The Operating Credit Line : Revolver Loan Financing Is A Key Business Finance Solution

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Will A Business Credit Line Revolver Financing Fix And Grow Your Business ? You Decide !

Information on revolver loan financing in Canada. Business finance solutions for your business includes the operating credit line

Business finance includes the need for working capital, and a valuable financing tool is the 'operating line of credit '. This facility is also commonly called a 'revolver' by finance professionals.

What is the revolver? It is a financing facility, most commonly done with a bank that provides credit against the customer's receivables and inventory.

How does the facility work? After the facility is approved and negotiated with the bank the customer submits, usually monthly, a detailed list the firms account receivables and inventory. The bank calculates what is known as a 'margin limit 'and advises the customer that the business can write cheques against that overdraft, or line of credit up to the maximum of that margin limit.

That new limit is of course approved until the next month's receivables and inventory are reported on by the customer. We would say that in 99% of industries the reporting by the customer is done once a month, but on occasion it can be more regular with some customers, and on rarer occasions it can be less often.

How does the bank or financial institution calculate the approved amount? Typically the bank looks at the accounts receivable and calculates how much of the receivables less than 90 are days old. Banks assume there is a high level of uncollectibility on receivables older than 90 days. This may or may not be the case according to the customer - but the bank makes the assumption on the conservative side. (What a surprise!) Given that the bank now has an amount of A/R less than 90 days they take 75% of that amount, typically, and use that as the credit limit. A similar calculation is done for inventory.

The inventory calculation is a little trickier. Why? That is because the bank understands receivables and could step in to collect them if they had to - however, they don't understand inventory, and their customers have all types of inventory! Our experience is that as a rule the banks will pick an amount close to 40% for the inventory portion of the credit line. So if a customer has a month end balance of 200,000.00 in inventory the bank will arbitrarily allow them to write cheques of 80,000.00 against the inventory.

The bank has now calculated the facility based on our above A/R and inventory figures.

It is very important to know that the whole exercise with the bank is subject to a number of other factors, such as the profitability of the business, the risks associated with the customers industry, and any personal guarantees that also support the facility.

In summary, operating lines of credit are important, dare we say critical, to a customer that is growing and needs working capital. More cash is available, per our formulas, as the business grows. Problems can arise when a business is no longer growing though - the bank restricts the borrowings, less cash is available, and supplier payables place pressure on the company's working capital.


It is also important to note that if the operating lines of credit are significant the customer may lose focus on profits and operations, thinking he or she has all the cash they need. That's not good. Business owners are cautioned to used operating lines properly, and also focus on their profits and operating capabilities. Seek out and speak to trusted, credible and experienced Canadian business Financing Advisor with a track record of success for help in your business growth financing needs.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com


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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Accounts Receivable Financing Solutions : Who Needs Working Capital & Factoring Finance

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Your Company Might Just Be A Sitting Duck For A/R Cash Flow Finance Solutions !

OVERVIEW - Information on factoring and accounts receivable financing solutions in Canada. Working capital solutions comes in many forms . Here’s how they work and why they might be right for your cash flow needs

Accounts Receivable Financing In Canada . Canadian business owners and financial managers are hearing more and more about the concept of 'factoring 'their accounts receivable as a cash flow solution and overall strategy. Increasing numbers of companies are investigating what most people consider to be an 'alternative financing' strategy. Let’s dig in .


'Alternative 'clearly is in the context of alternative to a Canadian chartered bank line of credit. As Canadian companies build up their investments in accounts receivable ( and inventory ) they are finding it more difficult than every to ensure that their customers are paying them on time, typically not receiving those payments in 30 days per the terms they provide to their customers.


Naturally the current somewhat difficult economic environment as we head into the 2010 Business year lends itself to slow paying receivables. Management therefore is paying more and more attention to managing cash flow, and, most notably, this is taking more and more of senior management and business owner time.


The basic challenge is as simple as it gets - suppliers, landlord, and, dare we say it, your employees want to get paid on time, while the source of that cash is tied up in receivables that are paid in, many times 60-90 days.
Enter Factoring as a potential solution that will allow the Canadian company to benefit from increased cash flow, albeit at a cost. Just to be clear, the term factoring is also referred to as 'invoice discounting' and 'accounts receivable financing.'

The mechanics at the outset seem overly simple. You send your invoice (or invoices) to the 'factor' firm who immediately, usually same day, sometimes next day, issues you funds for that invoice or group of invoices. All of a sudden you immediately have the working capital and cash flow to run your business.

Let's be clear, this is not a loan per se. It is an immediate advance of funds against money owing to your firm for products and services you have delivered. We used alternate term 'invoice discounting' as noted above. The 'discount 'referred to be the amount of the finance charge the lender keeps for carrying the receivable.

We cant over emphasize the fact that the funds generated from an accounts receivable financing facility such as we have describe should be used for short term working capital needs.

You need to view the factoring facility in exactly the same manner as your bank line of credit (if you had one!)
So more about the potential 'benefit 'of factoring that we have alluded to. We can somewhat easily say that a factoring facility can be set up in fairly short time, certainly in much less time than it would take for your firm to negotiate a bank cash term loan or a Canadian chartered bank line of credit.

Another benefit? It's simply that you receive that much needed cash same day. A very significant amount of the invoices, usually 80-90% is 'advanced 'to your firm the same day. The difference is held back as a temporary holdback, and remitted to your firm, less the finance fee, when you customer pays.
We have focused on some of the benefits of factoring, such as the strong cash flow aspect of this type of facility, and its ease of set up once you have found a solid partner firm.

However, the cost of the facility is usually between 1 – 2.5 % of the invoice amount for a 30 day period - Naturally you entered into such a facility because your customers probably weren't paying you in 30 days already, so you can see that the financing fees can add up.
So, as in all business evaluations there are trade offs - if you firm can absorb the financing costs with adequate profit margins on your products and services you can categorically benefit from a factoring, a ka working capital facility! Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success


.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

b>http://www.7parkavenuefinancial.com


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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Are There Government Grants and Loans For Canadian Businesses?

How To Address Gov't Grants & Loans .. Seriously

Information on government grants and business loans in Canada . What programs deliver on funding for your business? Answer = Gov't Guaranteed Loan and SR&ED!

I am often asked by customers if there are grants and loans available for their business in Canada. On many occasions these firms are either a start up or pre-revenue. There is a general belief that there is 'free money' out there, and people are trying to find it! I categorically believe there is no free money available - if that was the case can you just imagine?!

However, there are some excellent programs, two in particular, that in our opinion are the two best government programs for Canadian business in the SMALL MEDIUM ENTERPRISE ' SME' sector.

The Canadian government has allocated hundreds of millions of dollars into what is known as the CSBF Loan program. The government provides a lot of data at its website around the availability of the program, how it works, and who is eligible.

While some of the information might seem overwhelming there is a lot of assistance available. For the purposes of this article we will share that the program is available to all new or established firms with revenues under five Million dollars. We note also that the program does not apply to publicly listed companies.

Most people that are familiar with the program might not know that in the current 2009 world economic crisis the government increased the amount of these loans to $ 350,000.00 and in some cases $ 500,000.00. NOTE - The program was recently increased to 1,000,000.00$ !

How can you qualify for the program, and, more importantly, do you qualify?

Customers need to review the classes of assets that can be financed. The true power of the program is that the rates are only 3% over prime, currently in the 5% range. Terms of repayment are 5-10 years, and, are you ready, a full personal guarantee of payment is not required!

Typically these programs are used by companies to acquire assets, improve their business, purchase or develop software, and even in some cases buy real estate.

Do Canadian business owners know that the government can assist them in purchasing business real estate with limited guarantees and great rates and terms? We don't think so!

If business principals feel they are adequately prepared to source out this programs financing power we strongly recommend that they begin this process. However, not everyone has the time, financial skills or accumen, and the ability or comfort level to complete this financing.

Those people should seek out the aid of a trusted advisor and business financing expert in order to maximize their participation in the program.

Let's get back to free money! Does it exist? Again, not really. But would you like to receive a check from the government for any processes, research or innovation that your firm has developed? If so you want to maximize your participation in the governments SR ED tax credit program.


Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com


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 '


ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop




Article Source: http://EzineArticles.com/3386915

Common Sense Tips on Buying a Business and Selling a Business

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Information on buying a business in Canada . Acquisition financing is a large part of a successful purchase of a company . Ensuring the right valuation and financing for buyout funding is critical - here's why !

We are often asked by clients for assistance in validating the price they are going to pay to purchase a small / medium enterprise. Business people should of course rely on their trusted advisors for professional help in that area, but this article will hopefully give them insight and advice into their challenge.

We also encourage our clients to talk to either their own peers, or in some cases our clients with respect to others experience in this area. This may help alleviate some of the concern around those business people who are ' non - financial ' in background and somewhat overwhelmed by discussion of terms such as EBITDA, intangible assets, capitalization and discount rates, etc!

We would point out that as technically overwhelming as some of those issues might be, there is even a whole additional layer of complexity around longer term issues down the road. These would include:

- Owner and management compensation

- insurance planning

- estate planning

- exit strategy

With reference to our last point on ' exit strategy ' imagine the look on some purchasors faces when they have not even completed the deal and are encourage to talk about an ' exit strategy '!

At the heart of the matter around the final price paid for a business is the concept that both parties feel they have reached a fair deal. As we all know the buyers and sellers perception of the same deal might vary greatly. Ultimately all the technical jargon around buying a business comes down to a term such as 'reasonable market value'. As common sense as this may sound it also has its challenges since is it only a hypothetical value based on all the difference financial elements related to the purchase of a business.

The most commonly used valuation of a business is know as ' value of future earnings '.. Accountants and financial advisors often project earnings out as far as ten years and try and then place some value and normalcy around those future profits. Our on piece of advice in this area is simply that owners should not focus solely on future earnings potential, there are other factors to be taken into consideration.

Some of those other factors of course include the true value of the current business assets, such as equipment, real estate, fixtures and leaseholds, etc. We can only say that as critical as those assets are they must be supported by the company's ability to generate the cash flow to support those assets and grow the business. Buyers and sellers frequently disagree on the total purchase price, with all sorts of psychology kicking in around prices being set artificially high for negotiations purposes, the buyers focus on a low- ball offer, etc. We would also point out the buy/sell challenge is accentuated when it relates to a ' service' firm as opposed to a product firm.

Many experts agree that ultimately the valuation of the business was so far out of whack that this clouded any possible attempts to negotiate a fair price for buyer and seller.

In summary, buying or selling a small to medium enterprise has its challenges. If owners are aware of the key basics around the technical aspects of the matter they can successfully utilize third party assistance ( accountant, lawyer, trusted financial advisor ) to consummate a successful transaction. Buyers and sellers must focus on tangible issues as well as all the intangibles that come into play in order to assist in a proper, ( and a successful ) buy or sell.


Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com




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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop


Article Source: http://EzineArticles.com/3459268

Business Financing In Canada : Tips To Secure Loans And Other Cash Flow & Asset Based Lending Solutions

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Canadian Business Financing - No Jaw Dropping Solutions - Just Common Sense Real World Finance Results Your Firm Can Achieve

Information on business financing in Canada . Solutions such as traditional cash flow and term loans can be complemented with alternative asset based lending facilities that provide your firm with the capital and funding it needs

Business financing is a challenge anytime, from the entrepreneur's dream of a small start up to major corporate needs. The current economic downturn makes the above noted challenge even more daunting. Whether a firm is established and doing well, or experiencing financial distress or working capital or growth needs - the challenge remains the same. Let's dig in.


What is the 'challenge'? Simply speaking it is identifying the proper financing solution , determining whether the solutions is a short term fix or a long term solution , and then, most importantly executing with experience the proper financing solution.
The business owner must be able to properly position the current shortcoming as both an opportunity and risk appropriate.
Proper financing begins with the owners and his advisors ability to identify the current financing challenge. The owner and advisors must provide a compelling reason for the lender to assist in an appropriate financial solution.


Who are these 'advisors'? Typically they are internal financial staff, i.e. CFO/Controller, etc, or alternately third part accountants and experienced financial intermediaries with a track record of success.


Business Financing is complex - However at the end of the day the financing solutions are actually very well defined - They are as follows:


Leases and Term Loans

Working Capital Loans

Asset Based Lines of Credit

Bank credit lines

Non bank credit lines

Receivables purchasing

Inventory Lines of Credit

Purchase Order Financing

Commercial mortgages

Tax Credit financing


The business owner, and their advisor, should have a very clear focus - That focus is as follows: What is the best financing solution on either a short term or an intermediate/long term basis for the business. Does the business owner or executive clearly understand all the financial options available - what are the criteria for these different options - what are the rates/terms and structures for each option. 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 business finance needs.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop


Article Source: http://EzineArticles.com/3000189

Purchase Order Financing Canada : A Great Canadian Business Alternative Finance Solution To The Working Capital Challenge

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P O / Contract Financing In Canada – Use This Asset Based Lending Solution As Directed!

OVERVIEW - Information on purchase order financing in Canada. P O funding is a solid alternative business finance solution for working capital need . Here’s how your firm can access this alternative finance solution to the cash flow challenge

Purchase Order financing, as well as inventory financing are two relatively new alternative financing solutions in the Canadian business environment. These two solutions provide additional flexibility when combined with traditional financing sources provided by your Canadian chartered bank or independent finance firm. Let’s dig in.

Traditional business financing in the context of working capital and cash flow revolves of course around the traditional current assets of receivable and inventory. Even if your firm is well financed and has a traditional bank line of operating credit you may have challenges in fulfilling large orders and contracts. This challenge becomes equally daunting when you don’t have traditional financing, so the ability to generate cash to fulfill larger orders and contracts becomes seemingly impossible.

Purchase order financing can provide you with the capital to fill those large orders and contracts, and, if properly put in place; can be very complimentary to your current financing.

As we have noted the concept of purchase order financing, aka ‘P.O. Financing ‘is a relatively speaking, new phenomenon in Canada.

So how does it work? Simply speaking financing is put in place to cover your material costs and direct labor costs, which are of course a significant part of your order or contract. We can safely say in many businesses that is 60-70% of the total order or contract based on most gross margins in any industry.

Your firm therefore has the working capital to finance your production .What’s left of course is essentially the profit on your P.O. or contract.

While it sounds relatively simply and easy we would point out some key critical issues that will allow the Canadian business owner and financial manager to determine if his or her firm qualifies for such financing. We can first of all say there has to be sufficient proof that your purchase order or contract is with a valid, credit worthy party. Naturally if there is any doubt that your order might not get paid, or that the customer is not credit worthy that precludes successful completion of any purchase order financing.

You should also not view the purchase order financing as a long term financing solution, it is not that. The funds are generally repaid immediately when you have completed your order / contract.

There are also some technical issues that need to be addressed if you have secured financing arrangements in place already. For example, if your firm has a bank line of credit they would be required to acknowledge the security that is taken in the Purchase order and resulting receivables that you create out of that order.

In our own experience Purchase order financing frankly works best when there is not a secured lender in place already, but that’s just our firm’s observation. Additionally on occasion certain other collateral or personal guarantees might be required. We would hasten to add that if you have already provided guarantees to the bank or other firms it would seem logical that you would provide them on the purchase order financing, which is somewhat of a riskier transaction for the lender.

Another very critical point is the whole issue of gross margin. The issues are that you need good gross margins to complete purchase order financing! A firm that is in low margin very commodity oriented business is not a strong candidate for P.O. Financing , because the combination of cost of goods, labor, overhead costs, and financing costs of the financing leave very little for the business owner . So categorically good gross margins make a much better P.O. Financing deal.

So why has this type of financing become popular – that’s fairly easy to understand. First of all the current Canadian business financing environment is challenging – therefore any alternative financing vehicle has a strong chance of being embraced and becoming more popular . After that it simply makes sense that p.o. financing can be very successful for your firm if it gives your company working capital you didn’t have, , it allows you to grow and profit at greater levels , and overall improves your competitive positioning within your industry .

We strongly recommend that if you consider Purchase order financing that you enlist the services of a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist in maximizing your cash flow and working capital with this unique innovative type of financing.




Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com

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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Can Business Application Software Be Financed ? Yes Software Leasing & Financing Exists !

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Did You Forget Business Software Applications Can Be Financed & Leased ?

 

Information on software leasing and financing in Canada. Business application software solutions can be easily financed as part of your overall technology finance strategy

Software Leasing and Finance ... Many businesses, both small and large do not realize that software can be leased or financed. Although software financing is unique in some manner, in general it has many similarities to equipment leasing.


It is also proper to ensure that right finance firm is utilized, as many lenders are somewhat risk averse to financing this asset. However, many others are looking for business in this area!
Contrary to popular opinion software as an asset in many cases has more value that a depreciating hard asset. It has also been confusing for lenders when it comes to the registration of collateral under Canadian PPSA (PERSONAL PROPERTY SECURITY ACT) legislation.


In its broadest term the financing or leasing of software that can't be transferred to another user. The business owner does also of course not own any development rights in the software. Software financing is treated as a financing mechanism, it is not a true lease per se.


Some additional key points around the technicality of software leasing/finance are as follows:
The right of a customer to use the software gives the company no right in the intellectual property surrounding the developers rights in the software code. The best example of this is when we look at our EXCEL spreadsheets that we use in finance and home matters. We use the software, but Microsoft of course owns it.


The problem in the past around the financing of software revolved around the fact that lenders did not know how to collateralize and register their security. Under current PPSA legislation intangibles and software can be collateralized. Therefore the software financing lender/lessor can be very confident that the software can be collateralized.


At the heart of the software financing issue is the true value of the software to the business owner. He runs his business on it, i.e CRM programs, office software, manufacturing software, etc. Software lease payments tend to be made since the asset is indispensable to the value and on going concern of the business. Unless companies are liquidated in total bankruptcy most lessors and finance firms recover fully on their software leasing - Source - Journal of Equipment Leasing

In many business bankruptcies the software lessor or lender is treated as a secured creditor.


Also key to the software financing issue is that many software firms offer maintenance, support, and updates around their product. This enhances the lenders asset as it is used for longer lengths of time, and often constantly upgraded. Quite frankly it becomes less obsolete than computer hardware!
Many software lessors and lenders also finance the service and maintenance contracts associated with their customers software acqusition.


We do acknowledge in this article that it is more difficult to finance customized software although it is possible based on the overall credit strength of the borrower. Many customized software deals are done with only investment grade borrowers where credit risk is minimal. Many smaller ticket lessors and lenders however do now lease software. In general these transactions are full payout capital leases.


In summary, software lease financing is available and should be considered by every business owner in the same context as a capital equipment finance transaction. The computer hardware industry has grown with leasing, and the software industry is doing that also. The same considerations an owner gives to lease vs buy apply to a software finance acquisition.


Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com

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

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