Say Yes To Canadian Working Capital Solutions - Say No To Financing Cash Flow Obstacles !

Overcoming and Winning The Cash Flow Obstacle Game In Canadian Business


Information on financing cash flow in Canada. Understanding the root of your financing needs leads to effective working capital solutions .


Today the goal is fairly simple. We'll identify some of the obstacles encountered by Canadian business when it comes to financing cash flow, and, as importantly we'll demonstrate some traditional as well as new forms of working capital solutions for the Canadian business owner and financial manager.

One of the reasons we like talking to clients on this subject is simply for the fact that certain terms in financing, i.e. ' working capital' and 'cash flow' are often overworked and not properly understood.

Let's look at working capital as an example. Your accountant or your text will talk about that being the difference between current assets and current liabilities. We think a more clear way to understand that concept, and certainly a more ' real world ' one is to think of your business having hundreds of daily, weekly , or monthly ' incidents .

Incidents? Yes, incidents such as making a sale, recording a receivable, buying inventory, shipping inventory, finally collecting that receivable, etc. Those tens, hundreds or thousands of incidents change your balance sheet accounts every time, and their year end summary of activity reflects ' sources' and ' uses ' of cash flow - i.e. where it came, where it went!

Your ability to understand the ' turnover ' in your accounts will ultimately reflect your ability to address, and understand cash flow challenges, and our proposed ' fix’ re: solutions.

For a manufacturing company the process is, for example, well defined. Buy inventory... make products, sell and invoice those products, and collect your funds. It's a simple three step process right?

But what happens when your cycle of operations is long, or complicated. That's when financing challenges occur. Canadian business owners must be in a position to understand where profits went, why A/R and inventory might be done but not profits up, and where funds will be found to purchase new assets.

Misunderstanding of cash flow is rampant we feel. We read about it being a ' yardstick measure of success ' in investments. We note our financials have a ' cash flow ' statement. Our accountant gave us a ' discounted cash flow ' analysis, and we're working on a ' cash flow budget. Talk about a very convenient catch phrase!

So once we finally get a handle on understanding and addressing working capital solutions the financing of cash flow becomes a lot easier.

So what about those working capital solutions we spoke of, traditional, and otherwise. Options to enhance your cash flow needs are available to the Canadian business owner.

They include bank lines of credit, government SBL loans for new assets, which in turn save cash outflows for new assets. And don't forget equipment leasing as a solid asset finance vehicle.

Receivables and inventory can be financed via one working capital or asset based lending facility, or separately via boutique offerings through specialized commercial finance firms. More esoteric financing, yet 100% viable and effective are the monetizing of SR&ED claims, as well as purchase order financing.

So what’s our bottom line? Simply that there are achievable goals in addressing working capital expectations - but those goals must be appropriate to the specific cash flow challenge, in terms of structure and rates. Make a commitment to address financing cash flow, and speak to a trusted, credible and experienced Canadian business financing advisor on those very solutions.





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_cash_flow_working_capital_solutions.html

Canadian Accounts Receivable Finance ! Avoid The ‘ Fat Smoker ‘ Crisis Via Confidential Invoice Factoring

Invoice Discounting Fixes Future Cash Flow Challenges – Today!

Information on accounts receivable finance strategies in Canada . Let confidential invoice factoring take you out of crisis mode in cash flow and working capital management.




We’re the first to admit we’re always on the lookout for a solid business analogy. Enter the ‘fat smoker’ crisis as it relates to accounts receivable finance and confidential invoice factoring in Canada.

A U.S. publication entitled ‘Strategy & The Fat Smoker ‘ talks about how either in our personal or business lives we wait until we are in crisis mode before taking action. So why do business people, especially business owners or those in charge of finances wait until that critical time when it comes to addressing cash flow challenges. Can we address the problems of an overweight smoker immediately ? Rarely .

We know we will never really know why, but we can offer some solid pre – emptive strategies around monetizing your A/R into real world cash flow, the moment you generate that sale and invoice.

It’s the build up of accounts receivable and inventories which in fact cause that crisis – it might come from strong sales growth - not the worst problem in the world to have in business , right ?However when a cash flow crisis comes from a slow down in sales, that’s often a different story .

The very quick way to address the build up of A/R as it relates to accounts receivable finance is to do a very simple calculation, that being your days sales outstanding. Let’s use a quick example, and in our example we’ll focus on a quarterly number. (You can use any timeframe you wish). So we’ll take our accounts receivable level in total dollars at the end of a quarter and we’ll multiply that by 90 days, and then we will divide that number by your sales for those 90 days. Voila! You now have your DSO or days sales outstanding.

Now what? You have to benchmark that number on your selling terms, and also measure it against your days payable to suppliers and other lenders. Simply speaking if your terms to clients are 30 days, but your DSO is 88 days, and your terms with suppliers are 30 days… well… we think you see the problem!

Many Canadian business owners and financial managers see the problem, however many in fact combine the challenge of making money and having money. Again, simply speaking, sales don’t pay your suppliers, cash does!

So, if curing the ‘ fat smoker’, or in our cash our cash flow problem is the challenge, how can that be done? Invoice factoring, or its better cousin, confidential accounts receivable finance is in many cases the solution. It is a solid cure for the financial side of your cash flow and financing challenges.

Many clients we meet are forced into A/R financing – either via losing their bank lender or being unable to meet criteria for any other ‘ traditional financing ‘.

Invoice financing monetizes your A/R into instant cash flow. That heavy investment of A/R on the left hand side of your balance sheet now shows ‘ cash on hand ‘. When you qualify for confidential invoice factoring you have raised the success bar even higher, you are in a position to bill, and collect your own invoices outside the regular process of invoice factoring.

Be proactive, don’t be thrown into the fixing the ‘ fat smoker’ crisis of cash flow shortages on an emergency basis . It’s tough ! Understand your DSO and speak to a trusted, credible and experienced Canadian business financing advisor on ways to monetize what is quite often the largest asset on your balance sheet.











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/accounts_receivable_finance_invoice_factoring.html

Interested In Why Equipment Lease Rates And Low Leasing Payments Might Not Be Important ? !

Wouldn’t You Like To Understand The Pricing Game In Asset Leasing?



Information on the key factors regarding equipment lease rates. Are low leasing payments the most important factor in asset financing . Maybe. Maybe not.





You tell us, because we sure don't know. We're talking about equipment lease rates, and why clients are almost always under the distinct impression that the concept of a ' low payment ‘ or a ' great rate ' via leasing finance in Canada is their sole focus .

We recently came across some great information on that very subject, so let's try and put that in perspective from the viewpoint of the Canadian lessee and in the context of lease finance in Canada. (It differs considerably from the U.S.! via types of leases, market players, etc.!)

If there is one major point we're trying to make its simply that many Canadian business owners and financial managers don't quite understand the difference between pricing, the proverbial ' low monthly payment ‘, and the element of ' structure ' in an equipment finance transaction.

One key factor in the concept of lease rates and pricing , and we can forgive clients for not addressing this, is the fact that many borrowers don't address the end of the lease term with the same focus as all the due diligence and effort they put into getting a lease transaction in place.

The end of term option is critical when assessing equipment lease rates, and never moreso if you are focusing on an operating lease as opposed to the alternative, the capital lease, aka ' lease to own.

Naturally the asset at the end of the lease term has value, and structuring your lease properly will significantly enhance the value of that asset to either yourself, or the lessor. (We’re on your side, ie the lessee, by the way!).

The majority of lease leasing of assets in Canada is under and unregulated financial services. So it’s up to you to determine what amount of information you need to achieve your asset financing goal.

Here’s the $ 64,000.00 question. Do lessors in Canada tell you what your options are at the end of a lease term in a proper manner, allowing you to plan in advance on asset disposition, re-financing, return of equipment, etc? We assure clients (because we've been there) that major corporations spend a lot of time on their leased assets portfolio, reporting, etc. It's in that management of the equipment lease that thousands of dollars are saved, or lost.

We talked before about how equipment lease rates and the concept of a ' low payments ' is often intermingled with other issues forgotten or not known by the lessee. What are some of those other issues?

Naturally the actual interest or borrowing rate drives a significant part of the transaction, but other factors include any payments you make in advance, including security deposits. Also, they way you structure your payments or cash flows ultimately affects the lessors yield and your overall pricing. We're spoken of the residual value at the end of the lease, particularly when it comes to operating leases, as well as other structures such as a bargain purchase option.

So, complicated? It could be if you let it. But our key take away today is simply that you should consider leasing and that ' low monthly payment ' in the context of many other factors that drive a lessors profit on your borrowing via a lease financing transaction. Speak to a trusted, credible and experienced Canadian business financing advisor about why that ' low rate ' you're looking for might not be the most important factor in asset 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 . 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/equipment_lease_rates_low_payments_leasing.html

Canadian Commercial Business Bank Financing - What’s Right ( And Wrong ) With Your Banking Strategy

Business Lines Of Credit In Canada



Information on Canadian bank financing . Commercial business banking strategies vary with your needs and current situation and required needs for growth or survival.



Canadian business owners and financial managers assess their commercial business banking and financing needs at different times in their company's life.

As in many other facets of business it's a little difficult to develop a solution and fix a problem if you don't understand the fundamental problem.

The need to grow your business and be profitable usually drives a bank financing need. A growing business consumes, and needs more cash, if only for the fact that you’re building up receivables and inventories.

In Canada business operating lines of credit are offered by our chartered banks. These facilities finance your A/R and inventory via specific margin calculations.

Most Canadian firms that have this type of credit facility submit monthly financials and aged receivables, which in turn create a new borrowing base under which you can draw funds. Companies that are having challenges ( i.e. they are in special loans ) or who are in breach of covenants may in fact be required to submit almost daily cash flow and receivable reports .

Although the basic arithmetic around bank financing and commercial banking is simple in reality there are a lot of other factors that might end up affecting your bank facility.

What are some of these? In the continuum of time certain industries fall in and out of favor. No better example of this is offered up than the auto industry. Other factors that you as a business owner might not like that affect your bank financing are issues such as your profits ( or lack thereof!) , they quality of business and outside collateral, and your banks insistence on personal guarantees.

Bank financing works best under the following condition - your company is expanding, but at a reasonable rate. One of the greatest ironies of Canadian business financing is that a hyper growth business, even if its generating profits, is often viewed as financing challenged by a Chartered bank.

Business banking utilizes a very basic concept that is often misunderstood by the Canadian business owner. That's simply the fact that with a commercial bank line of credit you're drawing on assets of your growing business to pay older items. But wow, when your business ceases to grow, or profit your ability to draw cash flow out of your A/R and inventory business line of credit stops. But you still have operating and fixed term payment obligations and it now becomes difficult to pay suppliers.

Companies that have a solid handle on cash flow needs and their historical working capital inflows and outflows are in the best position to manage their firms and access bank financing.

Time and time again we meet with clients that tell a very similar story - business grew, expansion plans were put in place, fixed and operating costs grew, and .. you guessed it .. sales started flattening or going down. The result - a recipe for financial disaster!

The ability to manage your cash flow, or, alternatively, slow down your business is key. Speak to a trusted, credible and experienced Canadian business financing advisor for commercial bank financing that makes sense from where your firm is now.






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/bank_financing_commercial_business_banking.html

Understanding the SBL . The Canadian Small Business Financing Loan Is A Winning Finance Strategy

Obtain Capital Financing You Need To Grow Or Start A Canadian Business


Information on the ‘ SBL’ . The Canadian small business financing loan provides asset financing to start up and small businesses in Canada via Industry Canada.




Understanding the Canadian Small Business Financing, aka, the ' SBL ' is not as hard as Canadian business owners, start up entrepreneurs, or first time franchisees might think.

It's those three categories of business in Canada that are typically the ' prime suspects' for success financing approval under the SBL.

So are there ways to fast track and maximize success under the program. We sure think there are. It probably begins with understanding the basic benefits and attributes of the program.

A simple overview of the basics is as follows. The program is sponsored by Industry Canada, a federal department in Ottawa. That’s exactly right where you involvement with the good folks at Industry Canada ends, because as nice as they probably are they only monitor and sponsor the program. Your actual interface to approval and successful receipt of funding is via your Canadian chartered bank, which administers and funds the program under the governments guarantee to the banks.

It is of course helpful to understand what can be financed under the program , that’s where clients we talk to have received a lot of mis communication about what's eligible and what isn't. In fact only a few asset categories can be financed under the program. They include leasehold business improvements, equipment and tangible assets, real estate (rarely used under the program), and miscellaneous items such as computer application software.

While we are often amazed at why more businesses don’t use the SBL to finance real estate part of that simply might be that some of the amortizations available might not make sense in a commercial mortgage sense.

It's therefore important that you have proper asset descriptions for your Canadian small business financing loan needs, allowing you to quickly determine if they are eligible under the program. These might be in the form of quotes from vendors, invoices you have paid already for which you want reimbursement, or quotes from prospective suppliers detailing the asset, service, or price. Just makes sense, right?

It's somewhat of a little known fact that items you have paid for can be in effect re-financed under the program if they under a 6 month timeline. In certain cases an appraisal might be required, which might come into play when there is a question about asset valuation. We point out to clients that the minimal cost of such an appraisal might actually work in your favor, as the appraisal required is usually just a fair market value appraisal.

The different asset categories don’t alter your basic rates, terms and structures under the program. They are constant. Amortizations under the loan are 5-7 years, rates are just 3% over prime, and if we had to pin down one of the biggest attributes of the program it's that clients are required to fully personal guarantee the loan.

We've hopefully demonstrated that taking the time to understand the SBL itself can save you time and maximize financing ability as well as the overall timeline to get approved, which in many cases is just a matter of days .

If your banker isn't 100% up to speed on the program consider seeking and talking to a trusted, credible and experienced Canadian business financing advisor who will put you in fast track mode on the Canadian Small Business financing Loan program






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/sbl_canadian_small_business_financing_loan.html

Making Sense Of Franchise Loan Financing In Canada . Business Loans That Work. Business Loans For Franchising

Pitfalls and Tips on Franchise Financing In The Canadian Franchise Industry

Information on franchise financing in Canada . What issues to address for your business loan. Franchising Loans In The Canadian Marketplace.



A lot. That’s our description these days about what's happening in franchise financing. Canada has hundreds of franchising opportunities that abound; it’s just sorting through the right opportunity and matching business loan / loans to fulfill that entrepreneurial dream.

Let's sift through some of those challenges, allowing the franchisee to realize on the business ownership dream.

Many clients we talk to seem to think that a tougher economy makes it tougher to get a business loans for franchise financing in Canada. We don't necessarily feel that’s the case, if, and it’s a big if, you have done your homework and have a game plan.

That game plan includes planning, ensuring you have the expertise and sources to get your transaction completed. And all of those financial needs in many cases need to be financed differently. Those needs might include the actual franchise fee itself, financial planning that covers off your royalty fee, as well as inventory, working capital, and leaseholds and equipment.

Franchise sizes vary significantly in Canada. Many are Canadian organization, while others are units out of a U.S. parent who has a direct organization in Canada or in other cases works through a Master franchisor who has purchased a territory - Canada! (Talk about a big territory!)

Your personal resources play a significant part in your overall franchise business loan financing plan. It's important to create a personal balance sheet that allows you get a sense of your overall liquidity. Simply speaking, what you have, and what you owe.

The importance of that document can be over stated. Both franchisor and your franchising lender want to get a sense of who they are dealing with, both from a financial and business experience point of view. And by the way, your personal credit history has a huge impact on your ability to both acquire the franchise, but moreso, get it financed!

There are some interesting trends happening in the franchise industry in Canada. Many entrepreneurs are actually increasing their chances of success, (or failure) by trying to acquire multi units at the same time. We generally caution clients who are looking at multi unit deals to ensure they have the financial bench strength to go the whole process. It's absolutely critical to also ensure they have legally structured their total opportunity to ensure the failure of one unit doesn't take down their entire empire!

The other key trend we see a lot of today is that multiconcepts seem to be popular. This has the owner juggling multiple brands, typically in the QSR (quick service restaurant) industry. So if they didn't think one restaurant was enough of a challenge, how about two!

One big, now scratch that, huge mistake that franchisees make, and we see it often, is the financing of a new store out of the working capital proceeds of their other store. Inevitably Murphy's Law sets in and the resources and financial reputation of both entities are strained to the point of collapse. Our advice, consider financing each unit separately on its own merits with some additional new equity.

We can’t begin to list all the risks and rewards of a franchise opportunity in Canada. But we can ensure franchisees that careful financial planning, with expertise, is critical .Speak to a trusted credible and experienced Canadian business financing advisor on making sense of franchising opportunities in Canada. Minimize the risk, maximize the reward.





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_financing_canada_business_loan_loans.html

The Business Case For ABL Asset Based Lending Canada . The Ultimate Credit Revolver For Business Financing?

Considered Financing Your Business In A Different Way?


Information on abl asset based lending in Canada. Credit revolver deluxe!



The infamous ' business case '. We're told its a tool that ‘supports planning and decision making ...’ . Is there in fact such a case to be made for business owners considering ABL asset based lending in Canada via a credit revolver facility versus bank lines of business credit? We think so. Here is why.

We agree that more isn’t always best in business, that's for sure, but isn’t the fact that your company can generate more borrowing capacity based on the sole criteria of assets ( not rations, covenants, personal guarantees, outside collateral , etc) an impressive point. And remember, just because you have the ability to draw down additional working capital and cash flow on a daily basis doesn’t mean you have to use it. But boy, knowing its there has always helped.

More borrowing power is based on the same ' borrowing base ' certificates you might currently be utilizing at your bank. You assets of inventory and accounts receivable of course substantiate that base, and typically your receivables and inventories are margined at 90% for a.r and 30-70% range on inventory.

Many clients we meet have a traditional mix of A/R and inventory in some per cent age mix. However Canadian business owners and financial managers shouldn't think the A/R and inventory relationship is ' cast in stone '. It is not. You can still qualify for an ABL asset based line of credit in Canada if you just have inventory, or if you just have A/R, or if in fact you have both but one significantly outweighs the other.

Example? A good example might be a major retailer who has a huge inventory component on the balance sheet, but sells of course on cash basis, i.e. no receivables.

So is there an industry when our ' business case' doesn’t make sense for a credit revolver? We can make a general statement that all firms in Canada, regardless of size of nature of business still qualify for this type of financial vehicle. Naturally pricing, terms, and margining will always come back to analysis of the asset class.

Growing or just surviving are two very good reasons to consider ABL finance in Canada. But here’s a solid business case to be made - These facilities can also be used to acquire a competitor or strategic partner. In fact it works to your firm’s advantage to consider ABL financing for that type of transaction because it minimizes cash required to complete the deal.

So, the business case for ABL. It’s about benefits, return, and financial justification. Consider ABL asset based lending as making a great business case for your firms financial underpinning. Speak to a trusted credible and experienced Canadian business financing advisor today.




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_canada_credit_revolver.html