Can AR Finance Increase Profitability ? Looking For Some Clear Thinking On An Effective Receivable Invoice Financing Strategy / Partner?

Canadian Receivable Finance


Information on AR Finance in Canada . Can an effective receivable invoice financing strategy increase sales and profits . Here’s how !



A strange question? Can an AR Finance strategy actually help to increase your profitability? Top experts in the field indicate a strong case can be made for that statement, so all of a sudden receivable invoice financing has seemed to catch our client’s interest. No surprise there!

Whether we like it or not business history, just like regular history, tends to repeat itself. So unless the Canadian business owner and financial manager make a decision to change how they run and finance their business they are somewhat doomed to soldier on under the same current circumstances.

When we sit down and benchmark traditional bank finance against receivable financing the differences become quite clear. For the banks and business oriented credit union’s full repayment ability as well as secondary collateral (often that’s your personal guarantee) becomes the total focus. The banks focus on you as the owner, business equity, collateral and historical cash flow is... well... supreme.

Naturally we're the first to admit that if you can secure bank financing it does have significant advantages - they include the lowest possible cost of funds, your ability to deal very locally with your banker, etc. Our point is simply that there are alternatives that can still assist you to generate sales and profits.

Every business owner knows you can increase profits by lowering costs and increasing sales. But what they don't often address is their ability to turnover assets, in our case today accounts receivable. That continual turnover allows you to generate more sales and address the opportunity cost of doing something with your assets!

Naturally invoice financing is just one method or choice you the business owner has when considering how to accelerate sales and profit via proper financing. Our point is simply that invoice financing simply accelerates cash flow, which is a key driver to your profits and ability to sustain daily operations. At the end of the day its ' quick financing ' that allows the business owner and entrepreneur to address cash and revenue goals.

And don’t forget that you can take advantage of this method of financing in more ways than one - they include taking supplier discounts, taking on larger orders and contracts, and purchasing more efficiently based on your ability to pay suppliers and vendors better.

So, our bottom line today? Asset turnover can affect profitability. And Receivable financing enhances asset turnover. Alternatively said - working capital management works! when it comes to profits . (And don't forget to manage those long term assets also!) This makes you more effective as a company!

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in growing profits and sales via a solid Receivable Financing program.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING FINANCE EXPERTISE


Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/ar_finance_receivable_financing_invoice.html

Is a Sale Leaseback of My Business Assets a Good Thing?

At various points in the economic cycle a business owner or financial manager considers a sale leaseback financing. Is that type of transaction advantageous, and what are the risks and benefits?

Many firms do not fully know about or understand the advantages of this type transaction. This is a classic alternative financing strategy that works best when it is a good deal for the lessee and the lessor. It does not work well when the lessor presumes it is a 'cash grab' by the lessee.

This type of financing should be contemplated if your firm has the following characteristics:

- Experiencing working capital challenges

- Declining profits

- Excess unencumbered assets

- High amount of debt


If a company has a high amount of debt a sale leaseback transaction can still be a very positive financing event. By structuring the the transaction as an operating lease the debt becomes 'off balance sheet '. This gives the appearance of the company being not so highly leveraged and quite often it can save the company from being in default of its loan covenants.

In many cases the sale leaseback can bring a significant amount of capital back into the firm.

So when does a firm consider such a transaction - every industry is different but if the firm is bottom line, over leverage, i.e. Debt too high, there can be advantages to an off balance sheet sale leaseback transaction.

If a company has historically had pride of ownership, and has significant assets, and is suddenly going through a high growth stage it also becomes a good candidate for a sale leaseback. Cash flows are restructured and the company gains significant new working capital.

The best candidates, overall, for this type of financing strategy are high growth companies who would prefer to invest additional cash in receivables and inventory. Naturally no lessor wants to consider such a financing if the company is in some sort of death spiral.

In some cases when assets have in fact appreciated (not depreciated in value) the company may actually be able to report a gain in earnings, as the sale leaseback transaction in excess of book value allows the company to book the sale leaseback gain into the profit account!

Many government institutions, such as municipalities, hospitals, etc may find this type of financing strategy as optimal in solving temporary budget cuts and working capital challenges.

In summary, a properly structured sale leaseback can provide new cash, enhance earnings, and in effect be a creative way to temporarily re finance the firm or institution.

7 PARK AVENUE FINANCIAL IS AN EXPERT IN SALE LEASEBACK FINANCE



Stan Prokop is founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


The company originates business financing for Canadian companies,specializing in working capital, cash flow, and asset based financing. In business 10 years the company has completed in excess of 85 Million $ of financing for companies of all size. For info on Canadian business financing and contact details see:

http://www.7parkavenuefinancial.com/toronto_ontario_equipment_financing.html

Is There A Difference Between Truck Leasing And ‘ IT’ Leasing ? An Equipment And Technology Finance Surprise ?

Is there a major difference in which assets can be financed?

Information on leasing and equipment finance . Do the same benefits apply to truck Leases and IT technology financing ? Business owners may be surprised!



At first brush is the answer ' Are we crazy?' How could there similarities between financing a transportation asset or entering into an equipment finance leasing transaction for new ' IT ' assets?

We actually think you will be surprised at some of the similarities which clearly brings home the point that various asset categories (whether it is a truck lease or for a sophisticated computer infrastructure ) lend themselves to a solid finance vehicle. And excuse the pun on vehicle!

Whether your Canadian firm is a start up or a ' mature ' firm (are start ups immature?) the need to access capital to either enhance the truck fleet or add hardware and software to your computing power remains the same.

Both assets , using today’s example are depreciating assets - many will make the case that truck and transport assets depreciate much more slowly than IT type assets, which seems to lose value very quickly if only for the reason that technology seems to change about every 2.5 minutes these days!

So does lease finance have an answer to both those asset classes? It does, and it's all about picking one of two leases that fit what the industry calls your ' end of term' strategy. So it might be a more sophisticated operating lease for your computer IT solution, and it might be a long term capital lease ( a lease to own ) for your truck finance.

Naturally you can buy depreciating assets, no one is forcing you to choose leasing in a ' lease vs. buy ' analysis... but the reality is that unless your cost of capital significantly exceeds a lease total cost that financing is more often than not the right choice. And don't get us started on the very high cost of equity capital which is a whole new kettle of fish.

Naturally it makes sense in any business financing strategy that your feel the cash flow required to pay the lease can be met even when things are tough.

Companies use assets to generate value, so whether its a transport truck asset to deliver your products or perhaps a new IT computer / software system to make your operations more efficient and competitive.... a lease finance strategy , a proper one by the way, simple accelerates your ability to fund new assets and the growth of your firm .

The proper lease strategy will allow you to both replenish and upgrade assets, or make key decisions around what will happen to the asset at the end of term. In today’s example for instance we could replace a truck with a new one, keeping our monthly payment the same ... of we could return IT assets to our vendor for an upgrade of newer technology... with... you guessed it, the payment remaining the same.

An interesting side point is how valuation decisions are made on assets such as trucks or computers during and at the end of lease. In the real world (that’s where we work) it comes down to best inputs you can provide, along with value opinions that might come from an appraiser, your experienced equipment finance company, or research on the internet at best values.

Hopefully we have made our point - whether it’s financing rolling stock type assets where key factors such as physical condition, safety and maintenance come into play... or the other end of the spectrum , IT type assets that of often require large capital outlays around changing technology .

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining the value of equipment finance, whether it’s your trucks... or computers!

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCE EXPERTISE

Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/leasing_equipment_finance_truck_it_technology.html

Can ABL Asset based Line Of Credit Lending Cure Your Finance Blues ?

How The ABL Business Line Of Credit Facility Provides A Fresh Perspective On Business Financing

Information on the asset based line of credit facility in Canada. How ABL lending can dramatically change the force of your business financing success .






Is there anything worse in business than the Finance Blues? We don't think so, and one potential cure is asset based line of credit lending in Canada.

The reason this method of business financing is still somewhat widely unheard of, (or worse yet) misunderstood comes down to that fact that a majority of business owners in Canada, we think, don't understand they have options. And ABL lines of credit are clearly a new option.

It kind of always comes down to two different cures for the business finance blues, one is when your business simply can't achieve traditional financing within our chartered banking system, and the other is when the amount of financing the business owner and financial manager needs far exceeds what other forms of finance can't deliver on.

And when ABL turns out to be both flexible , and justifiable in cost , that’s where the cure has kicked in !


Are there any typical scenarios under which asset based lines of credit work best, or are more common? One that we see often is that your company has come out of the 2008-2009 recession with a lot of focus having been around simply managing your business and assets to the best of your ability without the use of or access to bank type financing. Things are better, sales are growing again and fortunately or unfortunately that means that receivable and inventories... you guessed it, are up!


We won't weigh in today on why traditional methods of financing might not be working any more.... at the end of the day your firm has deemed to be unfinanceable or, as challenging, financeable without the amount of capital you need access to!

That latter point is a common one, your firm has financing now, but always seems to be out of cash. And in many cases a simple glitch on either an operating covenant or some interim financial losses challenges your bank or other institution to reduce their involvement in your firm... just at a time when you are looking to increase that involvement.

That is the ABL asset based credit line solution then - a simple focus on your operating and fixed assets that allow you to margin those to great cash flow and liquidity that you never thought you could access previously. To re enforce our point ... it’s not about the balance sheet and income statement, it’s about the ' A' in Asset based lending, your ' Assets'!

Typical advances on an ABL facility include a 90% receivable advance and a predetermined amount of your inventory on an ongoing basis, anywhere from 25-75%.

Is traditional bank type lending on the rise again? We're not sure, supposedly it is, but who really knows. What we do know is that asset based credit lines are absolutely on the rise - they are your cure to the working capital blues!

So whether you consider ABL as a transitional finance vehicle, or simply a new great solution for business financing take time to investigate this method of finance in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in curing those finance blues!

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED LENDING EXPERTISE



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/asset_based_line_of_credit_lending_abl.html

Financing Your SR ED Tax Credit in Canada

Not everyone Canadian business owner or financial manager takes advantage of the Canadian Governments SR & ED (Scientific Research & Experimental Development) tax credit program. It’s clearly in our opinion of the best and truly legitimate and valuable programs that a government provides for its business entrepreneurs in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN SR ED FINANCE


Many, when they hear of the program for the first, are amazed that they can receive significant funds, that are non – repayable (yes that’s non -repayable!) for their ongoing investment in research, product development, business processes, etc.

And, those that do take advantage of the program dutifully wait many months, in some cases a year or so or more for their cheques from the provincial and federal government.

Why not borrow against these funds and utilize those funds for much needed working capital and cash flow to further fuel the growth of your firm.

SR & ED financing is still relatively unknown in Canada – it is clearly a very specialized type of financing, somewhat ’boutique’ let us say, in nature.

The government, via the program, wants to provide funds to Canadian business so they can continue to further their research and development and provide Canadian firms with a lead in technology and business.

So lets get back to the financing of the SR ED, aka ‘ SHRED ‘, aka ‘SR &ED’. SR ED Loans are typically for approximately 70% of your combined federal and provincial claim. The claim can be financed as soon as you have formally filed the claim with the government, which is at the same time you do your year end tax filing.

SR ED applications can be filed for the last two years, so on occasion your firm might in fact have a significant receivable generated by virtue of that filing you have done. Our observation is that some companies actually book that receivable in their financial statements for the full amount of the claim. Some companies take the conservative approach and only record the cash coming in when it is received from the government.

So, you as a business owner or financial manager of a Canadian company are asking yourself the obviously – if I book the SR ED as an account receivable, will my bank provide financing for it. Our experience is generally ‘no ‘they will not. Canadian chartered banks, being somewhat more conservative in nature, recognize the SR ED claim may or may not be approved. So if there is any risk in your financial structure as viewed by the bank they will not advance funds.

The private sector of Canadian finance is in fact doing the SR ED financing. Claims are financed on the basis of your firms overall financial status, although we add that even pre revenue companies or companies that are losing money can still obtain SR ED financing.

Every Canadian firm that files a SR ED claim should consider financing the claim if they feel the additional cash flow and working capital will assist their company in continued growth and success. Talk to an expert and use this alternative financing as a great way to boost cash flow.




Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/Contact_Us.html

Is The Grim Reaper Of Your Business Cash Flow? Here’s Working Capital Tips And Solutions That Only Make Sense

You Lose.. He Wins .. Don’t Let The Grim Reaper Of Business Finance Get The Lead On Your Business !



Information on business cash flow solutions for the working capital challenges faced by Canadian business on a daily basis .



Is the lack of business cash flow a potential ' GRIM REAPER ’ for Canadian businesses of any size? We certainly think so, and that’s why the ability to figure out / measure what isn’t working and what solutions are needed should be ' job 1' for the Canadian business owner and financial manager.


The goal of course is simple, and it’s to achieve the right balance of both profits and cash flow liquidity. Easier said than done, as we are prone to be saying these days, but the sad state of affairs is that most clients we talk to are focused on revenue and profits and don't have the best handle on business cash flows. And even when the problem has been identified where does the business owner/manager go for solutions?

It seems as if the Grim Reaper of negative cash flow seems to be stalking us all the time!

The actual management of cash flows is really about how well you handle turnover and overall quality of your ' current asset ' accounts. They are actual cash or business lines of credit you have access to, receivable turns, and inventory turns. And, as we said, it’s a case of quality, not quantity. We get a big kick out of what many financial analysts and accounts deem to be the best measurement of liquidity, and that’s the ' current ratio ‘. In reality this number looks great, even fabulous if you have uncollectible receivables and slow moving inventory. But don't get us started...

At the core of understanding your business cash needs is the concept of arranging your finances so that short term cash flow needs are in fact met by short term asset financing. Typically in Canada that comes from various types of financing that might include:

Receivable financing

Inventory Financing

Asset based non bank lines of credit

Supply chain / purchase order financing

Tax credit monetization


In order to determine which one of these is right for your firm the business owner must focus on the amount of financing you require, the rates of that particular finance vehicle, and your overall ability to get approved for the financing you believe you need.

Many of the non traditional sources of working capital solutions , some of which are referenced above have in fact become more popular and well known simply because Canadian business has found it more difficult and challenging to access proper liquidity solutions from Canadian chartered banks over the past several years, although, on balance, this seems to be improving . And remember that traditional bank financing can be withdrawn at any time if the bank calls the ' demand ' loan based on perceived risk in your business, or industry. Think Automotive, circa 2008-2009.

Managing and having access to working capital cash flow and solutions is one of the greatest challenges for any business. Dropping the ball on this issue will ultimately lead to business failure.... simply speaking... the GRIM REAPER wins.

Speak to a trusted, credible and experienced Canadian business financing advisor for proper solutions to business liquidity.

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS CASH FLOW SOLUTIONS









Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/business_cash_flow_working_capital_solutions.html

On Top Of Trends In Technology Leasing And Business Equipment Financing ? Smart Choices To Increase Canadian Lease Benefits

Successfully Managing Your Leased Asset Strategies


Information on technology and business equipment leasing in Canada . Benefit from asset acquisition via a capital or operating lease .




The ability to stay ' on top ' of what’s happening in technology leasing or financing your other business equipment needs gives the Canadian business owner two things: Options, and of course benefits!

The concept of ' change ' drives a lot of technology acquisition and finance decisions. Business owners and financial managers don't even seem to think twice these days about whether they need to acquire computers, telecom, software, and other ' tech ' type assets the reality is that those improvements to your competitiveness and infrastructure cost a lot!

And let's not forget to mention that new concepts such as Cloud computing, virtual, and grid computing, etc simply bring new burdens of decision making for the owner, finance manager, and IT manager in any small to medium size corporation in Canada. We're somewhat leaving out the larger corporation given they have the assets and tech savvy to wrestle down these challenges in a much easier fashion.

So how do you fund these acquisitions ... the goal seems pretty simple - buying the best and right products and services and paying or financing them in the best manner possible. Easier said than done.

When you think about it what you want to do is not that complicated conceptually - its simply about picking the right financing option and ensuring that the cash outflows, structures, and tax/accounting type benefits match what works for your firm . Again, we know what you're thinking ... easier said than done, right?

Don't forget also that in a perfect world you want to match benefits of your financed assets with cash outflows. That’s why the majority of tech assets are leased; business doesn't want to pay up front and reap benefits over time down the road.

There is a substantial amount of flexibility in the term, or amortization of tech financed assets. Typical terms available range from 2-5 years ... but we always caution business owners that long terms , while they lower the monthly payments, come with a cost re replacement, functionality, obsolescence, reduction in competitiveness, etc. So bottom line, watch the ' term'!!

While for many assets the business owner/ manager is always focused on the implicit interest rate in the least we caution lessees do not overly focus on the rate as opposed to the term, structure and type of lease, conditions , and the all important end of term decision - namely, return, replace, or upgrade .

And getting back to that ' interest rate ' issue, the reality is that in the current 2012 competitive leasing equipment marketplace clients have access to some of the best terms, rates, and structures within the industry, as the lease finance folks are busier than ever, and very competitive . Lease financing is available from bank subsidiaries, U.S. lessors with Canadian representation, and independently owned Canadian firms that service transactions in the small, mid, and large ticket asset area.

One word of caution though, not all firms are both experienced or even have an appetite for tech type assets such as computers, software, cloud computing, etc . It might be advisable to seek the service of a trusted, credible and experienced Canadian business financing advisor to wade through the lease industry ' jungle' on your behalf .

The bottom line - focus on type of lease, and working with the right party. Your ability to manage and finance tech assets will become much easier and give the business owner and manager the feeling that invested and spent funds for business equipment assets are achieving the benefits your firm deserves.

7 PARK AVENUE FINANCIAL
CANADIAN TECHNOLOGY FINANCING AND LEASING EXPERTISE








Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 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 re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/technology_leasing_business_equipment_lease.html