Are You In The Game ? Confessions Of A Cash Flow Manager On Time Tested Canadian Business Financing Solutions

Are You Happy Solving Your Firms Cash Flow Equation?


Information on cash flow financing alternatives in Canada . Business working capital solutions.



Call us biased but our preference on cash flow financing for Canadian business is to learn from an expert. The rookie thing never seems to work ..! One of the most famous industrialists of all time once said ' the only irreparable mistake in business is to run out of cash ... when you run out of cash they take you out of the game.

No Canadian business owner or financial manager wishes to be ' taken out of the game ‘. So lets look at some of the analysis, as well as ' the fix ' when it comes to financing your working capital.

We always are a little of wary in initial discussions with clients around how they are doing when they are only focusing on just profits and sales, which are great by the way . But the juggling act around sales growth and profits, to use one analogy, also revolves around the spinning knives of cash on hand.

Confusion reigns supreme around even the terminology on cash, cash flow, and working capital. Naturally actual real cash on your balance sheet, i.e. your bank account, is your business lifeline .Cash flow on the other hand revolves around the changes in your working capital accounts, which, by the way, includes payables also.

Your working capital, on the other hand, is really the value of our working capital accounts, ie receivables and inventory, and how they relate to your payables.

Financing solutions for Canadian business working capital are numerous.

Cash flow and working capital solutions include:

Bank operating lines of credit

Receivable Financing

Working capital term loans

Unsecured cash flow loans

Asset based lines of credit

Supply chain /P.O. Financing

Which of these solutions work best for your firm? Although sales generate cash it’s used to support your vendors, payroll, utilities, etc, and etc. ! Those sales however convert to receivables, and those can be easily monetized by all of the solutions we note above, with the exception of the working capital term loan.

Term loans are debt, and if you don't necessarily want to take on more debt and interest expense its more often than not best to use financing that converts inventory, receivables, and purchase orders to cash .

Oh and by the way, that sure beats putting more equity into your company, or selling assets. (Selling non performing assets or looking at a sale leaseback is not necessarily a bad thing by the way).

Remember today’s motto though, don't run out of cash or you ability to access cash. The most serious signs of cash flow doom are usually quite obvious: serious losses, inability to access traditional financing, lack of assets to finance new cash flows.

Can we learn anything else from those confessions of a cash flow manager? Understanding the past sometimes help, so knowing your historical peaks and valleys is a good thing, and your ability to plan and demonstrate future cash flow needs sure helps!

And the tools you'll need? Very basic: cash balance and aged receivables and payables. A look into future sales projections sure helps.

In summary, while stretching suppliers or bringing in new ownership and equity work, they aren’t desirable. Sales are good, in fact they are great, but focus on financing solutions and mgmt tools that convert working capital assets to cash.

Speak to a trusted, credible and experienced Canadian business financing advisor on your firms ability to achieve the right type of cash flow financing to compliment sales and .. hopefully, profits.

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/cash_flow_financing_business.html

What’s Your IT Finance IQ? Technology Leasing And IT Computer Software Financing In Canada

Information on the IT Finance decision when it comes to technology leasing and financing of a computer system, software, and other tech assets such as software , servers, etc.


Here’s a free knowledge upgrade !



IT Finance and Technology Leasing. Whether you consider the acquisition of a computer system or other tech gear a cost or an investment it's important to know your ' INTELLIGENT QUOTIENT ' ( IQ) on what for many firms is a very significant either ongoing or one time expense.

There has never been a time when a competitive edge often is aided by a tech investment your company makes or needs. In the language of the people it’s all about the ' bang for the buck ‘, getting the most out of the minimum spend.

That’s where finance and leasing options around computer, software, and telecom type needs becomes a critical aspect of your overall decision. It's all about benefits you can achieve from the flexibility of a (proper) finance solution.

Naturally the benefits of a tech investment arent just financial, as we noted they are both operational in nature and in some cases might be a key part of your overall competitive strategy.

Numerous North American stats suggest that the majority of IT Computer solutions end up with a financing package attached to them. That is either driven by the vendor or your own expertise in the matter.

So what are those key reasons that Canadian firms choose to finance their technology. One major one is simply the fact that technology today seems to be a moving target, and your firm is often concerned with the ability to acquire the newest and the best at the lowest cost. A real irony in the industry is that in many cases cost goes down and benefits go up, not visa versa.

Secondly, a prudent busines owner, IT manager, and of course the finance manager want to be able to match benefits achieved over the long term with cash outflows. Yesterday we got a call from a corporate treasurer who had just found out his operational staff had ordered a 1.6 Million dollar ' simulator ' and delivery was forthcoming. (We’re of course assuming the operational staff had the authority to order that much?!). The Treasurers' challenge? How to finance and pay for the system !But our point is that based on a proper financial package of information that type of problem can be fixed in a matter of a couple of days via a lease financing approval .

Whether your firm is a medium sized or larger corporation it probably has a budget around the technology spend. Lease financing and proper structuring of a finance solution allows you to acquire and manage assets within that budget. For the SME business owner , whether there’s is a formal budget or not it always more often than not comes down to cash flow management .

In certain cases some firms certainly have the ability, or need to purchase technology outright. Proper use of any type of lease vs. buy analysis will usually guide the business owner, CIO, or manager to the right decsion.That when the investment should allow you to achieve competitive and operational efficiencies.

Never underestimate the power of a financing / leasing solution when it comes to IT and technology financing. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right financing decision around what arguably is one of your companies most important and asset acquisitions.

7 PARK AVENUE FINANCIAL
CANADIAN IT FINANCING AND 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/it_finance_technology_leasing_financing_computer.html

Turn $500,000.00 Of Promises Into Cash In 4 Hours . Financing Receivables Via Invoice Discounting And Receivable Lending In Canada

Canada’s Newest Cash Flow Financing Tool


Information on financing receivables in Canada . How invoice discounting via receivable lending turbo charges cash flow and working capital .




Financing receivables in Canada. Trust us, it's not magic . The concept of invoice discounting and receivables lending practices in Canada allows Canadian business owners and financial managers to turn sales into cash ,, pretty well in 4 hrs .. ! In case you haven't thought about that a lot, 4 hrs is better than waiting 1, 2, and yes sometimes almost 3 months for your sales to turn into customer receipts of payment . Talk about bridging the gap!

Surely business owners can't be surprised when they hear that the majority of firms tend to drag their feet when it comes to paying their bills . In the world of corporate financing slowing down payables is actually part of the formula for cash flow calculations ! And be honest, you cant be surprised about that one since the your firm is probably itself in that same majority of firms who in a calculated manner only pay suppliers at the last minute .

At the root of the matter though is the fact that the slow down in receipts from your clients creates a problem for your firm . Can it be fixed ? Absolutely .

We'll quickly add that your own firm can do a lot internally to accelerate cash - that can be done by stressing payment terms with clients and maintaining a focused ( but professional ) approach to collecting your accounts . That type of policy also prevents you from hearing about invoice or product or service problems much too late in the business cash flow cycle .

While many firms want a positive business relationship rather than have their valued customers on ' credit hold ' its safe to say this is a tough balancing act to manage . One U.S. survey, and we're pretty sure it is the same in Canada had 1000 of the largest corporations in America acknowledging they were paying suppliers more slowly . We already told you the reason why of course . Another survey indicated by the way that 50% of all ' small guys ' were experiencing cash flow ' concerns'! No surprise, right .

Naturally the concern of the SME business owner and manager revolves around ' will I lose a client if we have a strict credit policy '. We don't think so , but at the same time that is yours to decide . We would add by the way that profits of lack thereof rarely takes down a company, but running out of cash ... does .

So, our ' magic solution ' on turning , in our example 500k of promises into cash . Its invoice discounting. It's basically getting cash before your client pays you, and it’s done via legitimate receivable lending firms, typically non bank in nature in Canada.

Your receivable or receivables are purchased when you issue the invoice, and typically, 4 hrs or so later you have cash in the bank. In Canada a typical advance rate is 90%, so if you have 550,000.00$ in sales you would receive approx 500,000.00$ in cash. Oh and by the way, that remaining 10% is yours when your client pays, less the financing cost.

Accounting for all this is quite simple , using one invoice as an example you would CR a/r and DEBIT cash and invoice financing expense . Mission accomplished!

The largest corporations in North America use a more formal program that typically is called ' securitization ' whereby they move their a/r off the balance sheet to a third party in exchange for immediate cash . Boy does that balance sheet look good. No A/R and plenty of cash.

The benefits of financing receivables should by now be pretty obvious - it comes down to customer retention, not running out of cash, better supplier relations , and the ability to feel you have a sense on future sales and growth financing .


Speak to a trusted, credible and experience Canadian business financing advisor on how your firm can benefit from invoice discounting. It's not magic, just experience and knowledge!

7 PARK AVENUE FINANCIAL
CANADIAN INVOICE 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/financing_receivables_invoice_discounting_lending.html

Canadian Business Financing Options . Don’t Make These Credit Finance Mistakes

Information on Canadian business financing options . It’s all about timing and the right finance and credit choices.


Here’s How To Not Lose Control On Business Finance Options And Solutions






Canadian business financing options. Here's a question for business owners and financial managers. Do you really think you have made the right business credit and finance choices for your firm?

When we talk to clients it's often clear they are not sure they have the right finance mix for both survival and growth of their business.

Contrary to what many businesses think they actually do have a lot more choices than they think. Often times the owner/manager is focused solely on a final approval for ' any ' type of financing that seems to fix that days problem.

What the owner/manager doesn't realize is that as your business grows and matures different financing options are both required, and available. That of course covers us all the way from start up to mature!

So what are some of those mistakes that are being made... and more importantly how can you avoid them? Let’s cover off some basics.

The first point is that at certain stages of your business growth it’s all about ' collateral ' when it comes to business lending. Our point here is that different forms for finance require different forms of collateral, and in fact you quite often aren't required to put up as much collateral as you think.

One area is the personal guarantee, which in many forms of business financing is sometime very much required, and in other instances has little emphasis put on it. Quick example - in a start up environment there is going to be significant emphasizing of personal credit and net worth of the owners. However down the road your firm might be eligible for millions of dollars of asset based lending finance, and that type of financing does NOT place a large amount of emphasis on personal guarantees.

So it’s all about ensuring you don’t over pledge on collateral when you don’t need to, while at the same time recognizing that the type of financing you require is going to focus on the collateral aspect. But it might not be all of your collateral - its all about the negotiation process.

Receivable financing, which is a subset of asset, based lending in Canada and if you have solid A/R clients external collateral shouldn’t really be on the table for discussion.

A lot of business owners misunderstand how their personal finance and credit history can affect their ability to get business credit. At the same time larger firms with established collateral does not really overly focus on personal credit of owners. But we do caution the start up firm that banks and other commercial lenders view your personal credit as a signal as to how you might run your business finances. Enough said!

A third area of potential mistakes revolves around the fact that business owners are sometime poor at matching the financing they have access to with what they really need. Here it’s critical to understand how your cash flow and collateral fits into each different type of business financing, and what rates make sense for the type of financing you're trying to achieve. Quick example - for revenue generating assets solutions such as long term equipment leases make sense. Don't use cash or credit lines which typically give your working capital.

It's all about two simple choices - are you looking for debt in the form of long term loans, or are you wanting to monetize assets for cash flow and working capital . Once you understand your options its all about deciding which of these options works for you best:

Receivables finance
Bank operating lines
Equipment leasing
Working capital term loans
Non bank Asset based lending
Securitization


Our bottom line - it’s about access to knowledge and execution of the proper business finance strategy. Speak to a trusted, credible and experienced Canadian business financing advisor on your business finance 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.com/business_financing_options_finance_credit.html

Business Financing . Are You Making Right Decisions On Borrowing And Collateral Leverage Loans?

Why Amount and Type Of Business Financing Should You Really Be Comfortable With ?


Information on business financing in Canada and factors to consider on leverage and borrowing collateral for loans and credit facilities



Your business financing in Canada. When it comes to priorities and important things on our ' to do’ lists borrowing and leverage, collateral loans, and credit facilities are surely at the top of our list - or at least we think they should be. Here's why.

Canadian business financing is all about financial decisions, ie when to make them, and making them properly with informed clarity. But what type of financing is in fact best for your firm, and will it allow you to both maintain and grow profitability, or even, dare we say it... get to a profit point.

We don't hear a lot of clients talking about ' leverage ' but it’s a simple key concept in business finance. They way that you lock into your fixed costs is in fact all about our term ' leverage '. As sales increase naturally your fixed costs don't -- they're fixed! So in the good times sales grow and profits grow quite nicely . (We all kind of vaguely remember the good times, right?)

On the other side of the coin when sales go flat or down those profits kind of disappear pretty quickly. We suppose that if you're highly leveraged and sales are great those profits look pretty good.

So at the end of the day , its about borrowing and locking into the right amount of debt - that’s the financial leverage, and on the other side its the operating type leverage related to your fixed costs.

Each business owner and financial manger tends to develop their own comfort level around the amount of debt they are comfortable with. In the case of the larger public companies there are some generally acceptable rules around debt ratios, etc

The thing that Canadian business owners must keep in mind that it’s all about borrowing for the right reasons and making sure that you get a good return on those borrowed funds.

Collateral is a key factor in the type of debt your company takes on. We always remind clients that your lender has no upside; ( the collateral you have makes them feel comfortable they won’t be participating in the downside !) he or she just has their collateral and agreed upon interest rate.

One of the big challenges we see all the time is the reality that in a lot of firms sales and profits are all over the place - that of course makes it difficult to know how much debt you can take on , or by how much you can comfortably increase your fixed costs if you’re expanding, etc. A quick common example is airlines - if they acquired/financed a lot of new planes and then had poor load factors... well you know the rest...! I guess we're saying in a perfect world that it might be good for you to conservatively assume ‘worst case ' scenarios and then take on an appropriate amount of debt you can repay .

In Canada business can take on debt in the forms of:

Bank loans
Equipment leases
Working capital term loans
etc.

But, and its important, they can also monetize assets without increasing debt - this is done thru :

Bank revolving facilities
Asset based lines of credit
Receivable and supply chain facilities,
Monetizing their tax credits if they have them .

So, our take away? Simply that you should get a handle on your debt leverage and your fixed cost leverage and borrow for the right reason with the right financing vehicle - loans, or asset monetization.

Speak to a trusted, credible, and experienced Canadian business financing advisor on whats right, and not right, for your company.

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_financing_borrowing_collateral_loans.html

Is ABL Financing A Solution For A Business Debt Restructuring Loan ?

Here’s A Solution To A Successful Turnaround


Information on how ABL asset based financing is a solid solution when it comes to a business debt restructuring loan facility .



A business debt restructuring loan. ABL financing (asset based lending) offers a strong solution for Canadian firms who require some sort of restructuring. Why does this type of financing suit the immediate needs of the business owner or equity investors? Simply because it takes a different look at all the assets of the remaining business, including inventory, receivables, and fixed assets.

By focusing on the assets of the business this typically provides significantly more breathing room for the business as it settles into a new stage of its life. The ability to leverage these assets provides more liquidity at rates commensurate with the current overall credit risk.

While a bank solution for such situations might significantly emphasize cash flow the ABL facility takes the posture that assets are the key collateral. This focus allows asset based lending to supersede a more traditional banking solution which often time simply is not available due to the businesses current state.

The other benefit of an ABL business debt restructuring loan facility is simply that it's available to the SME sector of the market. Larger or public corporations requiring restructuring tend to have access to business credit that only large capitalization corporate firms can access. Companies in that, for example 1-50 Million dollar ranges can view an ABL solution as their solution to restructuring.


Firms in restructuring mode quite often are focusing on getting back to breakeven and profitability. The ABL solution is simply more patient in allowing them to do that. Since other models of financing and business loans focus on cash flow/ebitda etc the asset based finance solution allows a firm with declining or lower cash flows to leverage the asset base for liquidity.

And by the way, although we refer to this financial restructuring vehicle as a loan in effect it’s a monetization of assets, so there is no ' pay down ' per se. ABL restructuring solutions are often paid out by a Canadian chartered bank when it comes to a return to profitability and growth and a stable balance sheet.

The challenges for the business owners and financial manager is significant when it comes to restructuring. It's all about cost structure, sales revenue, efficiencies, asset sales... or upgrades, and people issues. These challenges, safe to say, need time and an ABL financing solution can give your firm that time.

Are there some solid takeaways when it comes to looking at your restructuring finance needs? We think there are , and they include the fact that this type of solution needs time to take hold, sales volume takes awhile to regain stride, and the business owners and manager who are managing through the current situation need to be able to measure progress,

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in relieving the burden of a financial restructure scenario via an asset based ABL facility. It's a solid working capital and business survival tool that will provide significant improvements to your cash flow growth.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS RESTRUCTURING 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/business_debt_restructuring_loan_abl_financing.html

May The Force ( Of Business Cash Flow ) Be With You ! Focus On These 4 Working Capital Management Issues .

Understanding Business Cash Flow And Working Capital Dynamics

Information on business cash flow management issues and working capital challenges for Canadian business owners seeking financing success.



Business Cash flow management in Canada. That’s a very powerful force in the overall success of your business... as they said in the movie ' may the force be with you '.... and here's why and how!

Let's examine some of those forces and focus on what key areas ultimately are critical to your financing success when it comes to working capital, growth, and daily operational survival.

Every Canadian business owner or financial manager probably agrees on the fact that there is nothing more powerful in their businesses than ' cash on hand ', or access to cash via working capital solutions. Early on in business careers we mistakingly focus on the fact that profits = cash on hand / available. But it isn’t so, as we all quickly discover.

The reality is the cash generated from your business goes into purchasing fixed assets, paying suppliers, etc.

So what are those four key forces of business cash flow management? Simply speaking they are government liabilities, debt and repayment thereof, working capital access, and finally, last but not least, withdrawals of profits from your business.

It's critical that the business owner in manage those forces on an ongoing successful basis. Paying taxes promptly and ensuring debt is repaid in a timely manner are of course job #1 if we had to maintain a pecking order on these things.

A pretty reasonable rule of thumb is that your firm has a couple months of working capital to cover operating expenses outside your credit facility

Working capital, unfortunately, tends to be somewhat of an up and down business for the Canadian business. Is there a good way to get a handle on whether you're winning when it comes to the area working capital forces? There is, and it’s to focus on operating cash for your company, which is very easy to calculate.

How is that calc done? Using a month end calc as an example take your profit and add back the positive or negative changes in receivables , payables, and inventory . Example - if receivables went up in the current period that’s a negative number, if inventory went down that’s a positive number. All of this is in relation to sales of course.

When it comes to business cash flow management and working capital don't make the mistake of confusing term debt and lines of credit. Business credit lines are good things when they fluctuate - if you're always at the top of your bank or asset based credit line that’s basically not a good think and you're avoiding the issues of additional permanent equity in the business

Term debt is not a bad thing if it’s used for the right reasons. Equipment finance is a solid example of taking on term debt if you are profitable and can retire the lease as agreed, all the while using the asset to generate sales. Real estate debt, as large as it might be is actually good debt given you're building equity with repayment.


What then are our ‘take aways ‘? It’s simply that you need to understand your cash cycle, borrow in the right manner, and focus on taxes and equity take outs properly.


In Canada working capital and cash management solutions come from 6 key areas:

Receivable Financing

Inventory Financing

Asset based lines of credit that combine A/R and inventory

Tax Credit Monetization

Securitization facilities

Working Capital Term Loans

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can ensure the force (of cash flow and working capital!) is with you!

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_management_working_capital.html