Business Credit Squeeze ? Rerum Cognoscere Causas ? Better Yet … Solutions !

Canadian Business Financing - Unsqueezing the Squeeze!


Information on business credit and financing solutions in Canada.
Causes and finance remedies for Canadian companies.




Business credit and financing solutions in Canada. We saw a headline that screamed out of a U.S. publication indicating that small and medium sized businesses in the U.S. were in a ' CREDIT SQUEEZE'. And that got us to thinking ... Rerum Cognoscere Causas? Which is simply Latin for ' knowing the cause!

So we're in Canada ... is there a credit squeeze here for the SME (small and medium sized enterprises) sector... and if so, how can your company eliminate the squeeze?!

When it comes to business financing it’s about daily operating cash flows as well as growth financing. How you manage or solicit solutions to those two challenges ultimately will affect the long term success of your business. And without good solutions and information the short term can be quite painful might we add!

As a company in the SME sector in Canada you're vulnerable at a lot of levels... the economy, the crazy things your competitors do and the fact that these days almost any global issues can almost be biting your firm also! So access to working capital and business credit financing is critical.

Many clients we speak to are immediately always focusing on outside external cash flow financing solutions. The reality is that a lot of their problems can be fixed by a focus on cash from their own operations. And the last thing most owners want to do is to focus on equity financing, which at its simplest just reduces your ownership and long term equity potential.

So how do Canadian business owners and financial managers address those internal solutions? We recognize it's easier said than done but it's done by focusing on your collections and payment terms, maximizing solutions around electronic payments and business credit cards, and managing payables and supplier relations.

But getting back to external solutions now, how then can the owner address business credit financing solutions in a manner that makes sense? You do that by identifying which of the three (or perhaps all three) types of financing you need from external sources.

What are those three types of financing? They are:

Fixed financing
Working capital financing
Growth financing


In Canada numerous external solutions exist for all those three types of financing you need to be successful. Those solutions include : Canadian chartered banks, receiving financing facilities, working capital solutions via non bank asset based lines of credit, leasing and sale leaseback solutions, and even tax credit monetization and securitization when those two apply to your firms condition. And remember, under all of those solutions you are not giving up equity.

Don't also forge the government Small business loan program which is a great program for business capital for asset and leaseholds up to a maximum of $ 350,000.00.

So, are we in a credit squeeze in Canada in the SME sector? We'll let the economists and business pundits argue out that one as they always do... instead focus on internal and external solutons that make sense for you, the Canadian business owner and financial manager.

Speak to a trusted, credible and experienced Canadian business financing advisor on eliminating that credit squeeze!

7 PARK AVENUE FINANCIAL

BUSINESS CREDIT AND FINANCING SOLUTIONS 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/business_credit_financing_solutions.html

Getting Enough? Business Cash Flow Financing!

Are You Managing For Sales Or For Cash Flow And Profits?


Information on business cash flow financing in Canada . Cash management and Financing solutions for Canadian Business


Business cash flow financing. Is your firm getting enough? It's probably just us but we have never met a client who, unlike larger corporations, has just too much ' cash on hand'!

The whole idea of having enough cash flow and working capital is to allow you to have enough liquidity for your daily operating needs while at the same time allowing you to grow your firm.

The challenge therefore becomes how much cash do you need, and where do you get it. (There are only 2 places to get this cash).

If the Canadian business owner and financial manager has a good handle on his or her cash flow needs you're in a position to pay back any secured debt and run your firm.

So what factors in fact determine if you're ' getting enough '? Well, first of all it’s about the level of risk you want to take in running your firm on a daily basis with either just enough cash, OR ACCESS TO CASH, or with a buffer that you're comfortable with.

While your debt payments might be fixed... in fact they probably are, the reality is that there are circumstances that occur to all firms that make your cash inflows fluctuate.

So how can you ensure you have access to capital for short term operating needs? That's the $50,000.00 question. You can of course access bank financing if you qualify for a Canadian chartered bank business credit line, but that might come with commitment fees for unused balances, compensating balance requirements, and the challenge of dealing with the bank when sales and financial performance declines.

We referenced only two sources of business cash flow financing previously. In essence they are first of all internal profits and operations, and secondly external working capital financing. It's as simple as that.

So can the business owner / manager actually accelerate cash, ensuring you’re ' getting enough' from an internal perspective. You sure can!

That can be done by accelerating collections, understanding your ' float time ' re cheque processing, lock box operations, etc.

We actually think there are firms out there they invoice once a month. Nothing could be worse... so invoice your clients as soon as you have earned the right to do that by shipping your products or completing your service delivery.

In some cases you should revisit customer terms and perhaps require deposits for work to be done.

Delaying payments requires a fine line of management thought. You should of course pay creditors to terms, but not before then - stretch them as long as possible without altering vendor relationships which can be valued highly. If you have a sales force compensation plan you could adjust commissions relative to receivables collected, not sales made. We fully realize we've just made an enemy of the sales force by the way, but it’s a cruel world!

Business cash flow financing externally consists of bank lines of credit, working capital facilities that are non bank in nature which secure receivables and inventories, and don forget the new kid on the block, asset based business credit facilities. In some cases the business owner can consider sale lease back or tax credit financing where appropriate.

So, getting enough? If you aren't speak to a trusted, credible and experienced Canadian business financing advisor for assistance on working capital needs for business cash flow financing.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS CASH FLOW 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/business_cash_flow_financing.html

Could ABL Asset Based Lending Be Your Rude Awakening To Business Credit Line Success?

What's all the commotion about Asset Based Credit Lines?


Information on ABL asset based lending . Why does this unique business credit line facility work when others do not?



An ABL Asset based line of credit. Could this form of financing be the ' rude awakening ' you need when it comes to understanding what type of business credit line is available to your firm?

What many Canadian business owners and financial managers don’t understand is that there are different sources of business lines of credit, and while it might all seem like a blur sometimes its worth sorting through the differences to ensure your firm is financed properly.

Things you'll be considering in this sort of analysis include the rates around line of credit pricing, what type of financial strength is required and the overall risk and benefits associated with any type of financing you might take on for your business.

Asset based lenders in Canada consist of both Canadian and U.S. firms doing business in the Canadian marketplace. They are differentiated by the amount of capital they provide (in some cases unlimited), geographical preferences, and most importantly industry and asset type focus.

The most important thing you can derive from any analysis in determining if ABL finance is right for your firm is to ensure you understand the differences between bank lines of credit and ABL revolving facilities. They are the same, and they are different... in some cases very different.

Why the difference? It comes down to the fact that asset based lenders providing credit lines are not regulated like our Canadian chartered banks. In essence they can do what they want, as long as transactions meet their own risk criteria.

What does that statement in effect translated into then? Simply that there is a lot of flexibility, and probably liquidity around any ABL arrangement you consider. It comes down to the focus on collateral, whereas the bank is focused on ratios, covenants, cash flow formulas, etc. That’s not a bad thing; it’s just ' different '!

The total focus of ABL asset based lending credit lines revolves around the total value of your assets, with typical categories being receivables, inventories, and unencumbered equipment.

How does the ABL lender do this when the bank sometimes cannot? The key to that answer is that proper appraisals and closer reporting of your ongoing situations translates into greater borrowing power for your firms financing needs.

The concept of ' evergreen' is often a true ' rude awakening ' when it comes to the ABL business credit line. Simply speaking it’s that these unique lines of credit don’t have set repayment schedules - they grow as your firm grows, so the concept of a cap at a bank is a significant differentiator.

Oh, and about those qualifications. We can make a broad statement that almost every firm qualified, whether your company is enjoying strong sales growth and profits, or if you're at the other end of the spectrum and have some severe challenges and distress issues. It all comes back to your asset base and its value. To qualify you simply should be able to present proper updated financials and aged lists of receivables, inventory, etc.


In our business and even personal lives rude awakenings are either a good thing, or perhaps not so good. Canadian business owners and financial mangers might well find a positive awakening when it comes to differences and benefits in ABL asset based lending credit lines. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in defining the differences.

7 PARK AVENUE FINANCIAL

CANADIAN ABL 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/abl_asset_based_lending_business_credit_line.html

Your Company Successful And Going Broke? Here’s Why! Business Cash Flow And Working Capital Solutions For Canadian Business

Measuring and Solving Challenges of Business Cash Flows


Information on business cash flow in the Canadian financing arena . Measuring and solving working capital challenges .



Business cash flow. It's the reason that thousands of Canadian businesses, everyday, must feel like they have a combined feeling of ' going broke ' while seeing their sales rise at the same time.

It's very wrong of course to assume that profits out of those sales assumes positive working capital equals profits. That is absolutely not the case.

Yes, over the long run those profits will become cash, but what about the gap? That’s that lag in between that is giving our business owners that ' broke ' feeling!

Business cash flow is in fact the ' lubricant ' that keeps your company running. You get that working capital from two sources, internally, i.e. how you run your company and manage your current assets, and externally, via commercial lending facilities. We suppose that you could also sell assets to generate cash, but that’s not really why businesses go into business, right?!

Your company balance sheet changes everyday, At the same time though its important to regularly take a look at that balance sheet as a measurement of your ability to run your company . Simply speaking it’s a way of both you as owner or manager, or any of your lenders for example, to determine if you're solvent and able to meet your commitments.

Borrowing properly and putting cash flow to good use is of course your goal for a successful business operation it’s about borrowing the right way, from the right parties, in a manner that ensures you are not in a liquidity trap that so many business owners and financial managers find themselves in.

One key way you can borrow successfully is to match short term debt with the right assets. A great example of this is a business line of credit or receivable finance and inventory finance facility. In this manner you're taking current assets and ensuring they are supported with a solid short term debt solution. When it comes to financing long term assets you should not be doing that by collateralizing your current assets. It's all about the matching!

Let's use a quick example of where things can go wrong... it comes back to that ' business is great' but why do we feel like we're going under' feeling! Let's say a company had a significant receivable base and put in a business line of credit facility. A need perhaps develops for some new assets to support the growth of the business so part of the line of credit funds are used to finance equipment assets.

Where things go awry is when sales go down or flat , funds are used to reduce payables or temporary operating losses, and the company finds themselves ' over advanced ' . This is right about the time when creditors get worried, both suppliers and your lenders. Bottom line, it’s a perfect storm of cash flow ugliness.

To avoid that ' broke feeling' it’s a question of matching debt properly and using cash flow via solutions such as leasing or term loans for asset acquisition.

Numerous short and long term solutions are available to the Canadian business owner when it comes to business cash flow solutions. Short term liquidity comes from bank lines; receivable financing facilities asset based lending lines of credit, and monetization of tax credits.

Speak to at trusted, credible and experienced Canadian business financing advisor who can assist you in being successful... not ‘going broke’!

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS CASH FLOW 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/business_cash_flow_working_capital_canadian.html

Equipment Leasing Documentation. Caveat Emptor When It Comes To Lease Financing And Asset Leases In Canada … Unless…!

Why Are Lease Documents So Important In Canadian Equipment Finance



Information on equipment leasing documentation in Canada . Lease financing has strong do’s and don’t when it comes to Asset leases .



Equipment leasing in Canada. Ever made a big mistake in lease financing of asset leases in Canada? We're going to take a wild guess and say that mistake may have in fact involved the documentation on your transaction.

The actual ' papering ' and documentation around your lease is a lot more important than many Canadian business owners and financial managers might think.

Let's take a short, but much needed walk down the path of helping you sort out the pitfalls of entering into the wrong type of lease issues. The reality is there is a standard process pretty well around every asset lease you enter into.

We're assuming you have picked the type of lease you feel best suits your transaction - that might be a capital, operating, or short term rental transaction. The lease process simply involves ensuring that the purchase of the asset is properly done by the lessor and your vendor. In some cases it might be that you are the vendor, that situation of course revolving around a ' sale leaseback ' scenario.

The whole process is completed by payment for the asset by the lessor, execution of the documents and commencement of payments.

That all sounds pretty basic right? The reality though is that there are three types of lease financing companies in Canada. Their type of operation depends really on their size and market focus. In general they can be called: small / medium and large ticket firms. And depending on which type of firm you are dealing with a whole separate level of documentation and issues need to be address.

In today’s case small is good, that’s because small ticket equipment leasing in Canada is simple and efficient. It generally consists of a one of two page lease document and covers assets under 25k size. More often than not the simple lease document covers off the rights and obligations of each party - That’s you and the lessor, as well as incorporating your acceptance of the asset for lease commencement. Nothing could be simpler.

When we travel up the lease ' food chain' and enter the mid ticket asset leases category we're talking about a different kettle of fish. Oh and by the way, general this category caps out at 500k to 1 Million dollars, depending on whom you are talking to.

Many firms you deal with in this ' mid ' ticket area prefer a single Master lease, at which point individual schedules can be added later. As challenging as it might seem some time we do in fact recommend that to clients because it simply becomes much easier to add other leases down the road - in effect you have already agreed to all the key terms and conditions and don't have to renegotiate them.

Is there a lawyer in the house? We're referring to the fact that when it comes to large ticket transactions you can assume a very ' custom' approach. This is not cookie cutter leasing and we typically see both the lessor and your firm having lawyers negotiate some of the critical terms of the lease , for the obvious reason that its often a multi million dollar transaction that presents potential risk to both the lessor and you the lessee.

Don't underestimate the need to understand the type of lease you are entering into and the equipment leasing documentation that comes with that transaction. Speak to a trusted, credible and experienced Canadian business financing advisor for help in lease financing in Canada.

7 PARK AVENUE FINANCIAL

CANADIAN EQUIPMENT LEASING 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/equipment_leasing_lease_financing_asset_leases.html

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