Business Cash Flow Financing Problems ? Here’s Some Solutions

Escaping The Cash Flow Cycle Dilemma

Information on business cash flow financing problems and challenges for Canadian business . What solutions are available for working capital needs .


Nothing is as entertaining to us sometimes as to talk to a new entrepreneur who aspires to ' get rich ‘in business. It's at that time that things just don't seem that complex; a firm just needs to make a product, sell it, and bank the profits. And when you think of it, that's not incorrect, it just exhibits a bit of inexperience in the perception of that simplicity, don't you think.

The only thing that is missing in that analysis is of course those three magic words, the ' cash flow cycle'. It's that cycle that will dictate whether your business cash flow financing problems are normal, or perhaps seriously in need of solutions .

Clients often mistakenly think that negative cash flows, those huge swings from positive to the negative are in fact a sign of failure. That's the farthest from the truth. It simply means you're ' in line ‘. In line? To get paid of course!

But the preparations you make when you are ' in line ' are what will truly make or break your business. Simply speaking you need cash flow financing solutions to cover those deficits. It is at those times that your firm is most vulnerable - because employees, suppliers, and lenders, (what a group!) may in fact doubt your ability to return to positive cash flow.

Canadian business owners turn to chartered banks to cover that deficit, when they can. The bank is in a position, when you qualify, to provide you with a business line of credit that will allow your cash flow cycle to continually repeat itself, from negative, to positive, and all over again.

But what if the bank is an inaccessible option for cash flow finance solutions? In some cases we have seen business owners solve their working capital problem by simply accessing supplier credit in a more aggressive manner. It’s not always immediately obvious to business owners that slowing down payables increases your operating cash flow. Of course it's a delicate balance though.

Another issue in working capital and cash flow financing challenges can be the seasonality of your business. Many businesses have very uneven profit earnings; for example they might break even or sustain financial losses during some parts of the year, and thrive at others.

When business in fact seasonal, experiencing the ' bulge ' as we might call it your bank or other lenders have the option of staying the course with your firm, or canceling credit facilities altogether .

We have shown that cash flow challenges are a business reality, spanning all types of businesses and different industries. With proper management and solutions those challenges can be overcome. It always gets back to the issue of cash flow and profits being recognized as different. Bottom line, your profits are on paper only until they are banked.

In Canada business owners have access to a number of business finance solutions for working capital and cash flow. They include traditional banking, asset based lending, receivable finance, inventory finance, P.O. finance, and tax credit monetization.

Speak to a trusted, credible and experienced Canadian business financing advisor who will ensure your business hasn't lost faith in its ability to come up with growth and capital solutions for 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/business_cash_flow_financing_problems_solutions.html

5 Things You ( Probably ) Didn’t Know About Canadian Business Receivable Finance . Cash Flow Financing Via Factoring Clarified !

Receivable Financing In Canada


Information on Business receivable finance in Canada . Cash flow financing via factoring and a/r financing – explained and clarified!



Clarity and quality of information surely count when Canadian business owners and financial mangers consider business finance alternatives. We've said in the past, and still feel it's true that no other form of finance in Canada is as misunderstood or potentially confusing as business receivable finance. So does this method of cash flow financing have to be confusing? We don't think so, so let’s recap 5 often asked client questions with a goal of clarity for you, the Canadian business owner.

Question 1 revolves around the amount of funds you can expect to obtain in Canada. Typical advance rates for most facilities revolve around the 90% mark if you are dealing with the right party. The balance, i.e. the remaining 10% of your receivables is a holdback that is remitted to you immediately after your client pays. Another key question is facility size, and the good news here is that your facility grows as your sales grow. In general there are no credit limits per se, unlike bank facilities, which clearly have a cap .

Question 2 revolves around the process, i.e. the length of time it takes to set up a facility. We generally advise that it takes approx 2 weeks to set up a proper facility - that is a general guideline. You will know, by the way, very early on in the process if you are approved. After that it's simply a question of documentation.

Question 3 is the proverbial hot point. Fees and costs. Various factors come into play here, the credit quality of your firm in general (it does not have to be as solid as you think), the size of your facility, the nature of your industry, etc. On balance a solid business receivable finance fee in Canada is 2-3% if you're billing and collecting on a 30 day term.

Question # 4 revolves around types of receivables that can be financed, The key point here is that only ' business’, i.e. B2B a/r can be financed in Canada, so those companies with a consumer a/r base cannot take advantage of cash flow financing .

Question # 5 revolves around the age of receivables that can be financed. As a pretty general rule only A/R that is under 90 days in age can be financed via this method of Canadian business financing. One can safely assume of course that if you haven’t collected your accounts by that time there is an element of uncollectibility or bad debt in your A/R portfolio.

There you have it. Confusion gone away? We hope so. When considering working capital finance via business receivable financing ensure you've got the right information at hand to make an informed decision. Speak to a trusted, credible and experienced Canadian business financing advisor for your ability to get on track with cash flow 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/business_receivable_finance_cash_flow_financing.html

Why The SBL Government Business Loan Bridges The Gap Between Banking And Canadian Business Financing You Need Today

SBL Loans Fill The Gap In SME Finance In Canada

Information on the Canadian government business loan . How SBL financing provides an intermediate finance solution for start ups and small to medium sized businesses with revenues or projections under 5 Million dollars


We're talking about the gap today. It's the gap that is the bridge between a Canadian government business loan and the traditional banking term loan. So how does SBL financing help you or your firm bridge that gap. Let’s examine.


So what's the ' scoop ' on SBL loans? They are term loans from your bank with Industry Canada, i.e. the federal government guaranteeing 90% of the loan.

So what's the goodness in all of that. Simply that it is a great financing vehicle for start ups, small, and medium sized businesses who are looking for loans they will repay from future cash flow that they might otherwise not be able to obtain from the traditional Canadian chartered banking system. Additionally they might not have the collateral to collateralize the loan in a manner that most banks require.

It's prudent at this time to recap what mainstream chartered banks in Canada require for this same type of financing. Typically a company such as your will be required to have substantial equity in your company or the transaction in question.

Banks in Canada are very focused on what commercial lenders call the 3 C’s of lending. Those 3 C's are the banks interpretation of your character, your company's capacity to borrow ( i.e. repay!), and the quality of collateral you can offer up, The bottom line all that then ... the bank must feel comfortable with your business - its sales, cash flows, and any external issues relating to the current economy, your particular industry, etc.

So that brings us back to ' the great divide '. It’s the gap that the government business loan delivers on Canadian business financing for those firms that can't meet the requirements of Canadian business banking in the traditional manner we think of.

Don't forget also that bank loans come with commitment fees, prepayment penalties, covenants, and extreme default measures when things go awry.

So we have come full circle to a proposed solid alternative, SBL financing, that’s 'SBL ' as being the acronym for what most people call the ' government business loan '.

How does it fill the gap then? It sure is obvious to us. It allows you to repay a loan out of projected cash flow when historical cash flows are insufficient or simply not available. That's because thousands (yes thousands) of firms that utilize the program are in fact start ups, pre-revenue firms that are looking to build and grow a business.

In many cases the assets of the business otherwise would not allow you to complete a financing.

Is there enough money go around in the program? That’s a typical client question. The answer is a resounding yes! In 2010 alone over 7000 businesses borrowed billions under the program. And yes, that's billions with a ' B'.

Uses of the program are equipment financing, leasehold financing, computer and software financing, and even real estate.

The cost of the program is very appealing to business owners in Canada. Rates are competitive, there is no prepayment penalty, and even the owner’s personal guarantee is limited to 25% of the loan. Try and get that deal under more traditional financing - we bet you will find it difficult!

Is it challenging to acquire such a loan? Not if you understand the requirements and create a streamlined process and follow documentation and application details properly and efficiently.

Speak to a trusted credible and experienced Canadian business financing advisor today on Canadian SBL financing. Bridge the gap!





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_business_loan_canadian_financing_sbl.html

5 Reasons To Consider Canada Government loans . How To Use the SBL Federal Loan Program

SBL Loans - Consider the Program For These Business Needs

Information on Canada government SBL LOANS . The federal small business loan can be used for a variety of business uses .. here are some of them .


We're big supporters of the Canada government loans, commonly called the ' SBL loan ‘. Why? This federal loan (you’ll soon see it’s not as federal as you think ... it's more local ...) can be used for a variety of solid business reasons. What are those uses then? Let's explore.


Canada government loans are the ideal financing solution for a business start up. SBL financing compliments significantly your own equity contribution to the business. A large amount of outside collateral is in fact not required for the federal SBL loan. Traditional financing via Canada's chartered banks and other lenders often make it difficult to achieve any proper level of start up financing.

Amortizations are available that make sense for your start up. You are trying to minimize monthly payments and maximize cash flow. There isn't a day when we don't talk to an entrepreneurial client who doesnt feel their resolve to start and succeed in business isn’t tested, so the federal small business loan is a solution to the testing of your resolve!

Our second category or use of this financing is ' Equipment. When you are looking to purchase assets to grow and maximize your profits government loans make a tremendous amount of sense.

Your equity contribution, i.e. the down payment that you would typically associate with a lease financing is low, the 5-7 year term amortizations make sense, and the bottom line it's a classic use of matching your new assets useful economic life to the term of a loan.


Use # 3 for Canada government loans. Buying a business. Funding from our proposed financing solution allows you to purchase an existing business.

We caution clients that the requirement for purchasing a business using the SBL vehicle requires that the seller agree to an asset sale, as opposed to a share sale. Almost any industry can be financed in this manner, as long as there are assets in the business that you are acquiring.

The good news here is that the emphasis on the financing of your proposed purchase is focused on the previous success of the business, as well as your ability and experience to run and grow the business. The SBL loan can also finance real estate as part of a business purchase - in this case the traditional limit of financing actually increases to $ 500,000.00.

Potential use # 4 for the Federal small business loan - refinancing! If you or your firm incorporated or otherwise have purchased assets within the last 6 months they can be refinanced under our proposed program. This generates working capital that can be put back in your business. In certain cases an appraisal might be required on the asset, but that is a very modest expenditure relative to the benefits of the financing received that come back into your business cash flow.

Finally, use # 5 for Canada government loans. It's buying and financing a franchise. Entrepreneurs in Canada finance thousands of franchises each year under the program, which in many ways is perfectly suited to the challenges of a franchise.

There you have it, 5 solid uses for the utilization for the federal SBL Loan. As we noted federal denotes Ottawa and government, but Canada’s chartered banks administer and fund the program under federal auspices. Speak to a trusted, credible and experienced Canadian business financing on how you or your business can utilize this valuable Canadian business financing vehicle.





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/canada_government_loans_sbl_loan_federal.html

7 Guaranteed Ways To Fail In Canadian Franchise Loans. Franchisee Financing Done Right !

Use This Information On How Not To Fail When You’re Purchasing A Franchise In Canada !

Information on Canadian franchise loans. How does franchisee financing work in Canada and how can entrepreneurs avoid failure and guarantee success.


It's a given fact that some franchises fail. We all know that. We love providing guarantees to clients. But are there some guaranteed ways to fail. Nothing like a guarantee, right?

We're hoping that entrepreneurs considering franchise loans for franchisee financing in the Canadian marketplace take some of our advice, and by the way, that's on how NOT to fail!

Guaranteed failure point # 1 - Expect your franchise to either help or provide you with financing in Canada. That is a sure fire method of failure. While many franchisors have some relationships with certain organizations or financial institutions never forget that they are in fact in the business of selling franchises, not financing them. We will concede thought that lately we have heard rumblings of U.SS franchisors who are getting more involved in providing assistance and franchise loans for some of their units but we certainly haven’t seen any serious evidence of that in Canada.

So if you cant rely on your franchisor to provide you with financing assistance ensure that you have access to experience and relationships that can in fact assist your with completing your finance plan around your purchase. And while your franchisor may ' point ' you to some financing that may assist you it's safe to assume there are no guarantees.

Guaranteed failure point # 2- Don't explore your options. Another great way to fail... not recommended though! While the options to finance your franchise in the Canadian marketplace are certainly not abundant they do in fact exist if you are armed with the right knowledge and contacts. Never ever assume that you have to finance your purchase through your own bank, in fact some banks publicly or privately stay away from certain industries, and hospitality is an example. And that’s not good news for the thousands of entrepreneurs that want a part of this industry! So, take the proverbial advice of ' shopping around' for either a franchise financing expert or an institution that understands and is committed to your success.

Guaranteed failure point # 3- Borrow more than you can afford for your franchise. Another great way to ensure non success! Remember of course that the people providing franchise financing actually expect to be paid, in full! Larger loans translate into larger payments and cash flow concerns, so ensure that your financing has a proper mix of debt and your own equity. Remember that the optimal financing allows your business to succeed, grow, and pay you salary while building owner equity.
Guaranteed failure point # 4- Pick any franchisor... after all they are all proven business models, right? Well, not really. There is downside to any business, and certain industries and markets fall in and out of favor over time. So carefully assess your opportunity from both of course the financial perspective, as well as the overall market perspective. Your franchisor can be a Canadian organization, or a licensee of a U.S. company. Use the franchising disclosure laws in Canada to properly do your due diligence.

Guaranteed failure point #5 - Skimp on your financing. Borrow less, so you won't have to repay as much... right. Wrong! Don't cut corners when it comes to franchise loans and franchisee financing for your Canadian business. Understand your costs, and remember that you need to focus on two areas, purchasing your business, and then growing it. A proper combination of long term debt and working capital is needed. Don't let the excitement of owning your own business cloud the financial realities of what it takes to be successful in any business, franchising included.

Guaranteed failure point # 6- Assume sales are profits. Guess what? They are not. Build a proper business plan and ensure you have a solid handle on cash flow. An experienced Canadian business franchising advisor can help you here.

Guaranteed failure point # 7- Assume you know how to finance a franchise, or that it is easy. It's not necessarily the case. Understand your financing options, which in Canada exist, but are somewhat limited. Negotiate a fair price for your chosen business. Terms and rates in franchise financing vary, whether you are using 3rd party independent financing or the BIL franchise loan. As stated previously, borrow the right amount you need, whether you are purchasing a new unit or buying an existing franchisee out.

So there you have it. 7 guaranteed, yes guaranteed ways to fail at franchise financing. And by the way, we want you to succeed! , not fail, so speak to a trusted, credible and experienced Canadian business financing advisor who can help you with franchise loans and franchisee financing in the Canadian market space.







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_loans_franchisee_financing_canadian.html

Talking Points For The Canadian ABL Business Credit Line . It’s Commercial Financing That Works!

Why You Should Consider An Asset Based Line Of Credit

Information on the Canadian ABL business credit line facility . A unique commercial financing facility based on your assets.



We hear the term a lot these days. A ' talking point ' is simply a ' succinct statement designed to be persuasive '. Let's examine some key talking points on commercial financing in Canada, very specifically the ABL business credit line. (ABL is the acronym for asset based lending).

Part of our job seems to always be simply defining ' ABL ' in our context, because it's often a catch all term or various single asset finance categories, for example receivable financing.

Instead we're talking about what is referred to as a ' comprehensive ‘business credit line, one that lends against a combo of inventory, receivables, equipment. Although low interest rates are what often attracts clients to a more traditional Canadian chartered bank line the reality is that thousands of firms simply can't access traditional bank credit.

Although the Canadian economy has somewhat slowed down financing needs are as large as ever, whether you're a start up, an early stage company, or a mid market or larger corporation.

In the U.S. this form of financing is very developed, in Canada it's been a different story with various players, mostly non bank, not regulated firms have come and gone, and returned back to the Canadian space to deliver this commercial financing product.

‘Are there times when the ABL business credit line is a perfect solution for business finance”? is a typical client question. Probably the most common time for your firm to consider it is when you are in a restructuring phase. This is when the power of this business financing truly emerges because at a time when you company needs it most and can't qualify at the bank ABL business credit typically increases the funding to your firm.

The caveat tot that last statement is simply that you need to have the ' assets' on which that increased lending is based - That's the ' A' in asset based financing!

It's at this point that we always find ourselves explaining the differences in this financing relative to traditional bank commercial facilities. Those facilities are much focused, it’s the triumvirate of profitability, cash flow, and a very decent balance sheet; oh and by the way, you require all three!

It's the flexibility in structure that is most appealing to clients considering this method of finance. All of those ratios, covenants, outside collateral, personal guarantees tend to be either non existent or very minor ' talking points' when it come to an ABL facility. So when you are attempting a ' turnaround ' the asset based line of credit, simply speaking, is turning with you.

Another great talking point for our proposed new facility is that it can almost always facilitate peaks and bulges in your business; those temporary spikes in working capital needs are sometimes difficult to resolve in a more traditional chartered bank facility.

If there is one final ' talking point' to add it’s simply that the ABL business credit line is probably the best finance method to support sales growth when you are capital structure constrained. So as the Canadian economy improves you aren't penalized by previous challenges you have undergone.

Speak to a trusted, credible and experienced Canadian business financing advisor on what you need to know about this innovative method of business finance in Canada. Understand the requirements and take advantage of the benefits!






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_business_credit_line_commercial_financing.html

Here’s Your Fighting Chance For Cash Flow Solutions! How To Pinpoint A Canadian Business Finance Solution

Looking For Working Capital Survival Techniques?

Information on cash flow solutions for Canadian business owners . Understand the problem and find a business finance solution .


Canadian business owners and financial managers are looking for ' fight back' type cash flow solutions for their survival and growth challenges. Let's examine that from two angles understanding and pinpointing the problem, and then implementing a satisfactory business finance solution for your firm, one that makes sense in the here and now!

While clients we talk to are often very focused on fixing the problem we’ve felt it's just as important to understand how and why they got there. Makes sense right?

If you step back and take a closer look at what's going on in your business you will see that the constant pattern of payments and receipts to your firm dictate the need for Canadian business financing at certain times. The cycle typically constantly repeats itself, your company buys goods, generates a payable, incurs costs in creating your products and services and finally invoice generation to your clients. And then you wait!

That's when we arrive exactly at the crux of the matter as typically at this time your cash shortfall is at its greatest point. All the while your firm of course has payable and creditor obligations, and let’s not forget the tax man!

Now we are getting to the core issue, creating cash flow solutions to finance these needs. We now arrive at a point where many companies ' blow it ' for lack of a better word. That's because the obvious solution is ' the bank '. We can't count the number of times clients told us they have approached their bank on what we can politely term a ' short notice'.

Guess what though. Banks don't like to lend on a short notice. Quite frankly they are managing their own cash flow issues! Clients simply often don't realize that at this point in a company's need for a business finance solution that insolvency risk is at its greatest.

The other irony of our situation as described above is that in many cases business has never been greater for your firm. New contracts, new orders abound! Yet history tells us many companies, small and large have gone under when profits and sales were great, but cash has run out.

Solid and savvy Canadian business owners and financial managers will step up to the challenge this time and learn to plan better for short term borrowings. You don’t want to over borrow but at the same time you don't want to commit yourself to having excess cash and liquidity. (Although that’s a problem clients never seem to have!)


One of the best ways you can monitor your cash flow needs is to monitor on an ongoing basis changes in your assets and debt. Business owners often don’t realize that the transfer of funds between those two identify the movement of your cash.

If assets go down cash has been generated from the asset, if assets go up you have in fact invested in this asset, and, guess what, your cash has gone down.

In Canada you have a number of available cash flow solutions for working capital needs. They include properly managed bank debt via a solid relationship and track record. Companies that can't qualify have access to asset based lines of credit, working capital facilities, receivable and inventory financing on their own or together and even monetization of tax credits and purchase orders.

Looking to better understand what business finance solutions makes sense for your firm, and why? Speak to a trusted, credible and experienced Canadian business financing advisor to determine your firm’s best course of action.





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/cash_flow_solutions_business_finance_solution.html