Working Capital And Business Cash Flow Problems?

Consequences of Inadequate Cash Flow And Growth Financing


OVERVIEW – Information on solutions for working capital and business cash flow problems for the Canadian business owner .




Business cash flow problems. Are there some consequences to working capital management and solutions? You bet there are, so let's recap what's important when it comes to this critical aspect of running, managing and growing your business.

Your ability to both manage working capital, as well as finance it will ultimately decide the long term success of your business. (A lot of small things happen along the way too!)

So how in fact can you exhibit good business working capital management and can you in fact measure that concept ? Look at the following points and ask yourself as a business owner or financial manager where you fit in -

Do you typically have enough cash on hand to cover your operating needs?

Are you in control when you look at the overall daily management of your accounts receivable?

Does the cost and flexibility of the financing you have in place reflect your overall needs?



It is safe to say that if you answer to any (or perhaps all?!) of the above you're either continually muddling through a cash crisis, or worse, the survival of your company is at risk.

So how does a firm actually ' run out of cash ' and what can you do to spot this as far in advance as possible? Believe it or not ' fast growth ‘, something the owner and entrepreneurs and managers dream of actually becomes a double edged sword relative to business cash flow problems.

That's because all that growth bulks up your balance sheet and you’re now carrying inventory, receivables, and new fixed assets all of which make you balance sheet rich and .. you guessed it... CASH FLOW POOR! To make matters worse , when sales in fact start to slow down at the same time inventory turns slow and a/r deteriorates you're as close to crisis mode as you ever will want to be .

A key point we make here also is that we're assuming all this growth is bringing you profits. If in fact it isn’t, i.e. higher costs then you're at the edge of your own version of the fiscal cliff

one more time. No business owner wants to be there!

So are we all doom and gloom today? Hopefully that's not how it's coming off. The reality is simple tools such as a cash flow budget and financing solutions such as:

Receivable financing
Asset based non bank credit lines
Commercial bank lines of credit from Canadian chartered banks
Tax credit monetization
Supply Chain Financing
Securitization
Unsecured cash flow loans

all can help you get to the working capital goal line. Oh and by the way that cash flow budget isn’t a sales forecast, it should properly reflect the timing of inflows and outflows to your capital.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in measuring and solving working capital and business cash flow problems.

7 PARK AVENUE FINANCIAL
CANADIAN WORKING CAPITAL AND CASH FLOW FINANCING EXPERTISE



Stan Prokop





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 10 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/working-capital-business-cash-flow-problems.html

Looking For Leasing Companies ? Here’s 5 Steps For Finding And Dealing Successfully With An Asset Finance Company

Here’s A Short Success Road Map to Asset Based Equipment Finance


OVERVIEW – Information on leasing companies in Canada . Knowing these tips will help you deal successfully with an asset finance company for your business financing needs.



When the Canadian business owner or financial manager maximizes the benefits of utilizing an asset finance company for their capital asset needs it clearly is a win. Here are some proven tips, steps and issues to consider and follow when dealing with leasing companies in Canada.

Point # 1 - While almost any asset, including some intangibles such as computer software can be financed it’s important to have a solid handle on being able to identify the manufacturer of the asset to your leasing company. You can waste a lot of time in finding out that in some cases the firm you are leasing from does not have an appetite for a particular industry .

Point # 2- The leasing rate and monthly payment are key drivers in your final monthly payment calculation. Providing a concise estimate of the actual cost of the asset helps the process move along in a much better fashion. That can often be achieved by simply providing a quote to your lessor.

Point # 3- You want to be able to be in a position to identify when payment must be made to your manufacturer or vendor. In certain cases there might be a staggered payment scenario. That situation will also be reflected in your monthly payment. If you have a legitimate vendor or manufacturer they typically can be paid even if they are outside of Canada, provided you and your leasing company agree on the terms and timing of the payment. Remember also that the majority of leases in Canada have what is known as a ' hell or high water' clause which simply stipulates that you are responsible for paying back, via your monthly payments, any amount that has been advanced to your vendors or mfr's.

Point # 4 - Delivery and acceptance are key aspects of any equipment financing lease in Canada. In certain cases if the delivery date is outside of a normal period of time your lease rate may need to be adjusted. Many Canadian business people don’t' understand leasing companies in Canada borrow and lock in funds also! As a result the timing of cash outlays is reflected in their profits.

Oh and by the way, interest rates go down as well as up, as they certainly have over the last several years. So you should have a clear understanding that you have a right to request the lease rate be lowered downward if in fact general market rates have fallen. It's a two way street, right?

Point # 5- Many Canadian lessees assume that the asset finance company is not necessarily concerned about the location of the assets they are financing. That's wrong, in that it's critical for the lessor to understand where your financed assets are located - they might be at head office, a branch, or even a job site of sorts. You also don't want to move the assets during the term of the lease without proper notification to the asset finance firm/lessor.

Ensuring you address our 5 points will help you in a number of ways; they will streamline your overall approval and funding process, and further enhance your longer term relationship with the right leasing companies you have chosen to work with.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring successful lease finance transactions while eliminating the risk of things going wrong.

7 PARK AVENUE FINANCIAL
CANADIAN EQUIPMENT FINANCING AND LEASE 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 10 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-companies-asset-finance-company.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com























Stan Prokop

Financing Receivables. Here’s What You Didn’t Know About An Accounts Receivable Financing Company!

This Just In! A/R Finance just might work!



Information on financing receivables in Canada. What does the Canadian business owner and manager need to know when dealing with an accounts receivable financing and factoring company.




When Canadian business owners and managers utilize an accounts receivable financing company the focus is all on the dollar value and quality of your A/R. That's what is going to generate cash flow under this process - which simply is a transaction in which you immediately monetize your sales for cash, at a discount... the obvious benefit being the ability to generate cash flow and working capital for your company.

We will add a small technical point here, in that when we typically describe the process we always advise clients that invoice discounting monetizes your revenues as you generate them. That infers that you have to finance those sales all the time and immediately, and actually that’s not 100% correct. The reason? Simply that if you are working with the right firm you certainly can finance any amount of sales you need - it doesnt have to be all or nothing.

And about that ' timing ' issue. The reality is that you can finance those sales ' ANYTIME' after you make them. Quick example: You generate a 100k sale to one of your clients, and the client typically pays you in 60 days. (Notwithstanding your terms are 30 days!) . If you don’t need the cash right away but need it, for example around day 45 in this process, you can finance the invoice then. The benefit - Again its immediate cash when you need it and you are only paying for 15 days of financing! Talk about a win / win!

Invoice discounting, A/R Financing, Factoring, etc are all synonymous terms for the process we are describing today. Pricing always causes mass confusion

with clients. Can this confusion be avoided? We thing it can when you simply focus on and understand the three elements of A/R finance pricing - they are:

The advance rate/ hold back

The discount rate

Time to collect your accounts

When you have a solid grasp on those you've become somewhat of an immediate Receivables Financing expert.

Let's use a quick example, and let us use a 100k invoice as an example. There is no real dollar limit on these facilities, and for that matter invoice size, whether large or small, is not a concern either.

Anyway, you have just invoiced your sale and have 100k outstanding on an invoice. The Accounts receivable financing company will typically advance, at your request 90% of this amount. The 10% is a reserve or hold back that allows for anything going wrong, primarily uncollectibility. If your customer pays you in 60 days, as they typically did in our example you receive the 10% hold back, less financing costs which are typically 1.5-2% for a 30 day period.

If you are using traditional A/R financing companies the finance firm you are dealing with handles collections. That's not our recommended solution - as we prefer the confidential invoice financing strategy, allowing you to bill and collect your own accounts, with no notice to any client, supplier, other lender, etc. We do of course point out that when financing receivables your accounts receivable financing company partner must in fact have clear collateral of your receivables. Many clients we talk to think they can have a bank line and finance receivables via a commercial finance firm. They are wrong! It's one or the other.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in setting up the facility that works for your business when it comes to monetizing your sales revenues and cash flowing that balance sheet!

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLES 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 10 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-accounts-receivable-company.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com
























Stan Prokop

Buying A Company? Who Can Help You With Financing To Buy A Business Or Make An Acquisition?

Canadian business acquisitions and merger financing


OVERVIEW – Information on buying and financing a company in Canada . When you buy a business or make an acquisition you need specialized assistance and expertise



If you are buying a company or a business in Canada your goal is of course to make an informed acquisition, pay a reasonable ' market' price and get the financing to need to make your deal work.

That might be an outright acquisition, or perhaps even a merger with a strategic partner or competitor.
The large corporations in Canada, public and otherwise have access to tons of talent and assistance in this area. But what about businesses in the SME sector, from a small business to a mid market type company?
If you’re looking to execute on a deal it might be very wise to consider the assistance of a Canadian business financing advisor to assist you in closing the deal, and in some cases even finding the deal.
Going it alone works, but boy can that be both time consuming, painful and expensive.

In what ways can a qualified intermediary or financing advisor help you? There are several key areas - they include:

Developing criteria for your final decision

Reviewing and assessing financial information that's available

Helping with pricing and valuation

Structuring a financing that makes sense based on assets, cash flow

Timing is always critical when it comes to arranging financing and making that acquisition. You need to ensure that who ever you are working with is proactive when it comes to timelines. The quality of a final financing package is critical and can significantly influence the parties who will finance your deal - which might be Canadian banks, independent commercial finance companies, or even perhaps a private equity group.

What can the business owner or manager expect to pay when it comes to a Success fee or work fees? In the SME sector we suggest a nominal but reasonable work fee and a Success fee in the 1-5% range depending on the complexity of the deal. In many cases the work fee or ' retainer' as many seem to prefer to call it can easily be negotiated to be deducted from the final Success fee.

Reasonable fees for an advisor or intermediary ensure he or she is incented to keep things moving when things get tough on a deal , and the quality of the person or firm you are dealing with will quickly demonstrate to you the amount of useful information and advice they can bring to a deal .

Also, it sure helps if you are working with someone who has a sense of the industry you are in. They tend to be on a first name basis with people and firms that can help you both acquire and finance your deal. That's important and has value.

Buying a company and arranging the appropriate financing to make your acquisition successful requires patience, proper documentation and disclosure, and some hand holding along the way. You may have found the right deal, but if proper and successful financing is not in place there is of course... NO DEAL! That’s when the right amount of debt, equity and financing expertise becomes critical.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you buy and finance that company or acquisition.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING ACQUISITION 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 10 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/buying-company-financing-buy-business-acquisition.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com













Stan Prokop

Loan For A Franchise? Here’s How Franchising Finance Can Work For You

Buying A Franchise ? How To Finance That Smart Purchase!


OVERVIEW – Information on how Canadian franchisees can access a loan for a franchise . Franchising finance is a specialized form of finance .


Yes, you're looking for a loan for a franchise, but who in fact is lending for franchising finance in Canada and what are the criteria. Is there a way to ensure you have access to all aspects of franchisee loans? Some good questions - let's explore some even (hopefully!) better answers.

A few years ago as the Canadian franchise industry (and all businesses in general) recovered from the global financial crisis it probably was the worst time even to seek franchising loans. But the dust has settle, the Canadian economy seems to be firing on all cylinders, and the only question you as a franchisee want to know is ' where's my loan approval'?

While Canadian banks promote actively that they support franchises in Canada the reality is that quite often, in fact almost always! ... they don’t do this directly. That probably simply comes from the fact that in many aspects franchises are viewed as start up in nature - notwithstanding the proven business model and brand you as the franchisee have bought into. So that means from a fundamental finance point of view that there are no strong opening balance sheets, historical cash flows, and proof of profitability. In essence you're a start up... and start up financing is hard to find.

So how in fact do the banks finance franchises? The reality? They do it under the auspices of the BIL/CSBF loan program, which is a government guarantee to the bank for the majority of the loan.

There are of course other sources of franchise loans. They include specialized franchise finance organizations, private commercial finance firms, and to a certain extent equipment finance firms that will finance certain hard assets associated with your business.

The key aspect of getting approved for financing under the Govt loan program is your ability to find an experienced banker who is both familiar with the program and can help you identify the key requirements of the loan . Another method in which you can address this ' search issue ' is to seek out a trusted, credible and experienced Canadian business financing advisor who has the established relationships and knowledge to fast track approval success.

In the U.S., which has a similar program almost 25% of all loans made under their program are for franchises, and we think that's probably a similar, if not larger number in Canada. So if your competitors are getting franchising finance, why shouldn’t you... right?

If you are buying a master franchise or have multiple locations in mind various other options might in fact be available - for example assistance from a private equity group, etc. But the reality is that one individual franchise will never qualify for this type of financing participation.

The equity, or down payment component of a franchise loan is critical - It can be anywhere from 10-50% and it’s a fine line that has to be managed relative to the amount of personal funds you commit and where there will come from - i.e. collapsed savings, collateral mortgages on your home, etc, Remember the saying ' once you spend it, its gone! ‘which we caught recently.


The reasons you want to get a loan for a franchise are quite clear – owning a business, financial independence, etc. Accessing the right type of available finance for that entry into entrepreneurship is critical. Seek out and talk to an expert in franchising finance options.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE LOAN 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 10 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/loan-for-a-franchise-franchising-finance.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com
















Stan Prokop

Are You A Franchisee Looking For a Franchise Finance Loan . Here’s Franchising Capital 101!

How To Finance A Franchise


OVERVIEW – Information to franchising finance in Canada . Here’s what a franchisee needs to know to be successful in getting a franchise finance loan for his or her new business opportunity




Isn't the scary

part of getting a proper franchise finance loan in place the fact that you've already spent a ton of time, and probably some money in addressing your project? That of course means you have probably covered off already key issues such as researching franchise trends, choosing the franchisor with which you wish to become aligned with, checking out industry trends and competition... and on it goes.

So with all that good staff work behind you it must seem daunting to know that getting franchising financing might still be your biggest obstacle. Not necessarily though, so let's discuss.

If you are focused and can address 4 or 5 issues surrounding your potential purchase and financing you are going to have a lot less of a challenge than you think.

The first key issues is that of ownership equity, aka the proverbial ' down payment '. Every client we talk to seems to want to know the minimum amount of capital they can put into the transaction. Surprisingly though we even see the other extreme where some business entrepreneurs are prepared to risk it all and pay cash for their franchise - often collapsing savings or taking mortgages on their homes.

So our key point on that issue - if we had to summarize we would say that somewhere between a low down payment and a 100% cash purchase is probably what you want to be focusing on. You're never going to be successful with 100% debt, and the reality is that no financing is in fact available on the ' OPM ' concept - i.e. 100% other peoples money! Over the years we met franchisees who have told a sad tale of losing it all, personally, after their business failed and they had pledged all personal assets.

We would add that the Canadian govt business loan, aka the BIL/CSBF program requires that you provide only a limited guarantee of 25% of your entire borrowings. That as well as good rates and flexible terms make it a prime candidate to research when you are looking for a financing facility for your transaction.

Another key issue that we always focus on is the concept of doing a bit more planning around how financing will work after you have closed your transaction. So a proper business plan and cash flow that you'll need should also stay focused on how the business will address wages, how much salary you will draw, covering the franchise royalty fees in your agreement with your franchisor. Typical royalty fees we see seem to be in the 6-8% range, sometimes more, and can take a significant chunk of your profits and cash flow.

One of the ways that you can address on going working capital, other than wrestling with your spreadsheets.. is to discuss carefully with the franchisor and other current franchisees as to the ongoing capital and expansion requirements of your business.

Many business owners start with modest drawing of salaries when they start a business. A franchise scenario, at the end of the day is still a start up. Yes, its a proven business model with a good chance of guaranteed revenues, but at the end of the day its as close to a start up as you can get, so budget accordingly for your personal needs relatives to a salary, living expenses, etc.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in addressing the key issues of franchise finance success in Canada.

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 10 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/franchise-finance-loan-franchising-franchisee.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

















Stan Prokop

3 Ways To Manage And Accelerate Business Cash Flow Via Solutions And Management Techniques

Getting Your Funds Flowing?

Information on business cash flow solutions and management . Accelerate working capital and timing with these tips and business finance methods .




Business cash flow wouldn’t be required if we could all sell on cash to our clients. However, unless your business is 100% retail that of course can't be the case. So let's examine 3 ways to address management of working capital solutions in Canada.

Sales growth is good... right? Well kind of, because those sales require financing, and management of your current debt. So at issue today for our purposes is the discussion around managing that liquidity issue, and solving problems via financing solutions...

The longer your receivables go unpaid creates two issues - first of all there is a chance the sales might be at some point uncollectible, and secondly you are going to have higher financing costs. And that’s whether you are financing through a bank or non bank solutions. (Yes, there are non bank solutions when it comes to financing A/R)

It's therefore important to continually assess your asset turnover - one basic tool being a days sales outstanding calculation. Also, at the heart of the matter is your firms overall philosophy to granting credit and setting limits with clients. Oh... by the way... the largest corporations in the world do that also, its one way in which they get large and successful! So why shouldn't your firm?

Naturally there is a potential cost in addressing a new credit policy as not all clients will want to pay within your stated terms and may consider other vendors. One way to address that issue to offer a prompt payment discount - which typically is called ' 2 % 10 '. That simply means that you are giving up 2% of your gross margins for the ability to collect A/R faster and generate business cash flow. So that is clearly on management solution you can consider.


That brings us to the actual financing of your receivables. This is an overall critical part of every company’s finance strategy and success. The hear of the matter is simply financing your sales with a cost that your firm can bear, while at the same time generating the maximum amount of cash that you require .

One of the fastest growing and popular methods of financing A/R is called ' factoring’... aka ' invoice discounting'. To clarify how this works let's use a simple example - If you have 100k in receivables you receive 90k as soon as you generate your sales. That's instant cash. You receive the balance, i.e. the 10k, less financing costs, when your client pays.

And those financing costs? They are very similar to your strategy of offering a prompt pay discount as we noted above. While this cost seems high to many the reality is that you are already incurring it by carrying receivables, or offering discounts, and not being able to take discounts with suppliers. Our recommended solution to clients is a ‘ confidential invoice financing facility ‘ that allows your to bill and collect your own receivables without intrusion from any third party .

So one key point today is to evaluate the criteria under which you can finance your sales via a receivable factoring arrangement. The costs may not be what you think!

Finally, the alternative to factoring A/R is simply bank financing via commercial lines of credit. Canadian chartered banks offer A/R credit lines that are generally based on the quality of your A/R as well as the overall quality of your financials -- so caveat emptor here - you need to demonstrate profits and a balance sheet that meets bank criteria. Under bank credit lines 75% of receivables are generally margined.

So, here we are - it's decision time. Use our information to address business cash flow solutions via internal management, credit policy, and financing solutions such as factoring and commercial bank facilities. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the right solution.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS 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 10 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-solutions-management.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com







Stan Prokop