Growth Financing Challenges ? Don’t Trade Off Growing Due To A Cash Flow Problem !

Canadian Growth Finance Problems .. and Solutions!


Information on growth financing challenges in Canada . Don’t let a cash flow problem prohibit your company growth!




Growth financing in Canada. It's a harsh reality for many business owners that with new found revenue growth comes a cash flow problem. Knowing why that problem exists and what to do about it is what we're talking about today.

Cash flow goes higher and lower with growth. Simple as that. But why those changes ? That is the key question. It's because your working capital accounts change all the time, every day in fact. Those working capital accounts are receivables, inventory, and your payables on the other side of that balance sheet.

So if there is any one point you can take away here its that as your assets and payables increase your business cash flow goes.... DOWN! It therefore goes without saying (almost) that if your sales go up and your working capital assets such as inventories and A/R stay the same or decrease your working capital cash flows get ... Better!

It’s your ability to either finance, or turnover those working capital accounts that will ultimately make you successful in growth financing and solving any cash flow problem you have.

The big take away here, again, is that you have to watch your receivable and inventory growth. Not all companies have an inventory challenge, such as service Type Company, but pretty well all of us have A/R. One internal way you can address a cash flow and working capital challenge is to slow down payables. As we have pointed out in the past that is a very double edged sword given that you value your supplier and vendor relationships which can often be key to long term success.

Don't forget also that when your sales go down for whatever reason that also has, somewhat ironically a positive effect on your working capital. The trick here is to also reduce some of your expenses as much as you can.

It's also a good tip, over time, to monitor your levels of inventory and A/R in conjunction with sales going up and down. That's because it’s simply a great tool for predicting better or worse cash flow in the coming months based on history.

So is a cash flow problem necessarily a bad thing. Ironically, definitely not. It's all about the reason for that issue, which typically in a good environment is growth.

We've talked a lot about internal issue and knowing when and why a problem might exist. But a better questions form clients is of course ' what solutions exist?! '.

Here the key rule of thumb is to match the right type of financing with the actual problem. To put it even more clearly, finance shorter term working capital with short term cash flow solutions. In this case we're talking about some traditional and not so traditional solutions.

In Canada they included bank lines of credit, receivables financing, working capital facilities, non bank in nature that finance both A/R and inventory, as well as purchase order or supply chain financing. If you have a SRED claim you can even finance that for short term cash flow, as these loans don’t even carry monthly payments!

Speak to a trusted, credible and experienced Canadian business financing advisor for solutions to growth financing.

7 PARK AVENUE FINANCIAL

CANADIAN GROWTH FINANCING 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/growth_financing_cash_flow_problem.html

Don’t Overlook These 5 Leasing Finance Issues Around Lease Documents In Canada

Don’t Forget These Issues When Leasing Assets In Canada !


Information on leasing finance in Canada and the importance of address key issues within lease documents when financing equipment and other assets.




Leasing finance in Canada. Just how important is the issue of ' lease documents ' when it comes to equipment financing in Canada. When you speak to companies who have encountered what we can diplomatically term as ' issues ' in the past with their lease transactions you just might find that a lot of those issues revolve around key terms and obligations in your transaction.

Let's examine 5 of those key points, with a focus on protecting your rights in the transaction with a fair lease transaction - because at the end of the day also those same issues have to be fair and make sense to your lessor.

We would also point out that many of these issues can be negotiated and that’s important for the Canadian business owner and financial manager to know.

First of all it makes great sense to consider signing one master lease with your leasing company of choice. Why ? If only for the issue of saving time and money , as this type of document addresses once and for all , the terms of all future lease transactions . Larger transactions will tend to always have a ' master lease ' scenario in place anyway given the complexity of a larger transaction. It's not all that complicated, but many firms might want to have their lawyer look the document over once, as it identifies the rights an obligations of both parties and describes the financial terms of the deal.

Second issue today ... warranty. Make sure you understand your warranty rights on any asset you purchase. Many Canadian business owners/ managers confuse, mistakenly, the finance firm as their ' vendor ‘. That is not the case... they are financing the transaction for you, not providing a warranty. It gets very complicated, and somewhat ugly, when businesses withhold payment to their lessor for product defect issues.

In Canada there are two types of leases essentially when you enter into a lease contract - a capital lease ( lease to own ) and an operating lease ( lease to use) . Capital leases typically have what is known as a ' hell or high water ' clause in them which basically means that you agree to make your payments, no matter what!

The third issue to watch out for is the issues of liens and registrations against any asset you purchase. This typically is not a problem is your are purchasing from a legitimate vendor , but leasing finance in Canada also means you can finance used equipment - so its critical that you ensure that you and the lease company have clean title to the asset .

Fourth issue today - taxes. Lease payments in Canada will include the provincial and federal portions of tax due on the monthly payment amount. Don't forget to budget these into your cash flows. This issue brings out a positive advantage of leasing finance in that your taxes are in effect financed, unlike a loan type transaction.

Our final issue today is the issue of use and return requirements. Examine carefully your obligations around the type of condition you must return the asset in when your transaction calls for an asset return to the lessor. And make sure the location and costs involved around that make sense to you the lessee. If you are entering into an operating lease and have the right therefore to extend the transaction or purchase the asset it just makes sense to maintain the asset properly.

Bottom line; don’t forget the ' terms ' part of any leasing finance transaction in Canada. Issues not addressed now will be costly and time consuming later.
Speak to a trusted, credible and experienced Canadian business financing advisor on assistance with lease documents and issues that protect your firm and enhance the true value of leasing in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN EQUIPMENT 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_finance_lease_documents.html

5 Methods Of Canadian Business Financing In Canada . Which Finance Companies Are For You?

The Money Is Out There – Here’s How ! And Where!


Information on access to Canadian business financing . Which finance companies and loans and services best suit your firm today?





Canadian business financing... It works when you have business owners and financial managers in Canada that know how to be successful with the right type of finance for their company - as well as a lender or institution who wants to share that success with yourself .

For the business owner the reward is growth and profit, for the lender its repayment with a reasonable rate of interest commensurate with credit risk.

When we speak to clients about financing choices its all about ensuring you understand the alternatives. Let's examine 5 of those.

One of the newer methods, relatively speaking, that Canadian firms use to finance growth is the selling of their receivables as they generate sales. This form of financing goes under a number of names: receivable financing, invoice discounting, factoring, etc. By employing this method of finance they immediately generate typically 90% of any sale into direct cash, with the other ten per cent, less financing costs, coming to them when their client pays.

Although there is a strong perception in the Canadian marketplace that this type of financing is expensive. It becomes less expensive when business owners utilize that cash to sell more, take supplier discounts, and purchase more effectively with new found cash. In truth this method of financing, quite frankly, works best when you are partnering with the right finance firm and have the right type of facility in place.

An even lesser known method of Canadian business financing is what is known as purchase order or supply chain financing. This works best when you have legitimate orders from bona fide clients and have a need to be able to pay your supplier significantly in advance of your own firm receiving final payment from your client.

PO and SUPPLY CHAIN finance can really float you through a busy season or time of year.

Smaller firms and retail organizations have a real challenge in financing their firms. This is because they traditionally don’t have the assets that are sought after by banks and other finance firms when it comes to working capital and cash flow financing. So the solution here becomes bridge loans that are typically collateralized by inventory and cash flows. Typically you would supply 3 months of recent bank statements to show inflows and outflows of your business.


80% of all North American businesses employ equipment financing in that it allows you to have up to date assets that won’t become obsolete during the time you need them for production, operations, etc.

Almost anything can be leased and financed, and all credit qualities are eligible based on the creative structuring offered by lessors in Canada.
As a business owner your choice becomes whether you enter into a capital lease or an operating lease, depending on the ultimate disposal of the asset at the end of the lease term.

That method of financing, i.e. lease finance brings us nicely into # 4 in our list of 5 methods of business finance. Here the concept is customer financing - i.e. offering a finance program for your clients when you have a product that can in fact be financed. Setting up a program with a qualified partner allows you to sell more, generate cash flow on the sale immediately, and be perceived by your client as a full service vendor that truly adds vale to their operations.

Finally, don't forget the government SBL loan, which is, bar none, the best available financing for new or established firms with fewer than 5 Million dollars of revenue. Great rates, terms and structures, and a solid solution for financing equipment and leaseholds.

Speak to a trusted, credible and experienced Canadian business financing advisor on putting together a package or financing request that properly positions your firm for financing success.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS 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/canadian_business_financing_finance_companies.html

Accessing Business Lending In Canada . Making The Right Financial Decisions When Financing A Business

Canadian Business Financing



Information on business lending in Canada . Financing A business comes down to why, how and where!



Financing a business in Canada. Decisions, decisions... decisions! It seems you always have unanswered questions - what type of business lending is best for my firm, what types of finances are available? ... who can we talk to .. and on it goes.

In fact the word ' debt ' keeps coming up when it comes to accessing financial solutions for your company... how much seems to ring a bell.

One of the things that business owners and financial managers often don't think about is the concept of ' fixed costs '. Those costs will always stay the same, no matter if your sales revenues and cash flows go up... or down. When times are great those costs stay the same and your company rises above the tide when it comes to profits, etc. However, if sales and cash flows decline your fixed costs unfortunately don’t fall in tandem.

It's all about leverage, and that becomes the double edged sword in business. That leverage that we associate with fixed costs and debt is risky but at the same time provides greater returns if your company is successful and growing.

We actually break leverage down into two different types - operating and financial. Financial is of course relating back to that debt and the amount we're willing to take on. Operating leverage on the other hand revolves around the amount of fixed costs you undertake.

No mater which type of leverage you’re talking about it always comes back to that balance act of how much is appropriate.

If you are not a public company it becomes a financial decision you make as to taking on debt ... unlike the public company you’re not in a position to go to the shareholders and ask for more equity . At the end of the day most Canadian business owners and financial managers borrow somewhere down the middle - by that we mean they don’t take on onerous debt, , yet they do take on some form and amount of debt .

One of the main decisions that business owners make around accessing business lending is the idea of making more return than the actual rates they are paying for debt. That becomes a challenge is your rates to finance are particularly high, which no doubt relates to your overall credit quality as perceived by lenders when financing a business in Canada. Your lenders, as we have pointed out in the past, DON'T share in the upside - they only want to cover off their risk and return. And if they have sufficient collateral or confidence in your cash flow all the better.

Canadian business owners benefit from leverage by accessing the right amount and type of financing. That includes equipment finances, term loans, bridge loans; asset based lending facilities, securitization facilities, etc. Speak to a trusted, credible and experienced Canadian business financing advisor on business lending in Canada, as it pertains to your firms needs.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS 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.webpage66.com/business_lending_financing_a_business_canada.html

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