Receivable Loan Solutions In Canada : AR Finance Via Invoice Financing Delivers Cash Flow When You Need It

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Getting Restless Around Cash Flow Financing For Your Business ? Here’s One Solution!

OVERVIEW – Information on AR finance solutions in Canada. A invoice financing receivable loan facility ( it’s not a loan ) is one of the most accessible and sought after Canadian business financing solutions today

Receivable loan solutions in Canada have significant advantages for Canadian business owners/financial mgrs seeking to improve (and accelerate) their overall cash flow / working capital situation. Shortages in ongoing cash needs, safe to say, leaves owners somewhat 'restless'! That's why the right A/R finance solution is critical when it comes to invoice financing. Let's dig in.

Invoice financing is, in essence, a form of asset based credit lines. They are the ' bank alternative ' and allows you to leverage A/R assets to maximize cash flow.

Factoring and invoice discounting firms are playing a larger role in the overall climate of business financing - coming off very challenging years ( 2008-2009) as the global meltdown severely hampered small and medium sized firms ability to raise financing for operating capital needs .


Borrowing against accounts receivable is a very simply way of leverage assets, without taking on additional debt to your balance sheet, and converting a/r into cash - allowing your firm to reduce payable and invest in ongoing growth and profits .

So those are all great positive aspects to working capital benefits - so the question remains to be asked, is there any ' downside '? The reality is that there is no one single perfect solution for any firm considering working capital financing - There are pros and cons to every method of financing your Canadian business.

So the recommendation we provide is simply, ' caveat emptor ' - or to translate that Latin phrase into plain English - investigate invoice discounting and factoring and determine if the benefits of that type of financing can help you survive and prosper !


When you secure an invoice discounting or factoring facility you have new flexibility in a number of areas - you have additional cash for one thing - never has the phrase ' cash is king' meant so much in today's competitive business environment.

Many Canadian firms have seized the day and taken the global financing challenge head on and in effect capitalized on invoice financing availability - they have acquired a competitor, merged with a synergistic partner, or in some cases engineered a management buyout. Factoring or invoice discounting and full asset based lines of credit can assist you in any of those strategies.

More often than not funds acquired through a factoring facility are simply used to reduce payable, or help to affect a business turnaround after a firm has had a very difficult year. In some cases traditional financing has been curtailed, and leverage of cash flow via factoring has emerged as the only option to business survival.

In the direst cases factoring or a full asset based line of credit has helped many a firm in fact survive the bankruptcy or re organization process. But it's important to know that some of the largest and most successful public and private companies in Canada finance A/R through non bank alternative finance solutions.

Why does A/R financing work? It's because it immediately frees up cash in your receivables - this helps to increase sales and allows your firm to invest in additional inventory - the cycle of course continue as this inventory is again converted into a receivable, generating further profits for your firm .

Many times smaller and medium sized firms cannot take advantage of the strategies that larger firms utilize to liquidate receivables - they don't have the funds to invest in corporate credit and collection personnel, as well as sophisticated cash management and planning. So, by utilizing factoring and invoice discounting issues such as being 'too small ', or 'too new a firm ‘holds little relevance.

Many Canadian firms adapt formal U.S. or European methods of factoring - careful investigation, best achieved by working with a trusted and credible advisor, will allow you to find a facility that meets your long term needs. In a perfect world we recommend to clients that they seek a facility that provides maximum loan to value on receivables, can incorporate inventory as some additional component of financing, and, most importantly, allows you to bill and collect your own receivables.

Our recommended solution in receivable loan financing? It's Confidential Receivable Finance, allowing you to have full control and bill and collect on your receivables, utilizing and paying for the amount of financing you need when you need it!

Is factoring or invoice discounting the optimal solution for your firm? Weight the benefits, and seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you eliminate that ' restless ' feeling that comes with funding challenges.


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

Leasing & Equipment Loans In Canada :Just The Good Stuff ( Mostly ! ) On Asset Financing

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Following the ‘ Crumb Trail ‘ To Successful Asset Financing For Equipment & Technology Needs

OVERVIEW – Information on asset financing in Canada . Leasing solutions via equipment loans and leases are probably the most effective manners in which to acquire the assets you need to run , operate and grow your business

Asset financing in Canada is all about acquiring in a responsible manner the assets you need to both run and grow your business. When we follow the ' crumb trail ' on this financial strategy it almost always leads to leasing and equipment loans. Let's dig in!

The ' property, plant and equipment ' you need is many times assets that will have production capabilities for your business.

What is the best financing option, or is it actually better for a firm to pay cash for these types of asset acquisitions?
Certainly outright ownership has its benefits, but at the same time valuable cash resources are drained from your business when you buy an asset for cash, especially an asset that is depreciating in value.

For that reason the majority of business owners seek out equipment financing / lease financing solutions for capital asset acquisition. Depending on what industry your company is in the investments required in capital might be very significant. In today’s economy that might even mean investments in technology, such as computers, software etc. (Yes Virginia - software can be financed!

We would also point out that even used equipment can be leased / financed. The emergence of the internet allowed firms to scour the world in an effort so sources assets that still have value and economical pricing that otherwise might not have been accessible in previous times.

Part of the attractiveness of leasing / equipment loans revolves around the fact that, when properly structured the assets remain yours at the end of the lease term. In cases where ownership is not required or is not critical operating leases might well be considered. Wear and tear will simply often make many assets unusable after a period of time.


The obvious benefits of lease financing are touted often - there are other hidden benefits also. One of those aforementioned obvious benefits to equipment financing is simply the ability of your firm to save cash flow and working capital - if cash flow and working capital are ' king ' as they say, then clearly in the challenging business environment of 2010 they have been re crowned!

You can further augment your cash flow and working capital by giving consideration to a sale leaseback strategy. In this scenario you are maintaining the use of assets you already own and have paid for outright - the strategy completes itself by your firm selling the equipment back to a lease company and paying for it over time again, usually 3 years as an example. Cash proceeds from the sale of the asset you are using go into your company for working capital needs. Many business owners and financial managers in Canada overlook this strategy.

We mentioned some of the lesser known and perhaps less obvious benefits of lease financing. One of those relates strictly to your ability to understand your options at the start of the lease. If you find that you might not want to own, or continue to use the equipment at the end of the lease term you should opt for what is known as an operating lease.

Could there actually be even another benefit to the transaction we have noted above. Yes, because under a true operating lease your overall payments and actual cost of borrowing will be significantly lower - sometimes by 10 - 20 %, versus if you had chosen a lease to own strategy.

Equipment financing can be complex, and the ability to negotiate a proper rate, term, and structure for your firm can be a daunting task. The challenge is further exacerbated when business owners are not knowledgeable enough to relate the pure acquisition to the balance sheet, income statement and other benefits that relate to a properly structured lease.

We therefore recommend you seek out the expertise of an experienced, credible and trusted lease financing advisor who can assist you in your firm’s asset 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

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