Confused About Financing Costs And Rates ? Here’s The ‘ Skinny’ On Business Loans And The Real Cost Of Finance

Canadian Business Financing - Rates, Costs and Implications


OVERVIEW – Information on the cost of finance in Canada . Financing costs, either rates or implications of business loans and asset monetization play a critical role in the business decision




Financing costs and ' rates’ re: business loans are top of mind for Canadian business owners and managers searching for some sense of stability and reliability in running their business as bench marked against the cost of finance. Let's share some ' skinny '

around these issues.

A good place to start is to give some solid thought around whether your financing will cover off the current need, and take you into the intermediate and long term when it comes to growing or expanding your business.

There are about 6 ways to ensure your business has the short term financing you need. Let's look at some of them... with a focus on ... COST!
The average business owner can be forgiven for not viewing their supplier as a form of financing, along with considering the benefits and costs around this continual relationship.

Let's use the example of a supplier who offers your firm payment terms of 2/20 net 60. That of course means that you can pay them in 60 days, or takes a 2% discount if you pay in 20 days. If you use a sample $ 10,000.00 invoice the arithmetic around that transaction will tell you the opportunity cost of not taking that discount is almost 19%!

By the way... Opportunity cost? It's the cost of passing up the next best choice when making a decision.

In Canada bank loans offer the lowest cost of finance when it comes to business borrowing. In the current low rate environment of 2012/2013 typical borrowing rates are in the 4-5% range. The challenge in Chartered bank facilities is getting approved, as well as ensuring you have the right facility in place. Those include: unsecured cash flow loans, business credit lines, installment loans and term loans for the purpose of asset purchases.

Probably the best advice we can give clients in reference to bank loans and their costs is to simply understand the alternatives, especially if you either don't qualify or are in the position of having your loan called. I.E. The Special Loan scenario!

A lot of the financing that banks provide in Canada can also be achieved via commercial finance firms. While rates might be higher and more emphasis is placed on collateral you can often achieve all the financing your firm needs. By the way, why are rates higher from commercial finance firms? Probably because they get their funds from the bank!

Receivable financing in Canada is more common place everyday. Many misconceptions exist around financing costs associated with ' factoring ‘. It's also important to remember that A/R finance allows you avoid long term debt and giving up equity - those are important considerations. If you understand the miscellaneous charges, the advance rate, and the discount rate on Receivable Finance in Canada you may well embrace the benefits, which are:

Immediate cash flow
Bulge financing
Growth potential
Strengthened balance sheet


Two other subsets of short term financing in Canada are Inventory finance and Leasing. Inventory finance is generally done within the context of an asset based credit line, which comes at higher than bank rates.

Leasing/equipment financing in Canada offers competitive rates for all asset classes commensurate with your asset class and overall credit quality. The industry has a solution for every asset, and rates from 4-24% cover the spectrum of asset financing in Canada. While you will probably pay more for leasing than a bank term loan the appeal is staggered cash outlays, obsolescence protection and fewer financial covenants /restrictions.

So our bottom line today? Simply that each category of financing required comes with a different measure of cost, risk, liquidity and in many cases, restrictions. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the cost of finance for your business.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING 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 10 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/financing-costs-cost-of-finance-rates-business.html






7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

















Stan Prokop

Client Finance Via A Vendor Financing Program . Zero Cost And Growth Benefits For Your Company!

Missing The Boat? Come On Board With Customer Financing Programs


OVERVIEW – Information on the benefits of client finance. Setting up a vendor financing program is essentially zero cost and can contribute to sales growth, cash flow and profitability



It's one of the worst feelings a business person can get - that of having ' missed the boat '

when it comes to a revenue or growth opportunity. That's why we are more mystified than ever, sometimes, when we talk to clients who are in a position to set up a client finance program. Oh and by the way, that type of ' vendor financing program ' comes at... are you ready...? ZERO COST!

As we have noted in the past, growth comes with risk, is challenging, and often can be perceived as ' expensive '. So why not achieve stronger revenues, instant cash flow, and greater profits at... here it comes... ZERO COST, ZERO RISK, and very little challenge; especially if you have the right assistance.

When you implement a client finance program you are immediately removing most, if not all, the challenges that come with your product pricing, and competitive strategies,

Why then is a customer financing program both easy to implement and so attractive to your clients? The answer is that if you help your client with financing you're in a position to close a sale without price as an objection, basically helping them simplify their decision to acquire your product or services, whether they are high tech, or low tech in nature. And those sales come with a much shorter sales cycle; we can assure you of that.

Another fundamental piece of logic that we will offer up is that the majority of businesses in North America (that includes Canada!! last time we checked) lease or finance assets.

As we have pointed out this valuable sales and growth tool comes at essentially zero cost. The prudent business person would say that it probably takes some level of management, operations, and funding to pull off a real vendor financing program. That's correct, but the reality is that by partnering with the right person or firm you can in effect outsource 100% of those challenges. Of course you could in fact set up a full fledged finance firm if you want to , but the reality is that the majority of Canadian firms want to stick to their core ' knitting ' - they want the advantages of a client finance program, but not the risk . And that’s ok!

So what in fact does the Canadian business owner and financial manager look for when it comes to the right finance partner in your program. Those factors include a good reputation, competitive funding and the ability of your firm to provide strong input as to what you are looking for in flexibility for your vendor financing program. It's all about customer service, flexibility, and the ability to be perceived as offering a reliable and competitive finance solution.

So, don’t miss the boat on one of the most effective ways to increase sales, cash flow and profits. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a client financing program that makes sense.

7 PARK AVENUE FINANCIAL
CANADIAN CLIENT FINANCING PROGRAM 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 10 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/client-finance-vendor-financing-program.html




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com














Stan Prokop

Receivable Finance And Factor Funding In Canada . Looking For Some Growth Tips On Financing AR And Growing Your Company?

What’s The Big Deal With ‘ Growth ‘ ? !


OVERVIEW – Information on factor funding in Canada . Implications of growth, profits and financing AR cost when Canadian business utilizes receivable finance



Whether he or she likes it or not Canadian business is somewhat obsessed with growth.

It might come from the perception that to be successful you in fact have to grow. We're not 100% sure we agree, but if your firm is in fact placing a high priority on growing financing is probably a challenge you're consistently facing.

We do admit there might be some risks to not growing a lot - they might include the ability of competitors to run all over you, even going as far as stealing some of your people and clients.

One of the ways to feel a lot better about ' growth ' is the utilization of Receivable finance as a method to enhance your overall return on capital. Your growth in fact can come from only 4 areas... they include acquiring business your competitors previously had, raising your prices, seeing your industry grow as a whole, and finally .. your potential acquisition of a competitor.

So, we suppose you could say we're getting a bit more converted to the concept of ' growth ‘... when it’s done properly. Sales growth, properly achieved, does in fact bring more value to your company, but how do you get the financing to get there. One of those solutions is factor funding.

Receivable financing, considered ' expensive ' by some in fact is a very critical and valuable form of business financing in Canada... and becoming more so everyday. It's simply an agreement between your firm and your chosen finance partner (choose one carefully!) to provide you with cash as soon as you generate sales. All of a sudden your balance sheet and perhaps some temporary operating losses aren't holding you back to... you guessed it... growing!

The Canadian business owner and financial manager can probably immediately see the advantages here of this method of finance. You are now in a position to improve relations with suppliers, take prompt pay discounts with cash now that you never had before, and all along the way you don't have to deal with restrictive bank covenants. Oh and finally, all of a sudden you’re on equal footing with those competitors who have been taking that business away from your firm. Finally... a level playing field.

A common questions from clients who suddenly are seeing the benefits of factor funding and growth is as follows - ' so what is the limit of the financing here?’ The answer? There is no limit - your sales in effect determine the limits you can finance against.

So when does financing your A/R work best? The following conditions create a perfect storm for this method of finance:

Good gross margins
Pricing ability on your products and service

And quite frankly, whether you consider the pricing of factor funding ' high' the ability to quickly and flexibly get all the funding you need in place is probably very much worth considering .

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your Receivable finance needs.





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 10 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/factor-funding-receivable-finance-financing-ar.html






7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

When Cash Flow Problems Become A Crisis . The Power Of Proper Financing Solutions

Want To Avoid A Cash Flow Crisis? Here’s How!


OVERVIEW – Information on cash flow problems faced by Canadian business. Financing solutions and working capital management avoids a business crisis



Can a problem become a crisis?

You bet it can and when your business cash flow is a problem potentially verging on a crisis financing solutions and some analysis into what happened and how you fix it sure helps! Let's explain.

A ' constant juggling act ' is how many clients and business people we talk to describe the day to day challenge (let alone planning!) of business operations and growth when it comes to operating and funding your business.

Looking for one more good analogy? One author described cash flow management along the lines of juggling bowling pins, spinning knives, and flaming torches. Enough said!

We've often spoken about the very simple problem around cash flow that doesnt even involve the solution yet. It's understanding what it is. The hard core cash is of course what you have in your bank account, but when it comes to ' flow ' everything changes. It becomes the dynamic of sorting out where you are using and getting cash, and where you are able to get cash by perhaps managing your business in a different manner.

So how is cash flow managed then? We can also say that you can improve cash flow by taking on debt, increasing profits and, our favorite and most important... ‘Managing assets '. We're not huge fans as you can guess of taking on long term debt, or giving up ownership equity. Who wouldn’t be!

We all know the results of a cash flow crisis gone bad. They include supplier/vendor relations, employee morale, and lender concern. The path to these problems becomes very steep when operating losses continue, wrong financing is put in place, and creditors sue for payment or attempt to realize on security you have provided.

Some solid cash flow planning helps in a number of ways - You are in a position to plan cash needs, lenders feel more confident about your plans, etc.

Cash flow financing solutions in Canada include:

Asset based credit lines
Receivable Finance
Tax Credit Financing
Inventory finance
Supply chain /PO finance

Ultimately the business owner by experience and planning can put the right plan and solution in place. Your goal: Creating cash and then using it!


In summary then, what’s the best way to avoid cash flow problems, or even a crisis? Yes, you can borrow more; sell equity, but the easiest and as important? ... Convert working capital into accounts (A/R and inventory) into cash faster. Oh and by the way, if along the way you can increase sales and reduce some costs you're a true cash flow superstar!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can get you out of working capital crisis mode!


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 10 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/cash-flow-problems-crisis-financing-solutions.html







7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com












Stan Prokop

Know How To Finance A Business ? Financing Choices Are About Timing And Strategy In Funding Choices

Properly Forecasting Your Business Finance Needs ?


OVERVIEW – Information on business finance solutions in Canada . Financing and funding a business is about time horizon, current and future needs , and risk.


Is there a right way and a mistaken way to finance a business in Canada? We definitely think we can show you there is ... as well as pointing out those risks and benefits. And by the way, it is in fact possible to change horses in midstream
to adapt to today’s changing times when it comes to financing your company.

As we have been prone to say lately the concept of ' term' is critical in both assessing and choosing the right business finance. By terms we simply mean short, intermediate and long term, as all of those have a number of different implications. And to compound the challenge for the business owner and manager both the type and ' term ' of the financing can impact the amount of funds that flow in and out of your business.

So what in fact are some of the things you need to consider when choosing a financing solution? There are a number of factors, probably all as equally important. They include cost/rates, the amount of risk you are taking with any particular form of finance, how your overall structure changes with any one particular sort of financing, and the amount of cash flow, working capital and profits that that financing will deliver... or take from your company!

It's easy sometimes to get confused on the time frame when you're in the middle of searching for a finance decision. We meet and talk to many clients that are looking to solve an immediate problem and somehow miss considering the growth and future of their firm. A simple example might be a banking arrangement - i.e. not considering whether you can live through the tough times based on covenants, guarantees and collateral that you have either offered up or have been demanded of you.

One of the most proactive things the business owner/manager can do is to focus on planning to be short of cash and what solutions might be available. Why? Because cash flow shortfalls always happen, for pretty well everyone!

The toughest decision many business owners have to face if giving up equity and ownership of some sort in their business because debt levels are too high or the right financing is not available.

So what are some of the short and intermediate financing solutions available - They include:

Supplier financing
Bank lines of credit
Receivable financing
Equipment leasing

Supplier financing is almost always overlooked when it comes to cash flow financing. Just negotiating better payment terms or taking supplier prompt pay discounts can save firms many thousands of dollars.

Bank financing in Canada takes many forms - when you can achieve approval. Those forms include lines of credit, term loans and fixed asset financing for long term assets.

We caution clients that the crux of the bank relationship should revolve around what you need to provide in the form of collateral, covenants, and reporting. Many Canadian business owners simply don’t know that alternative financing for their businesses can in fact be arranged outside of Canadian chartered banks. While these solutions might be more expensive they solve problems!

What financing solution suits your business? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor today.



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 10 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-finance-financing-funding.html

7 PARK AVENUE FINANCIAL IS : CANADIAN BUSINESS FINANCING !


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com






Stan Prokop

Working Capital And A Cash Flow Problem ? Fear No More!

Curing the Cash Flow Blues In Canadian Business Finance


OVERVIEW – Information on solving your cash flow and working capital problem in Canada . Techniques, tips and tools to analyze, monitor and solve Canadian business financing challenges



We're not sure there's a cure for the regular blues;

but if working capital challenges and a cash flow problem are top of mind in your Canadian business we do in fact have some solutions, tips, tools, and techniques... yes we guess we could call them cures!

And if there is every some good news in a problem its the fact that if you address working capital, cash management and a/r and inventory properly you're now in a position to enhance your overall return on investment, while at the same time minimizing the risks that come with these types of problems . Talk about our ' double whammy’

Canadian business owners and financial managers often have a poor handle on their current asset accounts - primarily of course receivables and inventory. We can forgive them for that, because those balances changes pretty well every couple hours. Talk about a moving target! ....

Invoices get issued, receivables get paid, inventory gets shipped... and more goods are purchased.

So what's the problem then? To put it simply it revolves around the fact that if you are mismanaging these accounts, or not financing them properly you lose the ability to deploy funds more productively - i.e. growing your business. That’s when the total ' mix ' of your assets becomes important.

Clients sometimes probably tire of us advising them that they need to get a handle on which category of financing is going to fix the cash flow problem. Those categories are short term debt, long term debt, equity, and asset monetization. (If we had a favorite ... we confess ... its asset monetization)

There is a very simple way of matching the financing you need to your assets. The solution - use financing of similar maturity to your assets. A quick example - use something such as leasing /equipment financing for long term more permanent assets. Another example? Utilize a receivable financing program for your A/R.

Another solid rule of thumb is to always not forget that the longer it takes for a dollar to flow through your firm (your cash conversion cycle) the more working capital financing you will need).

Focus also on managing and financing your accounts receivable in a manner that suits your firm. Here's a shocker - there’s a cost to carrying a/r. Receivable financing, aka ' factoring ' is a solid tool when you can get a good handle on net savings using this type of short term financing . Never forget (everyone else seems to!) that stronger sales, asset turnover, and more profits can easily justify the use of a receivable finance facility.

Is there a perfect balance for solutions to working capital and a cash flow problem you might be having. We guess the ' textbook ' type answer is that if you properly manage your working capital accounts and are comfortable with the amount of financing risk you are taking you have achieved a cure for the working capital blues. But we toil in the real world, so remember that you also having finance solutions such as :

Asset based credit lines
Commercial bank facilities
Purchase Order Financing
Tax Credit Monetization
Receivable Financing/Factoring
Inventory Finance

Remember that your cash flow accounts change daily and require a lot of vigilance. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business finance needs.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW FINANCING 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 10 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/cash-flow-problem-working-capital.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com






Stan Prokop

Sources Of Business Capital In Canada . Financing Your Company From Startup Capital To Advanced Growth Stages

The Reality Of Business Financing In Canada. Opening the Coffers !

OVERVIEW – Information on sources of business capital in Canada . Financing a startup to advanced growth stages requires these types of expertise and information



There are, of course, limits to the sources of business capital financing that your firm can achieve in the Canadian business environment. And by the way, that pertains to whether you are a startup or a more mature company looking for advance growth.

Those limits are about the amount of equity you might be able to put in, or raise, and of course the debt levels and type of external financing that you can be approved for. Issues such as personal guarantees and the amount of debt your firm can manage become paramount.

In some cases the amount of capital you in fact are eligible for may be directly tied to personal assets and guarantees. There is a goal here of course, and that’s to ensure that personal guarantee and personal asset liquidation never happens. A very simple rule of thumb? .... Just ensure that your assets are rising commensurate with your personal guarantees. And don't forget to ensure some sort of liquidation calculation and cost is included in your analysis.

Lenders in Canada, bank and non bank by the way tend to want a lien on as many assets as can be negotiated. More often than not that comes in terms of a ' GSA ' - The general security agreement that covers all your assets. While your main lender typically will always have this other lenders might jockey for this also.


Rates often become big issues when it comes to all capital. What you expect to pay and what might be charged often becomes a harsh reality.
So what can the Canadian business owner and financial manager expect when it comes to ' rates ' in various sources of business capital. Rather that talk about specific rates we can offer this - you can expect to pay very high rates for investors, merchant banks, venture capital, etc.

Lowest rates are achieved through traditional bank facilities, leasing, asset based lenders, etc. And additionally those rates will be commensurate with the amount of capital you need. Whether business owners know it or not they are generally put into a category - those categories include start up, early stage growth, mid market, and mature larger corporation.

That is one of the reasons we have chose not to get into specific rates for approximately 15 types or sources of business capital. To clarify, while your firm might be eligible for an asset based line of credit your rates will vary depending on what stage of financial progress your company is in. Good example - business lines of credit are available for rates anywhere between 5% per annum to 1.5-2% per month. The qualifier? Simply the amount of capital you need and the overall financial position of your company and its owners.

So if there is a theme or a ' bottom line ' today it’s simply that you need to take a hard look at what stage your company is in. That ' stage ' will control the amount and rate of financing you can achieve.

Oh, yes, we almost forgot! Those sources of business capital. They include:

Friends and Family
Banks
Government SBL Loans
Asset based lenders
Bridge loans
Lessors
Mezzanine/cash flow lenders
Merchant banks

Etc!

Speak to a trusted, credible and experienced Canadian business financing advisor on which coffers are available to your firm, at what rate, and under what terms. That's the reality of business finance in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING ACCESS!


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 10 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/sources-business-capital-financing-startup.html


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com