Danger Signs ( And Solutions!) For Canadian Working Capital Financing . Real World Cash Flow Solutions

Solvency Solutions For Canadian Business

Information on working capital financing & Cash Flow Solutions for Canadian firms.


Cash flow solutions are sort of best implemented when you know what the problem is. Makes sense, right ?We're discussing working capital financing and the danger signs your firm needs to look for to both prevent and of course solve some of those problems .

The challenge in business financing many times is that both the challenges and the solutions to business financing aren't readily obvious. The good news to that story is of course that many finance challenges can be fixed with some very immediate solutions.

And there are more solutions than you might think which becomes readily obvious every time we talk to a client. By identifying working capital problems early in the cycle allows you to prevent a much larger problem down the road?

Shrinking working capital is often the most obvious problem. The irony here is that many firms are in fact growing, and profitable (on paper - profits do not equal cash!) But a combination of external factors or losses, or hyper growth all can lead to insolvency.

Many business owners view bank credit as somewhat of a blessing, if in fact they can get a business line of credit from a Canadian chartered bank. This facility allows you to borrow against receivables and sometimes inventory based on pre established margins. The quick example is that 99% of eligible business can borrow against 75% of their total under 90 day receivables.

Operating lines of credit work great if you are growing !We can say that for both traditional bank financing and non traditional solutions such as receivable financing, inventory finance, tax credit finance and monetization, etc.

A real danger sign though is when your business has stopped growing and credit facilities, both short term and long term are in place. An even worse danger sign is when Canadian business owners and financial managers use the line of credit to unwittingly mask some other problems such as issues in their organization, financial or operational mistakes, or being at the mercy of some external event - i.e. the loss of a key supplier or client.

In general if you are operating at a loss and your balance sheet accounts aren’t really changing cash flow should be viewed as trending down, and that’s a danger signal.

What about the issue that we have referenced a couple times already, strong growth? There isn’t a more classic good news/ bad news scenario. Sales are great, inventories and receivables are up, and cash is down. In fact any expert will tell you strong long term growth is better when its planned, not just happening .

There are numerous danger signs as we have noted when it comes to cash flow solutions for working capital financing shortages. In Canada these solutions include asset based lending, invoice financing , sale leaseback of long term unencumbered assets, tax credit monetization, and purchase order and inventory finance .

Speak to a trusted, credible and experienced Canadian business financing advisor on both avoiding, and oh yes, fixing those challenges.




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_cash_flow_solutions.html

Caution - Danger Ahead ! IT Finance And Computer Leasing . Technology Financing Tips

Good Information Spells The Difference In Technology Financing

Information on IT Finance. Technology Financing And Computer Leasing Covered!






It's probably just us, but we think there’s no aspect of equipment financing in Canada where one small piece of info could cost you, or make you thousands of dollars. Let's cover off some IT Financing (IT = Information technology) basics. All of a sudden that cautionary road sign up ahead wont be as much of a concern.

Although the actual benefits and economics of any lease should always be considered it just seems more of a need when we are talking about IT finance for your infrastructure, computer, and even telecom needs. The challenge is actually pretty basic, matching a financial solution to those fast paced (and expensive) technology needs.

So know what you will face, what decisions you need to make now, and during and at the end of your lease financing is, well, critical!

The reality of tech financing is you have to be pretty sharp and well informed in several key areas - just knowing those areas is important. They include documentation, structure, as well as your rights and obligations in certain lease arrangements.

Hardware makes up probably the majority of dollars in computer leasing transactions. Whether it be telecom, server, pc, laptop, notebook, tablets, or even ' cloud ' type solutions that’s where the buck seem to be. Canadian business owners can finance hardware separately through 1 of the 2 lease vehicles available, or your transaction can be combined with soft costs such as application software, installation, etc.

Where hardware financing gets somewhat tricky and challenging is when it comes down to operating leases, residual values, disposition of equipment at end of term, etc.

The majority of Canadian business has financed larger computer leasing and it finance technology projects via operating leases. However, the next several years major changes in international accounting rules might well render a lot of the benefits of operating leases less effective, so it’s critical to stay on top of this development in accounting.

Although larger more sophisticated Canadian businesses have been utilizing software financing for years many smaller and medium sized businesses sometimes aren’t even aware soft costs such as software can be financed and bundled into your IT finance transactions. A good tip here is to ensure you understand how the cost of software is priced and blended into your entire transaction. It is most often amortized in full and sometimes attracts higher rates.

Medium sized and larger corporations are encouraged to take advantage of a Master Lease arrangement. A one time negotiation of terms, rights and obligations is going to save you time and dollars in the years ahead, along with the ease of simply adding on additional schedules of assets to be financed when you need them.

A common misstep in computer leasing is the failure of Canadian business to separate the financing from the manufacturer of the equipment, especially when it comes to warranties, service, and the right to use. So be careful in addressing issues separate, with the right party.

The largest benefits and the most risk in IT finance come from what happens during at end the end of a technology leasing transaction. Investigate and understand thoroughly your rights to terminate, upgrade, or renew at the end of the term. If you have entered into a capital ' lease to own' type scenario monitor your purchase options at the end of term.

Is there anything more ' mission critical ' than technology, computers, and telecom assets in Canadian business? Debatable, but doubtful don’t you think? Speak to a trusted, credible and experienced Canadian business financing advisor for your IT finance needs. All of a sudden that ‘Danger Ahead’ becomes manageable.




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/it_finance_technology_computer_leasing.html

Understanding Receivable Financing Pricing And Rates Is Not Impossible! Invoice Discounting 101 - Now It’s Clear !

Are You Getting The Best Invoice Discount Pricing In Canada?

Information on receivable financing and invoice discounting rates in Canada. Understanding Factoring Prices .



' Misunderstanding all you see ' ; those are lyrics from the Beatles ' Strawberry Fields ' , and talk about being a bit appropriate for the confusion around receivable financing and invoice discounting rates in Canada .

So, talk about confusing... lets try and clear up some real basics around receivable finance in Canada -mostly along the lines of how it works and how it is priced. Clients are always providing their version of what they think they are getting but the reality is often far from that.

A/R finance is used by thousands of firms in Canada to address cash flow shortages when in fact more traditional financing simply doesn’t make sense or can't be attained.

A good way to clear up some of the confusion around this method of business finance in Canada is to address it head on, which is simply to say that this finance mechanism isn’t financing per se, it’s simply the sale of one of your assets at a discounted rate. So from that perspective even we own up to being guilty sometimes around the terminology!

Another way of looking at our issue to frankly address what might be perceived or real drawbacks or negatives around A/R financing. The discount rate used on receivables when you sell them, in Canada, ranges anywhere from 1-5%. To be fair, the average discount rate tends to be in the 2% range.

Invoice discounting rates make the most sense when they are used to take advantages of opportunities for growth and higher profits and sales via asset turnover.

Part of the reason A/R finance is viewed as confusing by many is that it’s essentially part of an unregulated industry. Clearly our banks are regulated and you know what you get (when you can get it!)

So what does that all mean to Canadian business owners and financial managers. Simply 4 words. Pick a solid partner! Or advisor.

Where invoice discount financing gets confusing is in the terms/contracts, and the rates.

So how do you address that pricing in terms of benefits? Several factors have to be taken into consideration. They are the quality and age of your receivable portfolio, the ' opportunity cost' of what you can do with additional cash flow, and the actual cost of carrying your receivables and inventory as opposed to monetizing them more quickly via a receivable financing strategy.

As we have said in the past carrying receivables anywhere from 60-90 days can easily cost you anywhere from 10-20% when you factor in days to pay your firm, admin costs, lost opportunities, your current financing costs, etc.

So why do Canadian business owners and their finance staff stumble on the issue of receivable finance. It’s partly, as we have shown due to their inability to overlook the total pictures in the areas we have demonstrated above.

Invoice discounting rates makes the most sense when you look at opportunity cost. If you finance your receivables as you generate them you lower the balance sheet investment and reduce your day’s sales outstanding.

A quick example - if your annual sales are 1.2 million and your daily sales are $3300 per day for example you could add $10,000 to cash flow by a 3 day reduction in DSO. A 30 day reduction adds 100k to cash flow!
Charges or costs for a 100k per month facility equate to a 2k per month cost if you are turning your A/R promptly.

So, confusing. We hope not, although we're the first to admit it takes a bit of time. Speak to a trusted credible and experienced Canadian business financing advisor for clarity on achieving best invoice discounting rates and benefits 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/receivable_financing_invoice_discounting_rates.html

How Competitors Beat You At Vendor Finance and A Customer Financing Plan For Your ( Lost ) Clients

Considered a Canadian Client Equipment Or Service Financing Program ? Here’s How - Easily!


Information on benefits of vendor finance . A customer financing plan increases sales, cash flow and market opportunities.



Here's the problem. You don't have one, your competitors do. We're talking about a customer financing plan for your products and related services. And can we all agree that a competitive disadvantage is not a good thing, which is why Canadian business owners and financial managers might well want to consider a vendor finance program for clients/

So how exactly does Canadian business benefit from the ability to offer customer finance solutions for clients. If we had to sum it all up into one thing we guess it well might be: ‘Increasing the sale of your products '!

The good news is that a customer finance program can be easily put in place either directly, if you have the experience and resources, or as importantly, indirectly via a solid partnership arrangement. And if you choose the partnership arrangement you can pretty well reduce the cost of your program to zero, which is a great price point, wouldn’t you agree?!

The key concept around a financing program for your clients is essentially that it is a strong sales tool. Companies in Canada that use vendor financing tend to form over time stronger relationships with their clients. While the finance industry itself tends to portray this type of program as a ' control mechanism' on your clients in our opinion its more of a customer relationship scenario. but we'll let you decide that one.

It all starts of course in your firm’s sale cycle, and hundreds and probably thousands of firms that utilize vendor finance tools quickly find that simply offering a finance option in many cases gets that purchase order or commitment from your client. Unbeknownst to you clients might well be talking to your competitors about their ability to offer a finance option on the same products and services you are competing for.

Also, at the same time a financial firm who is aligned with your competitors might in fact be pitching your competitor’s product versus your own for their own selfish reasons.

One of the strong merits of a customer financing plan always comes back to the relationship cycle, because even after you have provided your client with a customer financing option the flexibility around financing options allows you to constantly work with your client on upgrades, add- ons, Using a basic ' master lease' allows you to constantly add on new sales and services to your existing arrangement with clients.

Ever wondered how your competitors sometimes seem to have made a sale to a major client in a much shorter sales cycle. If you investigated closely you might just find that your client was less focused on price simply because he was being offered a financing option via vendor finance that made sense and was quick and easy to facilitate.

At the end of the day you can devote money, time and resources to setting up your own program. In many cases that requires a major commitment of time, capital, and oh yes, you have to know what you are doing.
A strong alternative? Work with a qualified third party to set up your own customer financing plan at no cost, at the same time customizable to your own firm’s products, services, and needs.

Speak to a trusted, credible and experienced Canadian business financing advisor on a program that works best for your firm. All of a sudden you may well find that you are now winning and regaining lost clients and sales otherwise not achievable without a finance solution.





Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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/customer_financing_plan_vendor_finance.html

Chimp Simple! Explored The Canadian Government Loan? Get The SBL Guarantee Difference!

Why Not Your Business ? Why Not Now?

Information on the Canadian government loan SBL. Use their guarantee for your business.



Chimp simple? That comment came from a client the other day, and we can think of no better way of using that expression for the Canadian government loan program, aka the ' SBL ‘. (Small Business Loan). And as you know, the old expression is ' even a monkey could ...’!

So is there a way of addressing the SBL government guarantee program in a way to actually keep it simple... and quick? We sure think there is, and here's how.

Most business owners have finally realized that local bank approval of your business financing loan rarely is local anymore. In fact it never is period. What complicates this matter further is that while the Canadian government SBL loan is sponsored by the gov't in reality the banks run the program. Therefore you have to know what you are doing to effectively and quickly move through what many perceive as a complex process. Trust us... it is not!

Once you understand the players you're now in a position to understand the process. So focus on a solid loan package that will be easily evaluated by your banker for submission under the government SBL guarantee guidelines.

Just to clarify, you are only personally guaranteeing 25% of the loan, and the government guarantees the majority of the loan to the bank. Simple so far, right.

All that's left is the basics which we maintain is not complicated at all. Those basics include a basic business plan or very strong executive summary, some cash flow forecasts (bankers love them, trust us on that) and some very traditional what we will call ' back up' info on yourself and your business - items such as your personal net worth form, confirmation of no tax arrears, and your ability to demonstrate that you run your personal financial life in a responsible and reasonable manner. (That is validated by your credit bureau report)

So as we have demonstrated here , there is no long chain of approvals here, just the recommendation of your banker , the completeness of your package, and a final review by an underwrite you will never meet .

So why are we trying to satisfy someone we'll never meet. Simply because if you have properly addressed the 4 or 5 key things you need to support your loan request there should be theoretically no reason for an underwriter to not approve your loan. In Canada currently SBL guarantee loans max out at $ 350,000.00 and cover a variety of financeable assets such as equipment, leaseholds, application software, computers, etc.

So why do many clients share experiences of unsuccessful Canadian government loan approvals. We put that down to communication.

You simply haven’t communicated a strong package that you and your banker can articulate as having the small handful of basics required for the program. And at rates, terms and structures equal to those of larger firms you can’t afford to not get this financing that otherwise might not be available under normal borrowing circumstances.

So, is it all really Chimp simple?! We still maintain it is, so speak to a trusted, credible and experienced Canadian business financing advisor who can put you efficiently through the process and on the road to small business 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/canadian_government_loan_sbl_guarantee.html

Want To Buy A Franchise? Need A Loan ? Here’s Your GPS to Loans for Franchises in Canada!

A Roadmap To Successful Canadian Financing For Franchises


Information on the proper method of obtaining a franchise loan in Canada . Loans for franchises are significantly different than regular business loans. Use this information as a roadmap and guide to franchising success when you buy a franchised business.





So... you want to buy a franchise. Why then our analogy to a GPS system? Simply because that type of gadget these days provides you with a road map for not getting lost, and from our perspective getting a franchise loan is the last place where you want to be lost and not knowing your position . Make sense? We think so.

Loans for franchises in Canada can be a combination of an exhilarating process and a frustrating one - the former referring to being approved and the latter referencing our conversations with clients who have been frustrated by the process.

Let share some solid ' road map' type information on ensuring you minimize the time and risk when you buy a franchise and consider a franchise loan. The reality is that in many ways we could make a case that ownership via a franchise business is actually significantly less risky that other types of businesses which are viewed as 'start up ' in nature.

The challenge becomes knowing which institutions and programs will make your franchise investment happen. It's a common fact that a large majority of business funding requests by entrepreneurs fail simply because they are poorly presented. So knowing how you can easily prequalify yourself, and putting together a basic package that presents yourself and your new business in the best manner is well, worth its weight in ' money ‘!.

In Canada franchises can be financed from a turnkey point of view, or in some cases you may wish to acquire a franchise from an existing franchisee in the system you are looking at. It's ironic, but one of the lesser know but larger challenges in the Canadian landscape is the ability of current franchisee's to add additional units to their first location .

So is it possible to prequalify yourself? We assure clients that a large part of that process can be done by themselves. They must demonstrate some level of either specific industry or general business experience, while also showing the lender that they have run their personal lives from a financial perspective in a manner that reflects solid stewardship. That means having a solid credit bureau score (650 tends to be the magic number) and it certainly helps to have assets such as a home, savings, etc.

We don’t suggest or recommend to clients that they leverage all or a very large amount of assets when considering loans for franchises. But certainly anywhere from 10-50% of a purchase price typically needs to be covered off by the franchisee. That’s your ' owner equity '.

You establish the amount of financing you need by putting together a fundamental business plan around your opening balance sheet. That will reflect your own cash investment, funds you have spent already, and what is needed to get you to a turnkey grand opening! That typically is equipment, leaseholds, perhaps real estate, etc.

In Canada franchise loan financing is generally done via an independent commercial finance company or the bank. But when we say the bank we are actually referring to the CSBF program which has provided thousands of franchise loans at terms typically enjoyed by established businesses.

So is there a guaranteed GPS road map to a business franchise loan. Never 100% but you can get very close to that by pre qualifying yourself realistically, putting together a solid package, and ensuring you know who finances loans for franchises in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor for access to your road map for 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/franchise_loan_loans_for_franchises_buy.html

You’ve Got Questions . We’ve Got Answers . The ABL Asset Based Lending Facility Is The Credit Revolver Loan You Need

Business Lines Of Credit Spell The Difference Between Failure and Success

Information on ABL asset based lending in Canada . Common questions and straight forward answers on a credit revolver loan for your company .


Being well informed in any area of business is critical, and business financing is certain an area that comes under that category. Lets examine 5 typically client questions on ABL asset based lending in Canada, and why this type of business credit revolver loan (it’s not a loan by the way) can help your company through growth and or challenging times.

Question # 1 - It’s a simple one. What is ABL? The term is actually used in many ways ( ABL = asset based lending ) but in our context today is a revolving credit line which Canadian business owners can draw down on . Collateral for the facility is typically your A/R and inventory, but can include miscellaneous assets such as equipment, real estate, tax credits, etc. All these assets are collateralized and become your firm’s new line of credit facility based on the ongoing fluctuating values.

We said an ABL credit revolver loan was not a loan per se, and that’s an important distinction. No debt appears on our balance sheet, you are just monetizing current assets on an ongoing daily basis. Canadian business is graduating more and more to ABL types of business credit if only for the reason that it gives them more borrowing power than a traditional Canadian chartered bank business credit revolver.

Question # 2 - Why in fact are businesses moving to or considering this type of facility? Our answer here is pretty simple, and we have touched on it already. It’s the fact that you now have the ability to generate cash flow more quickly to support growth. Your firms new found ability to create faster asset turnover increases profits. It’s a solid alternative to borrowing via long term debt, of the dreaded giving up of owner equity, never a great solution for business owners. We point out also that pretty well every firm in Canada that has business ' current assets' is eligible for some form of asset based lending . Small facilities tend to be 250k and up but the large mega corporations in Canada also use this method of financing, there is no discrimination when it comes to an ABL revolving loan. And by that way, that includes public companies also.

Question # 3- Is the difference in new credit facilities actually worth considering the move to an asset based line of credit facility? We're biased of course, so you decide. Typical bank credit lines margin receivables at 75% and inventory anywhere from zero (yes zero) to 50% typically. ABL facilities get you approx 90% of A/R and inventory financing can go as high as 70% in many industries, depending on your type of inventory.

Question # 4 - Our company is having some challenges in a number of areas, are we still eligible. The answer is a resounding yes, yes, and yes! Whether you are a start up, established, or even in bankruptcy or receivership proceedings (you heard us right!) you are always eligible for this financing, as long as you have one thing - Assets!

Question # 5 - Where can we find out more? Speak to any trusted, credible and experienced Canadian business financing advisor on the merits and tangible benefits of ABL asset based lending. There is no better way to finance your firm in current times.



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/abl_asset_based_lending_credit_revolver_loan.html