Business Cash Flow Finance And Working Capital . Out With Old Problems And In With New Solutions

Have We Got A Story ( On Working Capital ) For You !


OVERVIEW – Information on business cash flow finance in Canada . Managing and solving working capital challenges and problems for growth and daily operations is key to success .




The way in which you manage and solve business cash flow finance and working capital in your business... well... makes or breaks you. It's as simple as that. Ironically many business owners and financial managers spend a tremendous amount of time in and on their business doing everything EXCEPT addressing those two aspects of their business. And the result? Well quite frankly, you don't want to know!


The management and solving of business cash are tremendous indicators of how well you are running your company. In the eyes of lenders, owners and anyone else that has a vested interest in your firm your ability to address working capital management makes is a critical part of the ' scorecard ' on your business.

When we talk about business cash flow it’s a combination of two things, your ability to manage in the short term, i.e. operate, pay employees, buy products and services ... as well as a longer term focus on viability and meeting lender commitments.

Furthermore, if you have a handle on today's topic you’re in a position to spot future problems, then not having to fight those business cash brush fires

that seem so common when we talk to clients.

Part of the problem in the way owners and external folks look at and address the issues is the simple fact that information is coming from different places. Some look at the balance sheet, some look at the income statement, and few, yes few look at the cash flow statement.

Case in point? Many years ago when we toiled in the bowels of corporate finance we got in financial statements from a client. But it was just the balance sheet and income statement. We were asked how the cash flow was by my management. We replied ' there was no cash flow statement’
The response ' why don't you create one?'

We can pretty well assure you that if we hadn’t done that already the business owners hadn't also. With the balance sheet and income statement in front of us we jotted down net income and depreciation from the income statement. Then we went to the balance sheet and measured the changes in receivables and inventory - thereby giving us the most pure indicator - operating cash flow. Voila - we were done. Quite frankly this was all so long ago, (and we're getting older) that we don’t remember if that clients cash flow was positive or negative. Suffice to say it was a key indicator of our ability to deal with the client - i.e. lend funds.

Using simple ' ratios' in your financials (we like to call them relationships)
you can get a strong sense of how you're doing and further be able to anticipate upcoming cash flow challenges.

That of course allows you to implement solutions - In Canada they might include:

Commercial bank credit lines

Non bank asset based credit lines

Receivable financing/factoring

Tax credit monetization

Securitization

All of those come with different costs, take a short or long amount of time to implement, and have different effects on how you can grow your business.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in solving the mystery, aka the measurement and solving of business cash flow finance problems.

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 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-finance-working-capital.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

Can A Leasing Company Empower Your Asset Finance Needs ? Understanding A Lease Companies Offerings

Maximizing Benefits of Lease Finance

OVERVIEW – Information on asset finance in Canada . How a leasing company provides lease financing solutions that empower business owners and managers.




Does your ability to deal with a leasing company empower your asset finance needs? We checked out ' empowerment' in the dictionary and its all about giving ' power and authority '. Your ability to master dealing with and recognizing the benefits of the right leasing company and solution clearly put you in empowerment mode.

Let's explain!

At the heart of leasing finance is its ability to be both straightforward, yet creative when it comes to financing assets your business needs, or needs to replace! We constantly hear the term ' win / win ' in business and nothing embodies that more that your ability to properly finance assets.

Lease finance in effect empowers you to have greater control over a number of key aspects of your business - they include cash outflows, balance sheet and income statement consequences, and the ability to profit using assets acquired under the lease. Some of those assets might in fact be needed in the normal course; some allow you gain a competitive edge over the competition.

When Canadian business owners and managers acquire assets from major manufacturers they are often pleasantly surprise to find out that these corporations have independent finance related companies that are incented to move product. That’s to your benefit of course, and taking advantage of their financing options is a clear example of empowerment.

What are some of those finance options? They might include staggered cash flows, low or no down payments. Operating leases with greater flexibility at end of term, etc. And on it goes.

Quite frankly we can’t think of one other form of business financing that allows you to gain a certain level of control over technology, financial statement presentation, cash flow management, as well as the opportunity to match the economic life of certain business assets to your own firms financial condition.

Feeling locked or trapped in, in any form of business is not a great feeling. A leasing company allows you to manage the concept of upgrading, whether that be on the shop floor or in the computer room. We're constantly told we are living in a ' knowledge based ' environment , so just managing tech assets such as computers, telecom assets, and application software all can make or break your business . With what other financing mechanism other than an equipment lease can you in fact transfer the risk of obsolescence to the lessor, your lease company? The answer - basically none!

Owners and managers of corporations of all size are beholden to their shareholders (in some cases themselves!). Leasing companies offer you solutions that allow you to report a higher level of return on assets and equity.

Many managers in medium sized and larger corporations are ' victims 'of 'corporate budgets. At lease it certainly feels that way sometimes. Lease companies allow managers that are constrained by capital budgets to acquire the assets they need to run their division or business. That's empowerment! And again let us make the point that what other finance tool allows you to acquire more expensive and better assets while keeping monthly payments or budgets in line. As we said, we can't think of one.

Want to get a bit more ' empowerment' when it comes to financing business assets? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your asset finance needs.

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 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-company-asset-finance-lease.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

Is Selling Receivables Via AR Finance Factoring A Viable Cash Flow Solution?

Assessing Viability of Canadian Receivable Finance Strategies


OVERVIEW – Information on selling receivables as a cash flow financing strategy in Canada . Why AR finance, aka ‘ factoring ‘ offers a viable business capital solution for Canadian business owners and managers.


It's not only a great legitimate question... it's a great question. Is selling receivables via AR Finance factoring a solid way to generate cash flow and growth for Canadian business? We're all for painting a balanced view of this common question so let's examine some key facts.

Factoring in Canada is not borrowing - it's selling. So just that simple concept is critical to understanding how A/R financing differs from traditional bank commercial credit lines. It's fundamental to understand the paperwork and legal concepts behind this process - and quite frankly it’s not that difficult. Let's use a $ 10,000 invoice as an example. If your terms are 30 days and you client actually pays you in that time frame (some don’t by the way!) then here's how the process works.

No loan is in place here. You sell that 10k invoice at a discount, which is typically, using our example at a discount of 150-200$. You are in a position to receive those funds, if you choose, immediately upon issuance of your invoice to the client. In effect you have transferred the ownership and the rights of that ownership in your sale to your factor firm.

Here is where some additional clarification is required. Two key points come to mind. One is that the majority of factor firms in Canada (let’s say 99 %!) typically take over the collection process. After all they have purchased your accounts and given you funds, right?

Not so fast mister!

An even better solution at this point is to utilize a confidential receivable financing facility. Under this program you still are 100% in charge of collecting your accounts, and maintaining the client relationship. And you still have received the benefits of that instant cash flow. Talk about the proverbial double whammy!

Are there any guarantees in life and business? We can think of one, which is that the debate on the cost of selling receivables under an AR Finance program will probably never end! We can though strive to provide some clarity around the issue, which is simply that you need to have a handle on three aspects of invoice factoring.

What are those three key underpinnings then? They are as follows:

The holdback that is imposed by the factor firm

The actual discount percentage (clients mistakenly refer to this as ' the rate ')

The advance amount under your borrowing facility

You will also recall that when we used our 10k example we made the assumption that your clients will pay in 30 days. As we joked, no really we were joking... many firms don't pay in your stated terms. How then does the A/R financing industry handle this? Well, if you're dealing with the right firm your costs will be then calculated on a per diem basis, so that if you clients pay in 47 days you will only be charged a fee that reflects those additional 17 days.

Why then to experts maintain that the cost of factoring is in fact not as expensive as perceived. It comes down to some basic reasons:

Your cash flow accelerates immediately

By turning over more sales and assets with those new funds you generate more profits - You are no longer ' the bank' for your own clients, as you never intended to be! What we are really talking about is a trade off between more financing costs than the bank but the ability to earn profits on more sales and asset turnover. Oh and by the way, some firms seem never to be able to be in a position to get approved for bank financing - but there will always be an A/R solution to their working capital problems.

One quicker example. Let's say your company determines it needs 250k of extra working capital. You could, if your firm is bankable, approach your bank for a 250k working capital cash flow term loan. Typical term might be 3-5 years. You might well find that these costs are much higher than a factoring facility which is all about asset turnover.

Today’s key point? Simply that keeping an open mind to selling receivables as a cash flow strategy might just be the most viable finance structure you have looked into! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your A/R financing needs.

7 PARK AVENUE FINANCIAL
CANADIAN 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 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/selling-receivables-ar-finance-factoring.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

Solutions For Optimal Financing Of Capital Structure In Canada

Substitute Failure For Success In Canadian Business Financing

OVERVIEW – Information on implementing financing solutions for optimal capital structure in Canada .



Financing your capital structure might sound like a bit of an esoteric or technical term for many Canadian business owners and financial managers - in actuality its easier to understand than you might think, and .. Important!

The general idea of capital structure is for the business owner/manager to have a strong sense of whether money is coming from, or could come from your suppliers, your bank and other lenders, or your own owner equity in the company. It's those three that comprise your capital structure!

The manner in which you finance your capital structure makes you successful, or drives you into bankruptcy.

We prefer the former by the way!

In some ways you might be managing your capital structure quite uniquely and successfully already. Case in point - supplier terms. Just getting a supplier to allow you to pay anywhere from 60-120 days brings you a solid source of cash at minimal cost. Hopefully the ultimate cost isn’t the relationship you have with your suppliers of course!

Canada's chartered banks, asset based lenders, lessors, or working capital firms such as receivable finance and PO based finance firms are your short and long term lenders for capital structure as it pertains to debt. And that debt of course is short term, or long term, depending on the nature of the borrowing.

Another point to be made is that the debt you undertaking within your capital structure has collateral attached to it -and there's only so much collateral to go around. A positive aspect of debt is that you can leverage it to maximize returns on capital and investment - if done properly. A great rule of them is that your long term debt is not greater than your shareholder equity. And when it comes to total debt a typical bank requirement is that it should exceed equity by no more than 2 or three to 1. Otherwise debt becomes a burden .

If you are looking to purchase a business for example its important to understand that financing will come from a combination of lenders, your firm or you personally, and potentially the seller - aka the Vendor Take Back.

In talking to a bank about financing your capital structure they are going to focus on cash flow stability. Banks and other lenders use a simple cash flow analysis tool called ' coverage ' and they like to see cash flow exceed debt coverage by 1.25:1 typically.

Lenders, i.e. banks and other commercial finance firms will at the same time look to the balance sheet for collateral - which typically is going to come from receivables, inventory and fixed assets and even real estate.

Getting a handle on today’s subject will help guarantee business success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with financing solutions within your capital structure.

7 PARK AVENUE FINANCIAL
CANADIAN 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/capital-structure-financing-solutions-optimal.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

Acquisition Finance Challenges ? How To Obtain Financing For Buying a Business

Need Some ‘ Finance Smarts ‘ in Business Acquisition ?

OVERVIEW – Information on acquisition finance in Canada . Techniques , tips and financial solutions on financing and buying a business in Canada .




No secret here... buying a business and financing that purchase can take you on a path that is a lot longer than you could wish for, with challenges all along the way. As a result any lead up you can get on acquisition finance will get you to your corporate ' goal line ' a lot faster. That’s where our expert advice, tips, and information come in today!

Our focus is mainly in the SME sector - the ' big boys ' of Bay Street seem to already have their millions in place to pay for expert advisors. ( Although if you read the financial pages every day as we do you certainly wonder about where some of that advice is coming from when you see the deals unravel and the scandals

unfold?!)


When you think of it the concept of purchasing a business or engineering a merger with a competitor is a bit of a journey (we’re hoping you won't view it as a ' bad trip ;!) And what does that journey consist of - well, we are assuming that you have done the work on identifying a target, valuing the target in some manner, and then negotiating your best offer that hopefully makes sense for all parties .

Have we forgotten anything? Oh yes, the financing! Here's where the challenges get a little steeper, as they relate to how much capital your own firm has or can put in the new business, as well as the overall financial condition of the business you are buying or merging into.

Canadian chartered banks tend to be the first ' go to ' when it comes to obtaining acquisition finance. The good news here is that there is no mystery around what’s required:

A solid business plan and cash flow projection

An industry / competitive overview

Management bios and personal financial statements - including your ability and agreement to sign on with your personal guarantee

Growth plans

Balance sheets and income statements that reflect acceptable debt/worth and cash flow ratios

If we had to sum up the entire ' bank journey ' in acquisition finance in the small to medium enterprise sector it would be that you need to focus on a banker who strongly supports your purchase and has the credibility with bank underwriters to both recommend and move your application forward.

Areas you should consistently focus on in the whole bank process:

Collateral
Cash flow
Sales
Operating ratios

Banks primarily lend on receivables, inventory and fixed assets and real estate. Your ability to manage and monitor those will be reviewed in detail.

When Canadian chartered bank financing just isn't going to work the goods news is that there are numerous other options to finance your acquisition of merger. They include:

The Government BIL Loan

Asset based lenders

Private equity /merchant bank groups

Any of those solutions can bring the proper mix of capital to your acquisition finance challenge. Financing of both short term and long term assets can in fact be accomplished in a number of manners, delivering the right leverage and working capital to make your buying that business successful.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your acquisition and merger 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/acquisition-finance-financing-buying-business.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

Loan For A Franchise Opportunity ? How Franchisee Financing Works In Canada

Canadian franchise Finance


OVERVIEW – Information on ways to successfully achieve a loan for a franchisee opportunity in Canada . Key elements of franchisee financing explained




Just when the entrepreneur comes out in you to be a franchisee in Canada a new challenge arises - how to get a loan for a franchise opportunity. At that point you have most likely made the decision that you are suited to be part of the franchise industry and have picked your industry and vertical - whether that is hospitality, a service industry, retail, etc.

That financing challenge must now fit into a budget that comprises your own equity in the transaction as well as how much money you can raise to complement the rest of the transaction. Certain things you can do properly will ultimately affect the outcome of your transaction.

The whole issue of down payment or owner equity is top of mind for most franchisees. You want to ensure you have the optimal amount of debt and equity, you don’t want to over borrow, and we’re also encouraging you, to the extent you can, to separate your personal finances from your newly incorporated business.

Awhile back we spoke with a franchisee who advised us that he had ' paid cash ' for his entire franchise. Unfortunately sales and profit objectives weren’t being met and his entire personal life vis a vis savings, credit history, etc was at risk. So that ' pride of ownership'

issue somewhat backfired on our client. Don't let that happen to you. Franchise loans and other financing you need for your venture translate, 99% of the time, into fixed monthly payments which must be met.

Ultimately you want your business plan and cash flow to reflect, and deliver on! The fact that your franchise will be able to meet its own financial obligations, as well as allow you to draw a salary and or bonus that meets your lifestyle needs.

Knowing how the bank or a franchise lender views your application gets you a great start on the road to a successful finance plan. You'll be judged on your overall character, the amount of money you have to put into the business, your business and or industry experience, and your overall past personal credit history.

The manner in which you ' sell' your financier on your franchise financing needs is reflected in your busines plan. The ability to sell your concept and background and experience, as well as business potential has to be reflected in your business plan and cash flow projections.

The issue of franchises being more risky or less risky is always a discussion point we have with both prospective franchisees as well as the finance community in general. Yes, you are of course buying into a proven business model and brand, but at the end of the day you are in many respects a new business start up.

That’s why many successful franchisees utilize the government BIL/CSBF loan to finance their business. It offers premium rates, flexible terms, a lower personal guarantee component, and can even be repaid without penalty.

Our final pearls of wisdom today?

Just the basics... spend time on the amount of funds you need, allow for reasonable time
frames to complete financing, plan for a realistic payback, and seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in complementing the financing you need to make your venture successful.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE 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/loan-for-a-franchise-opportunity-franchisee-canada.html


























Stan Prokop

Searching For Leasing Companies In Canada? 7 ( More) Key Steps To Find And Deal Successfully In Equipment Asset Finance

7 ( Count ‘ em !) Ways To Make Lease Finance Work For Your Company


OVERVIEW – Information on leasing companies in Canada . Key attributes in dealing successfully with the equipment asset finance firm





Dealing with leasing companies in Canada for your key asset finance needs. Want to maximize your return on this popular method of financing fixed assets in the Canadian marketplace. Or perhaps you simply want to find a lease company you can comfortably work with on a long term basis.

Previously we offered up 5 points on maximizing asset financing for your company. Those points / tips revolved around:

What can be financed?

Lease rates

Payments to your vendor/mfr for the asset

Delivery and Acceptance

Asset location


As the announcer on TV says ' But wait ... there’s more!

And if you act now we'll throw in ...'


Anyway, here are 7 other aspects to consider when utilizing a lease company for your financing needs.

First of all, focus in, or brush up on what type of lease you actually are looking for. Capital leases, i.e. lease to own, and Operating leases, i.e. lease to use are in fact that two main choices offered up to Canadian business owners. Each has its nuances when it comes to monthly payment calculations, implied interest rate, and how they affect your balance sheet and tax situation.

Secondly - determine what the term of the lease is that you require. Term, or amortization affects pricing of course, but other factors such as useful economic life and options at the end of your lease available to you are also critical.

Thirdly, believe it or not you have more flexibility around the timing of your monthly payments. Aside from monthly you also have the option of requesting quarter or even semi annual type payment structures. In certain cases if the asset isn’t going to be fully functional you might want to ask for a short ' interest only ' payment scenario as the asset gets up to full production speed.

Fourth - this one is important. It's your end of term options. They might include negotiating buying the asset at the end of term, upgrading it, returning it, or simply extending the lease for a few more months based on the particular use of the asset.

Our fifth point? Well it might seem a little bit mundane , but its about knowing how to address basis , lets call them documentation or paperwork issues around maintenance of the asset, servicing it, ensuring the asset is properly insured in your name and the name of your lessor, etc. And can it get anymore boring than taxes? In general you will pay the taxes as a combined amount on your monthly payment, i.e. it will be included. By the way when you create a loan transaction, as opposed to a lease those taxes can't be financed, so that’s one of the flexibilities of leasing equipment.

Point # 6 today? It's ensuring that any smaller transaction expenses, which can add up by the way, are identified in your lease offer. They might include admin fees, legal fees for collateralization, registration fees, etc.

Finally, point # 7. It’s simply that you should strive to ensure you are fully credit approved for equipment asset finance transaction, as final credit approval drives both your rate plus some other issues that we have spoken of. You might also want to ensure the actual rate of the lease and verify that with a proper financial calculator. There are only 5 drivers to a monthly payment - term, rate, monthly payment, value of the deal, and the end of term obligation. If you know 4 of those you can figure out the last one easily.

Successfully dealing with leasing companies in Canada can save you both time and dollars. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor, who can assist you with your key fixed asset financing needs.

7 PARK AVENUE FINANCIAL
CANADIAN EQUIPMENT 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 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-key-equipment-asset-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