Asset Based Credit Line Solutions In Canada: Your Assets Make This Working Capital Facility Work

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The No Longer Not So Super Secret Business Credit Line ! ABL 101

OVERVIEW – Information on the asset based credit line in Canada. If your company needs a true working capital facility this just might be the solution – here’s why and how

Asset based credit line solutions are no longer that ' super secret ' answer to a working capital facility in Canada. It's the kind of solution that will help power your sales and revenue growth. Let's dig in.

It's tough to determine these days whether business owners/financial mgrs are in fact more optimistic about their future success and their ability to beat the competition in their industry. When they are in fact optimistic the reality is that they must always balance that optimism against their ability to finance both operations and growth.

Although financing continues to be one of the most serious considerations for business in Canada the alternatives are certainly not as available and obvious as they once were. That's what the Asset Based credit line in years past was quite either misunderstood or in fact unknown.

Working capital, cash flow, and cash conservation when it comes to capital expenditures top the lists of most owners/mgrs. Small and medium size business naturally has the greatest challenge, as they don't have the bench strength of larger firms. While Canadian chartered banks are certainly paying lip service and trying to, for the most part support small and medium business the reality is that the ability to finance basic growth of inventory, receivables and contracts is a challenge.

So what does the owner do when traditional bank financing can't be finalized? The reality is that more and more Canadian businesses are considering a financing solution that is becoming more developed every year in Canada - that solution is broadly referred to as an asset based line of credit, or a ' working capital facility '. The acronym for the facility is called ' ABL '.

Is there a special requirement for this type of financing - just one? Assets! Asset based lending is simply the provision of the maximum amount of cash flow and working capital that can be loaned against assets. We used the word loan. But this is not a loan or term loan, it is a revolving facility based on inventory and receivables, (and sometimes customer purchase orders) that your firm generates. The facilities only security is of course the A/R, inventory, and unencumbered equip that your company has available to finance.

The reader might be surprised to know that even the Canadian banks now have special divisions entirely devoted to ' ABL ' solutions; however some feel that their continued emphasis on balance sheet ratios, income statement ratios, and covenants and outside collateral is somewhat similar to traditional banking.

Asset based lines of credit, or working capital facilities as we have called them focus on only one thing, the collateral. These facilities are provided by independent commercial finance firms, and pricing varies by transaction facility size, the overall quality of your business risk profile, and, more importantly who you pick as a partner firm in this area.

We therefore strongly recommend that since this is a newer breed of financing that you speak to and work with a trusted and credible business financing advisor in this unique area of Canadian business financing.

So what is really happening in our facility - it is simply leverage the business assets you have on an ongoing basis to their maximum monetized value. That tends to be 90% of receivables under 90 days, as well as inventory advances of 40-80%, and on top of that unencumbered equipt is valued and advanced on if required. (Real estate is also a component, although less widely used.)

Our Nobel prize winner friend (Bob Dylan)

probably wasn’t talking about ABL lending when he wrote ' The Times They Are A Changing ' - as years ago a description of this financing would have come with terms such as ' lending of last resort ' but the new reality is that asset based lending is fundamental to thousands of businesses in Canada, and growing every day. Even large, well recognized public companies utilize the same facility.

Investigate, and consider the advantages, and benefit from the cash flow and working capital that can benefit growth of your Canadian business. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor and check out that not so super secret business credit line solution.




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

Business Loans & Finance Options In Canada : Financing & Funding Your Company Properly.. Today!

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Turning Business Financing Conspiracy Theories Into Real World Accessible Financing Solutions For Your Company

OVERVIEW – Information on business loans and company finance options in Canada. Funding via short term and intermediate term financing is key to business growth and success

Business loans and financing for their company must surely make some owners/financial mgrs feel like there is some sort of ' conspiracy theory' out there relative to their ability to access finance options and funding solutions successfully. Our point of view? That doesn't have to be the case, so... let's dig in.

Some business folks particularly start up and earlier stage companies (including franchises) should definitely check out the Canadian Govt Small Business Loan Program, which, by the way, has the federal govt guaranteeing the major part of your loan. The short term recap on this program:

Great rates
Nominal personal guarantees
Fluid structures and repayments re terms, etc

It's no secret that thousands of new and emerging private companies successfully access this program every year.

The downside to the Govt loan program is that many businesses are not seeking the asset or leasehold financing that the Govt ' SBL ' loan program provides. They're looking for cash flow and working capital sources!

Believe it or not working capital loans are actually available from what people consider traditional sources. One of the Crown Corporations within the Canadian government actually focuses very significantly on cash working capital loans. These loans are structured as term loans, have fairly competitive rates, and repayment terms of 5 to 6 years. They are also unsecured, which means they rank behind and senior lender or security you might have in place.

The only commitment to repay is the guarantee of the company as a promise to pay, and a full or partial guarantee by the owners personally. We point out that the majority of business loans and financing in Canada does in effect require some level of guarantees from the owner as well as a general positive personal financial history of the owner/ owners.

Understand your businesses overall cash and capital needs often comes to the root issue - the financing of receivables and inventory.
Those are the key drivers of any working capital need.

The ' holy grail ' of financing and funding your business? Growing your business, reducing inventories and turning them faster, and increasing receivable collections.

Increasing A/R either via more efficient methods of collection, of selling your receivables as you generate them ( that's called invoice discounting or factoring ) is the most optimal way to generate working capital financing .

Naturally the challenge in doing all that is to ensure you can still maintain your projected sales and profit growth!

If your company has a significant inventory investment at all times you can obtain direct loans in Canada against that inventory. Bank financing traditionally is the route many larger and established businesses take when they required working capital for inventory purchases. However when your firm can't qualify for the full extent of financing that you need then a direct inventory working capital loan is best.

Our recommended working capital loan is actually not a loan that adds additional debt to your balance sheet. It's a facility which margins your receivables and inventory to proper market valuations. This generates the additional cash flow and working capital you are looking for, and, as importantly, doesn't add debt to the balance sheet. For companies that can't access any or all of the operating cash they need these ' Asset based Non Bank Lines Of Credit ' are the golden solution!

The best way to generate your own working capital loan to your firm is to improve collections and delay payments to suppliers. The latter must be done carefully of course, so as not to mismanage vital supplier relationships. However, clearly it's every man and woman for themselves when it comes to business financing, so you should focus on negotiation the best payment terms you can with valued suppliers who will usually extend solid payment terms when they see you as a viable and long term customer.

Bottom Line? Real world accessible financing is no conspiracy theory - seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding and finance option 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

Working Capital Financing In Canada : Picking The Right Business Finance Solution For Your Funding Needs

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Can Your Business Pass The Stress Test For Present & Future Cash Flow Needs

OVERVIEW – Information on working capital finance needs and solutions in Canada. The right business financing solution and funding for your company depends on understanding your cash flow cycle

Working Capital financing in Canada is all about assessing your current and future business finance solution needs. We hear a lot about ' stress testing ' these days - which seems to us a great analogy for our theme of ensuring your business can withstand the right funding challenges. Let's dig in.

So what about that oft used term ' working capital '? It's used a lot these days and means different things to different people - more often than not simply ' operating liquidity '.

Text books tell us that there is a clear definition of working capital, namely going to your balance sheet and subtracting current liabilities from current assets. That’s a great textbook definition, but let’s visits the real world together on what that means.

In looking at different ' stress tests ' for your business it's all about your daily operating needs, plus of course your ability to reduce your long term obligations that you might have in leases or loans.

The absolute number of dollars in your net working capital as defined by our definition above does not really matter. (Although positive working capital is better than negative working capital!)

So how do you ' stress test ' your business for cash flow needs. It's really all about the turnover and management of your working capital accounts. Those accounts are:



Inventory

Receivables

Account Payable



Simple business logic tells us that if your inventory and receivables are turning over properly, and you’re managing your payables (by delaying them to the maximum amount possible per your terms with suppliers) you will be achieving working capital management success, and well on your way to ' stress test' success.

When your business is building up receivables and inventory the pressures on liquidity are increased. That's when the stress comes in!
Your fixes are potentially various - a permanent working capital term loan (larger companies and the big boys call these loans ' sub debt or mezzanine financing). Another positive solution is alternative financing strategies to increase cash flow availability. They include:


A/R Financing / Factoring/ Confidential Receivable Finance

Inventory loans

SR&ED Tax Credit Financing

Sale leasebacks on owned assets

Bank Credit lines / Non bank asset based lines of credit (‘ABL Loans')

Those above mentioned solutions are gaining more traction in Canadian business finance everyday!


Many clients tell us that they address some of their working capital needs through use of Business Visa credit cards. This clearly adds additional capital, you are paying for what you use, but in our opinion does a poor job of separating the owners personal credit from the business as these types of cards are closely tied to personal net worth’s and credit scores of the owners.


The other solution in a more traditional sense is to ensure you are using lease financing or sale leaseback financing to minimize cash flow out when you are considering purchases of assets.

Solutions such as this save the business owner from committing additional funds into the business via owner equity which he may not be able to, or not want to do. It certainly isn’t unusual in Canada to see business owners ‘lend ‘their company money in times of need, often with no fixed repayment schedules. However, as we have noted, the better solution is effective turnover of receivables and inventory or accessing alternative working capital solutions that we've mentioned.


In summary, business in Canada always has working capital challenges. Those challenges are diminished when you are focusing on proper turnover of current assets.

If you want to ensure your company is ' stress tested' for proper Canadian business funding needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital needs.


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

Sale Leaseback Financing In Canada : Exploring The Top Shelf Bridge Loan Lease Back Strategy !

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Just The Good Stuff On Sale Leaseback Cash Flow Strategy

Information on sale leaseback financing in Canada. The lease back strategy via a asset collateralized bridge loan is an often effective cash flow strategy - here is how and why

Sale leaseback financing , we think, is very much a ' top shelf' cash flow financing strategy often overlooked by Canadian business owners/financial mgrs. Knowing you have unencumbered assets that can also generate additional working capital for your business via a lease back bridge loan is a very powerful tool. Let's dig in.

Being asset rich... and cash poor is a sometimes common feeling among many Canadian business owners and financial managers. Knowing how to channel these assets into working capital can often make sense for a variety of reasons. Since the 2008 recession the ability to know about and source every funding strategy for your business is a ' must know '.

How can your firm free up the cash flow and working capital in these assets and put those funds to work for sales and profit generation? Refinancing these assets, or any asset via a lease or bridge loan (both strategies work) is the answer!

In some cases if you owe money on the equipment those payments can be stretched out to lower amounts, and at the same time improve working capital and liquidity.

Is it difficult to engineer a sale leaseback financing. The answer is categorically ' NO ‘if you employ a trusted, credible and experienced advisor in lease/loan financing in Canada.

The one caveat that we warn clients on is that the sale leaseback should not be greater than the book value on your financial statements of the asset being financed. If in fact that value was greater you would incur a tax on the financing which might negate the positive aspects of the sale leaseback.

So how do you get your sale leaseback financing completed? In effect you are selling your equipment back to the finance or lease company - so you are required to prepare an invoice and a bill of sale. That invoice of course means that you are warranting that the equipment is free and clear of liens and that you have valid title to the asset.

Lenders protect themselves by simply registering their new financial interest in the asset/assets being refinanced.

There are a large number of assets that actually hold their value, sometimes increase in value, and in some circumstances only depreciate a modest amount. In that case we recommend to clients that they invest a nominal amount in an appraisal - this may well generate a larger amount of working capital and cash flow coming back into your firm.

Prudent customers will generate an appraisal known as a fair market value appraisal - unfortunately many lenders will focus on a liquidation value appraisal, which is of course much more conservative .

Are there different documents used in a sale leaseback transaction? No! They are the same lease type of documents that you would expect in any type of equipment financing/loan transaction.

Careful attention should also be paid the 'type 'of lease that you consider in such a transaction. You essentially have two choices in Canada regarding such a structure; they are capital leases and operating leases.

If you choose the former you have a stated intention to own the equipment again when all payments have been made; an operating lease signifies your intention to use the equipment, upgrade it, or return it at the end of term. Each of these two types of structures has different balance sheet and income statement effects.

In summary, sale leaseback financing allows you to generate working capital and cash flow from unencumbered assets. It can be done for any asset, including real estate by the way.




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

Asset Based Line Of Credit Financing In Canada : The ABL vs. Factoring vs. Bank Cash Flow Conundrum

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Fixing The Perils Of Cash Flow Financing Challenges : Which Of These Solutions suits your firm ?

OVERVIEW – Information on the asset based line of credit working capital solution . How does this financing differ from factoring and what does the business owner/mgr need to know in assessing true cash flow needs

Asset based line of credit financing is fast becoming a well know funding solution for Canadian business owners / financial mgrs. Equally as popular a solution is the alternative financing delivered through various types of factoring solutions - both of these competing directly with traditional bank financing. Misunderstanding abounds around which solution might be best for your company. Let's dig in.


There's no question that SME COMMERCIAL FINANCE
needs are in constant need. Owners that are unable to properly interpret their current financial position don't properly understand the true value and importance of cash flow in the future of their business.
The cash flow that's required to run your company on a daily basis is a factor of your total ' working capital cycle '. As your current assets (receivables and inventory mostly) build up you find they cannot be liquidated as fast as they might be able to. Naturally some of that cash flow is required to service your long term debt also, specifically to service loans and leases your company might have in place on the balance sheet.

When Canadian business has too much money tied up in accounts receivable and inventory it must consider financing alternatives to address that issue. Two of those financing alternatives are asset based lines of credit (we like to also call those 'working capital facilities ', as well as factoring. Many firms that are fast growing and don't have the financial requirements to appease a Canadian chartered bank are looking therefore for alternate solutions.

Clients are always asking us which one is best for their firm. We believe that a true working capital facility is probably better than factoring, but the reality is that many firms cannot qualify for a true working capital facility.
It's key to remember that any type of ' business line of credit ' financing will have a positive effect on your cash flow, namely improving it! , and at the same time reducing the need to borrow funds on a long term basis. Prudent business owners/mgrs will avoid new debt on the balance sheet as well as recognizing the dilution of new owner equity.

It is very important to note that both an asset based line of credit and a factoring facility is not ' debt ' - you are not borrowing at a fixed rate and increasing the overall debt load of your company. Both facilities simply 'cash flow 'or 'monetize' your current assets in a more efficient manner.


The reality is that when you do free up that additional cash flow by using one of these two facilities you, as we noted, reduce your dependence on external funding or equity needs. Your firm now has the flexibility to address day to day issues, and grow. Many firms who are growing quickly won't qualify for bank financing if for the only reason they are growing too quickly!

Clients ask then what the main difference is between these two financing facilities. It's actually quite simply - a factoring facility is simply the sale of your accounts receivable for immediate cash on an ongoing basis. On the other hand an asset based line of credit provides that same level of immediate cash, but your firm hasn't 'sold 'the receivables, you have simply provided them as collateral.

The other main difference is that in many cases a true asset based line of credit will also cover inventory also, in many cases increases your cash flow availability by 50% or more.
In summary, asset based lines of credit and factoring is coming into their own in Canada as true business financing facilities, and are a viable alternative to traditional bank financing - albeit more costly .

Both facilities have different criteria for approval, and overall an asset based line of credit, or working capital facility, is probably the best facility for your firm - if you qualify. Investigate carefully and determine which type of financing might be right for your firm. Looking for the best answer to your cash flow needs? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in solving that conundrum!


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

Working Capital Financing In Canada : The Speedy Evolution of Business Credit & Alternative Loans

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The Not So Strange Disappearance Of Traditional Financing Solutions in The SME Commercial Business Sectors Of Canada

OVERVIEW – Information on working capital financing in Canada. Successful business credit solutions revolve around ensuring you are aware of the right types of loans and cash flow solutions available to your business

Working Capital financing is fast evolving into one of the most accessible forms of business credit in Canada. For firms that are searching for additional working capital either in a traditional or alternative for it's by far one of the best solutions for additional cash flow. Let's dig in.

Naturally business owners have alternate choices such as forms of debt and equity also, but when done properly cash flow type financing is by far a cheaper form when benchmarked against giving up more equity or putting long term debt on the balance sheet.
For permanent working capital solutions companies can choose between fixed and variable rates - it's always important to ensure you have a repayment schedule that meets your cash flow needs.

Permanent working capital loans are most often classified into two categories, intermediate, or long term. Intermediate tends to be 3-5 years, and long term in our experience tends to reflect a 7-10 year scenario.

While many facilities are sometimes back up by equipment collateral our focus here is the cash flow to back up your loan.

The two most common cash flow loans in many cases have fairly strict criteria and ongoing requirements from a financial performance perspective. If you business is smaller the loan can actually also specify the amount of debt that you as a guarantor, and your company also, can take on. Naturally in a pure cash flow loan the only collateral you provide as direct collateral is your firm’s ability to generate cash flow on an ongoing basis for repayment. This is more often than not referred to as ' mezzanine finance '.

Cash flow loans can be, on balance, the cheapest form of term financing in Canada. Working capital loans are provided by three types of entities in Canada, of course our chartered banks, a government funded crown corporation, and private independent finance firms.

The challenge for Canadian business owners and financial managers is simply to feel they understand the wide spectrum of this type of financing and to ensure they understand the degree of approval required by the three types of institutions we have mentioned.

What can you business use the working capital loan for? Our clients often focus on two areas, simply growth and cash flow, and, in many cases, acquiring another firm.

Clients ask for a simple explanation of what is required to get approved - quite simply the answer is that the loan focus is on credit capacity (your ability to repay), character and experience of you as owners/managers, plus the overall ability to demonstrate accurate revenue and profit projections.

The Canadian business financing landscape has dramatically changed in the last number of years, more specifically since the 2008 global recession. In many cases traditional financing sources such as banks have pulled back on financing all the needs of the start up , small and medium sized business sectors in Canada . Enter, stage left : Alternative Finance Solutions!
Niche types of working capital/cash flow financing can be derived from:

A/R financing / factoring / Confidential receivable financing

Inventory loans

Tax Credit Financing ( sr&ed )

Sale leasebacks

Asset based non bank lines of credit

Sales Royalty Financing

All of these forms of business finance can work either on their own, or are very often cobbled together to provide you with the capital and funding you need for your business.

In summary, properly constructed working capital financing solutions can make or break your firms overall growth and profit success .Speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success to determine if this type of financing meets your 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

Receivable Financing In Canada : The Factoring Credit Line Solution Explained

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The Not So Thin Line Between Commercial Receivable Financing & Cash Flow Success

OVERVIEW – Information on receivable financing in Canada. A factoring credit line offers numerous benefits to business liquidity and growth - here is why and how!

Receivable financing in Canada continues to play an important role in the newer ways to finance a business. Also know by the general term "Factoring ' this solution works best works best when it involves ' growth ' - simply speaking clients tell us that they cannot access traditional financing to handle new sales opportunities . Let's dig in!

A/R financing is one of the components of asset based lending. It focuses solely on the immediate conversion of your receivables into cash. Your company can also combine A/R finance with inventory and equipment to get a total business credit line solution - it's the bank alternative.

When businesses choose factoring or receivable financing (also known as invoice discounting) as a financing mechanism they have options on how to structure that facility. The challenge - working your way through the different product and service maze that's lumped together in that term ' factoring '!

Let’s recap why you would consider non bank commercial A/R financing in the first place. Some of those reasons might be:

" to generate additional working capital
" to purchase another firm, utilizing receivables as a key part of your overall financing strategy
" To reduce payable and improve relations with suppliers
" To access cash flow and working capital without taking on debt (factoring is not borrowing - you are simply monetizing more quickly your largest liquid asset)
" To utilize funds for the down payment or purchase of equipment (Note - we don't recommend to clients that they use short term working capital to fund long term fixed assets
" In some cases your firm might be re organizing or coming out of a difficult period

Understanding why this solution works is all about what's known as your
Cash conversion cycle - you have operating cash tied up in receivables.
Part of your overall growth strategy might be to offer extended payment terms to key credit worthy customers. To do that you can utilize factoring by offering those terms, yet at the same time converting the receivables into cash.

Additional cash from factoring can be used to purchase more inventories, which is in term converted into receivables, allowing your cash conversion cycle to come full circle. In simple terms it's all about tracking how a real dollar of cash moves through your company.

Clients ask us what size their firm has to be in order to be considered for this type of facility. The reality is that it works for firms of any size, whether your firm has 250k in sales or 25 Million. (Even some of Canada's largest firms factor their receivables, you just didn't know that!) That includes both public and private companies by the way.

When considering this type of financing option cost is often raised as an issued by our clients. So what does factoring cost? In Canada the cost ranges from 9% per annum to approx 2%. Clients focus on these rates as annualized interest costs, when in reality the best way to look at them is reduction in gross margin with offsetting benefits of immediate cash flow and working capital.

Here's how we prove to our clients how over a long period of time this financing solution can offset perceived higher costs. Are any of the following important to your term?

" Immediate cash flow and working capital in an unlimited fashion (if you have sales you can always finance those sales - you don’t have a limit per se
" Better supplier relations
" Ability to offer extended terms to customers that generate good profits for your firm
" The ability to now take supplier discounts and take advantage of better pricing based on your ability to pay cash

When evaluating your options the best advice we can share is to understand what’s happening in the Canadian factoring market. Work with a trusted advisor who can take you through the various industry nuances such as:

" Recourse factoring
" Full notification
" Non notifications - We consistently recommend CONFIDENTIAL RECEIVABLE FINANCING as the best solution in Canadian A/R finance
" Annual contracts or open contracts
" Pricing based on your facility size and customer base,


In summary, naturally Canadian business owners and financial managers realize there is no one single Holy Grail of business financing.
But if you want immediate cash flow, no focus on your balance sheet by the factor firm, better supplier relations, ability to finance your business as you grow, etc .. then you should consider factoring as an option. The weight of evidence might just suggest that factoring is the right financing right now! for your business .
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the right cash flow solution for your business.


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