Exactly When Does Your Company Need A Receivable Finance Solution? Financing Working Capital Is About Timing!

Let A/R Finance Get Your Receivables In Overtime Mode!


Information on receivable financing and the proper methods to look at when financing working capital in Canada




Have we got a story for you! There's an interesting old story /legend about a guy named Bernard E. Smith who at the time of the 1929 crash of Wall Street crash simply went around and saw what companies were building up receivables and inventory and maybe not selling enough either . We're not really focusing on ‘sales ' today though. The bottom line on this legend is that by simple observation of build up in receivables (and inventories) he became somewhat of a predictor for companies that would fail.

Receivable finance in Canada. Exactly when does your firm know it needs something new when it comes to financing working capital and understanding what solutions are available and when ?

If you have a strong handle on receivables in your company you're in a position to know a lot about your cash flow and working capital. When we look at what our buddy Bernard Smith was doing he probably would have profited even more (he was ' shorting 'those companies ) if he had simply had solid access to an analysis of any company’s' A/R position.

When you truly understand the relationship between sales and properly managed accounts receivable you're a more effective business manager or owner. That’s because you can only run so long on the concept of sales, and what one analyst called ' borrowing from the future '.

Financing working capital is need when your receivables rise substantially over your sales growth. Poor collections and liberal credit terms are some other causes, and those require separate measures and actions. But today we're focusing on simple ' growth ‘.

So, two things. How can you track such a phenomenon, and secondly what is one solid solution for receivable financing in Canada?

When it comes to tracking set up a very simple chart or spreadsheet around sales / receivables, and inventory. Simply track the actual growth rates over a specific period, say quarterly, even monthly if you want. (We’d say annually was a bit too late!)

If you find that sales are growing at 15% for example, and A/R and inventories are growing at 35% you will quickly start to feel a working capital and cash flow shortage. It's as simple as that!

So if you can’t get support from a bank in Canada on your A/R and growth then perhaps its time to look at another option. That option is known as receivable finance, or invoice discounting is another term. You might not be able to get additional financing because you're growing to fast, or in some cases you simply can’t meet bank criteria.

That's when it comes time to rethink your Canadian business financing strategy. The cost of factoring is often a consideration or concern , and business owners can address this by effectively understand how they can use the capital generated from invoice financing .If you have good gross margins you're even in better shape when it comes to assessing the cost of receivable finance.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in both monitoring working capital needs and assessing quality solutions for business cash flow and growth.

7 PARK AVENUE FINANCIAL

CANADIAN RECEIVABLE FINANCE EXPERTISE




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_finance_financing_working_capital.html

Debt Financing And Business Liquidity For Canadian Companies

Canadian business financing debt solutions – Is Now The Time?


Information on debt financing and business liquidity solutions for Canadian companies . Assessing and managing debt load.



Debt financing for your Canadian business. Should you... and when? That’s the key questions the Canadian business owner and financial manager takes a look at when assessing business liquidity.

No one is going to argue that the focus should not be on profits, but the reality is that if you have too much business debt, or aren’t properly monetizing current assets you're going to be in a situation where the last of your concerns are going to be profits, you'll in fact be fighting for business survival.

Notwithstanding the type of debt your company needs it’s in fact the level of that debt that is going to be the key focus of any financing partner you're looking at. That partner’s focus is very clear: getting repaid!

So are there in fact some ways you as a business owner or manager can determine what the right amount of debt is? Ultimately it's a case of ensuring that business liquidity is there to properly augment future business success.

We point out to clients that there is not magic formula for the right amount of debt; there are some industry standards though and that relates to the fact that different industries and business models require different amounts, and types, of debt financing.

The average business owner thinks of ' the bank ' when it comes to measuring debt. They are of course the masters of ratios (we have always preferred to call them relationships) and the covenants that come with those ratios. We're also not necessarily in agreement if some of those rations and calculations accurately reflect whats going on!?

Case in point? The proverbial ' current ratio ' which many bankers and lenders focus on as a key measurement of debt and business liquidity. By going to your balance sheet and taking current assets and dividing them by current liabilities we're told that a 2:1 ratio is generally desirable, and that higher is better. But our point? It's simply this in fact might be a poor measurement if receivables and inventories are growing... BUT NOT TURNING!

Debt financing in Canada brings interest repayment. That's where interest coverage comes in - you want to be in a position to generate enough positive cash flow, at a minimum, to repay that debt. The quick formula if net income plus deprecation divided by interest expense. Here to the bankers tell us that 1:25 to 1 is a desired ratio that reflects positive business liquidity.

The total debt you carry in relation to your equity in the company is a very valid discussion point when it comes to your ability to achieve the amount of debt financing you need. And how you use that borrowed money, via leverage, is also key.

So whats our take away today when it comes to accessing the right amount of debt via business liquidity solutions Simply that you do need to understand how debt financing is score carded , by your lenders and yourself as an owner .
Using debt properly won’t put you in a cash crunch and will allow you to grow your business.

Speak to a trusted, credible and experienced Canadian business financing advisor on sourcing debt financing that makes sense for your business liquidity needs. That might include bank debt, cash flow loans, equipment financing, subordinated debt, or merger and acquisition financing. It's score carding and measuring that’s the trick!

7 PARK AVENUE FINANCIAL

CANADIAN DEBT FINANCING EXPERTISE



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/debt_financing_business_liquidity.html

Facts On SBL Government Small Business Loans In Canada

Things You Must Know About SBL Loans In Canada



Information on government small loans in Canada . The SBL loan program is a viable form of financing for any eligible company who can’t access traditional bank capital



Government small business loans in Canada. We're talking about some straight facts around ' SBL ' financing in Canada. We all have heard the story: businesses in the SME sector account for huge portions of the Canadian economy in employment, revenue, and tax generation.

In Canada Industry Canada is the government department / organization that sponsors and administers the SBL program.

The SBL small business loans program allows for maximum financing of 500,000.00$, however that amount is limited to real estate only. The limit for financing of equipment and leasehold improvements maxes out at 350,000.00$.

The program sets a maximum interest rate of 3% over the bank prime rate. Unlike a similar program in the U.S. (In the U.S. it’s called the 'SBA ') the SBL program does not cover cash loans, working capital, business lines of credit, etc. That's a popular and unfortunate misconception when it comes to businesses that are looking for other types of financing.

One area of clarity that we explain to clients is that both corporations and individual business owners, i.e. a proprietorship, can be eligible for an SBL Loan.

Why are SBL loans so popular then? We’ll quickly add that they apply to any business that has real or projected revenues under 5 Million dollars annually. The popularity is derived from the simple fact that businesses in the SME sector traditionally have a tough time raising capital... of any kind!

Without strong financial statements or solid net worths and guarantees from the owners there is a real financing gap in Canada when it comes to term loans and access to capital .

In Canada the SBL program is administered, as we said, by INDUSTRY CANADA . But that is not your key contact for any loan application. It's your bank, who administers the program on behalf of the government. This allows banks to provide a valuable dimension to business financing in Canada to the small business sector.

So what in fact are the requirements of the program? Essentially you need to present a sound and viable business plan that shows a reasonable expectation of profit and of course cash flow generation - which is of course what repays the loan.

The business owners provide a guarantee limited to 25% of the amount of the loan. That in itself is a great thing, given that the majority of business financing in Canada requires 100% owner guarantees. As a business owner applying for he SBL program you should be able to demonstrate a good personal credit history and we can only call a ' reasonable' personal net worth. Things like being a homeowner and having some savings, etc certainly help the cause.

A couple key business ratios must be satisfied in your business plan and financial projects - they revolve around debt to equity and working capital calculations. Your business advisor or accountant can make sure these are properly presented.

Government Small business loans totaling the in billions are provided to almost 8000 businesses annually in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in finalizing your access to one of the best programs in Canada when it comes to finance for the small business sector.

7 PARK AVENUE FINANCIAL

CANADIAN GOVERNMENT SMALL BUSINESS LOAN SBL EXPERTISE


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_loans_sbl_canada.html

Seeing Through The Fog Of Business Capital Financing In Canada ! Unfrazzling Credit And Funding For Canadian Businesses

Canadian Business Financing


Information on accessing business capital and financing in Canada . Funding via traditional and alternative credit solutions .


Business capital in Canada. There is absolutely nothing like some clarity when it sometimes seems that you’re trying so hard to see through ' the fog ' of misinformation when it comes to financing and funding your business through business credit solutions that work.

There is of course the old adage that he best time to be looking for business financing is when your firm doesn't need it, and we certainly have met our share of clients who don’t follow that saying! It's simply stressful and often precarious when it comes to looking for business credit solutions at a time when your firm faces all sorts of challenges, not the lease of which is survival.

There is a clear road map that Canadian business owners and financial managers can follow when looking for business financing solutions.

What is that road map then? It’s about ensuring you understand your various sources of capital, approaching them in the proper manner, and with the help of a qualified advisor if needed. You then need to qualify the source of financing - is it truly the right solution for your firm? And finally it’s about obtaining that commitment and executing on the solution in a timely manner. That's a road map that we all can follow.

A good business plan will often assist you in ensuring you are on the right track with your business finance needs. Picking the right partner becomes a little easier when you're sharing the right information with the right party.

In your case it's about making money and growing, in the lenders case it’s about repayment!

It's also very important to qualify your source of capital, and ensure the benefits of your proposed financing are in fact ... real. Taking your same challenge to different people, for different reasons, and benefits simply... does not work.

Many business owners are not sometimes able to handle the objections or questions of lenders. They know their company only all to well, and are somewhat blinded to what lenders consider as relevant. That allows you to build trust and confidence with your proposed partner fir, or financial institution, in the financing of your business.

Sources of business capital in Canada include our chartered banks, independent commercial finance companies, and government and quasi government institutions and organizations. Speak to a trusted credible and experienced Canadian business financing advisor on how you can see through the fog of the challenge of funding and financing your firm, via solutions that make sense.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS FINANCING EXPERTISE

New ! Improved Formula ! Why An Asset Based Lending ABL Business Credit Line Just Might Be What You’re Looking For

How Does The ABL Credit Facility achieve greater liquidity for Canadian business


Information on asset based lending in Canada and why the ABL business credit line is favored by many firms seeking revolving facilities.


Asset based lending in Canada. What's with the ' new ' ' improved formula ' - Are we talking about laundry detergent? Not really of course, we're referring to the difference between how an ABL business credit line differs from the traditional Canadian chartered bank line of credit facility.

And those ' new improved formulas ' in fact then bring substantially more liquidity to your business when it comes to cash flow and working capital needs.

Let's examine why that is, how it works, and why this form of business credit line might in fact be perfectly suited to your business.

Traditional assets that are margined for liquidity under a business credit line (bank or ABL) are receivables and inventory. If your receivables are eligible, i.e. they are earned and less than 90 days and not subject to any contra, return provisions etc you can typically get an advance of 90% of this A/R.
That of course differs from the bank in that bank lines traditionally advance 75% of accounts receivable. Bottom line, you're up 15% already in total liquidity.

If you are working with the right firm we point out those even things like government receivables and U.S. A/R are fully eligible for borrowing. When your a/r is outside of North America you might have to arrange some sort of credit insurance - but that just makes sense anyway when the business owner and financial manager recognizes the risk, sovereign or otherwise, of a foreign receivable,.

So what inventory is in fact eligible under an Abl facility? Here we also point out to clients that in many cases a bank might not be able to, or be interested in, including an inventory component to your credit facility.

A typical due diligence process in asset based lending will quickly determine if your inventory is eligible for borrowing. When completed that part of your facility may well margin anywhere from 30-70% of your current inventory, depending of course on the nature of your business and industry.

A major difference in the way in which asset based lending delivers higher borrowing is simply that fact that more due diligence is done up front when it comes to assessing your overall borrowing power.

It is in this manner than that the ABL business credit line delivers more new cash flow to your business. You are borrowing against a larger borrowing base of inventory and receivables, thus providing more liquidity to optimize working capital.

Naturally there are numerous other advantages, and yes, differences between an asset based business line of credit (ABL) and a bank facility. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing advantages and determining if this type of financing works for you. It works for thousands of others in Canada.

7 PARK AVENUE FINANCIAL

CANADIAN ASSET BASED LENDING EXPERTISE





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_abl_business_credit_line.html

Creative Debt Financing Sources For Canadian Business . Canada Business Loans And Monetization Strategies

Debt Financing In Canada


Information on sources of debt financing in Canada . Business Loans In Canada for the right reason !



Debt financing sources in Canada. Most business owners and financial managers would agree that a little creativity can sometimes go a long way in helping a business achieve the stability and financial resources a business need to succeed.

Let's take a quick ' tour ' around some of those sources which include term loans, leases, and some other less known types of financing.

The reality is of course that different sources of debt meet different needs, so you need a sense of the ' lay of the land' when you're evaluating solutions.

It's also all about not ' wasting time ' and there is no better example of this in Canada than spending a lot of time, and in some case dollars in pursuing Chartered bank financing in Canada that will not happen .

Canada's chartered banks are the backbone of Canadian business finance. They are trusted proven providers of capital... if, and it’s a huge if, you can meet their criteria. However in fast moving or tough economies, while the banks would in fact be the best solution for you business, the reality is that on occasion they aren't suited to very specific needs.

Are there some quick ways to evaluate your ability to positive secure bank debt? There definitely are, and if you feel you can meet 4 - 5 key criteria then you should absolutely pursue Chartered bank debt in Canada.

What are those criteria then? Simply speaking they are profits, assets and collateral, sound operating ratios, repayment with outside collateral ( personal net worth issues, etc ), and finally your ability to summarize all that, typically in the form of a business plan or executive summary .

Banks look for positive cash flow. When you line up ' cash flow lenders' with ' balance sheet lenders ' banks typically are in the cash flow line up, required a positive cash flow ratio of typically 1.25: 1.

When it comes to collateral required for loans banks focus on the more liquid ones, such as receivables and verifiable inventory (not always inventory though).

Operating and liquidity ratio calculations play a key role in bank loans. They include leverage via debt to equity calcs, our aforementioned cash flow ratio, working capital rations, etc.

You can absolutely be expected to be asked for a personal guarantee when it comes to bank debt financing in Canada. Other sources of financing may also include personal guarantees, but they play less of a role in final approval.

You have to be able to summarize a bank proposal effectively. This can be done via a Canadian business financing advisor, your accountant, or some other third party. It’s critical to put forth a realistic financial and operating document that demonstrates repayment and viability.

Other sources of debt financing for business loans include asset based lenders, lessors, the government SBL program, cash flow loans, etc.

It's clear that it becomes a case of identifying what you need, and what you realistically can qualify for.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in identifying sources of debt finance and loans in Canada that make sense ... specifically for your firm!

7 PARK AVENUE FINANCIAL
CANADIAN DEBT FINANCING EXPERTISE







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/debt_financing_sources_canada_business_loans.html



















Stan Prokop

Why You Should ( And Should Not ) Lease Equipment. When Do Financing Leases Make Sense Via A Leasing Company In Canada

Lease Equipment Strategies In Canada – Is Timing Right For Your Company?



Information on the pros and cons of financing leases in Canada . To Lease Equipment may via a leasing company may, and may not always be the right decision for your firm . Here is why !


Financing leases in Canada. Should we... or perhaps we shouldn’t ... and who with... and when ... and why. Can we make up our minds here!

No one is a bigger fan of lease equipment strategies in Canada than us... when you're with the right leasing company it's a powerful double whammy of financing success. But is it always advisable to choose equipment finance, and when are there some clear disadvantages to this popular method of Canadian business financing.

Although 80% of North American firms utilize lease finance it might not always be your preferred strategy. Two obvious alternatives of course are to purchase the equipment outright, while the other options might just be a term loan strategy.

If there was in fact on perfect method of financing fixed assets, trust us... we'd be all over it. However the real world suggests that it's always about some pros and cons where you as the business owner or financial manager have to weigh in.

One of the most obvious benefits of those who have used leasing before is simply that it more efficient and less time consuming than seeking loan financing. The industry in Canada is basically categorized as ' document efficient’... smaller transactions can almost always be approved in a day or so ... sometimes within hours if you're at the lower end of the spectrum.

One other key advantage of asset finance via a lease strategy is your ability to manage what is known as the obsolescence factor. Because you're paying over time and the lessor owns the asset it becomes the risk of your leasing company when it comes to declining asset values. Most of us know that 99% of busines assets depreciate, not appreciate in value.

One solid example of the whole issue of obsolescence is the technology area. Whether its computers, software (yes software and software licenses can be financed) and telecom equipment are prime examples of expensive higher ticket items that can lose their value almost overnight given changing technologies. So to pay for them in cash or to lock into a term loan that has no flexibility is simply... not recommended!

Many companies in the manufacturing sector rely on production assets to run their company. These quite often need to be upgraded, if simply for the wear and tear aspect something mechanical. So the idea of flexibility in a lease to return, upgrade, trade in, and then refinance is a highly sought after financing strategy in Canadian business.

Not all fixed assets that your company needs will be needed for a long time... in some cases they may even be project oriented. That’s when a shorter lease term with an aggressive depreciation policy makes solid sense.

That’s just a couple advantage of leasing in Canada. But should you always be using this option? We do like to present a balanced picture!

If there are situations when you can maintain residual upside in the value of the equipment or asset (perhaps your company jet?!) then by all means consider an operating strategy or a term loan scenario.

Also, if you are in a position to pay cash and not hinder your overall cash flow situation then there is some accounting and cost advantages to outright purchase.

So, bottom line today? It's simply to manage and understand the weight of evidence that come with any lease vs. buy strategy.

Need help? Speak to a trusted, credible and experienced Canadian business financing advisor today for your lease equipment needs.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING EXPERTISE




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/leasing_company_lease_equipment_financing_leases.html