Working Capital Factoring - Leveraging Receivables, Inventory and PO'S

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Information on working capital factoring and financing solutions. Financing receivables and Inventory might just not be the challenge you think !

Working Capital - Canadian business owners want to maximize the utilization of their receivables, inventory and incoming orders and contracts to leverage cash flow. The goals are very clearly, grow business revenues and profit with the right combination of internal growth, borrowing from banks and others, and achieving the best blend of working capital and cash flow by leverage those current assets.

Long term debt or additional new equity is not often the business owner's choice in arranging more cash flow for the business.

We meet with many business owners who tell us they have the opportunity to significantly increase sales.They are looking for a financial strategy to grow those profits and equity while the at the same time minimizing loan interest and any other external financing costs. When a business gets its hand on a proper working capital solution it has the potential to reduce or minimize debt, and increase bottom line equity or value in the business.

Our point is simply that if your business can absorb a reduction in your gross margin - (the cost associated with receivable, inventory and PO financing) then you can avoid debt and equity scenarios and still grow your business.

The Canadian business owner and financial managers challenge is to grow the business and understand the cost of growing the business under various financing methods.

Clients are often surprised to learn how much their business can chance by a simple analysis of their financing choices.

Using factoring or inventory financing as a cash flow supercharger is many times the best strategy for working capital enhancement. Most non financial business owners do not appreciate that power that working capital turnover

There are all sorts of tools that your business can very easily use to monitor your working capital needs. One is simple you need to monitor your working capital to sales ratio.

How do we calculate the working capital to sales ratio? It's easy. Working capital is essential your current assets minus your current liabilities. Take that number form the balance sheet and divide it by sales. If you have a low ratio then you ability to generate cash flow is stronger.

The solution for Canadian business owners is to maximize the turnover of those current assets such as receivables and inventory via working capital facilities. If those facilities can't be arranged with a bank then you have the option of working capital lines of credit and asset based lines of credit that will cover receivables, inventory and even under many circumstances bulges for new contracts and purchase orders

Working capital facilities via factoring or inventory financing or purchase order financing maximize your cash flow - they also cost more and many Canadian businesses simply focus on the cost. But they fail to measure the cost of carrying those receivables and the cost of not turning over that inventory efficiently. These two costs alone have the ability to completely in some cases erase your cost of financing under a factor and cash flow facility.

How does a business compute its cost of credit? The formula relates to your firm not taking credit and payment terms extended by suppliers. Your suppliers give you terms that specify a payment date the amount of the discount if you pay early, and of course the due date. The cost of NOT taking that discount is huge! Most owners don't realize that. If your firm can negotiate better prices by utilizing financing strategies such as factoring and inventory financing and purchase order financing you have just become the best comparison shopper in business!

In summary, the cost of not taking trade credit discounts is very significant when your business has the ability to take those discounts via aggressively financing your receivables and inventory. Utilize innovative strategies, you will find that the cost of paying in full is higher that the cost of a working capital facility to cash flow those receivables and inventory!


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.


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

Fax = 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/4010286

Guess What Your Business Needs? Working Capital and Small Business Finance Loan/Loans Options

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Looking To Get Off The Off Ramp And Get On The On Ramp To Successful Canadian Business Financing ?

Information on working capital solutions and small business finance loan arrangements that make sense for your cash flow needs. Cash flow financing via loans or monetizing your current assets is your challenge - here's how to solve your problem for business financing

Just picture your firm having access to all the working capital you need. Seem impossible? Not really... if you have a solid understanding of your options and your firms capability of qualifying or executing on those options.

Whether you're the largest corporation in Canada or a small new start up (and everything in between) your business needs working capital. In Canada small business financing loans and financing arraignments for working capital are limited to a handful of possibilities - but being aware of what they are and qualifying for them could be the solution to your constant focus on cash flow via some sort of working capital loan.

It is probably easier than you think to ensure you are addressing the cash flow challenge correctly - where it gets somewhat ' thorny ' is matching a solution to the problem or locating an expert that can provide you with the business financing assistance you need.

Two key elements of your first step working capital assessment are your gross margins and your turnover. That's the big problem we have with text book / academic solutions to working capital - they point you to the text book calculation - give you a formula which essentially has you subtracting current liabilities form current assets, and voila! the inference is you have working capital. However, our clients have never paid a supplier or completed a company payroll with a ratio!

To properly assess your working capital needs focus on understanding your turnover - how much inventory do you carry, what are the days outstanding in inventory, and as importantly, or more importantly, are your receivables turning over. Have you realized that for many firms 80% or so of the total of all the business assets you have are tied up in A/R, inventory, and, on the other size of the balance sheet let's not forget payables.

So can you have financial success based on your new found knowledge and analysis of your cash flow and asset turnover. We think you can.

Canadian business financing solutions to small business finance loans really revolve around a couple viable solutions. Typically, in our experience Canadian chartered banks cant satisfy your business working capital needs - if only for the reason that they rarely finance inventory and require significant merit in your overall financials, profitability, external collateral, personal credit worthiness, etc.

So, where do you go from there? The other solutions are very viable and can take you to a potential 100% turn around in cash flow - they include working capital financing as a bundled line of credit on a/r and inventory via an independent finance company. For firms that are larger we believe the ultimate tool is an asset based line o f credit that provides high leverage margining on all you business assets. Other more esoteric solutions, but still very viable although somewhat misunderstood are securitization, and purchase order financing of new contracts and orders. (Your suppliers are paid directly for the orders you have in hand - what could be better than that?)

Finally, coming up the road at lightening speed is factoring and invoice discounting. We mention them lastly but they are probably the most popular method, gaining traction everyday. Our favorite is confidential invoice financing, allowing you to control your financing.

So there you have it. You have identified new ways to determine the need; we have outlined 4 or 5 solutions that will take the guess work out of working capital. These loan and financing options are available with a bit of research, and, if you choose, speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can provide you with timely and valuable assistance in your cash flow needs.




Stan Prokop     
7 Park Avenue Financial :
 http://www.7parkavenuefinancial.com
 Business financing for  Canadian Firms  , specializing in working capital, cash flow,   asset based financing ,  Equipment Leasing ,  franchise finance and Cdn.  Tax Credit Finance .  Founded  2004  - Completed in excess of 100  Million $  of financing for Canadian corporations 

EMAIL - INFO@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

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/6082722

Not Getting All The Lease Equipment Financing For Business You Need? Financing Loans Made Simple!

Not Getting Your Share ?

Rumour has it you aren't getting your share of the amount of equipment business financing enjoyed by your competitors and others. Let's demonstrate how finance loans can be addressed in a time line that makes sense for your firm, with the rates, structures and terms that your competitors already enjoy.

We don't think we have met any business owner recently who doesn't feel that the traditional route or bank borrowing no longer makes sense for their asset acquisition needs. We don't have to explain the benefits of dealing with a specialist in any industry, so the firms that offer lease financing in Canada is where you will find financing products that work for you.

We also don't need to mention of course that if your firm is a start up, smaller in size, or perhaps going through some challenges... well... guess what - you are still a 100% candidate for lease and financing loans.

Many owners and managers searching for equipment financing for their business needs are under the pre-conception that certain assets can't be financed. That's where you ability to quickly focus in on a specialized firm that provides business lease solutions for your acquisition - and that includes computers, office equipment, plant and machinery assets, vehicles, and even intangibles such as software!

We are always intrigued by the reasons business owners offer up for leasing consideration - however when you think about it all those reasons come down to several key points - cash flow and working capital management, tax and accounting issues, matching the use of the asset to its estimated life. While every Canadian business owner likes to feel their needs are unique we are pretty sure that if you walk through those 3 key areas we noted above you will be able to significantly simplify your business equipment financing.

Is there a way to simplify the entire process? There sure is. Simply view what we will call ' the big picture ' around your transaction. Envision it as follows - your application and exchange of financial info with your lessor, discussion or correspondence leading to approval, documentation, and then finally funding and payment... which is often simply the payment made to your supplier, allowing you to receive the asset and put it to work for cash flow and profit generation.

There are hundreds of equipment financing and lease financing firms in Canada. We are quite sure you do want to ' simplify ' your business financing so speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can ensure your business lease is positioned properly, approved, and funded. Now you are getting your share!


Stan Prokop
7 Park Avenue Financial :

http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations

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.







Article Source: http://EzineArticles.com/6077333


Stan Prokop

Canadian Business Financing - Tips on Securing Financing For Your Business

Your Mission Should You Choose To Accept It? Sourcing the Right Business Financing Loans And Cash Flow Solutions For Your Business

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Business financing is a challenge anytime, from the entrepreneur's dream of a small start up to major corporate needs.

The current economic downturn makes the above noted challenge even more daunting. Whether a firm is established and doing well, or experiencing financial distress or working capital or growth needs - the challenge remains the same.

What is the 'challenge'? Simply speaking it is identifying the proper financing solution , determining whether the solutions is a short term fix or a long term solution , and then, most importantly executing with experience the proper financing solution.

The business owner must be able to properly position the current shortcoming as both an opportunity and risk appropriate.

Proper financing begins with the owners and his advisors ability to identify the current financing challenge. The owner and advisors must provide a compelling reason for the lender to assist in an appropriate financial solution.

Who are these 'advisors'? Typically they are internal financial staff, i.e. CFO/Controller, etc, or alternately third part accountants or a trusted, credible and experienced Canadian business Financing Advisor with a track record of success

Business Financing is complex - However at the end of the day the financing solutions are actually very well defined - They are as follows:

Leases and Term Loans

Working Capital Loans

Asset Based Lines of Credit

Bank credit lines

Non bank credit lines

Receivables purchasing

Inventory Lines of Credit

Purchase Order Financing

Commercial mortgages

Tax Credit financing

The business owner, and their advisor, should have a very clear focus - That focus is as follows: What is the best financing solution on either a short term or an intermediate/long term basis for the business. Does the business owner or executive clearly understand all the financial options available - what are the criteria for these different options - what are the rates/terms and structures for each option.




Stan Prokop
7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '




ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Working Capital Financing - Commercial Financing Solutions

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The Working Capital Financing Challenge In Canada. Which Commercial Financing Solutions Suit Your Business

Working Capital Financing is forever a major challenge for small and medium sized business in Canada. And that is certainly not to say that larger corporations don't have that challenge, it's simply a case of having more assets and resources to deal with the same challenge.

As a business owner or financial manager the level of funding that you need, and the method in which you achieve that financing is really what drives the solution to your challenge. It is important, in understanding your cash flow needs and solutions, to determine if your working capital financing is required due to the capital intensive nature of your business - or if you in fact simply need to ' monetize', or 'cash flow ' your assets in an effort to generate more working capital and faster turnover of those funds.

Your focus on cash and business financing becomes even greater if your sales and profits are increasing. However, at the same time the ability to obtain business credit in Canada remains a challenge.

Bank financing has become more difficult to acquire, and many firms are looking at non traditional or alternative sources of financing to secure the funds they need for working capital.

Another hard reality of working capital financing is that most small and mediums sized business are searching for more cash flow on an unsecured basis. This type of financing is very difficult to achieve in the Canadian marketplace, certainly in the Chartered bank environment.

So what are the sources of financial capital that Canadian business owners and financial managers can investigate and potentially utilize? Let's cover off some of the basic options - These include:

Personal savings (not high on a business owner's priority list!)

Business Credit Cards

Factoring

Government Working Capital Term Loans - Financing Business Loan (These are cash term loans with fixed payments and rates)

Factoring financing

Asset Based lines of credit

When you are looking for working capital financing one of the key areas you can start with is your own key financial metrics. You don't need to be a seasoned financial analyst to determine at what rate your receivables are turning over. The bottom line if you haven't realized it yet (we are sure you have) is that receivables and inventory ' eat ' cash.

One key point needs to be made here, if your sales are growing at 15% and your receivables are growing at 15% that's not a bad thing. (To calculate simply measure the ratio of these two data points) However, if your sales are growing at 15% and receivables are growing at 30% your cash flow and working capital is being consumed by the investment you have made in A/R and inventory that is not turning over. Collections and inventory turnover are a key aspect of working capital financing.

Commercial financing from a bank is the optimal solution for small and medium sized business - as have noted that is difficult to achieve. Funding a business can be complex and we urge clients to seek the advice and guidance of a trusted, credible and experienced Canadian business Financing Advisor with a track record of success to ensure they pick the right tools to solve working capital challenges.


Stan Prokop
7 Park Avenue Financial :

http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations


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




Click Here To Visit 7 Park Avenue Financial Website

' 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.






Article Source: http://EzineArticles.com/4669526 Stan Prokop

SR&ED Financing In Canada : SRED Loans Accelerate Cash Flow! Here Is Your ‘ How To’

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The Not So Tricky Art Of SR&ED Financing Loans In Canada

OVERVIEW – Information on SRED Loans in Canada . SR ED financing of SR&ED claims in Canada is a viable method to accelerate the cash flow from your firms r&d capital spend . Here’s why.. and how

SR ED financing (' SR&ED’) is a lot less of an art and science than most firms think. We're looking at SRED Loans from a ' how to' perspective - it's the ultimate cash flow acceleration with respect to the key benefit of the program - i.e. recouping a large part of your r&d capital spend. Let's dig in.

Billions of dollars each year flow from the government to thousands of firms who participate in the ' SR&ED ' program in Canada. The ability to turn claims into short term sred loans simply accelerates the benefits of the program. While the govt maintains that the program encourages companies to invest in the future via enhanced products and services the ' journey ' and the ' wait' for the refund can seem daunting at times.

Certain ' resources' are needed to both participate and benefit in the program. They include your own ability to finance the SR&ED process from start to finish, as well as the need to more often than not ( in fact almost always and recommended ) to acquire the services of a SRED consultant who understands your business and is experienced in the preparation , documentation, and filing of your claim.

There is a significant amount of time allowed for you to prepare your claim but the claim is always filed in conjunction with your year end. At this point both the eligibility and quality of your claim is key. Claims typically have a technical narrative and a clear break down of the costs you are claiming in the process. All of this effort is of course focused on one goal - the refund! , which is for most firms available in the form of a cheque from the government. Typical refunds are in the 30-40% of your total R&D spend, so it's easy to see why the program is in fact one of the most ' real' and ' attractive ' programs in Canada.

So at this point you've identified the nature of your claim, you've engaged an industry consultant to prepare the claim and you're filing your claim. In certain cases claims are subject to audit and assessment - thereby prolonging the waiting period for your refund.

Tired of waiting? Consider financing your claims as soon as it is filed. Enter the SR ED financing process. SR&ED Bridge loans are typically done on a 70% loan to value basis - allowing you to monetize your claim and accelerate that cash flow benefit we have been speaking of. The main collateral for the loan is of course the SR&ED claim itself - loans are repayable at anytime and rarely last longer than a year, by which time your refund will have been approved and processed via the govt.

Recent enhancements to financing claims allow you to file for both past and present claims, as well as to start a financing process around your next year’s claim.

The SRED loan process is quick and efficient, with most claims being financed within a couple weeks. If you're looking to accelerate R&D capital expenditures seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with SRED Loans that make sense for your firm.


Stan Prokop
7 Park Avenue Financial :

http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN SR&ED FINANCING AND LOAN EXPERTISE




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

Is it Advisable to Consider Sale-Leaseback Financing?

Information on sale lease back transactions in Canada. Leaseback financing has many advantages when properly executed. Here's why .. and how.

Many business owners and financial managers are often faced with the consideration of utilizing a sale - leaseback to generate cash. This strategy became much more popular over the last year or so as banking and credit liquidity scenarios deteriorated.

The overall strategy can be viewed as giving some operational flexibility to the business. The bottom line of course is that it brings additional cash into the company at a time when ash is king. The customer is of course, essentially 'tapping into equity 'that the firm has built up in the asset. What is that asset?

Typically assets given up for consideration in sale leasebacks are manufacturing equipment, computers, and even a firm's real estate.

Sale-leasebacks have to make sense to both the lessor and the lessee. We view the largest ' negative ' aspect to such a transaction being the potential perception by the lessor, or other lenders that the firm is making a last ditch ' cash grab '. There has to be, as referenced above, an agreement that the transaction works for both parties.

If we analyze a typical example of a transaction we will hopefully get a better sense of why this strategy can in fact be a common sense financing alternative. Company A has manufacturing assets, shown as fixed assets on the balance sheet. In the sale - leaseback scenario the assets of course remain at the company - they do not move. The company receives cash for the sale of the asset to the lease firm. Quite frankly customers who consider this transaction have explored other traditional options by this time, such as reviewing additional financing with their bank or other senior lenders. Naturally the equipment is used on a daily basis to continue to generate sales, (and hopefully profits) for the firm.

In certain instances the sale-leaseback can in fact enhance the customer's balance sheet. One additional major flexibility is that the new sale-leaseback financing can in fact be used to generate additional flexibility at the end of the lease - i.e. the customer can again regain ownership of the asset if it will have economic value, or might choose to negotiate a return of upgrade with the vendor or lessor.

In summary, does a sale-leaseback of assets make sense? The answer as we have seen is ' yes ' if in fact it is done for the right reasons and makes sense for the customer and the lender.



Stan Prokop
7 Park Avenue Financial :

http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations


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/3556312