Business Cash Flow And Working Capital – Are You There Yet?

Are We There Yet ? Good At Managing Your Firms Cash Flows?


Information on business cash flow solutions an working capital management for Canadian business owners .



Business cash flow. A lot of business owners we meet are often thinking a lot about the long term for their company , sometimes forgetting the importance of working capital management and solutions for their business. Let's explain.

A better way to look at things might be to ensure your short term financing objectives and solutions are more closely tied into your long term goals for growing your business. So of course growth and profits are important, but ' keeping the books and finding the funds ' can never be overlooked. Those functions are important if you're growing your business or even considering buying a competitor or making a strategic acquisition.

We meet a lot of clients / business owners who feel somewhat overwhelmed at the financing management of their firm - to the point where they in fact are spending a lot of time on those things, but not really understanding their alternatives and potential solutions.

Business cash flow management arises from the fact that the business owner and financial manager recognizes the need to control cash, forecast it, and raise it through debt or asset monetization.

Remember also that cash flow is tied into your overall profits, sales, and your ability to monetize assets. Another good point to consider in your search for financing solutions is to have a strong handle on larger capital outlays if you are in a capital intensive business. Committing to larger cash outflows will always have a large effect on your business for a long period of time

It's probably somewhat of an over worked phrase but cash flow really and truly is the life blood of your business. That's not the biggest secret in town. The simplest way to look at this is to monitor and get a handle on the timing of your cash as it relates to outflows and inflows.

That's really the simple explanation for your ' operating cycle ‘, and not having Canadian business financing solutions in place for those outflows and inflows simply generates ... you guessed it .. a cash flow crisis. Time and time again we ourselves have been intrigued by great or growing companies that were profitable but failed due to that cash flow crisis.

A good way to get a handle on the ' big picture ' is to take a quick look at your balance sheet and consider ' gross working capital ' and 'net working capital '. The ' gross ' part is simply the sum of all your current assets. The 'net ' is the difference between current assets and current liabilities.

Where business owners go wrong is when they don’t understand the actual level of asset turnover in those accounts. So having a great, large current ratio might be in fact a prediction of failure down the road as your accounts and inventory are uncollected and not turning over.

Oh, by the way your suppliers and lenders look at that same issue as your ability to repay payables and make loan and lease payments.

Once you understand and focus on your flow of funds you are in a better position to assess business cash flow and working capital solutions. They might include:

Receivable finance
Inventory financing
Non bank asset based lines of credit
Commercial bank facilities
PO/Supply Chain Finance
Tax Credit Monetization
Commercial bank facilities

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor

on finance solutions that make sense for your company in managing your assets and growth.



7 PARK AVENUE FINANCIAL
BUSINESS CASH FLOW AND WORKING CAPITAL


















Stan Prokop

Franchise Business Loans In Canada . What You Can And Can’t Finance With A Franchising Loan

Avoid Doing Something Wrong With A Franchising Loan


Information on franchise business loans in Canada . What part of your franchising opportunity can be financed via a loan and where does the franchisee go to seek proper franchise finance advice?



Franchise business loans in Canada. Can the prospective franchisee avoid doing something really wrong when arranging their franchising loan? We think we can help clarify, so let's dig in.

While a lot of entrepreneurs focus on the particular business or industry segment they are looking to participate in they sometimes sorely miss looking at how the franchise financing industry operates. It's somewhat of a given that it’s up to you to pick the franchise that best suits your talent, expertise, and budget. But when it comes to financing your business are you 100% sure of the expectations of your lender or lenders.

If there is any good news is that you do have some solid options available to yourself when financing your new business.

What exactly are some of the key elements of any franchise finance scenario? Well, they include the franchisee fee, equipment, leaseholds, working capital, and ongoing capital and cash flow needs.

Leaseholds are one of the most misunderstood aspects of the franchise finance mystery or conundrum. Typical leaseholds might include construction, HVAC, plumbing, lighting drywall, etc. If your franchise is not going to be fully financed by a specialty franchise lender then the best solution to financing leaseholds is under the auspices of the Govt small business loan program, In fact this program was designed solely for two asset categories - equipment... and the leaseholds we have been talking about .

In certain cases the franchise lender may wish the co operation of your landlord when it comes to what is understood as collateral in the terms of your agreement with the landlord. The situation can sometimes become more complex if there is not clarity and understanding around certain assets that you as a franchisee may have thought was a leasehold improvement as opposed to assets that become attached to the building such as oven hoods, etc. (That’s in the case of restaurants, etc)

At the end of the day it’s both the combined quality of the franchise you are buying as well as your own financial strength as determine by opening balance sheet and projected revenues and profits.

If there is one continuous misunderstanding or misconception that we see in discussions with clients on franchise business loans it’s as follows: The franchisor rarely plays a key role in franchise finance. That’s your job, or the job of you and you Canadian business financing advisor. At the end of the day your goal is simple - you want to be in a position to raise the right amount of capital you need to open and develop your business for success. Only the smallest percentage of franchisors in Canada offer any real tangible financing assistance.

Who are in fact the lenders you should be working with when arranging your franchise loan. In broad categories they are:

SPECIALTY FRANCHISE LENDERS
THE GOVERNMENT SMALL BUSINESS LOAN (very well suited to franchise finance)
EQUIPMENT LESSORS - They finance equipment and in some cases leaseholds
CANADIAN CHARTERED BANKS - Ongoing working capital and cash management

Since our theme is ' avoiding doing something wrong ' in franchisee finance it’s important for us to clarify the bank role in this industry segment. While a bank would consider financing your business directly it would place heavy reliance on your equity in the business, your personal credit, and collateral that you might have in savings, your home, etc. In our opinion where the banks do a better job is in the underwriting of the BIL loan when it comes to direct franchisee finance

To avoid making tragic, costly and time wasting mistakes in a franchising loan consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can asset you with franchise business loans that make sense for your future investment and success.


7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE BUSINESS LOANS 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 :

Canadian Franchise Financing















Stan Prokop

Will An ABL Credit Facility Replace The Business Bank Loans You Need ? Maybe And Here’s Why!

A Secret Portal To A New World Of Business Credit Lines ?


OVERVIEW – Information on an Abl credit facility as an alternative to business bank loans and Chartered bank commercial revolving credit lines





An ABL credit facility. Could this be the solution to business bank loans your firm has been seeking for your revolving credit needs? We believe the weight of evidence strongly suggest you take a look at one of Canada's newer methods of financing business commercial credit lines.

So what in fact do we think you need to know about this type of asset borrowing facility? Well, you asked for it, so here goes.

- The ABL (asset based lending) credit line is used by many Canadian businesses as an alternative to Canadian chartered bank lines of credit

- While this method of financing your business is not as widely known yet some of the Canada's largest corporations have used it, and continue to use it, for years.

- The main advantage of the facility is the fact that’s it’s based on all the assets of your company - those assets include receivables, inventory, equipment, tax credits and real estate. All of those assets are more aggressively margined than at a bank, so your firm has the ability to in many cases double its borrowing power. Yes, we said ' double '.

- Canadian business owners and financial managers look to this method of financing for a variety of reasons. We have already mentioned increased daily borrowing power, but other reasons include pricing , inability to achieve the bank financing you need, and the ability to leverage other assets rather than traditional bank a/r and inventory financing .

- Almost any firm can utilize an ABL Credit facility. Types of firms that typically consider this as alternative to business bank loans include start ups, high growth firms, companies in ' special loans ', and firms in turnaround or restructure mode. You can be a very 'normal' company, or a firm that has issues and challenges. Public and private companies alike have the ability to access asset based lending, as well as major retailers.

- Companies utilizing this type of line of credit can be expected to report more stringently on their assets - but it’s simply the basics, ie aged receivables, inventory lists, equipment lists, and aged payables as well as your monthly balance sheet and income statement. We don’t think any of those should surprise the business owner.

- The margins on a typical ABL funding scenario are usually 90% for A/R, 30-70% for inventory (it depends!), and appraised value of equipment, real estate, rolling stock, etc.

- Covenants and ratios typically demanded by our Chartered banks in their wisdom dont normally apply to asset based lines of borrowing. The full focus is on the value of your business assets and their turnover. High growth, viewed by commercial bankers as a minus, not a plus, is welcomed in an ABL funding environment.

So, how was your visit through the portal into a new world of asset based commercial revolving credit facilities?! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining if your focus on business bank loans should instead be on an ABL credit facility.


7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED CREDIT LINE 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 :

ABL CREDIT FACILITY BUSINESS BANK LOANS


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

Working Capital Business Loan Solutions . Don’t Quit Or Give Up on the Mgmt of Cash Flow

Trouble Identifying Cash Flow Management Solutions . You did until today! No More Identity Issues



OVERVIEW – Information on working capital business loan solutions and financing management in Canada




Working capital business loan solutions in Canada. It's no secret that the average Canadian business owner and financial manager has some ' identity issues ' around the mgmt and sourcing of finance solutions for their business.

To be successful in business, whether that means growing your company or just staying alive! You need to be somewhat, shall we say ' centric' when it comes to making sure operations and your chosen finance solutions are working together.

So how exactly do you address the mgmt of tools to run, operate and finance your business? And by the way, our comments pertain to both product and service companies, everything from manufacturing to technology.

Knowing and understanding your gross margins is one key to addressing proper finance solutions. Let's look at a case in point. If you have some fairly solid gross margins that allows you to have higher operating and finance expenses and still earn a profit.

A real world example might be having the luxury to carry receivables a bit longer, providing your customer with extended terms at the expense of your competitors. Many businesses in the SME sector are either considering or utilizing factoring or receivable finance as a method to benefit from good gross margins and turn their sales and paper profits into real cash flow.

Where many owners and managers we meet as our clients miss the boat so to speak is that they take their eyes of cash flow. And it’s easy if sales are booming and your financials show a great ' paper ' profit. You can use several very basic tools to get an ongoing, if not daily sense that you're able to pay your suppliers, vendors and your lenders, whoever they might be.

Those basic tools, sometimes called ' efficiency ratios ' allow you to determine if your inventory is turning and receivables are being collected. The greatest business is one that’s growing and managing its assets. All those calcs come together in finance mgmt quite nicely under whats known as your operating cycle - we like to think of it as the journey that a dollar makes through your business from day 1.

You can address asset conversion with some solid financing tools - they include:

Accounts receivable financing

Inventory financing

Combo working capital facilities that are based on your ongoing inventory and A/R

Non bank asset based lines of credit

For those companies that qualify for Canadian chartered bank financing rates are low and margining facilities are generous.


All these facilities mentioned when used either singularly or in combination allow you to take one bigger sales and contracts, and deal with corporations much larger than your own firm, which, without proper financing and asset mgmt is difficult to do .Remember also that working capital needs grow, in the same rate that your business does.

Yes, you can finance your business with more equity, but an often more easy solution is viable Canadian business financing arrangements with bank or non bank alternative lenders. And complimenting those solutions with good asset management from your operations will remove that identity crisis you've been having with working capital business loan solutions.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisorwho can help you implement financing that makes capital work!



7 PARK AVENUE FINANCIAL
CANADIAN WORKING CAPITAL BUSINESS 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 :

CANADIAN WORKING CAPITAL BUSINESS LOAN SOLUTIONS




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

Asset Finance Solutions In Canada . Working With The Right Leasing Companies For ‘ Your ‘ Acquisition Needs

Getting An ‘ Out Of Office Reply ‘ From Your Asset financing and Leasing Company ?




OVERVIEW – Information on asset finance solutions . Working with the right leasing companies in Canada solves equipment acquisition needs .. when done with the right partner firm!





Asset finance via LEASING COMPANIES IN CANADA. As unbelievable as it seems (to us) we speak to a lot of clients who have felt that they get that ' out of office reply ' when looking for Canadian business financing solutions for acquisition of assets.

How could that be the case, when in fact working with the right leasing companies in Canada solves problems that can be quite complex when it comes to financial statements, credit approval, and cash flow and working capital . We can only surmise they have been working with the wrong people and firms!

These days the sources of asset financing in Canada could not be more abundant. They include independent commercial finance companies, chartered bank leasing divisions, captive finance firms related to the manufacturer of assets, and specialized niche providers of equipment loans and leases that are sometimes accounted for as bridge loans as an alternative to a traditional leasing structure . People at these firms know one thing – the future value of the asset you are acquiring. We must also add that equipment needs in Canada can effectively be financing by Govt SBL loans which are uniquely tailored to finance business assets for the start up or SME sector in Canada.



As we have stated, the actual solution you have access to is varied - it might be a capital ' lease to own ', a shorter term rental via an operating lease , or a long term fixed asset financing that might even come with a 7 year amortization . Included in those solutions are unlimited amounts of flexibility revolving around end of term purchase options, seasonal payments, modest down payments and security deposits, etc.

And as boring as it might seem don't forget all the tax, depreciation, and off balance sheet financing structures that are possible with the right type of solution provided.

When it comes to the ' operating leases ' we have referenced we are never more surprised as to how little the Canadian business owner or financial manager knows about this type of financing transaction. In fact if you are financing technology such as laptops, pc’s, servers, storage, and internet plumbing (think routers) and even telecom equipment you should almost always at lease consider and evaluate the operating lease structure.

Why operating leases? Simply because you have options around the fastest type of depreciating asset around these days - Technology! Those options include end of lease scenarios that allow you to consider returning, extending, upgrading, or purchasing the asset or assets based on your firm’s unique needs and usage of the technology.

A lot of clients and business people we speak to think of banks as the primary source of financing in Canada, and indeed they are right up there. However when dealing with bank lease companies or divisions in Canada transactions must be of a more significant size and your firm must demonstrate sufficient balance sheet, income statement and cash flow strength to get approved. Oh and by the way, operating lease structures are not generally financeable by bank leasing entities in Canada, so the primary value of a bank leasing solution revolves around... you guessed it, great interest rates which make that monthly payment even more manageable.

Government and education entities in Canada can also make strong use of leasing solutions; it’s not just for the private sector when it comes to asset finance.

So how in fact do you determine the best lease financing company and solution for asset finance needs? One quick and efficient solution is to speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with all asset acquisition needs. Get rid of that ‘we’re out of the office ' feeling today and grow your business with smart financing solutions.



7 PARK AVENUE FINANCIAL
CANADIAN ASSET 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 :

ASSET FINANCING AND LEASING COMPANIES IN CANADA









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

Accounts Receivable Factoring Financing Costs In Canada

Don’t Let Factoring / AR Finance Become A True Life Horror Story



OVERVIEW – Information on accounts receivable factoring and financing costs in Canada . What can the business owner do to understand, manage and control finance costs to increase profits and cash flow .



Accounts receivable factoring financing costs in Canada. For some business owners and financial managers in the Canadian marketplace this issue either was or has the potential to become a true life horror story. Does it have to be... absolutely not! Let's explain.

To put it another way, wasn't it the Beatles who sang ' misunderstandings all you see ...' in their Strawberry Fields tune. That's probably a better assessment of the conundrum some face when addressing the costs, structure and mechanics of factoring in Canada.

So what we are searching for is actually the answer to the question: ' What is in fact the true cost of factoring? And how do we measure calculate and address those costs?

For the majority of businesses in Canada the actual discount rate (clients confuse that with an interest rate) is in the 1.5 - 2% range. That is based on a turnover of accounts receivable in a 30 day period, which in many cases is unrealistic in today’s business to business environment. This is actually one of the key points in financing receivables in Canada.

The majority, (not all) factor finance firms in Canada, by their nature in effect become your collection dept. when they insert themselves into your business process. If you were to retain control over your own accounts and collections (Yes, Virginia, you can!) and focused aggressively on collecting your accounts you in effect have negotiated one of the most aggressive A/R pricings in Canada.

Furthermore when you factor in all the costs of a bank line of credit including stand by fees, unused facility fees, misc bank charges etc you will find that your total cost to finance in a bank facility is probably quite a bit higher than you may have thought. Also, bank lines are under specified credit limits, and the one of many key benefits of factoring in Canada is that your facility grows in lock step as your company grows.

How do you achieve then the ability to collect your own receivables and finance only the A/R that you choose to finance, when you need to? The answer is a Confidential Invoice Finance facility - one that’s priced aggressively and allowing you the business owner/manager to be MASTER OF YOUR DOMAIN!

So if there is one key point today it's simply that your ability to turnover assets such as receivables effectively reduces your overall financing costs. And the funds you generate from accounts receivable factoring allow you to ship more, sell more, and grow more .. including adding more profits and equity to your business.

Looking for a quick snapshot of all issues affect A/R finance costs in Canada. Quite simply they include:

- The actual discount rate you negotiate

- The holdback on each invoice, which typically should be in the 10% range

- Misc audit, disbursement and wire fees

And, most importantly, a breakage fee should you choose to refinance with another party or financial institutions such as a bank.

Does the industry in Canada do a great job of explaining pricing for this key area of business financing. On balance we would say ' no ' , so seek out and speak to a trusted, credible and experienced Canadian Business Financing advisor who can assist you with your A/R factor financing needs at costs and a structure that makes sense - for you !

P.S. Don’t forget also that funds generated from A/R finance allow you to stay cash flow positive , take discounts with current suppliers ( reduces your overall cost of financing !) , and allows you to take on business and contracts that otherwise might have to be forsaken .





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 :


ACCOUNTS RECEIVABLE FACTORING FINANCING COSTS





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

7 Park Avenue Financial - Canadian Business Financing Blog Stats

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7 Park Avenue Financial provides the financing you need for working capital, cash flow and business loan needs. Our reputation is based on 16+ years of trust and Canadian business financing expertise. All major Canadian banks have referred and continue to refer transactions to our firm for business finance solutions.

We strive to provide flexible alternative finance as well as traditional finance solutions to companies that are growing or experiencing cash flow challenges. We are experts in alternative finance solutions.

We focus on financing solutions that are available in the least amount of time possible and strive to provide the finance solution most applicable to your firm's needs. That might be acquisitions, growth, or restructuring and refinancing needs.

Our solutions include asset based credit facilities, purchase order financing, accounts receivable and factoring solutions, term loans, equipment leasing, and franchise finance as well as tax credit loans.

Referral sources for 7 Park Avenue Financial solutions come from bankers, consultants and advisors, brokers, accountants, law firms, and of course our clients!


Click here for the business finance track record of 7 Park Avenue Financial








Stan Prokop
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