Christmas Cancelled Due To Cash Flow Financing! Avoiding Problems And Accessing Solutions To The Working Capital Gap In Canada

Business Financing Not Working For Your Company . Here’s Why!

Information on critical cash flow financing problems , What solutions can the Canadian business owner use to solve working capital problems



Say it isn’t so. Please say it isn't so. But it is so. There it was. The front page of Canada's best known business page, Sept 10/2012. It was a headline that screamed at us to look into it.

What was the story ?It involved one of Canada's most iconic and largest corporations , indicating that the company had chosen to preserve cash due to their investments in growth and the future . The result? Travel cancellations, no new hires, and yes ... and we're quoting here:

‘CUTTING ALL FUNDING FOR CHRISTMAS PARTIES’


We suppose if they had been politically correct they should have said ' holiday parties ' but we’ll weigh in on that one another day ... as in never.


So, cash flow financing. Is it that important that it makes the front page of Business news? Well we have always thought it was so thanks for the vindication.

Let's examine why front page news is where working capital solutions belong. Business owners and managers in larger corporations all the way down to start up realize that its that elusive cash flow that runs their business on a daily basis ; and in the case of our subject company today allows you to plan and grow for the future .

So, it’s all about careful planning, and solutions to not run out of cash. And as we're always saying, you can both access cash flow and working capital solutions, as well as managing your assets to optimize cash.

The business owner always struggles with debt and although that strategy (taking on debt) is on way of accessing capital it's certainly not always the solution. In fact we tend to favor two better solutions:

Managing asset turnover in receivables and inventory (and payables)

Monetizing assets into cash flow solutions that include:

Bank credit lines
Non bank business lines of credit
Receivable and inventory financing - together or separately
Supply chain / PO financing
Monetizing valuable tax credits under the SR&ED or **Film Tax Program - * unfortunately not all of us make movies though


Canadian business owners and managers need to run their business while at the same time understanding their cash flow cycle - its not that simple - just doing some basic calcs around how long it takes for 1 dollar to flow through your corporations, from the time you buy supplies and services to the point where your valued clients pay you . It doesn't take long for the business owner and manager to understand that cycle can be anywhere from 60 -120- days. And in between that? It's the cash flow gap!

Also, differentiate between making a profit on paper and having cash, or access to cash on your balance sheet. Huge difference.

In Canadian business financing today there are numerous solutions for working capital. Some are called ' alternative ‘... many are newer and innovative, often called ' alternative '. All of them can work for your firm when you understand how they work, what they cost, and what the benefits are.


So, Xmas cancelled. We hope not. But in the meantime, speak to a trusted, credible and experienced Canadian business financing advisor on how you can access cash flow financing that makes sense for your firm... today.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS FINANCE EXPERTISE

Don’t Commit These Deadly Sins In Canadian Lease Financing . The Business Equipment Leasing And Loan Decision

It’s Never Too Late To Get Equipment Leasing Right



Information on lease financing in Canada . Serious mistakes lessees can make when entering into a business equipment leasing or loan .






Are there some ' deadly sins ' Canadian business owners and financial managers can make when it comes to lease financing in Canada? We think there are a good handful of them, at least 4, so let’s cove those off. More importantly, let’s talk about avoiding them and using business equipment leasing as a solid tool to help finance your business.

So, what are those 4 key areas of potential ' sins' when it comes down to that asset acquisition decision? For us it comes down to:

Entering into the wrong type of equipment lease/ loan

Mistakenly purchasing the asset that in effect depreciates while at the same time providing your firm with certain benefits over a period of time

Entering into a term loan for the asset

And finally...

Working with the wrong lease finance firm



The good news is that there are some great solutions to avoiding today’s ' sins ' . A good place to start is spending some realistic time around both the costs and payments involved in your transaction, as well as any balance sheet and tax type issues that you might need to consider, if not now .. down the road!

The timing of cash outflows on your lease, versus the expected benefits is a key area to focus on. This is a classic way of weighing the alternatives to leasing. This analysis offers proof you are making the right decision!

Let's use a typical example, which in today’s case will be the acquisition of a computer, or a whole computer system, as well as all the related costs that come with that, i.e. software, maintenance, etc. That's an area of our businesses where real cash outlays are required these days!

So what must be considered in our example? Naturally actual cost is a factor. We have often said that using a financing mechanism such as asset finance in your business in effect helps you to remove what a dear friend of ours called ' the obstacle to innovation ‘. So just your ability to buy the best and the most with your dollars is one great way to ensure you're not committing one of today’s ' deadly sins '.

Other factors you should consider are the depreciation and obsolescence that comes with an asset such as this ... (or any other asset for that matter ... in truth some assets depreciate quicker than others - a cement truck can be leased or financed for ten years). Note to reader: We don't recommend financing computers and related equipment over a ten year period!!

Another key point is to ensure that the type of lease you enter into covers off what the leasing companies in Canada call the residual value, or end of term. Bottom line - focus on what you intend to do with the asset at the end of the term... is there some value still? If the asset can be replaced, upgraded, or still utilized it might be beneficial to enter into an operating lease versus a lease to own type scenario.

There are substantial differences in a loan versus a lease, including areas such as payment of the taxes, down payments required, balance sheet consequences, and credit requirements depending on who you are dealing with.

So who can give you a straight answer on what lease is best for you, and when? Resources include independent commercial lease companies, captive finance firms, bank leasing companies, etc. Or perhaps a solid decision is to use a Canadian business financing advisor who has strong relationships and knowledge about all of those resources, some of whom have very vested interests to make asset financing work more for them than you.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING EXPERTISE!






Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :



http://www.7parkavenuefinancial.com/lease_financing_business_equipment_leasing_loan.html

Can AR Finance Increase Profitability ? Looking For Some Clear Thinking On An Effective Receivable Invoice Financing Strategy / Partner?

Canadian Receivable Finance


Information on AR Finance in Canada . Can an effective receivable invoice financing strategy increase sales and profits . Here’s how !



A strange question? Can an AR Finance strategy actually help to increase your profitability? Top experts in the field indicate a strong case can be made for that statement, so all of a sudden receivable invoice financing has seemed to catch our client’s interest. No surprise there!

Whether we like it or not business history, just like regular history, tends to repeat itself. So unless the Canadian business owner and financial manager make a decision to change how they run and finance their business they are somewhat doomed to soldier on under the same current circumstances.

When we sit down and benchmark traditional bank finance against receivable financing the differences become quite clear. For the banks and business oriented credit union’s full repayment ability as well as secondary collateral (often that’s your personal guarantee) becomes the total focus. The banks focus on you as the owner, business equity, collateral and historical cash flow is... well... supreme.

Naturally we're the first to admit that if you can secure bank financing it does have significant advantages - they include the lowest possible cost of funds, your ability to deal very locally with your banker, etc. Our point is simply that there are alternatives that can still assist you to generate sales and profits.

Every business owner knows you can increase profits by lowering costs and increasing sales. But what they don't often address is their ability to turnover assets, in our case today accounts receivable. That continual turnover allows you to generate more sales and address the opportunity cost of doing something with your assets!

Naturally invoice financing is just one method or choice you the business owner has when considering how to accelerate sales and profit via proper financing. Our point is simply that invoice financing simply accelerates cash flow, which is a key driver to your profits and ability to sustain daily operations. At the end of the day its ' quick financing ' that allows the business owner and entrepreneur to address cash and revenue goals.

And don’t forget that you can take advantage of this method of financing in more ways than one - they include taking supplier discounts, taking on larger orders and contracts, and purchasing more efficiently based on your ability to pay suppliers and vendors better.

So, our bottom line today? Asset turnover can affect profitability. And Receivable financing enhances asset turnover. Alternatively said - working capital management works! when it comes to profits . (And don't forget to manage those long term assets also!) This makes you more effective as a company!

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in growing profits and sales via a solid Receivable Financing program.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING 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/ar_finance_receivable_financing_invoice.html

Is a Sale Leaseback of My Business Assets a Good Thing?

At various points in the economic cycle a business owner or financial manager considers a sale leaseback financing. Is that type of transaction advantageous, and what are the risks and benefits?

Many firms do not fully know about or understand the advantages of this type transaction. This is a classic alternative financing strategy that works best when it is a good deal for the lessee and the lessor. It does not work well when the lessor presumes it is a 'cash grab' by the lessee.

This type of financing should be contemplated if your firm has the following characteristics:

- Experiencing working capital challenges

- Declining profits

- Excess unencumbered assets

- High amount of debt


If a company has a high amount of debt a sale leaseback transaction can still be a very positive financing event. By structuring the the transaction as an operating lease the debt becomes 'off balance sheet '. This gives the appearance of the company being not so highly leveraged and quite often it can save the company from being in default of its loan covenants.

In many cases the sale leaseback can bring a significant amount of capital back into the firm.

So when does a firm consider such a transaction - every industry is different but if the firm is bottom line, over leverage, i.e. Debt too high, there can be advantages to an off balance sheet sale leaseback transaction.

If a company has historically had pride of ownership, and has significant assets, and is suddenly going through a high growth stage it also becomes a good candidate for a sale leaseback. Cash flows are restructured and the company gains significant new working capital.

The best candidates, overall, for this type of financing strategy are high growth companies who would prefer to invest additional cash in receivables and inventory. Naturally no lessor wants to consider such a financing if the company is in some sort of death spiral.

In some cases when assets have in fact appreciated (not depreciated in value) the company may actually be able to report a gain in earnings, as the sale leaseback transaction in excess of book value allows the company to book the sale leaseback gain into the profit account!

Many government institutions, such as municipalities, hospitals, etc may find this type of financing strategy as optimal in solving temporary budget cuts and working capital challenges.

In summary, a properly structured sale leaseback can provide new cash, enhance earnings, and in effect be a creative way to temporarily re finance the firm or institution.

7 PARK AVENUE FINANCIAL IS AN EXPERT IN SALE LEASEBACK FINANCE



Stan Prokop is founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


The company originates business financing for Canadian companies,specializing in working capital, cash flow, and asset based financing. In business 10 years the company has completed in excess of 85 Million $ of financing for companies of all size. For info on Canadian business financing and contact details see:

http://www.7parkavenuefinancial.com/toronto_ontario_equipment_financing.html

Is There A Difference Between Truck Leasing And ‘ IT’ Leasing ? An Equipment And Technology Finance Surprise ?

Is there a major difference in which assets can be financed?

Information on leasing and equipment finance . Do the same benefits apply to truck Leases and IT technology financing ? Business owners may be surprised!



At first brush is the answer ' Are we crazy?' How could there similarities between financing a transportation asset or entering into an equipment finance leasing transaction for new ' IT ' assets?

We actually think you will be surprised at some of the similarities which clearly brings home the point that various asset categories (whether it is a truck lease or for a sophisticated computer infrastructure ) lend themselves to a solid finance vehicle. And excuse the pun on vehicle!

Whether your Canadian firm is a start up or a ' mature ' firm (are start ups immature?) the need to access capital to either enhance the truck fleet or add hardware and software to your computing power remains the same.

Both assets , using today’s example are depreciating assets - many will make the case that truck and transport assets depreciate much more slowly than IT type assets, which seems to lose value very quickly if only for the reason that technology seems to change about every 2.5 minutes these days!

So does lease finance have an answer to both those asset classes? It does, and it's all about picking one of two leases that fit what the industry calls your ' end of term' strategy. So it might be a more sophisticated operating lease for your computer IT solution, and it might be a long term capital lease ( a lease to own ) for your truck finance.

Naturally you can buy depreciating assets, no one is forcing you to choose leasing in a ' lease vs. buy ' analysis... but the reality is that unless your cost of capital significantly exceeds a lease total cost that financing is more often than not the right choice. And don't get us started on the very high cost of equity capital which is a whole new kettle of fish.

Naturally it makes sense in any business financing strategy that your feel the cash flow required to pay the lease can be met even when things are tough.

Companies use assets to generate value, so whether its a transport truck asset to deliver your products or perhaps a new IT computer / software system to make your operations more efficient and competitive.... a lease finance strategy , a proper one by the way, simple accelerates your ability to fund new assets and the growth of your firm .

The proper lease strategy will allow you to both replenish and upgrade assets, or make key decisions around what will happen to the asset at the end of term. In today’s example for instance we could replace a truck with a new one, keeping our monthly payment the same ... of we could return IT assets to our vendor for an upgrade of newer technology... with... you guessed it, the payment remaining the same.

An interesting side point is how valuation decisions are made on assets such as trucks or computers during and at the end of lease. In the real world (that’s where we work) it comes down to best inputs you can provide, along with value opinions that might come from an appraiser, your experienced equipment finance company, or research on the internet at best values.

Hopefully we have made our point - whether it’s financing rolling stock type assets where key factors such as physical condition, safety and maintenance come into play... or the other end of the spectrum , IT type assets that of often require large capital outlays around changing technology .

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining the value of equipment finance, whether it’s your trucks... or computers!

7 PARK AVENUE FINANCIAL
CANADIAN LEASE 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/leasing_equipment_finance_truck_it_technology.html

Can ABL Asset based Line Of Credit Lending Cure Your Finance Blues ?

How The ABL Business Line Of Credit Facility Provides A Fresh Perspective On Business Financing

Information on the asset based line of credit facility in Canada. How ABL lending can dramatically change the force of your business financing success .






Is there anything worse in business than the Finance Blues? We don't think so, and one potential cure is asset based line of credit lending in Canada.

The reason this method of business financing is still somewhat widely unheard of, (or worse yet) misunderstood comes down to that fact that a majority of business owners in Canada, we think, don't understand they have options. And ABL lines of credit are clearly a new option.

It kind of always comes down to two different cures for the business finance blues, one is when your business simply can't achieve traditional financing within our chartered banking system, and the other is when the amount of financing the business owner and financial manager needs far exceeds what other forms of finance can't deliver on.

And when ABL turns out to be both flexible , and justifiable in cost , that’s where the cure has kicked in !


Are there any typical scenarios under which asset based lines of credit work best, or are more common? One that we see often is that your company has come out of the 2008-2009 recession with a lot of focus having been around simply managing your business and assets to the best of your ability without the use of or access to bank type financing. Things are better, sales are growing again and fortunately or unfortunately that means that receivable and inventories... you guessed it, are up!


We won't weigh in today on why traditional methods of financing might not be working any more.... at the end of the day your firm has deemed to be unfinanceable or, as challenging, financeable without the amount of capital you need access to!

That latter point is a common one, your firm has financing now, but always seems to be out of cash. And in many cases a simple glitch on either an operating covenant or some interim financial losses challenges your bank or other institution to reduce their involvement in your firm... just at a time when you are looking to increase that involvement.

That is the ABL asset based credit line solution then - a simple focus on your operating and fixed assets that allow you to margin those to great cash flow and liquidity that you never thought you could access previously. To re enforce our point ... it’s not about the balance sheet and income statement, it’s about the ' A' in Asset based lending, your ' Assets'!

Typical advances on an ABL facility include a 90% receivable advance and a predetermined amount of your inventory on an ongoing basis, anywhere from 25-75%.

Is traditional bank type lending on the rise again? We're not sure, supposedly it is, but who really knows. What we do know is that asset based credit lines are absolutely on the rise - they are your cure to the working capital blues!

So whether you consider ABL as a transitional finance vehicle, or simply a new great solution for business financing take time to investigate this method of finance in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in curing those finance blues!

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED LENDING EXPERTISE



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/asset_based_line_of_credit_lending_abl.html

Financing Your SR ED Tax Credit in Canada

Not everyone Canadian business owner or financial manager takes advantage of the Canadian Governments SR & ED (Scientific Research & Experimental Development) tax credit program. It’s clearly in our opinion of the best and truly legitimate and valuable programs that a government provides for its business entrepreneurs in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN SR ED FINANCE


Many, when they hear of the program for the first, are amazed that they can receive significant funds, that are non – repayable (yes that’s non -repayable!) for their ongoing investment in research, product development, business processes, etc.

And, those that do take advantage of the program dutifully wait many months, in some cases a year or so or more for their cheques from the provincial and federal government.

Why not borrow against these funds and utilize those funds for much needed working capital and cash flow to further fuel the growth of your firm.

SR & ED financing is still relatively unknown in Canada – it is clearly a very specialized type of financing, somewhat ’boutique’ let us say, in nature.

The government, via the program, wants to provide funds to Canadian business so they can continue to further their research and development and provide Canadian firms with a lead in technology and business.

So lets get back to the financing of the SR ED, aka ‘ SHRED ‘, aka ‘SR &ED’. SR ED Loans are typically for approximately 70% of your combined federal and provincial claim. The claim can be financed as soon as you have formally filed the claim with the government, which is at the same time you do your year end tax filing.

SR ED applications can be filed for the last two years, so on occasion your firm might in fact have a significant receivable generated by virtue of that filing you have done. Our observation is that some companies actually book that receivable in their financial statements for the full amount of the claim. Some companies take the conservative approach and only record the cash coming in when it is received from the government.

So, you as a business owner or financial manager of a Canadian company are asking yourself the obviously – if I book the SR ED as an account receivable, will my bank provide financing for it. Our experience is generally ‘no ‘they will not. Canadian chartered banks, being somewhat more conservative in nature, recognize the SR ED claim may or may not be approved. So if there is any risk in your financial structure as viewed by the bank they will not advance funds.

The private sector of Canadian finance is in fact doing the SR ED financing. Claims are financed on the basis of your firms overall financial status, although we add that even pre revenue companies or companies that are losing money can still obtain SR ED financing.

Every Canadian firm that files a SR ED claim should consider financing the claim if they feel the additional cash flow and working capital will assist their company in continued growth and success. Talk to an expert and use this alternative financing as a great way to boost cash flow.




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/Contact_Us.html