Is The Grim Reaper Of Your Business Cash Flow? Here’s Working Capital Tips And Solutions That Only Make Sense

You Lose.. He Wins .. Don’t Let The Grim Reaper Of Business Finance Get The Lead On Your Business !



Information on business cash flow solutions for the working capital challenges faced by Canadian business on a daily basis .



Is the lack of business cash flow a potential ' GRIM REAPER ’ for Canadian businesses of any size? We certainly think so, and that’s why the ability to figure out / measure what isn’t working and what solutions are needed should be ' job 1' for the Canadian business owner and financial manager.


The goal of course is simple, and it’s to achieve the right balance of both profits and cash flow liquidity. Easier said than done, as we are prone to be saying these days, but the sad state of affairs is that most clients we talk to are focused on revenue and profits and don't have the best handle on business cash flows. And even when the problem has been identified where does the business owner/manager go for solutions?

It seems as if the Grim Reaper of negative cash flow seems to be stalking us all the time!

The actual management of cash flows is really about how well you handle turnover and overall quality of your ' current asset ' accounts. They are actual cash or business lines of credit you have access to, receivable turns, and inventory turns. And, as we said, it’s a case of quality, not quantity. We get a big kick out of what many financial analysts and accounts deem to be the best measurement of liquidity, and that’s the ' current ratio ‘. In reality this number looks great, even fabulous if you have uncollectible receivables and slow moving inventory. But don't get us started...

At the core of understanding your business cash needs is the concept of arranging your finances so that short term cash flow needs are in fact met by short term asset financing. Typically in Canada that comes from various types of financing that might include:

Receivable financing

Inventory Financing

Asset based non bank lines of credit

Supply chain / purchase order financing

Tax credit monetization


In order to determine which one of these is right for your firm the business owner must focus on the amount of financing you require, the rates of that particular finance vehicle, and your overall ability to get approved for the financing you believe you need.

Many of the non traditional sources of working capital solutions , some of which are referenced above have in fact become more popular and well known simply because Canadian business has found it more difficult and challenging to access proper liquidity solutions from Canadian chartered banks over the past several years, although, on balance, this seems to be improving . And remember that traditional bank financing can be withdrawn at any time if the bank calls the ' demand ' loan based on perceived risk in your business, or industry. Think Automotive, circa 2008-2009.

Managing and having access to working capital cash flow and solutions is one of the greatest challenges for any business. Dropping the ball on this issue will ultimately lead to business failure.... simply speaking... the GRIM REAPER wins.

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

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS CASH FLOW 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/business_cash_flow_working_capital_solutions.html

On Top Of Trends In Technology Leasing And Business Equipment Financing ? Smart Choices To Increase Canadian Lease Benefits

Successfully Managing Your Leased Asset Strategies


Information on technology and business equipment leasing in Canada . Benefit from asset acquisition via a capital or operating lease .




The ability to stay ' on top ' of what’s happening in technology leasing or financing your other business equipment needs gives the Canadian business owner two things: Options, and of course benefits!

The concept of ' change ' drives a lot of technology acquisition and finance decisions. Business owners and financial managers don't even seem to think twice these days about whether they need to acquire computers, telecom, software, and other ' tech ' type assets the reality is that those improvements to your competitiveness and infrastructure cost a lot!

And let's not forget to mention that new concepts such as Cloud computing, virtual, and grid computing, etc simply bring new burdens of decision making for the owner, finance manager, and IT manager in any small to medium size corporation in Canada. We're somewhat leaving out the larger corporation given they have the assets and tech savvy to wrestle down these challenges in a much easier fashion.

So how do you fund these acquisitions ... the goal seems pretty simple - buying the best and right products and services and paying or financing them in the best manner possible. Easier said than done.

When you think about it what you want to do is not that complicated conceptually - its simply about picking the right financing option and ensuring that the cash outflows, structures, and tax/accounting type benefits match what works for your firm . Again, we know what you're thinking ... easier said than done, right?

Don't forget also that in a perfect world you want to match benefits of your financed assets with cash outflows. That’s why the majority of tech assets are leased; business doesn't want to pay up front and reap benefits over time down the road.

There is a substantial amount of flexibility in the term, or amortization of tech financed assets. Typical terms available range from 2-5 years ... but we always caution business owners that long terms , while they lower the monthly payments, come with a cost re replacement, functionality, obsolescence, reduction in competitiveness, etc. So bottom line, watch the ' term'!!

While for many assets the business owner/ manager is always focused on the implicit interest rate in the least we caution lessees do not overly focus on the rate as opposed to the term, structure and type of lease, conditions , and the all important end of term decision - namely, return, replace, or upgrade .

And getting back to that ' interest rate ' issue, the reality is that in the current 2012 competitive leasing equipment marketplace clients have access to some of the best terms, rates, and structures within the industry, as the lease finance folks are busier than ever, and very competitive . Lease financing is available from bank subsidiaries, U.S. lessors with Canadian representation, and independently owned Canadian firms that service transactions in the small, mid, and large ticket asset area.

One word of caution though, not all firms are both experienced or even have an appetite for tech type assets such as computers, software, cloud computing, etc . It might be advisable to seek the service of a trusted, credible and experienced Canadian business financing advisor to wade through the lease industry ' jungle' on your behalf .

The bottom line - focus on type of lease, and working with the right party. Your ability to manage and finance tech assets will become much easier and give the business owner and manager the feeling that invested and spent funds for business equipment assets are achieving the benefits your firm deserves.

7 PARK AVENUE FINANCIAL
CANADIAN TECHNOLOGY 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/technology_leasing_business_equipment_lease.html

Business Banking In Canada

Banking and business borrowing in Canada is significantly different than in the United States. That is primarily driven by the fact that our banking system is uniquely different. In the U.S., borrowing finance is driven through various entities - which include major ' money center banks ', Commercial banks, community banks, and what are know as S&L's, ( savings and loans ). In addition the American landscape is populated by community banks.

The Canadian banking system is different, in that the country has chosen to adopt a more smaller ( by competitor ) banking system that is extremely concentrated and dominated by a handful of major players. Primarily these are:



* RBC ROYAL BANK,
* TD CANADA TRUST,
* CIBC
* BANK OF NOVA SCOTIA,
* BMO BANK OF MONTREAL,
* LAURENTIAN
* NATIONAL BANK OF CANADA

All of these banks support the Canadian Small Business Financing program sponsored by the federal government.

There is a decent sized credit union movement in Canada, and many of these credit unions are making forays into Commercial banking and financing. Many people tend to feel these credit unions have not yet accumulated either the talent or the capital pool to properly play in business banking and commercial lending.

We would point out that some time ago now the government introduced legislation to allow foreign banks to lend in Canada. These banks are known technically as ' SCHEDULE B ' banks, and are referred to a briefcase bankers in that they do not have the large branch networks that are the domain of our BIG 7 banks as listed above.

Capital for Canadian firms is traditionally much harder to secure in the Canadian banking system. Outside of the aforementioned CSBFL program that is federally underwritten the banks tend to secure small business loans with usually up to 100% of personal collateral. That of course has the customers pledging personal assets, savings, etc. There certainly are no ' templates ' for fast quick borrowing in the Canadian small business banking. Loan criteria is judiciously adjudicated by underwriters on a case by case basis, and as has been noted, relies heavily on the traditional three C's of credit -

- character
- capacity
- capital

And oh yes, let's add a 4th, and the banks favourite - Cash Flow!

As the Canadian banks have emerged from the current world economic crisis they do however seem to be placing more focus on smaller firms. For example new divisions for small business banking are being created within some players, seminars and trade shows are being offered, and they often sponsor local events.

Larger firms who in many cases do not meet the requirements of the Canadian banks when it comes to significant borrowing requirements are often forced to consider asset based lending arrangements with Canadian and U.S. commercial finance companies who have stepped in to play a role in this vital area.Even though the larger firms may in fact have been in business a number of years their balance sheets and income statements do not meet the borrowing requirements of the Canadian loan committees. During the 2009 world economic crisis and financial meltdown the Canadian banks were consistently lauded for being some of the best run in the world. However, the downside of this is that ' best run ' in many cases means risk averse and commercial borrowing in Canada is significantly more difficult than in other countries such as the U.S.

The Canadian banks have distinguished themselves by developing software and technologies that have put them at the forefront of commercial borrowing/lending.

In summary, the Canadian banking system is uniquely structured and Canadian business, both larger and small,should focus on the unique strengths of the system borrowing and banking needs. Not all companies will be successful and business owners should ensure their financial executives or advisors know who can best meet their borrowing needs.



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.

Solving Turn Around Financing And Business Finance Problems in Canada

Do You Know How And Where To Finance The Turnaround?


Information on turn around financing in Canada . How business owners can address and solve serious finance challenges and problems with success



There are strategies that troubled companies can use to save themselves from dire straits and regain their former financial success. These same sort of strategies are valuable for business owners and financial executives to understand how their firms can avoid financial turbulence and failure.

We must first realize that business failure or bankruptcy never happens overnight. Normally there is a gradual trend of financial deterioration that is sometimes exacerbated by industry troubles. No doubt in the current 2009-2010 environment the auto industry is a poster child for a troubled industry, as an example.

Naturally firms that are on the very precipice of failure or bankruptcy do not have many options or time left. It has to fix itself, or sink. No business owners or entrepreneurs want to face bankruptcy, liquidation, and other creditor issues.

Do financially failing firms survive because of a revival in products or their services, or have they in fact executed on improved financial management?

This is a challenging question, because the very financial problems that beset a firm hinder it in getting new sales, acquiring inventory, and regaining supplier credibility.
Also, lets be realistic, banks and other finance companies do not throw themselves at failing firms with financial offers of loans, lines of credit, etc. In fact what usually happens is that the company is forced to pledge some or all assets at much higher rates, sometimes simply accentuating the financial problems that were already there.


So what are the financial strategies that a firm can undertake to avoid financial failure when it has been losing sales, not generating profits, and generally traveling down a potential death spiral?
There are three or four solid strategies that can save the firm. The first is ' assets '. The second is liabilities and debt, and the third we will simply call ' maneuvering'.


Strategy 1:


Assets have value. They can be sold, re financed,, or pledged to secure new financing. This type of strategy works best when it works for all parties, the company and the lender, or the company and another firm. However lets be clear that this is somewhat of a one shot strategy. It either must work or it doesn't. Asset maneuvers have 3 stages of success: assets can be used to get a new loan, assets can be sold, or they can, in somewhat of a worst case scenario, be liquidated.


Strategy 2:
On the other side of assets on the balance sheet is debt and equity. Debt can be structured properly to ensure the lender gets a reasonable reward, and the company is able to both repay and survive. There are too many types of debt to consider for the purposes of this article - suffice to say that creativity in debt is somewhat unlimited. A firm could issue debt, as an example, and repay only when the company is earning profits again.This would normally entail higher rates, but again, as we have stated, the transaction has to make sense both for customer and lender. A solid alternative solution is to simply re - structure existing debt at new rates and amortizations.


Alternatively to debt a company with promise can bring in new equity or ownership. This is somewhat more risk for all as dilution of ownership is usually significant when a company is failing and bring in new equity capital.

Strategy 3: A firm sometimes has to look to the outside for help. Since the owners and managers are often too close to the problem it is somewhat of a classic case of not seeing the forest for the trees. Outside consultants and industry experts can often bring a solution to the table. They have insights that management simply did not possess.

These strategies include developing new sales and product strategies, bring in new management, or considering a strategic merger.

In summary, anyone who has worked through several business cycles over a number of years knows that companies can in fact be saved. Some go on to be the new super stars of their respective industry. The company must clearly uncover what the problem is, and then adapt strategies, financial or otherwise, to fix those problems.


Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with ‘ the turnaround ‘!






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/turn_around_financing_business_finance_problems.html

How to Get Your Canadian Business Equipment Financing Lease Approved

Tips for Asset Financing Success



Information on how equipment financing solutions can be successfully obtained . Asset lease financing for business growth / success






What is my rate?' is a question I am often asked by customers when they work with us with respect to equipment and lease financing. They are surprised when we tell them that they get to pick their own rate! (All customers want the lowest rate!)


We are not trying to be facetious when we make that statement. What we are saying is that the over all credit quality of a customer, as perceived by the lender ( that's important!) is in fact set by the customer, thereby driving a final approval on rate, term and structure of the proposed financing request.


The role of the customer, or their trusted advisor is to understand the basic credit information requirements and how the overall risk to the customer and their industry will be perceived by the lender. The irony of a lot of business leasing is that the industry for the most part used historical analysis to project future ability to pay. That is a difficult concept for the customer to handle more often than not - as an example the customer may have lost some money last year, driving a negative cash flow figure. Prospects have improved, new orders are coming in, and yet the business has a problem in getting new financing.


The customer needs to ensure that the information and ' story ' make the transaction become more ' approvable'.


Critical categories in the information submission by the company are as follows:


Length of time in business

Personal credit history of the owners

Relationships with other financial institutions

Quality of the financials (Some customers submit balance sheets that don't balance!)

Additional collateral available if necessary

Summary of key financial info such as depreciation, cash flows

Positive focus on management and its background and experience



If the customer is qualified to make such a submission a solid package as per our list noted above should lend itself towards an approval at current market rates and structures. If the customer feels they are not properly qualified to make such a submission they are strongly encouraged to used a qualified intermediary who knows the industry and, more importantly, knows the specific weighting given by a lender to the above noted submission requirements.


The amount of information required around each component is more often than not determine by the size of the transaction or the lenders total exposure to that customer. In many cases small ticket transactions (those under $ 25,000.00) are adjudicated via a credit application and public reporting sources such as Equifax or Dun and Bradstreet. Typically 60-70% of all small ticket transactions are approved.


In summary, customers who want to get a prompt and of course positive lease approval should focus on providing a clean package of required information that will ensure a prompt approval based on specific industry requirements around the transaction size and asset type.

Knowing that the lender will focus on future potential of the firm, the management experience, and the collateral asset are valuable data points for any business seeking a business equipment financing lease.
Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your equipment leasing needs when it comes to solid, ( and quick ) approvals .

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_financing_lease.html

Sources Of Canadian Business Capital And Debt Financing

Financing Solutions For Growth ( And Survival ) In Canada


Information on sources of business capital in Canada . The proper choice in equity and debt financing helps guarantee success for Canadian business owners / managers





Businesses that are growing require sources of capital. The capital in a company of course comes from the owner or borrowed funds. Generally speaking business owners prefer to borrow rather than sell equity in the company, as that sale of equity dilutes the ownership position, i.e. they own less of the pie!

Debt vs. Equity


New equity can come from friends and family, venture capital firms, and angel investors. These parties are looking for good management, integrity, owner financial stake, and growth potential.



However, in the current difficult financial environment many lenders are in fact insisting that business owners put more of their own money into the company. There is never an easy answer when it comes to the debt or equity question.

When businesses borrow funds there is a cost to that capital - as interest on that debt reduces over-all profits. New equity in the company of course does not reduce those earnings, however the profits are distributed more widely and the earnings are proportionately reduced.


Borrowing funds of course comes with risk, as those loans must be repaid. Business owners sometimes get caught in the trap of financing long term projects with short term money - they are therefore at the mercy of having to always roll over that debt, and potentially also seeing rates go up, sometimes dramatically. Also, a business can carry only so much debt, at which point cash flow becomes a potential problem if the company is over leveraged.


Currently rates are very low for businesses that have access to capital. Therefore in many cases it might make sense to lock into longer term loans in the current attractive rate environment.


When the business owner has made the decision to purse business loans the old Boy Scout model works very well - BE PREPARED! Business owners that do their homework will usually be successful. Lets not forget the banks and finance firms are actually in business to loan funds. Naturally collateral, or additional collateral certainly improves the chances of debt financing success and loan approval.


Debt and equity financing as a sources of capital should be used for the right reasons - expansion, seasonality of business, increased inventory and working capital that will increase sales. Funds that need to address business inadequacies such as poor management, financial losses, falling sales, etc are very difficult to come by!




Solutions for debt capital include :

Real Estate / Asset Leasebacks
Bridge Loans
Term Loans
Government Loans
Unsecured Cash Flow Loans/sub debt


Additionally assets can be monetized without the necessary addition of debt ; These include:


Receivable Inventory Financing ( or combinations thereof )
Supply chain financing
Royalty finance
Tax Credit Monetization

In summary, business owners should carefully consider the positive and negative effects of additional debt or equity capital. Once they have made an informed decision, either on their own or with a credible, experienced and trusted Canadian business advisor they should consider the cost of that capital and how it is best achieved.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS CAPITAL 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_capital_debt_financing.html

How ‘ Not ‘ To Be Great At Mismanaging Cash Flow . Fixing Working Capital With Solid Financing Solutions

Become A Good Manager Of Cash Flow Assets



Information on cash flow and working capital financing solutions for the Canadian business owner / manager who is challenged by the right way to manage business growth and finances .



Cash flow and working capital solutions in Canada. If there is one myth about success with growth and financing solutions it’s that sales and revenue growth will get you there. It won't.

As the Canadian business owner and financial manager well knows it takes more than that to get lenders, ( bank and non bank ) to get a good feeling about financing your firm . At the end of the days it’s about ' protecting ' their financing and collateral interests in your company.

Unfortunately there are ways to be totally ' not great ' at proving that you're a good cash flow business owner/manager.

In financing, more often than not it’s about ' the assets '. So while we can easily get caught up in fancy formulas are EBITDA and other calcs the reality is that it’s your assets and their turnover that determine your real working capital health. Mismanaging those assets makes you a great ' mismanger ' of cash flow and working capital.

America’s great cash flow and investment manager, WARREN BUFFETT once said ‘Does management think the tooth fairy pays for (future) capital expenditures?).

Naturally term debt lenders focus on your long term viability to generate payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

So when profits and ebitda calcs are positive we meet clients that still are having a challenge paying suppliers and meeting payroll obligations.

So what we are saying is that it’s important to understand that sales revenue and profits and the ' value ' of your company, if you're focusing on just those, have made you a great Mismanager of cash flow and working capital.

It's all about know how your firm can access cash from assets , as well as being able to plan for future needs . That's where a bit of planning comes in - putting together a sales and receipts forecast, discussing these needs with bank or non bank lenders. The biggest mistake we see in this area from clients is they are not properly analyzing cash timing of collections from accounts receivable.

If your cash flows are negative through this plan process the solutions are pretty clear, and limited:

Take on term debt

Have shareholders put in more money

Delay payments to suppliers

Really increase sales!

And finally - convert assets into cash

Converting assets into cash via receivable financing, sale leaseback, or comprehensive asset based lending lines of credit is our personal favorite, mainly because they monetize assets without really creating new debt.
Use these solutions and tips to avoid being a MISMANAGER of working capital solutions for your firm . Speak to a trusted, credible and experienced Canadian business financing advisor on how to achieve the right solutions for financing your firm for health, growth and success.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS AND CASH FLOW 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/cash_flow_working_capital_finance_solutions.html