save Your Company?

Do The Benefits of A/R Finance Solve Your Working Capital Challenges ?


Information on financing receivables in Canada . What is a receivable factoring solution and how does funding a/r solve the gap in your firms cash flow and working capital needs.




We're pretty sure, based on talking to clients, that thousands of Canadian business owners and financials managers start every Monday worrying about business financing and cash flow. A lot is being said these days about financing receivables as a subset of asset based lending in Canada.

But can a receivable factoring and funding strategy really save your company? And another thing, what's a confidential invoice funding strategy and how does it work. A lot of questions! Let’s get some answers.

It is somewhat ironic that the growth your firm faces, which is clearly a good thing is offset by the need for more and more cash flow and working capital as you build receivables, and yes, inventories also. It's a very simple gap - simply the time between being paid for your customers and the need to pay suppliers and your operating costs. In a perfect world (it’s not apparently) your suppliers would be willing to wait an unlimited amount of time. They don't.

Therefore financing your receivables as you generate them provides you with cash flow needed - you are simply closing the proverbial gap in waiting for your clients funds.

In Canada you should expect, via a receivable finance strategy to receive in the area of 90% for your receivable funding as you submit invoices. What about that other 10%? It’s simply held back as a holdback or reserve to leave a buffer for financing costs and any short payments for your clients.

Financing costs. That’s the real discussion point these days on receivable factoring in Canada. Those costs range from 1- 5%. That’s a big range, so what defines that range. Typically the 4-5% range is defined by firms having very small receivable balances and who themselves are relatively small firms. A more typical range in Canada is 2%. While many clients view that as and interest rate on a 30 day basis it’s actually the discount your finance partner bases the purchase of your receivables on. So, utilizing a $100,000 dollar invoice as an example you should be expected to ultimately receive $ 98,000 for the invoice. That’s at settlement time when your client pays and you also receive the rest of the holdback we referred to.

So is that financing fee too much for your firm ?History tells us its not, in that your ability to generate more sales with the cash flow you receive daily usually significantly outweighs lost sales revenue , or , even worse, your ability not to meet your obligations to supplies or other creditors . The majority of clients we speak to are looking to grow their business and use a receivable factoring strategy as a tool to do that.

If you are looking at the traditional type of receivable finance facility in Canada that is offered there is one aspect that doesn’t appeal to many business owners, in that 99% of the firms in Canada who offer A/R finance require a notice to your client around this financing. That’s where a confidential invoice funding strategy works best, you bill and collect your own receivables, and your method of financing your firm is just that, yours, and no one else’s business.

So, can financing receivables save your company? We thing if it isn’t a matter of saving it’s a least a mechanism for growing, and that’s not a bad thing. To be honest though many firms that face financial challenges are often saved by an interim funding strategy such as ours when they cant obtain traditional bank type finance .

More info? Questions ? Speak to a trusted, credible and experienced Canadian business financing advisor on the benefits of a confidential invoice finance 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 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

Does A Canadian Vendor Leasing Program Increase Sales, Cash Flow and Profits? Yes, and Here’s Why Equipment Financing Works

Tap Into a New Business Success Tool - Customer Financing Made Easy !


Information on why Canadian business owners should consider a vendor leasing program and why equipment financing works for cash flow , profit and sales acceleration .


Rarely does one financing tool or mechanism lend itself to so many growth, profit and cash flow aspects of your business. You can achieve that by your consideration of a vendor leasing program for your clients. And oh, by the way, it can be done at no cost, some cost, or a lot of cost, it’s your choice. We'll show you how!


How does it not make sense to consider how your clients pay and acquire your products? When you are in a position to offer a financing tool to your clients you are now perceived as ' full service ' and ' value added ' to your clients. Those two terms, often over used and abused, make true sense, we think, in the context of being able to help your clients acquire your products and services.

So lets focus in on growing business, we're all for that. Depending on the product or service you sell, everything from machinery, construction equipment, or even computer software all your clients may have a sense of what we call ' sticker shock' around the price of your firms goods . And the reality is, even though it may not be the price, it can often be a budgetary and timing restriction of some sort. Larger firms are deeply embroiled in budgets, capital acquisition, and returns on equity and assets that may significantly impact their thinking on how they acquire your good and services.


By offering them a payment strategy you enhance your ability to close more sales, and, as importantly, reduce the sales cycle and lead time that come with some many acquisition decisions.

But how do you do that? The expensive way, we referred to it above as costing a lot, is to set up and fund your own finance firm. Very few companies in Canada in the current environment have the capital, and expertise to do that.

The alternative? Simply work with a trusted partner to co brand and private label a finance offering under your name. They will run it, administer it, and yes, fund it. That’s a win win scenario of course. And don’t forget, this entire id done for the benefit of your business.

By offering an equipment financing strategy you are now in a position to discuss pricing and discount a lot less than you would normally. That's a good thing, your client is now focused on a monthly payment, not determine their maximum discount from yourself. You also have a higher perceived value in your client’s eyes; you have now made it easier for them to reach the purchase decision with your firm.

Depending on what you sell you are now in a position to have some sense of control on the aftermarket for your products. And, as we noted, your sales cycle has just become significant smaller, as have your inventories which create a cash flow and working capital burden.

The bottom line is that when you put together a customer finance vendor leasing program you are now in a position to customize it to your own firms needs. In the majority of situations you can even bundle in other services, installation, warranties, etc, and yes, no billing, collecting or credit - your firm is paid in full, on shipment and acceptance of your products and services.

Want to know more? Speak to a trusted, credible and experienced Canadian business financing advisor on why equpment financing works, 24 hrs a day, 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 . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

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

All You Need To Know About Canadian Government Small Business Loans – BIL Business Improvement Financing

The Small Business Loan Program is Your SME tool for Business financing success


Information on the SBL government small business loan – Why the BIL Improvement loans are some of the best financing for the SME sector in Canada .




Many Canadian business owners are often guided to the Government Small Business Loan program in Canada by people such as their friends, advisors, bankers, etc. But boy, have we got stories for you about some of the mis information and frustration many clients have on what is fundamentally a great business financing program in Canada.

Our mission and goal? Clarify some of the mis information and help you understand what you need to know to take advantage of this great Canadian business financing advantage.

Part of the success of the government small business improvement loan surely is who the program is aimed at. In Canada the program focuses on everyone from a start up to companies under the five million dollar mark in sales revenue. Naturally if you are a start up , for either your own business or a franchise it makes sense that you might not be able to qualify for what the finance folks call ' traditional ' financing, in other words ' the bank'!

It has always seemed to us a bit ironic that it’s actually the banks that provide the SBL loans in Canada - however they do that because they have a guarantee from Industry Canada and the federal government with respect to any financial losses they might incur on the loan. While that guarantee doesn’t cover 100% of the loan let us assure you it’s a very significant amount!

So, as we said the banks in Canada (as well as some other miscellaneous institutions (some credit unions, etc) are what some folk’s term as the ' preferred lenders ' of the program.

Limits. Let’s talk about those loan limits. Canadian SBL loans are capped at $ 500,000 for real estate and $ 350,000 for equipment and leaseholds - which includes computer software by the way.

Rates under the program are 3% over the current prime rate, and the bank collect a one time 2% admin fee also. So contrary to what many business owners think, rates are not negotiable on a business improvement loan (B I L) - they are fixed under the program.

Where things often fall part on a SBL / BIL loan is due to the fact, we think, that the government allows each bank to interpret their own credit criteria on a Government small business loan. This causes no end of frustration for our clients who are often unprepared for this individual interpretation of SBL Loans... after all; it’s a ' program' is it not?

Most Canadian business owners and financial managers are keenly aware that ' pre paying ' a business loan without penalty is virtually impossible in Canadian business financing. However, the good news is that SBL government small business improvement financing is totally repayable, at any time, without penalty!

In sports in all about knowing how to play the game... that inside edge all players are looking for. Here's a tip - you should be looking at Canadian business financing process in the same manner... winging it should not be part of your strategy. In future writings we will cover off more info on how to win at the government business loan game. And by the way, it’s not a game!

Speak to a trusted, credible and experienced Canadian business financing advisor on how to successfully apply for and obtain one of the best financing resources in Canadian business - the SBL / BIL loan.




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 . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

What Types Of Loans Are Available For A Canadian Franchisee When Financing A Franchise ?

Successfully Navigate Franchise Finance in Canada



Information on financing a franchise in Canada . Does a Canadian franchisee have options when it comes to types of loans and finance that are available ?



What types of loans can a franchisee in Canada expect to attain when he or she is financing a franchise in the Canadian market? Even more importantly how do you qualify and access that financing?

Those are typical questions clients ask us all the time , so lets examine some critical info that will allow you to be successful in completing a franchise finance acquisition.

A good way to start is to build up a bit of a ' checklist ' on what you need to both investigate a franchise opportunity, as well as to present a finance proposal for that opportunity.

We add also that you have the option of course of purchasing a franchise from an existing franchisee, or working directly with the franchisor on a new unit acquisition. There is a big difference in purchasing an existing franchise for a number of reasons, some good, some not so good. First of all an existing unit of course allows you to independently validate the financial results and assets of that business, that’s a good thing. Your accountant, a Canadian business financing advisor, lawyer, or appraiser can assist in various ways to validate the true value of your purchase.

When you are financing an existing franchise it is important to ensure you are completing the transaction as an ' asset sale ' as opposed to a ' share sale '. It is extremely difficult, if not impossible to finance a share sale arrangement.

When you are financing a franchises types of loans dictate what will be financed and how. The key aspects of any franchise acquisition revolve around the following: the franchisee fee, the royalty arrangement, equipment, leaseholds, and sometimes forgotten ' working capital ' to ensure the future growth and health of the business.

If your franchise requires that you have physical leased premises it is critical to ensure that the term of the lease for those premises will at least match the term of the loan financing you are hoping to achieve. Simply speaking, a franchisee can’t get a 5 year loan for a business that has a one year lease! Makes sense, right?

Prior to starting to focus on the financing of your new business and life as an entrepreneur you should of course have completed what the legal and business folks call ' due diligence ' on your franchisor . That might include references from another franchisee, whether they are compliant with franchise regulations in Canada how royalties are paid and structured, etc. The bottom line? There are a lot of rights (and obligations) for you and the franchisor... ensure you understand wha they are.

As we referenced earlier start up capital and final approval can be challenging if you are not well armed with info and resources. In Canada the banks and some other institutions, (but mostly the banks) are the ' approved lenders' for the government BIL/CSBF program.

The vast majority of franchises in Canada are financed under this program. You would be totally missing the boat if you did not at least investigate why this program is one of the best methods of financing a franchise in Canada. The simple reason - just that it has great rates, terms, structures, repayment without penalty ability, and yes, even a low personal guarantee or ' covenant ' requirement.

Maximize your financing potential as franchisee by speaking to a trusted, credible and experienced Canadian business financing advisor who can help you navigate a path to entrepreneurial financing success.




Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

How Asset Based Lending Loans Competes With A Bank Business Line Of Credit Loan – Do You Understand ABL Finance?

Don’t accidentally discover asset based lines of credit!


Information on Canadian asset based lending Finance . Why ABL Loans are a direct competitor to a bank business line of credit . A finance alternative for business owners in Canada .


We're the first to endorse healthy competition in Canadian business finance (although it’s not as fun when we're doing the competing) so it seems a good time to profile ABL asset based lending and business line of credit loans which compete directly with Canadian chartered bank facilities.

To say that Canadian business finance has changed over the last ten years or so would be a dramatic understatement. The reality is that a whole new wave of offerings to commercial business borrowers are available, and they come, you guessed it, not always from the Canadian chartered banking system.

Independent finance companies, some from the U.S. and even overseas have a multitude of new products for the Canadian business borrower. Even the internet empowers the Canadian business owner and financial manager as it often reveals a multitude of varied choices to those willing to search. Entering a keyword such as ' abl asset based line of credit ' will get you tons of info on alternative business credit facilities.

While banks often command the first train of thought when it comes to business finance for a revolving line of credit asset based lending finance is gaining more traction everyday.

So let’s provide some clarity around ABL finance in Canada. If there is one differentiator of the product it’s simply that the total focus of the facility revolves around one word, ' assets '. Non bank asset based loans are more flexible than a traditional bank offering, and at a time when more is better they leverage your assets significantly greater than a bank facility. Remember that an ABL loan is typically from an unregulated lender; they have different sources of capital and don’t require key elements that are necessary in the Canadian chartered bank system.

Clients, and we can forgive ourselves also, often make the mistake of viewing the asset based business line of credit a as a term loan... in fact its not. It’s simply a monetization of assets with the intent to liquidate the assets or collateral in the event of a default. A good way to look at it is to view it as thinking of your assets having to perform, not our ratios which tend to become the prime fixation in a commercial business line of credit.

So why the sudden and growing popularity in asset based lending in Canada. We think the answer to that is the fact that it covers every type of industry, retail, manufacturing, service, etc. But more importantly it also addresses your company life cycle.

An asset based ABL finance facility can be achieved for a start up, an established growing firm, and yes, those firms that have suffered severe financial challenges. In the ' old days' (yes we remember them) it was not uncommon for forms of asst based lending to be viewed as a ' last resort' type of financing. Fast forward to today and some of the largest corporations in the world, in Canada included; utilize this financing as opposed to a traditional bank facility. So something must be working!

So what would you need to start discussion around this type of facility? Typically it’s just the basics: your financial statements, aged receivables and payables, and detailed asset listings of any fixed assets. And by the way those fixed assets can easily become part of your revolving day to day facility - that’s clearly a major advantage when it’s required.

Speak to a trusted, credible and experienced Canadian business financing advisor to better understand how asst based loans can monetize your firm’s assets into an ABL facility that provides you with maximum working capital and asset leverage.



ABOUT THE AUTHOR :
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 . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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