How To Decide If Financing Receivables Is a Solution for Your Working Capital Funding

Ready For Some Solid R & R?

We call it the R R factor. And we are not talking about rest and recuperation!

The R R factor will give you a sense it its time to consider whether a newer, more popular method of financing receivables is your working capital funding solution.


We're going to provide you with a quick but easy and powerful tool to determine if your cash flow challenges need to be addressed in a more positive fashion. It's the receivables to revenue ratio - hence the term R R. First, take you year end balance of A/R, which is of course your uncollected sales revenue at that point in time. Then determine how many weeks of sales that represents. Calculate this ratio historically and you have a method of determining whether your cash flow and working capital requirements are changing.


So how does business address the challenge of working capital funding when it's as challenging as ever to borrow. Many companies are assessing factoring, or financing receivables. It's a simple process that is only made complex and difficult when you don't understand the pricing, how it works on a daily basis, or the important need to align yourself with a partner that offers and matches your business financing needs.


The process is actually quite simple --- On a daily, weekly, or monthly basis - it's your choice, you sell your receivables. So what happens next? Simply that the day you generate that sale you have the same day cash for those receivables. Therefore the Canadian business owner and financial manager have created a true ATM machine out of the investment the company has in accounts receivable. Readers will also begin to immediately appreciate that they have just stumbled upon the ultimate cash flow solution, because every time they sale they have instant cash. So whats the catch?


We believe there are 2 catches, and when the business owner understands and addresses them the receivable financing solution becomes much more clear and common sense.


The first ' catch ' is the cost. The typical Canadian cost of financing a receivable is 1.5- 2% / month. The firms offering the service do not call that an interest rate, they call it a discount fee. You sold something, for cash, i.e. you're receivable, and it was discounted by 1 or 2% for that privilege. Is that expensive. Absolutely... maybe! That is because most business owners don't pick up on the fact that they are in effect carrying those receivables already, which is a cost that is often not intuitively calculated by the business owner. Secondly, the term ' opportunity cost ' comes in to play, because the reality is that if your firm can generate a good return on investment you can use the cash flow from your receivable financing to generate higher profits.


So why isn't factoring or receivable financing the choice of every Canadian business for working capital funding? The reality is, and this is a surprise to many, that the largest firms in Canada utilize this financing. They simply have a stronger ability, due to their financial strength, to determine how the facility works on a daily basis, the best type of facility we recommend to customers is one in which your firm is able to bill and collect its own receivables, which is not offered by 99% of firms in the Canadian marketplace. Search out that 1% solution is what we tell our clients - at that point you will have a competitive financing vehicle for working capital and virtually unlimited cash flow growth.


Speak to a trusted and credible business financing advisor who can assist you to put together a solid working capital funding 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 13 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/5263367

Cash Flow Receivable Financing In Canada : There’s No Mystery Around Business Factoring Solutions

Tweet







Looking For A Second Chance In Cash Flow Financing Success ? Your Ship Just Came In

Information on cash flow financing solutions in Canada. Business factoring , aka receivable financing is an accepted manner in which to finance your working capital needs - Here's why !

Receivable financing solutions in Canada offer a true ' second chance ' when it comes to the business owner/financial mgr’s ability to turn adversity into opportunity. Let's dig in.

The ability of your company to turn cash flow for business challenges into a major win in working capital and cash flow might just come from one of Canada's newer forms of business financing, called ' business factoring ' . Spoiler alert - it's not that new!

Getting the order, and then getting paid. The old ' cliché' of ' the order is not complete until it's paid for '... as trite as that sounds, seems to hold true even today, especially for new, small and medium size firms.

Many clients we meet with are in the enviable position of getting larger orders and contracts than they might have imagined based on their innovative products and services. But with that success, as we noted, comes the challenges of cash flow financing.

During the past few years with all the economic turmoil it seems Canadian business financing options seem either limited or have disappeared - that's certainly how many clients feel. The impact of accounts receivable growth is a huge challenge, not to mention inventory and PO / Contract needs.

So we have waxed eloquent on the problem- That's easy. You'd prefer a solution though! Receivable financing, also known as factoring addresses the issues of your customers paying you in 30.60, or dare we say it, 90 days. You can carry those receivables and continue to make a high investment in current assets, or you can turn your sales into immediate cash.

Let's cover off some of the basic requirements around how this innovative method of business financing works. When you sold the product or service you hopefully had enough gross margins in your cost of sales to make the sale profitable. If you are able to sustain another 1- 2% of gross margin erosion you can use receivable financing to turn sales into same day cash, which is what this financing is about.

So how does this all work? We're glad you asked! Let's reveal and recap in a manner that's understandable. Your purchase orders or contracts must be ' clean ' from a viewpoint of being able to demonstrate you can recognize revenue on your shipment. We should interject at this point that the banks will finance your receivables also, but that comes with much stricter criteria and limits on the amount you can finance.

That is why factoring has risen in popularity, it provides unlimited... yes... unlimited same day cash flow for your sales. Your challenge is to work with a trusted, experienced and credible business financing advisor who can steer you to the right partner with the type of facility that works for you.
Although traditional factoring along the lines of the U.S. model requires your customer to be notified we are in fact a fan of the type of facility that allows you to bill and collect your own receivables, for all the obvious reasons. We've called that CONFIDENTIAL RECEIVABLE FINANCING.

It's important for clients to understand at its most basic how factoring works. You are advanced, on the same day as you invoice approx 90% of funds for your invoice. The remaining 10% is a holdback which creates a reserve and also covers the financing charges. When you customer pays you or the factor you receive the remaining 10% of your invoice amount, less the financing charge.

In Canada cost of factoring ranges from 1-2% a month. It turns adversity into opportunity because you grow sales with larger gross and net margins, and if you utilize the financing properly you are actually in a position to reduce much, in some cases all of your financing costs by taking discounts with your own suppliers or buying smarter and in larger quantities . Reversing the cash flow for business problem - That’s a win win in the language of business.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and A/R 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 13 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

Will Asset Backed Lending Last Forever For Your Firm ? If You Want It To It’s the Canadian Business Financing Ultimate Solution

Looking for Something Different & The Real Thing In Canadian Business Financing ? This Just Might Be It

OVERVIEW – Information on asset backed lending in Canada . This newer form of Canadian business  financing has solved cash flow challenges for thousands of firms in Canada

Asset Backed Lending is often the answer to our clients main desire in Canadian business financing. That desire? Something that works! Who doesn’t want that?
The new business financing reality is that asset backed lending, aka ‘ABL’, might be your new choice for company finance needs.
Asset based line of credit facilities are becoming more popular every day. Why? It’s simply a newer method of lending to Canadian business with a total focus on assets. 'Assets'. That's the key word. Let's dig in!

So which assets are they ask our clients? Typically these include inventory, receivables machinery and equipment in your fixed assets part of the balance sheet, and in some cases real estate. In some very unique cases IP, or intellectual property, a la patents, etc can be financed.

Another new common category is tax credits, such as SR ED (SR&ED) tax credits. Tax credits are in effect receivables, money owing to you from the government that is in the form of a non repayable type grant. So monetizing that asset as soon as you can allows you to employ cash more efficiently in your business. So don't discount your ability to finance that asset, i.e. your R&D capital refund. It beats waiting and accelerates cash flow.

Clients typically imagine inventory and receivables as being the only items they could margin for liquidity with their bank. The reality is that even inventory financing is becoming more difficult in the chartered bank environment, certainly for start up, smaller, and medium sized firms. That therefore is the main difference in an asset backed lending and working capital facility; in its simplest form it's simply the margining of all those other assets to capture maximum liquidity. Repeat - All your assets!


So who is actually using these types of cash flow facilities, and why are they a very solid alternative to what is termed ' traditional' bank financing. (We're not so sure these days that ' traditional' bank financing is as available as it used to be - what do you think?!)

The truth is that this type of Canadian business financing is an alternative to bank financing, its real, its available, and allows you to not having to consider more unpalatable options such as raising new equity and diluting your ownership.
We are all for secured bank lending... if you firm can qualify for all the lending it needs. But if you have had financial challenges then consider asset backed lending as a solid option. What are some of those ' challenges' we speak of that might not allow you get Canadian chartered bank financing... its issues such as a temporary loss, a turnaround, new ownership, balance sheet ratios and covenants that might not work for the bank, etc .

Asset based finance doesn’t focus on those issues - yes they are discussed, but it always comes back to ' the assets ' - and if you have them you can margin them on a daily basis for working capital and cash flow .

What's the catch? While we feel the advantages of asset based lines of credit far outweigh the alternatives, the reality is that 95% of the time this type of financing is more expensive. It also requires more reporting on an ongoing basis, although most business owners we talk to will gladly pay more finance charges and are ok with reporting if they in fact have all the cash flow they need to grow and profit in today's competitive environment. You can also expect a bit more due diligence on your overall asset quality when you set up the facility.

Bottom line? An asset backed line of credit facility is a new and emerging working capital financing that provides your firm with all the liquidity to grow.

Speak to a credible, experienced and trusted Canadian business financing advisor to determine if this type of working capital and credit facility benefits your firm.



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 13 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 Inventory Financing Challenges : Here’s Something Different To Consider Around How You Finance Inventory

In Trouble With Inventory Financing Challenges – Here’s One Solution!

OVERVIEW – Information on inventory financing in Canada. The ability to monetize and cash for your inventories is key to working capital and cash flow success. Here's one way to consider the inventory finance conundrum




Business inventory financing has us feeling a bit sorry for your company. Why? Your firm is not in the service industry. Those that are in fact are the lucky ones with respect to inventory financing - there is no inventory! Unlike your business, which produces goods and carries inventory to meet customer order needs your services firms have no storage requirements! Let's dig in.

Depending on the size of the inventory component on your balance sheet financing for that asset is often, if not always, vital. Financing via bank credit lines for the inventory component of your balance sheet is always difficult, if not in some cases impossible.

Most business owners and financial managers know that of your two major current assets ( receivables and inventory ) that banks prefer receivable , aka a/r financing . It's not hard to understand the challenges around financing inventories - i.e. raw materials, work in process, finished goods, etc. The reality is that every business is unique.

So how do you finance your inventory, and what are the requirements to get such a facility in place?


Inventory financing in Canada is most often financed under an ABL facility. What's ABL? The acronym stands for asset based lending, and is a specialized type of financing that is mostly carried out by non bank institutions. Facility sizes tend to range from 250k and up, as it is not really economical for all parties (you and the lender) for finance amounts much under that.
Your ability to control, report, and purchase inventory most economically are key drivers in an inventory financing decision made by your inventory financier. Your ability to monitor, stock, and produce and bill and collect are the basic requirements for an inventory financing facility.


We would point out that in many cases this facility also includes a receivable component, because, as we all known, inventory flows into a receivable which flows into ... dare we say it... cash! That whole journey is called the business operating cycle by the way.

If you are unable to finance your inventory properly you can very easily get into what can best be describe as a ' cash trap '- and that's not a good trap to be in. Typically each one thousand dollars of inventory on hand can cost you between 150 and 250 dollars per year when you take into account some obvious and not so obvious factors such as financing costs, storage, handling, insurance, and deterioration of the inventory which by its necessity forces you to do an asset write down .
The irony is of course that you can have too much inventory or too little, it's a balancing act - often solved by Just In Time inventory mgmt solutions.

When you arrange inventory financing you want to ensure you have reasonable levels of product - so you need to focus on both financing cost and order costs.

If you have inventory financing fast efficient turns are potentially more possible and you annual carrying costs can be dramatically reduced- don't forget that the cash you invest in inventory could be put to work elsewhere and in many cases earn, for example, at least 12% more in profits. That's a very typical number for a manufacturer.
Financing inventory is a challenge - you want to be able to take advantage of volume discounts, but at the same time limit your investment in inventory while satisfying customer order needs. That's a real teeter totter don't you think?!


Speak to a trusted, credible and experienced business financing advisor who can guide you through inventory financing in a manner that supports your business and industry. Beating the inventory financing challenge is a solid financial accomplishment for long term growth.


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 13 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

Cash Flow Financing Challenges? Time To Reinvent Working Capital Financing Without Making Costly Mistakes

Tweet




Looking to Avoid Major Business Financing Blunders ? Here is how !

OVERVIEW – Information on cash flow financing solutions in Canada . Working capital solutions come from external borrowing, monetizing your assets, and more efficient running of your business - Here is why, and how

Cash flow financing often brings business owners & financial mgrs into the world of ... mistakes! As business owners we all make them at some point - So we're talking about wrong choices in working capital financing and how the right types of cash flow financing can turn adversity into opportunity for growth and profits. Let's dig in.

All Canadian businesses need working capital, permanently, or, as is often common, on a ' bulge' basis from time to time. In essence you are financing your operating cycle, and most business owners intuitively know their industry has a unique cycle - that being simply the time it takes for a dollar to flow through inventory, A/R, and back to cash. That can be a long journey!



Is your company large? Established? Congrats of course - you probably have a better chance of seeking what people refer to as ' traditional' forms of financing. Quite frankly we're not sure anymore what traditional means, as the lines are getting blurred between what some consider as nontraditional working capital financing. If you don't know it already alternative financing is on a major upswing in Canada.


Maybe we're hanging around with the wrong crowd, but we seem to meet more and more clients that are unable to access capital for growth and development. They seek to enhance working capital in a variety of methods. Those include:


Receivable Financing/Factoring/Confidential Cash Flow Finance

P O Financing

Non bank asset based lines of credit

Sale leaseback bridge loans

SR&ED Tax credit loans

All of these are great ' nontraditional' solutions for working capital and cash flow
Bottom line? Focus on liquidity, so if you have positive working capital as calculated by the text books (current assets - current liabilities) you must therefore monetize those assets into the ' cash is king ' model.


The harsh reality is that as your textbook calculation of working capital goes up your actual cash flow is negative , given that your firms ' money ' is tied up in inventory and receivables which seem to be collected more slowly every year in our opinion and those of our clients .

Naturally if you are able to be paid in cash at time of sale, of if inventories turn very quickly, and billed customers pay promptly ,, well suffice to say the cash flow financing pressures are eased quite a bit - but reality of business usually does not give us that luxury . Consider us jealous.

We are often amazed at how many clients we meet who are looking for proverbial ' working capital ' but are in a position of not being able to define the type of financing they think they need.

The ultimate cash flow support tool is the Chartered bank operating line of credit, but as we have hinted many business owners do not qualify for these facilities. They consider moving to either a receivable financing facility or an asset based line of credit. These come at a higher cost, but provide liquidity often 100% greater than might have been achieved previously, had they been bankable.

So what’s our take away tip here - simply that you must look beyond the rate and focus on what collateral you are providing to get the liquidity you need?

Ultimately you need to understand your particular need and choose a financing solution that provides you with the cash flow financing to meet your business needs, as well as grow your business.

Options? They abound - which many Canadian business owners and financial managers don't realize. Be they traditional or alternative, one or several of them will work for your firm. Speak to a trusted, credible and experienced Canadian business financing advisor who will put you on a clear path to the solution for working capital 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 13 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

Isn't Working Capital Bad For Your (Business) Health?

Tweet

Understanding and measuring business capital Needs. Information on business capital and why working capital might not be what you think it is! Cash flow solutions explained. Cash flow measurement tools.

We can hear our clients now! How possibly could working capital (isn't that cash flow?) be bad for my firms financial health. Let's talk about that.

The technical financial folks define this as a very basic calculation that even the non financial business owner can do - simply deduct your current liabilities from your current assets (from your balance sheet statement) and, voila! Congratulations, you have working capital. Hopefully that number is a positive number, because when it's negative you're technically insolvent and that's a subject and solution for another day!

Anyway, our number is positive - that's good, right. Not necessarily, and that's the premise of our info we share here, because if you have positive working capital your funds are tied up in receivables, inventories and pre paid items.

It is therefore very important to understand what makes up working capital, how you can monetize or cash flow it, and most importantly, but often totally overlooked, how you can measure business capital.

The essence of measuring your working capital revolves around turnover, days sales outstanding, inventory turns, and payables days outstanding.

The good news is that you can very easily calculate and track these measurements, and we can virtually guarantee they will better assist you to understand why your investment in working capital is very much a teeter totter of good news/bad news.

Do you like to travel? Money does also, and considers how long it takes for a dollar to travel through your company. From the day you place an order, purchase product, pay for product, bill a receivable, and yes, collect that receivable that total cycle can be easily 200 days, if note more. That's a lot of travel, so you hopefully can see our premise here that your investment in your working capital accounts is not necessarily a great thing.

Your business is composed primarily of inventory, receivables, and payables, (also fixed assets). We therefore strongly suggest to clients that they understand the turnover and overall return they are getting from these key asset accounts.

You would understand your situation somewhat better if it were not for those pesky issues that you can't control - business owners and financial managers recognize them well and run into them every day. They are sales growth and decline, your fixed costs that you have to pay and manage no matter what, and any financial distress you may be experiencing from past external factors - i.e. a bad year, etc,

The holy grail of business capital and working capital financing is when you have strong controls on internal asset turnover and at the same time you have access to external working capital via bank lines, asset based lending facility, loans, grants, etc.

We constantly remind clients that if they are turning over their working capital accounts more efficiently all the time its in effect a measure of the true success of your company - think of it, you're buying things, paying supplies on time, and customers are paying you on time and ordering more goods and services. A quick tool for measuring your progress in this area is simply to take your receivables days and inventory days, subtract your payables days outstanding, and if that number is improving, or going down you are winning the 'working capital is bad for your health' premise we have presented.

As a Canadian business owner you are both granting credit and requesting credit (customers and suppliers respectfully). Understanding business capital in this manner will allow you to finance better internally and borrow via banks, finance firms, asset based lenders, etc.

Speak to a trusted, credible and experienced business financing advisor about our ' health' problem and what your tools and solutions might be for better business 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 13 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/expert/Stan_Prokop/432698

Article Source: http://EzineArticles.com/5157895