R And D Tax Credits In Canada : The SRED Credit And Film Financing Incentives Are More Within Your Reach Than You Thought

Unlike All Movie Endings The Tax CREDIT Financing Story Ends In A Good Way

OVERVIEW – Information on SR&ED and Film financing incentives in Canada. R and D ( R&D) tax credits in Canada for research, as well as media credits in films, tv and animation are financeable and valuable cash flow and working capital sources



Both R and D ( R&D) tax credits in Canada , as well as film financing incentives , properly done, almost always have what movie pundits call the ' happy ending'. We speak to clients about both of these two types of tax credits because they are the two most ' robust' government programs in Canada, providing Billions (yes that’s Billions with a ' B'!) of $ of funds for claimants in either program. Let's dig in!


Lets first take a look at film finance tax credits, which are actually offered in 3 separate segments of the media/entertainment industry - television, film, and animation/special effects - the latter being the hot new kid on the block given all the incredible changes in technology . As we have pointed out in the past it's actually possible to file a SR&ED (‘sred’) claim based on your productions work in animation. So we think we can be forgiven for intertwining these two separate federal/provincial programs in our discussion.

FILM FINANCING INCENTIVES: These claims are based on what your project spends on labor, services and equipment - the key point being that you follow the guidelines under each category of spend per the government requirements. Each province has difference per cent age enhancements in these categories, and depending on which way the wind is blowing in provincial governments there is often a fierce competitive rivalry among very provinces to lure your project/production to their neck of the woods so to speak.

Using Ontario as a good example of the above ' competition' claimants is allowed to claim 15% more of their qualified expenditures if they film outside the Greater Toronto Area.

Typically media property owners of projects in film, TV and the digital area set up what is known as an ' SPE ' - A separately incorporated ' special purpose entity ' that allows them to properly capture what they spend . This is typically done by a tax credit accountant who should be well versed in what you can claim and how you file to get a valid tax credit certificate

SR&ED Tax Credits: 2013 was a watershed year

for claiming, and financing R&D tax credits in Canada. Change came from every direction.

That included the following:

New and simplified online forms to file your claim

Increased audits from the federal portion of the program that's administered by CRA

An industry wide review by a combo of the government and private sector- which culminated in the release of a Policy Review – aka ‘ The Jenkins Report’

Elimination of certain key aspects of the credit, not the least of which was the ability to no longer claim capital assets/equipment required for research

Intense scrutiny on the 3rd party consultants that typically prepare SR&ED claims - these folks are somewhat the equivalent of the tax credit accountants we referred to in the tax credit around film financing incentives

So while the media/Transmedia industry powers on at what seems to be 100 miles an hr around technology and consumer shifts (What? You can watch a movie on your phone/tablet?!) ,

and while SRED survived the purge and change of 2013 did anything in fact stay the same?










It did, and that’s the financing of your film or SR&ED tax credits. Financing from the private sector is abundant and laser focused, even becoming more innovative as many qualified claims can now be financed prior to even being filed. The ' bridge loans' around your tax incentive are structured as no monthly payment / balloon payment loans that are collateralized by your claim in either of the two programs we have spoken of.

Looking to finance your claim ?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 structuring the type of cash flow loan that makes sense for your tax credits.



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial = Canadian Tax Credit Financing Expertise - SR&ED & Media



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

Alternative Finance 2014 Resolution : You Intend To Understand Invoice Discounting And Factoring

And In Other News : Understanding A/R Finance : A Securitization Alternative For The Little Guy!

OVERVIEW – Information on alternative finance solution in Canada. Why factoring and invoice discounting allows the SME sector to mirror large corporate financing alternatives such as securitization






Canadian small and medium sized firms ( The ‘ SME’ sector of our economy ) do not have the financing alternatives enjoyed by their larger, often public company counterparts. As an example many larger corporations use the concept of securitization as a method of financing working capital and enhancing balance sheets. This type of sophisticated financing allows firms to improve liquidity and satisfy lender loan covenants.

Smaller firms, usually do to cost, lack of financial sophistication, and size are unable to utilize such alternative financing. Additionally, in the post 2009/2010 financial environment many firms are struggling with their ability to maintain bank credit facilities, let alone increase them!


Therefore factoring continues to grow and become more widely used in small and middle sized firms in the Canadian business environment.
The factoring or 'discounting' of receivables allows firms to convert working capital into immediate cash. This comes with a cost which we will also discuss. Unbeknownst to many Canadian firms they have the option of selling some of their receivables, at once or on an ongoing basis, or all of their receivables - again, on a one time basis or ongoing.


It is critical to note that when a firm sells, or factors, or discounts (they all mean the same thing) they retain no ownership or interest in the receivable. Depending on how the factoring or working capital facility is structured they may or may not have responsibility for the ultimate non- collectibility of the account. Lenders address that issue in a variety of manners.
As we talked about previously, larger corporations utilize this process in a very large and serious way. Millions, rather Billions of dollars are packaged up, put into special investment vehicles called ABCP or SPV ( asset backed paper ) ( special purpose vehicle ) and then sold to corporate and institutional buyers based upon the over all quality of the total assets.

IMPORTANT NOTE – Small and medium sized firms in Canada can ‘ mirror’ the securitization process by considering CONFIDENTIAL A/R FINANCING, which allows them to bill and collect their own receivables with no notice to their clients, vendors, etc. Check it out!
Smaller and medium sized companies in Canada aren't able to enter to large multi year arrangements, with lower costs, that would allow them to achieve the benefits of a true securitization.

Smaller and medium size firms have the ability to, either with their banks (possible, but doubtful) or independent finance firms, sell receivables under a factoring or discounting agreement. This means they don't have to spend time and costs on setting p those asset backed commercial paper trusts, deals can be structured uniquely to the customers situation, and their is a lower cost and no reliance or need for rating agencies, lawyers, etc.

If used on a regular basis the factoring or invoice discounting process continually generates new working capital, allows the customer to generate better rates as time goes on, and, most importantly, relieves the financial stress of managing working capital.

It is very important to note that smaller companies have some distinct choices that on occasion the larger firms don't have. They can on a one time basis, or periodically choose to utilize this alternate financing method.


We discussed previously the company's responsibility around the invoice not being ultimately collected. If that is the case, 99% of this type of financing in Canada is done on a ' recourse ' basis. This means the customers has to pay back the lender, or replace the invoice with another one of equal value.


Typically the costs in Canadian receivable financing and factoring vary greatly. Rates range from 1 - 3% on a monthly basis. Most customers view this as an ' interest rate ', while the lender tends to view it as discount rate.

Generally the factoring (receivable discounting) facility can be set up in a couple of weeks. As we can imagine it takes the larger corporations many months (and many thousands of dollars) to set up their large dollar securitization facilities.
The factoring facilities are set up

In summary, more and more firms are turning towards factoring (receivable discounting) to manage their working capital and liquidity challenges. Firms are strongly advised to search out experts in this area who know the Canadian marketplace, as it differs substantially from the U.S. environment in this unique method of alternative financing. Seek a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in successfully completing A/R financing alternatives successfully .



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


http://www.7parkavenuefinancial.com/factoring-invoice-discounting-alternative-finance.html



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

Equipment Financing And Leasing In Canada : Considered This When You Finance Assets ?

Sticky Situation : End Of Term Issues In Equipment Leasing In Canada – Solved!

OVERVIEW – Information on equipment financing in Canada . When business owners/managers choose to finance assets the end of lease issues are as important in leasing as your original goal





Depending on the type of leases that Canadian business owners and financial managers have entered into is critical to have the information and skills to negotiate a successful end of lease strategy. The bottom line is very simple – you are at the end of your Canadian Equipment Lease financing – what now?

What happens to this equipment and what are my rights and obligations...











The entire process should be viewed as a proactive process with your equipment financing lender. Some Canadian business owners may also choose to use the services of an experienced, credible and successful lease financing intermediary to assist them with the process.


We have heard the expression ‘timing is everything ‘.

That’s equally important in our scenario, as it is critical to start to evolve into discussions with your lessor at least a couple of months ( 90 days is recommended ) regarding final disposition and acquisition of the asset . Some equipment leases in certain areas of business may be in the many hundreds of thousands or millions of dollars – given these transactions are much more d complex we would recommend an even longer time period for start of negotiations.


So what are the Canadian lessee’s rights and obligations? That’s a simple answer – they are in the written lease contract your firm entered into with the lessor. That wording should be reviewed by you with respect to issues such as –


Can the lessor come to your premises to inspect the equipment?

Does your firm have to provide maintenance records?

What was the return or purchase provisions as documented in the lease transaction you signed?

We would also add that many equipment leases require you, the business owner, to notify the lessor of your intentions under the lease, and in some cases the lessor may also be bound to notify yourself as to final termination issues and procedures. The rights and obligations you have under the lease are neatly compacted into the following points – You can buy, return, renew or extend the lease, or surrender the asset.

By now business owners realize that the lease they entered into three or five years ago must clearly be reviewed again. Companies that do a lot of lease equipment financing are strongly recommended to have follow up and termination policies in place that will allow the lease to be reviewed as it comes to expiration.

Lets talk a bit about the ‘value ‘of the equipment, - This is somewhat of a tricky area and business owners are cautioned to investigate this one thoroughly. We can frankly compare our scenario to selling our homes – we think us as homeowners know what the price is worth, the realtor tells us their opinion, and, guess what, the market will ultimately decide what the home is worth.

It’s not unlike your lease financing transaction, whether that financing was for computers, or plant machinery. Certain assets depreciate and lose value s very fast, some lose a portion of their value, and in a very small set of circumstances some assets hold their value and may in certain instances be worth more than you paid for. (Rare, but it happens!)

In summary, business owners are cautioned to ensure they understand the end of lease options rights and obligations. Follow up to the transaction should not be done at the last minute, and thorough investigation of asset value should be done with proper diligence. It’s only common sense. 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 lease finance challenges.



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian Equipment 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

Accounts Receivable Financing In Canada : Examining The Physics Of Factoring Facilities

One Way To Escape The Working Capital Trap

OVERVIEW – Information on accounts receivable financing in Canada. Why factoring facilities might make the difference in your firms working capital and cash flow success



Recent Studies in the U.S. , ( and we believe the Canadian business landscape is very similar ) suggest that one of the most viable ways for businesses to grow and continue growing in the current economic and somewhat difficult credit environment is to consider a factoring working capital facility for their business . This type of financing facility is also known as an accounts receivable financing facility.

When business credit and access to business credit gets difficult Canadian business owners should of course investigate every ‘tactic ‘to get their company financing properly.

If your company is doing reasonable well, and the general economic and business and credit environment is quite positive naturally more traditional financing is considered – as a Canadian business owner you know the drill - prepare an executive summary or business plan, produce several years of financial statements, and meet with your Canadian chartered bank to discuss receivable or term financing . The reality of today’s economic environment is that many businesses aren’t in a position to pursue this traditional financing and therefore must consider what the alternatives are.

One of the appeals of factoring / accounts receivable financing is that your business is generating positive cash flow right out of the gate.

One of the other main benefits of such a facility is that business owners and financial managers can focus on running their business, and not spending all their time on cash flow problems and working capital challenges. We would point out that the time save on collections of course refers to the factor that the finance or factor firm is the one collecting your accounts receivable. Many business owners do not like this direct contact with the customer, and that is one of the reasons that the Canadian business environment has, relatively speaking, been ‘ slow ‘ to catch on to factoring .

This necessitates a brief discussion around the concept of notification and how factoring has traditionally been done in the U.S. and elsewhere in the world. Factoring started hundreds, some say thousands of years ago in Europe and Asian. Traditionally it involved the total ‘sale ‘of your receivables, your firm got the cash but you didn’t own or collect the receivable at that point. In recent years , due to the creativity of the North American financing markets there are numerous other product offerings related to factoring , one of which is ‘ non – notification ‘.

We believe non-notification factoring is the absolute best solution for Canadian business owners who are considering alternative financing. Under CONFIDENTIAL RECEIVABLE FINANCE facilities you bill and collect your own receivables, while at the same time receiving cash for them as soon as you generate your invoices. This provides a double whammy, so to speak!

1. You bill and collect your own receivables and get cash ASAP
2. You maintain the relationship with your customer, which is key to most Canadian business owners

As we have noted in the past factoring is more expensive than traditional financing, but that premium that is paid provides you with literally all the cash you need to grow your business. Savvy Canadian business owners are able to use that cash to improve supplier relationships, take prompt payment discounts, and purchase more inventories for sale to their customers. In certain cases, all, yes we repeat, ALL! Of the costs of a factoring facility can be offset by good gross margins and strong operating efficiencies.

Is it any wonder by factoring, accounts receivable financing and non traditional working capital facilities are becoming more popular in Canada? We don’t think so! 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 cash flow needs .



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

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

7 Park Avenue Financial = Canadian A/R Finance & Working Capital Solutions



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

Sred Program Claims : Become Master Of Your Domain When It Comes To Tax Credit Financing

Financing Your R&D Claim In Canada – The Why – The How !

OVERVIEW – Information on financing SRED ( SR&ED) program claims in Canada. SR&ED tax credit financing makes more sense than you think!






Financing Sred Program claims in Canada is big business. Why should the business owner/ financial manager consider tax credit financing under Canada's SR&ED program? Let's dig in.

Several billion dollars of Canadian govt funds are given each year to the several thousand firms in Canada that participate in innovation and technology via their funded research.

Numerous misconceptions exist around the program - issues such as ' who is eligible ' ... 'are start ups eligible ' ... 'does a company have to be profitable to claim SRED ', etc. By the way, even if your firm is unincorporated you could still apply for SRED funding! ; Although the majority of claims submitted and that are financed tend to be for legal Canadian entities.

The reality is that even companies that are in the pre-revenue, or in the early stages of gaining sales traction can still apply, and no, you don't have to be profitable yet. And the amount to be claimed? It varies by province because it’s a combo of federal and provincial monies, but as a broad rule typical SR&ED claims amount to approx. 40% of your total spend in R & D innovation and process improvements.

The key to achieving SRED approval is of course a ' quality ' claim.

Many first time claimants we talk to sometimes struggle with preparation of their claim. Here's where the word ' expert' truly has meaning , as SR&ED claims are, more often than not, prepared by external consultants ( 'SR&ED Consultants/Engineers ' ) who have experience and expertise ( hopefully!?) in your industry.

In the last couple years a ' crackdown' of sorts has occurred around these consultants, with questions being raised about the fees they charge, which are often on a contingency basis ., and the aggressiveness of claims that are filed . Since we're addressing SRED tax credit financing you can assume that who prepares your claim and the quality of that claim is one of several important factors that play a role in financing.

Companies claiming SR&ED credits typically, and correctly so, view their filed claim as a ‘Receivable’. Naturally it's a government receivable, the one issue being of course that until your claim is audited and approved it's not 100% clear that it will is 100% approved! So many firms book that receivable, some book a more conservative amount, and then the ' waiting game' begins!

The financing of your SR & ED claim alleviates of course the ' waiting' for the financial and technical audits that come from the program. We'll never fully understand why, but banks are more than reluctant to finance these claims, and when they do so, as we have pointed out in the past, it’s in the context of their entire relationship with your firm, including external collateral they hold.

Enter SR and Ed financing. The finance process around your claim is very straight forward, a simple business application and accompanying data is all you need to get started. Innovation exists even in financing! , so claimants will be surprised to know that recent trends in SR&ED bridge loan financing allow firms to receive financing prior to their claim being filed, which was not always the case.

So yes, you can wait 3, 4, 6, even 12 months sometimes to receive your SR and ED claim funding chq, but if your firm requires or can use the additional working capital and cash flow now seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
with tax credit financing for SRED Program claims expertise.




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 SR&ED Tax Credit Finance 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

CRA SRED And Film Tax Credits : Is It Art Or Science Behind Financing Your Claims

Financing Canadian Tax Credits Shouldn’t Be ‘ Adventure Time’ ! SR&ED And Film Financing

OVERVIEW – Information on financing CRA SR&ED Credits and Film Tax Credits often makes maximum sense with minimal downside . Here is why, and how!




CRA Sred (SR&ED) and Film Tax Credits are quite a good example of the concept of success when it comes down to the question of ' art or science'. And that pertains to tax credit financing also; we maintain it shouldn’t be ' Adventure time' when it comes to the finance of your SRED or film, television and animation credits. Let's dig in.

It shouldn't be a secret (but unfortunately it is for many!) that Canada has some great (aka ' generous') business tax credits. In the case of our two examples:

SR&ED (sometimes called 'SRED ')

MEDIA

businesses in industry and entertainment can compete effectively with other businesses all over the world.


CRA Sred claims, in many cases involve some element of information technology. And when it comes to the media industry - film, TV, and animation ' IT' technology has rapidly changed the entertainment industry. That bodes well for Canada of course as it ranks high in the world for trained people, country stability, and a strong banking and straightforward ( mostly !) tax and tax credit system. In summary, top experts tell us that Canada has one of the best overall environments for research and entrepreneurship in the world.

The Canadian dollar is certainly one factor in the cost, and the financing of tax credit claims in research or film. In recent times the 'Canuck buck’ reached parity and has somewhat backed off. We'll leave the currency predictions to the experts - we'll focus on the actual financing of your credits.

SR&ED:

Sred credits are a combo of federal and provincial incentives. On a broad basis the thousands of companies that participate in the program receive a refundable credit (which can be financed for cash flow purposes) in the general area of 30% of their entire spend.

While the program was static for awhile some major changes CRA Sred (SR&ED) and Film Tax Credits happened over the last year or so. In some ways these to a certain degree affect the financing of your claim, but not in a dramatic or negative fashion. One of those changes is the elimination of machinery and equipment acquired in your R&D; so when it comes to financing your claim the overall financeable amount might in fact be lower given you can't claim assets acquired for research.

One other ' change ' in the overall philosophy of the program was to focus on who was preparing your SR&ED claims and what they were charging. That probably struck fear and terror into the hearts of the SR&ED preparer industry - known as ' SR&ED Consultants '. As in all aspects of business the dust eventually settles and good credible honest consultants that charge a fair price will always survive.

FILM / TV/ ANIMATION CRA CREDITS:

Producers of content in the media industry are eligible for tax credits also, and yes, they can be financed also! These credits are typically prepared by a qualified or experienced tax credit accountant - we suppose they are the medias equivalent of the SRED Consultant.

Producers/owners of Canadian content simply put together a request around which they are Vis a Vis ownership, their budgets, productions costs, funds spent, etc - In effects it’s a business application.

Tax incentives in the media industry can range from anywhere up to 40-50% depending on what is spent and in what categories. Credits are a combo, again, of federal and provincial incentives. Provinces compete somewhat ferociously for your film, TV, animation or Transmedia projects as they view the employment and capital spending in this area a valuable commodity.

Our focus is financing these claims, and some may wonder why we talk about two very diverse credits - i.e. SRED and MEDIA. Our response - simply that in some cases even Media projects, can file for SR&ED claims.

And with respect to the actual financing of claims financing is very similar. Bridge loans on your SRED and Film credits are structured as loans with no payment, and are reconciled at the end when the government sends you funds. Loans are typically in the 70% ' loan to value' area, and you receive the balance of funds, less financing costs when the government remits on your claim.

If you're interested in financing, or getting some help with preparation of your claim seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can eliminate a lot of the ' ADVENTURE’ when it comes to CRA SRED and FILM TAX CREDITS.




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 = SR&ED and Film Tax Credit Finance 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

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