A Working Capital Management Sale : Here’s Your Best Deals On Cash Flow Financing

2013 – What Went Wrong With Your Working Capital And Cash Flow Challenges


OVERVIEW – Information on business funding and capital financing in Canada. What solutions are available for effective cash flow management and business success

Working Capital Financing – that’s a challenge that faces every Canadian business owner and financial manager. It’s that time of the year for ‘Sales ‘!

To be successful in today’s Canadian business environment (an environment that includes strong competition and difficulties in accessing financing) Canadian business has to ensure that have all their financing options up for review. Let’s dig in.


Lets take a look at some of these options, which include revolving lines of credit that are alternative in nature – these non – bank operating lines margin your firms receivables, inventory, and tax credits , equipment and real estate, in a manner that provide you with maximum financing for your business growth needs .


How does the business owner assess the need for working capital? That comes from carefully reviewing your firm’s financial statements and determine what is working and what isn’t.

Look at items such as:

Current debt to equity - calculate by taking current liabilities and dividing by your tangible equity – ratios over 80% signal danger

Debt to equity - take your total liabilities and divide by tangible equity - when the ratio exceed 100 your lenders are financing your firm more than you are

A great ratio in the context of our working capital discussion is:

Turnover of working Capital - Calculated by net sales /working capital. This calculation will give you a strong sense of how efficiently you are using working capital. When sales go up inventories and receivables tend to increase also – as a business owner you need to be buying wisely, and collecting your receivable even more wisely. It’s a great way to look at how you are buying and how you are selling. You don’t want to be put in a position where yourself, or your lenders feel that you don’t have the working capital to run your business and grow the business.

The above 3 examples are what we could call ‘ text book ‘ answers to major working capital and balance sheet issues – quite frankly business owners we meet with intuitively know what those working capital challenges are . What the really need is solutions, not technical finance explanations!

So let’s look at working capital solutions in the Canadian environment. For discussion purposes we will avoid traditional chartered bank financing, which is more difficult to achieve for the majority of small and medium enterprises. Coming off the difficult 2008 and 2008 liquidity crisis worldwide – including Canada balance sheets for many firms are challenged, and income statements are only coming back to life from a growth and profit viewpoint.

So what are some of those solutions you should be investigating? The Canadian business financing landscape is drastically changing – for additional working capital firms should be working with a trusted and experienced advisor in Canadian business financing and examine such alternate solutions as:

- Asset based lines of credit outside of chartered banking – these will margin all your current assets, (including inventory) and allow you to meet your working capital challenges head on.

- Another individual ‘ flavor ‘ of an asset based line of credit is factoring or invoice discounting – This provides business owners with immediate cash for receivables, and if managed properly can be cost effective, contrary to popular belief . Note – our best solution in this area is non notification factoring which allows you to bill and collect your own receivables

- Financing your SR & ED tax credits – why wait for 6-12 months or more for your government grant refund – monetize that tax credit now!

Two other more specialized (shall we say esoteric) methods of working capital financing are purchase order financing and inventory financing.

In summary working capital financing – Canada – continues to be challenging. And contrary to our theme of a year end ‘ sale ‘ it’s a full time year round job for business owners and financial managers .


Explore your options, alternative in nature potentially, and understand the optimal rates, terms, and structures that will allow you to grow business. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your capital and cash flow needs.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded in 2004 - Completed in excess of 90 Million $$ of financing for Canadian corporations . Info re: Canadian business financing & contact details :


Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Why The Sale Leaseback Lease Strategy Is Overlooked And Underappreciated When It Comes To Equipment Financing Loans

Could The Sale Leaseback Be Your Company’s Light bulb Moment?

OVERVIEW – Information on why equipment financing loans or a lease via a sale leaseback strategy is one of the most overlooked business refinancing strategies





A Sale Leaseback , when it comes to equipment financing loans can sometimes be a ' light bulb moment ' when it comes to the answer to a working capital and cash flow solution without taking on additional external debt.

Why is this Canadian business financing strategy sometimes overlooked, and often under utilized? And, even better, how does it work? Let's dig in.

The sale lease back has been around a long time. It typically is used for either refinancing of fixed assets, and in some cases real estate .In both of those cases the same principles apply. And more often than not it’s a way to improve profits and utilized assets that otherwise are only sitting on the balance sheet.

The key to a sale leaseback transaction is to understand some of the basic accounting rules around the transaction. As importantly it's also key to ensure you pick the right ' amortization' or ' term’ for the lease or bridge loan that will finalize your transaction...

A quick example of things going wrong?

Let's say your company wishes to do a lease back on your technology assets. It's a solid strategy employed by many. However, tech assets depreciate and become obsolescent faster than many other assets, so refinancing them and picking an amortization of, for example, 5 years doesnt make a lot of sense.

Simply because you will still be making payments on assets that probably need to be upgraded and changed while your firm is still locking into a sale leaseback refinancing payment. So understanding what we call the ' useful life' of the asset is key to a business owner/financial manager’s success in this type of refinancing.

Generally the lease or loan you enter into in this type of transaction should have some common sense attached to it. You need to understand the value of the asset, the costs involved in the refinancing, and some of the accounting and tax issues involved in such a deal.

The key benefit of equipment financing loans or a lease that solidifies your refinancing is the cash it will bring to your balance sheet. You also need to convey to the lessor / lender what the proceeds of the refinancing will be used for, as you do not want it to be viewed as a ' cash grab' for all the wrong reasons.

Have we covered off how the sale leaseback works? In its essence it couldn’t be simpler. Assets you already own that are not encumbered, i.e. they are lien free, are sold back to your lessor/ finance firm. The title transfers to the lender and passes back to your company once payments are completed under your lease back.

In almost all cases some sort of ' appraisal’ value needs to be tied to the deal - both you and the lender benefit from knowing the transaction makes sense re the asset values. And almost all assets can be refinancing via bridge loans, leasebacks. Rates will always be commensurate with overall company credit and asset quality.

If you want to investigate the ' light bulb moment' around the benefits of equipment refinancing loans seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring you have not overlooked this great refinancing strategy to enhance cash flow.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded in 2004 - Completed in excess of 90 Million $$ of financing for Canadian corporations . Info re: Canadian business financing & contact details :

7 Park Avenue Financial = Canadian Sale Leaseback Expertise


Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Business Leasing In Canada : The Secret Of Information Technology Finance is : TIMING

Information Technology Finance Was Made For Your Company !

OVERVIEW – Business leasing is a major provider of information technology finance solutions . Here’s why .. and how



Information technology finance is often all about ' timing'.

One of the ways the owner/financial manager can address the challenges that come with financing technologies is the proper use of business leasing. Let's dig in.

So why the theme of ' timing' ?It's because when we meet with clients to discuss their financing needs in the areas of computers, software , telecom, office, etc issues such as :

Budgets

Total Cost

Year Ends

Technological Change

Amortizations

are always top of mind

and need to be properly addressed.








In some cases the Canadian business owners/managers have in fact ' cut back’ on their ' IT ' (information technology) spending. That of course works for awhile, but ultimately your competitors tend to have a field day with their ability to leap forward in your industry.

More often than not your technology needs to be what the tech vendor’s call ' refreshed'. In some cases the startling change in tech almost forces the business owner to address newer hardware and software offerings that allow you to significantly ' fast forward' your overall business model.

Just yesterday we spoke to a CEO of a well known Canadian mfg firm who has now been able to offer their clients the ability to change core mfg. processes without scrapping their client’s legacy investments. Naturally the clients now have to address that acquisition in terms of cost, financing, budgets, cash flow, etc. Effective business leasing of tech assets can complement positively all those challenges.

In business it’s all about ' ROI ‘, the infamous ' return on investment'. Top experts in technology tell us that returns on your tech investments can bring anywhere from 30-80% ROI

Financing information technology also has the ability to reduce cost - those same ' experts ' have proven to us time and time again that a large portion of your finances in technology simply go to keeping things running. The one ' sure thing’ in tech advances is that things typically are cheaper, faster, and allow your firm to be more productive and competitive.

When it comes to business leasing in tech it's important for the business owner/ financial manager to understand that all hardware, software and related costs and services have the ability to be financed - typically via an equipment lease.

Financing options vary, so if your firm wants to address the specialized offerings in technology finance around lease documents, residual values, budgeting, software finance solutions, etc seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your information technology finance needs.





Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded in 2004 - Completed in excess of 90 Million $$ of financing for Canadian corporations . Info re: Canadian business financing & contact details :

7 Park Avenue Financial = Technology Financing And Business Equipment Leasing Expertise


Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Franchising Opportunities : Best Lessons For A Franchise Business Loan

The ‘ Big Reveal’ On Franchise Financing Options In Canada

OVERVIEW – Information on how Canadian entrepreneurs can address franchising opportunities via the proper type of franchise business loan in Canada






Franchising opportunities in Canada require... you guessed it... a franchise business loan of some sorts. Easy to say, somewhat harder to finalize. Let's examine some key points and lessons we've shared with franchisees in their search for ' the big reveal' around achievable franchise finance success. Let's dig in.

The type of franchise you select, i.e. ' the opportunity' part of your vision will often dictate the type and amount of financing you need. Depending on the nature of your chosen franchise you will need capital for one or all of the following -

Franchise fees

Equipment

Leasehold Improvements

Working Capital / Royalty fees

For the majority of clients we work with they typically incorporate the actual franchise fee as part of their own capital /equity investment in the business - in effect its part of that ' down payment '.

Most franchisors, often based primarily on their own experience have a strong sense of the total amt. of capital needed to be successful. With the amount of disclosure franchisors are required to make these days the benefits to the franchisee are clear - so doing your homework in investigating the potential financial success of your business is key.

Repayment for equipment and leasehold needs will typically come from the ongoing cash flow in your franchise. You of course know that, but the goal is to prove that to your lender/lenders. In Canada those lenders are either specialty franchise lenders, banks via 2 types of specifically tailored programs, and misc asset and working capital firms in the general category of leasing companies or working capital providers.

Your ability to prove repayment for your loans will come from your business plan and cash flow forecast. It's an investment of time (with minimal cost) that will prove to your lender/lenders your ability to repay term and operating debt.

Most franchisees most certainly are not accountants, but spending some time understanding some basics around cash flow, break even, and contingencies is a highly recommended pursuit. Advice in this area can easily come from your accountant, business advisor, even other franchisees you may choose to meet and talk to.

In the majority of franchise financing in Canada very little outside collateral is required. The franchise reputation, your business plan, your initial equity investment will more often than not carry you to reasonable chances of success. Lenders will though want to know how you have run your personal finances (credit bureau scores, net worth statements, etc) - lenders can be forgiven for treating most franchises as start up businesses with the risk that comes with any start up.

If you're looking for the ' big reveal' on the truth around basic franchise financing in Canada seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in making the entrepreneurial dream a financeable
reality.





Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded in 2004 - Completed in excess of 90 Million $$ of financing for Canadian corporations . Info re: Canadian business financing & contact details :

7 Park Avenue Financial = Canadian Expertise In Financing Franchise Opportunities






Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Remove Business Working Capital Action Paralysis : Understanding Commercial Financing Options

You Are Looking For A Simpler Plan For Business Financing Solutions

Information on business working capital solutions in Canada. The right commercial financing company removes the ‘ capital’ obstacle




Business working capital often creates somewhat of a state of ' paralysis' for many business owners. They are almost ' caught in the crosshairs'

when it comes to understanding their commercial financing options and demystifying the complexity around the need for those solutions. Is there a simpler way? Let's dig in.

Top experts tell us that when it comes to the SME Commercial sector of business in Canada owners and managers often don't realize the impact of a lack of working capital and cash flow until it's a bit too late sometimes.

In some cases, quite remarkably, they are not even aware of all of the traditional and alternative options they have available to them. They also are often not aware of both government and commercial financing programs that could potentially provide them with the funding options they need.

It is of course not surprising that almost half of business owners or their financial managers tend to only think only of their existing ' bank ' as the sole source of their financing solutions. Financial advice and solutions arising out of that advice also often comes from their accountants , searching the internet for ' Canadian business Financing ', and finally engaging a hopefully trusted, credible and experienced Canadian business Financing Advisor with a track record of success in business working capital solutions .

We recently read a study that indicated that over 60% of business owners stated that at certain times of the year they always need extra funding. That of course could come from seasonality in their business, ' bulge' situations that arise out of large contracts or orders, etc.

That type of short term cash crisis always demands funds and it’s often a case of simply surviving, let alone focusing on long term growth of the business.

Fortunately, or unfortunately? many business owners/managers often rely on their suppliers and vendors as a source of cash - they of course do that by maximizing their supplier credit facilities and then delaying payments as long as they can.

Technically speaking increasing payables in fact does enhance cash flow from operations, but it is often at the risk of the key relationships you need from major suppliers and vendors.

It (almost) goes without saying that your ability to play business working capital financing is really what needs to be done. In the case of cash flow fixed term debt is rarely the solution, so the business owner should consider the following solutions:

Receivable Financing
Inventory Finance
Purchase Order/ Supply Chain financing
Chartered bank business credit lines
Non bank asset based credit facilities (‘ABL’)
Tax credit monetization

Any one or a combination of the above solutions enhances cash flow especially when you are in fact growing your business.

Understanding the impact of commercial financing solutions is key to business working capital. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in unraveling the paralysis that often comes from understanding your working capital options.





Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded in 2004 - Completed in excess of 90 Million $$ of financing for Canadian corporations . Info re: Canadian business financing & contact details :

7 Park Avenue Financial = Canadian Commercial Financing And Working Capital Option Expertise






Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Alternative Funding Options Stand Up For Your Company When New Sources Of Financing Are Critical

Would You Consider Alternative Financing As A Source Of Funding For Your Business?

OVERVIEW – Information on alternative funding options in Canada. Sources of financing you may not have considered can provide your company with cash flow and capital you need to survive and grow





Sources of Financing in Canada can of course include alternative funding options that are typically non bank solutions. What are some of these finance solutions, When do these make sense for your firm, what are the costs, and how do they work? Let's dig in.

A company can find itself in need of alternative financing for many reasons. Whatever the situation may have been the end results seems more often than not to always come back to issues revolving around sales, profits, and cash flows. So at that point it of course still needs to ‘pay its bills' as well as hopefully grow.

What then are some of the actual sources of alternative finance and where do they come from. In some cases they might be obvious commercial financing vehicles ; other times owners might not consider less obvious sources of financing which might include working with vendor/suppliers , landlords which are uniquely part of the cash flow and creditor/debtor relationship.

We could call those internal type relationships and solutions; but when it comes to external solutions they are as follows:

Commercial financing companies

Insurance Companies

Specialized divisions of Canadian chartered banks

Government and Crown Corporation financing

Asset based lenders

Equipment financing firms

Mezzanine lenders


If your firm can work with any or a combination of these entities the following solutions are potentially available:

Receivable Financing

Govt Small Business Loans

Working Capital term loans from Canada's Crown Corp Bank

Inventory financing

Tax Credit Monetization (primarily SR&ED Bridge loan Financing)

Asset based non bank business lines of credit (Typically called ' ABL Financing')

Unsecured cash flow/mezzanine loans

In order to access these types of financing your firm must be in a position to demonstrate it has some long term viability despite whatever your recent circumstances might be. The ability to show some strong management expertise and to address why your own particularly industry is viable is also key.

In certain cases we've met with clients who have been asked by their bank to terminate the bank/client lending relationship. Typically the client is now in a specialized category called ' SPECIAL LOANS ' and banks typically provide some form of reasonable notice that new financing sources will be required for your company.

We feel business owners are somewhat naive in thinking that they can replace one Canadian chartered bank with another when their firm is in some sort of financial distress or challenging situation.

We would point out that in today’s more conservative commercial lending environment that it’s difficult to replace financing for a fairly healthy company, let alone one that is experienced challenges.

If you are looking at options that will ' stand up ' for your company in areas of financing investigate those options by seeking out and speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with alternative funding options that make sense.




Stan Prokop - founder : 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . In business 10 years - has completed in excess of 90 Million $$ of financing for Canadian corporations .

Info re: Canadian business financing & contact details :



7 Park Avenue Financial = Canadian Alternative Funding Solutions Expertise




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

ABL Is Extreme Corporate Turnaround Business Financing : Why Asset Based Lending Works When You Need It Most

ABL Erases That Dwindling Options Feeling When It Comes To The Business Turnaround Finance Solutions


OVERVIEW – Information on corporate turnaround financing in Canada. One Often Not So Obvious Solution is the Business ABL finance mechanism




Corporate turnaround business financing , simply put, involves the ' fixing ' of some major problem issues in a Canadian business. One of the best solutions for ' the fix ' is ' ABL ‘asset based financing. Let's explain why, so let's dig in.

Top experts will agree that there is nothing more challenging than a turnaround - in effect its a ' renewal ' of a business and financing will not always, but more often than not play a major role in that renewal. Going through that whole process is also a tremendous way to simply understand ' what went wrong ‘, and as we've said many times:

‘Tuition

is very costly in the school of experience'













During a ' turnaround' several major issues tend to always come up - they includes areas such as:

The need to restructure debt and business credit

People issues

Rightsizing the company to allow it to grow again

Address legal issues that might even include a protection filing under Canada's CCAA process (It’s the equivalent of Chapter 11 in the U.S.)


We're focusing mostly on the area of financing here, but it's safe to say a lot of other issues are always going to come into play. Also we're predominantly talking about an ' operating' turnaround as opposed to some of the ' strategic ' issues involved in products, markets, engineering, etc

ABL... It’s the acronym for asset based lending helps address the 3 key areas of corporate turnaround business financing - sales revenues, cost issues, and asset management and finance issues. It's simply one key effective solution that allows a financial restructure of the firm to be completed in its entirety.

Refinancing growth when equity issues are strained it what an asset based line of credit it all about. While more often than not it’s an operating facility that encompasses all the companies assets it can also, when applicable, include a term solution that is complimentary to the overall long term needs of the company.

It should be pointed out that typically an ABL business credit facility is a non-bank solution. (NOTE - Some banks offer ABL financing but the why and how of that is a subject for another day)

ABL will sometimes be priced as competitively as a bank solution - we will call those TIER 1 asset financing, but most firms requiring a turnaround will typically pay a major premium to bank pricing because of the inherent credit and perception challenges involved in a turnaround .

The essence of the ABL turnaround solution is the financing of all the business assets of the firm, margining their borrowing power to the maximum. Typically receivables are financed at 90% of their ongoing value , inventory is margined at anywhere from 25- 75%, and the most unique part of the ABL solution is the ability to carve out the fixed assets/equipment of the business and include them in the borrowing power mix.

Typical requirements to get the ABL solution in motion include due diligence around the business assets, the firms ability to prove it can provide ongoing financials, a long term cash flow and sales forecast , etc

If your company needs to address corporate turnaround business financing consider ABL as one method of getting the solution in place quickly. Those dwindling options you thought you suddenly emerge with a clear viable solution that's alternative in nature but has proven to work well for thousands of firms.

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with financing when you need it most.



Stan Prokop - founder : 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . In business 10 years - has completed in excess of 90 Million $$ of financing for Canadian corporations .

Info re: Canadian business financing & contact details :


7 Park Avenue Financial = Business Turnaround Financing Expertise




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769
Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop