Business Financing Change? Let Asset Based Change Your Outlook On The Business Credit Line

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Upgrade from an 8 Track Mindset to IPOD Via Changing Times In Canadian Business!    

 

When it comes to business financing in Canada what would you do if you could take one of your finance alternatives and take it from the days of  8 track players into the world of iPods and all the other technology we have access today.  Talk about a change in speed and features and ease of doing business, not to mention more for your buck!

 

AN ASSET BASED CREDIT LINE IS THE NON BANK ALTERNATIVE FOR A LINE OF CREDIT

 

That's the analogy we're using today for the Asset based credit line, which is a non-bank business finance alternative that provides your company with cash flow and working capital in a manner similar to a Chartered bank business line of credit. But there are significant differences in how these asset based lending lines of credit facilities are obtained and how they work. Let's examine some of those key differences as they affect account receivable, inventory and fixed asset borrowing.

Asset based lenders can also include real estate assets into the borrowing mix, providing even more liquidity.

 

CREDIT LINES FACILITIES ' REVOLVE'

 

When we compare how facilities such as this operate it's all about  ' revolving ‘. The analogy to your personal lines of credit in your own life isn’t far off here. So if the bank facility and the ABL (asset-based lending credit line ) fluctuate in the same manner, what’s the difference our clients can be forgiven for asking?

 

HOW ASSET BASED CREDIT LINES ARE MARGINED FOR BORROWING PURPOSES

 

One of those key differences simply boils down to the availability of funds, because you are in effect borrowing against the whole asset base of your company. To be clearer, most bank facilities focus on conservative margins of 75% of accounts receivable and an even more conservative margining of your inventory. The asset-based business facility typically lends at 90% of your receivable, and anywhere from   25-60% of the inventory and other assets such as equipment. Margining assets for more borrowing power is what asset based loans are about.

Borrowing approval is typically recalculated every month via what asset based lenders call a borrowing certificate.

 

THE DIFFERENCE IN BANK CREDIT FACILITIES AND THE ' ABL '

How then does the asset based lending lender take comfort in offering your firm so much more liquidity? They do that by utilizing two techniques that are typically ignored by the Canadian chartered bank credit facility. Those two asset based loan  techniques are :

 

Due diligence on the valuation of assets

More extensive monthly reporting requirement

 

   But those two techniques deliver because we have often seen clients go anywhere from 50-100% in total additional borrowing power. Talk about a potential liquidity explosion in your firm.

 

So why isn't every business borrower in Canada utilizing asset based financing? We wonder about that one a lot also! but the reality is that this method of revolving business credit is, on balance relatively new in Canada, having come to us from our good friends in the U.S. . Some estimates in the U.S. place asset-based lending at 30-40% of all borrowing activity if you can believe that.

 

4 TYPES OF BUSINESSES THAT UTILIZED ASSET BASED CREDIT LINES

 

Is the Asset Based Credit Line for your firm? It certainly covers all categories, including firms who are in the following phases of their existence:

 

Start up's

Fast Growth

Special Situations

Firms currently in Special Loans

Companies with solid credit but who are unable to access the full amount of financing they need from our Chartered banks can finance the balance sheet with asset loans.

 

CONCLUSION

 

Whether you are a small business or a larger corporation seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine the benefits of the asset based financing  ABL credit facility as they relate to your firm's cash flow needs. Let this facility, as in our analogy; take you from 8 Track to IPOD...quickly. Asset based lending works!

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

How To Untangle Your Business Financing Via ABL Capital

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Overcome Business Line Of Credit Finance Hurdles! It’s Changing Times In Business Finance. Here’s One Reason Why!
 

Is ABL capital a solid or maybe your ‘best choice’ when it comes to untangling the challenges your business faces when it comes to a comprehensive business line of credit?  We think it's a solid finance solution and many industry experts agree. Here is why!

 

WHAT IS  ' ABL' IN  BUSINESS FINANCING?

 

What is ABL? .... which of course stands for asset based lending. We ask that question only because it, and other terms such as ' cash flow ' mean different things to different people. In our terms, it is a total solution business line of credit that allows you to borrow against your  accounts receivable, inventory, equipment, and even real estate, all within one revolving facility. It is as simple as that.

 

THE ABL BUSINESS FINANCE SOLUTION VERSUS BUSINESS BANKING CREDIT VIA A CHARTERED BANK

 

It's really a total solution that, in effect, is an ' evolution ' in the concept of the asset-based line of credit.  For the asset based lending company, your new partner in business banking it's all about the balance sheet. That is of course compared to Canadian commercial business banking, where it’s all about the balance sheet... and your cash flow statement, and your income statement... and your personal guarantees.  In  ABL it's all about accounts receivable, inventory, fixed assets, and real estate.  Purchase order finance solutions can also be combined into a total overall financing solution for those firms taking on larger orders and contracts that otherwise might not be financeable.

 

Those of course are what drive Canadian business banking rates to be so low and so great... if you can access them! The asset based loan solution comes with a higher cost of financing via interest rates but provides you with that much more liquidity.

 

IS YOUR FIRM CURRENTLY ' UNBANKABLE' FOR YOUR BUSINESS CREDIT NEEDS?

 

If we had to line up the different companies that access ABL capital via asset based lending  it's a diverse group - its larger firms that are very bankable but can access more capital at better rates, all the way down to startups with a more limited financial history, at the same time having assets that can be financed.

 

We are pretty sure this doesn't exist in Canada, we certainly haven’t seen it yet, but in the U.S. there is a huge ABL capital market known as ' Second Lien '. Under these facilities, the asset based lender sits on top of the senior bank facility, in 2nd position, and advances even more against the total assets already being financed by the bank.  Surely that is one reason why our banking and lending practices are much more conservative in the world marketplace - we don't lend twice against the same asset!!

 

FIXED ASSETS AND EVEN REAL ESTATE CAN BE INCLUDED IN YOUR CREDIT LINE!

 

When we sit down and talk with clients about what can be financed and how its often practical to finance current asset accounts such as a/r and inventory via an asset based lending ' ABL' line of credit, while at the same time financing the equipment and other fixed assets under a separate facility with a finance partner/lender who has an appetite for those type of assets. That total combination of two facilities gives our client a lower ' blended cost ' of funds and at the same time increases borrowing power - talk about a ' double whammy '! Asset-based lending rates are higher thank bank financing but it becomes a question of access to capital versus cost of capital for funding and growing your business.

 

 

WHY IS THE ABL CREDIT FACILITY SO POPULAR

 

What made asset-based finance popular in Canada when it comes to business owners and financial managers seeking solid biz credit facilities?  A lot of it revolves around 2008/2009 when financial markets went awry and thousands of Canadian businesses started to investigate alternative methods of financing their business. And ABL sure was one of them. And let's not even talk about Pandemics.

 

And the irony in the above? Simply that companies that even theoretically qualified for more traditional financing could not get it... enter the ABL facility! It's a new kind of line of credit.

 

So is there a trend emerging in the  Canadian business line of credit offerings? We think there is. In the U.S. experts confirmed that even back to  2011 and continuing in popularity to today asset-based credit lines almost doubled. We think it did, perhaps somewhat less so, but clearly the emergence of a new trend via asset-based lending banks and independent non-bank commercial finance companies

CONCLUSION

If your company is looking to grow (or just survive) investigate the benefits of ABL capital and asset loans for working capital,  making you a more effective competitor. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision with the right type of facility.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

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Let’s play the Match Game Of Asset Finance In Canada 

 

Growth financing in Canada.   As if keeping your business alive as a Canadian business owner or financial manager wasn't enough, what about all the growth financing challenges you have to face?!

 

There probably are thousands of businesses in Canada who are either content to stay roughly the same size, or, at the opposite end of the spectrum, want their business financial assets to grow, but just don't know how,  or where to turn to.  Businesses in the SME sector in Canada are sometimes quite happy to put those earned profits regularly back in the bank accounts of their owners. That’s ok, for course, just not complementary to a growth strategy.

 

As we said though, many firms wish to capitalize on asset finance solutions in Canada to add assets to their business open a new location, buy a competitor, even in some cases franchise their business model.

FINANCING IS THE LUBRICANT FOR BUSINESS GROWTH

So if it is true that financing is the key ' lubricant ' in that growth financing depends on, and if the business owners don't have the ability to fund their firm personally, what are in fact the options? In reality, there are more than you think!

 

Naturally, early-stage start-up firms in Canada though do in fact rely on initial owner equity. But sooner or later you need growth financing of financial assets for key investments in office space, software, computers, and other infrastructure and business model assets.

 

We never fail, or at least try not to fail at pointing out to business owners/managers that internal cash flow generated from asset turnover is a key to growth finance.  It's just that they are never enough!  And if you're not big enough to go public yet, or engineer a reverse takeover then financing financial assets is in fact going to be a key driver in your revenue and profit growth.

MATCHING ASSET TO THE RIGHT BUSINESS FINANCING SOLUTION IS KEY TO FINANCIAL SUCCESS

Here though we are at a key point in the juncture of your firm. Because here's where mistakes are made, we’re referring to the sometimes inability of the business owner/manager to match the right assets with the right type of financing.  So a very key point is in fact that you should be financing receivables, inventories, and tax credits with short term financing vehicles in Canada.

 

Those solutions include : 

 

Bank lines of credit

Receivable finance

Inventory finance

Asset-based non-bank lines of credit 

Purchase order/supply chain financing

 

 Longer-term assets should be financed with : 

 

Term loans

Equipment leases

Secured or unsecured cash flow loans (unsecured is best!), etc.

CONCLUSION

If you wish to match the right assets you have, or need, with the right type of financing seek out and speak to a trusted, credible and experienced Canadian business financing expert today.

 

P.S. That is of course only if you want to grow your business!

 

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

A Stunning Claim? You Made A Big Financing Mistake By Not Considering An ABL Lender!

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How dare us. Are we actually saying you, the Canadian business owner of financial manager don’t know how to run your business? Not really! Our point is that you in fact may have missed one of the most solid strategies out there today when it comes to business loan financing. Simply speaking, if you haven't looked at an ABL lender for asset based finance business lines of credit, you just may be missing the boat when it comes to an asset based loan.

 

BUSINESS REFINANCING IS A CHALLENGE

 

We do think we can relate to the Canadian business owner though because we're the first to acknowledge that refinancing your business, in good times or bad is both a challenge and concern to the owner/manager. ABL lending is the solution that just might work!

 

U.S. AND CANADA SIMILAR GROWTH IN ABL LENDING

 

Whether you like it or not we often, in Canada, get our business trends from the U.S.  (We’re not necessarily thanking them for the 2008 worldwide implosion), and in the states, asset based lending drives a huge amount of business financing. So, we should at least look into that, right?

 

WHAT IS THE  ABL LENDING ASSET BASED LOAN  SOLUTION AND WILL IT SOLVE CASH / WORKING CAPITAL CHALLENGES

 

When we talk to clients about asset-based financing their business initial conversations focus on two areas - first of all, a definition of the subject, and secondly where ABL fits in the cash flow solution.

 

In terms of our subject matter let’s get straight on a definition in asset based loans. We're talking about what some call a  ' comprehensive ' ABL lending loan , that is to say, it is in fact one business financing revolving line of credit facility that lumps together accounts receivable , inventory/finished goods/work in progress,  fixed assets, and even real estate if your firm has that, into the mix. Real estate in ABL typically means owner-occupied and owned premises.

 

And where then does ABL lending  fit? That’s the good news, as it fits... everywhere. This type of business financing facility can function as a business line of credit, it can be used to purchase another firm via the other firm's asset base, and it is more often than not used to replace or pay out a bank facility when that isn’t working for the client.  Bottom line, a true business catch-all!

WHO USES ABL?

So who uses asst based lending ABL? That’s probably one of the biggest surprises to clients when we put forth an asset based  ABL lender solution. Why? Because what form of finance can be used from start-up to the world's largest corporations. Certainly, none that we are aware of.  Although not widely publicized, many of the world’s largest and most successful corporations utilize ABL as an alternative to traditional bank financing. It classic balance sheet finance 101 with a focus on .. Assets!

 

Cost is always a discussion point when you consider a new form of daily financing for your firm. Here you need some clarity, because asset based business credit lines are cheaper than bank facilities, and they are also more expensive.  What drives your final cost is your overall creditworthiness, the size of the facility, the level of accounts receivable and inventories, and who you are dealing with. That's the quick answer to ' whets my rate '?

 

So what do you need to really consider when it comes to assessing a new business line of credit asset based solution?

 

KEY AREAS REQUIRING FOCUS IN YOUR ABL LENDING DECISION VIA ASSET BASED LENDERS

 

Some key areas to focus on / explore and discuss are:

 

What are the direct advantages of ABL working capital solutions?  (More borrowing power)

 

Can both private and public companies use it? (Answer - yes!)

 

How does the facility operate on a daily basis different from a bank line re: access to cash flow  - (it doesn't)

 

Does ABL deliver more cash to my business (yes, 99.999999% of the time?)

CONCLUSION

Speak to a trusted, credible and experienced Canadian business financing advisor on why this solution for daily financing of your company... works

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial



Stan Prokop

 

 
7 Park Avenue Financial/Copyright/2020

ABL Lender Business Financing Asset Based

Got Cash Flow In The Cross Hairs? The Agony And Ecstasy of Working Capital And Lending Solutions In Canada!

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 It’s Changing Times In Canadian Business Finance!

 

Has your firm got cash flow in the crosshairs? Confused about that ' working capital formula ' you keep hearing about.

 

For many Canadian business owners and financial managers, it's clear - something isn’t working.  Business seems kind of back to the usual collapses (of everything), pandemics included, and the average SME business owner and financial manager find they have less working capital and lending solutions available than they had in the past.

 

DO YOUR COMPANY  HAVE ACCESS TO BUSINESS CREDIT AND WORKING CAPITAL CASH FLOW SOLUTIONS

 

Industry experts point out that the actual access to business credit and cash flow solutions is more and more a great predictor of survival.

 

Naturally, our banks and major financial firms have websites and advertisements that indicate they are providing more credit to great companies like yours. Sorry for the sarcasm...

 

It's no secret that lending standards are tighter than in the past, there are certainly not a lot of looser credit standards and criteria these days.

 

Here's a big irony - a large number of businesses in Canada actually run their businesses on credit cards - both business, and... You guessed it, personal. Working capital providers looking at loans for startups also place a certain emphasis on the credit profile and management experience of the owner/owners.

 

THE DANGERS OF MIXING PERSONAL CREDIT AND BUSINESS CREDIT

 

The one danger there of course is that the owner’s personal financial life is significantly mixed into the business. Banks are a good example of placing a strong emphasis on an owner's ' credit score ' . In general, that's not a good thing. One study in the states indicated that business owners seem to squeeze about 5k of revenue out of every 1k they spend via business credit cards... it could be worse we guess. All of a sudden that 0% interest rate on a new card must seem tempting we suppose.

 

In a perfect world (and we know it isn't) you want your company to be able to have enough cash for all your business needs, all the time. That’s of course where the imperfect world comes in.

 

What really happens is that you spend a lot of cash sometimes, and in those good months you receive a lot of cash from clients for goods and services delivered... For start-up firms or companies with a lot of seasonality in their business, it's even a rockier road.

 

If the business owner and financial manager track 'the numbers' over time he or she will find that at times when they have high inventories and receivables they are generally running out of much-needed working capital/cash flow.

 

MAINTAINING A BALANCE IN YOUR CASH FLOW NEEDS

 

Here's a fundamental concept that every business needs to get a handle on: You can raise cash flow by drawing down all the cash you have in the bank, borrowing via lending solutions - short term or otherwise, or raise additional owner equity. But you can’t keep doing any one of those all the time!! There needs to be a balance and a strong look at why you are always running low on cash.

 

Is there a most recommended way to access cash flow? More often than not it’s an internal solution, reducing A/R and inventory and managing payables carefully.

 

9 SOLUTIONS TO BUSINESS CAPITAL WORKING CAPITAL / CASH FLOW

Great lending solutions for your cash needs both traditional and alternative and  include:

 

A/R Financing

Inventory Loans

Access to Canadian bank loans/line of credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

Government Of Canada Small Business Loan Program  - The Guaranteed federal business loan

 

CONCLUSION

 

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your business financing needs.

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial



Stan Prokop

 

 
7 Park Avenue Financial/Copyright/2020/Rights Reserved

Are You Mismanaging Cash Flow? Fixing Working Capital Problems With Solid Financing Solutions

Getting The Bank Or Business Lender ' On Side  '

 

 Become A Good Manager Of Cash Flow Assets

 

As the Canadian business owner and financial manager well know it takes more than that to get lenders,  ( bank and non-bank) to get a good feeling about financing your firm and approving business credit for cash flow working capital finance solutions your firm might require. At the end of the day, it’s about  ' protecting ' their financing and collateral interests in your company.

 

Unfortunately, there are ways to be totally  ' not great ' at proving that you're a good cash flow business owner/manager.

 

  

ASSET TURNOVER HELPS DETERMINING WORKING CAPITAL HEALTH   

 

In financing, more often than not it’s about ' the assets '.   So while we can easily get caught up in fancy formulas are EBITDA and other calculations the reality is that it’s your assets and their turnover that determine your real working capital health. Mismanaging those assets makes you a great ' mismanager ' of cash flow and working capital.

 

One Of America’s great cash flow and investment managers ( Warren Buffett ) once said:

 

‘Does management think the tooth fairy pays for (future) capital expenditures'

 

Not all companies do the proper amount of planning  so when the inenvitable cash flow crunch happens a business is usually caught of guard for lack of that planning . Understanding your asset turnover will allow the business owner and financial manger to address needs  and identify proper business finance solutions.

Professional accountants and advisors call theis whole process the operating cycle, also called cash conversion . No secret to any business owner that  it takes a fair amount of time for a dollar to flow through the company coffers from the time that you created products or generated services all the way through to payment of your final invoice/contract.

At 7 Park Avenue FInancial we look at the whole picture and determine the critical relationships and timing betwee generating sales from inventory or providing services, to turnover in payable and receivables. Knowing the exact numbers in those relationships helps us dertmine financing solutions for our clients.

While our client might often view these calculations as complex, it simply know some basic formulas around how much days inventory is outstand, how long it takes to collect your receivables, ( thats ' days sales outstnading ' ) and finally days payable . Not all our clients understand that simply slowing your payables creates a positive cash flow - the actual formula for this is average payables multiplied by amount of time you are looking at , and then divided by your cost of goods.

If there is one very important number to keep in mind relative to some of the calulations we have shown it simply that there should be a commensute rise in certain accounts and relationships =

Example - if sales are stable or going down , and receivables you are carrying are up - that is a bad thing ! There should be a strong correlation to growht in sales and grwoth in receivables and inventories, as an example.

 

Naturally, term debt lenders focus on your long term viability to generate payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

 

So when profits and EBITDA calculations are positive we meet clients that still are having a challenge paying suppliers and meeting payroll obligations.

 

So what we are saying is that it’s important to understand that sales revenue and profits and the ' value ' of your company, if you're focusing on just those, have made you a great Mismanager of cash flow and working capital.

 

It's all about know how your firm can access cash from assets, as well as being able to plan for future needs.  That's where a bit of planning comes in - putting together a sales and receipts forecast, discussing these needs with a bank or non-bank lenders. The biggest mistake we see in this area from clients is they are not properly analyzing the cash timing of collections from accounts receivable.

 HERE ARE SOLUTIONS TO NEGATIVE CASH FLOW

 

If your cash flows are negative through this planning process the solutions are pretty clear, and limited:

 

 5 WAYS TO ACCELERATE CASH

1.Take on term debt

2.Have shareholders put in more money

3.Delay payments to suppliers

4.Really increase sales!

 

5. And finally - convert assets into cash via asset turnover focus

 

Converting assets into cash via :

A/R Financing

Inventory Loans

Access to Canadian bank line of credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

Government Of Canada Small Business Loan Program  - The Guaranteed federal business loan

 

CONCLUSION

Use our solutions and tips to avoid being a " MISMANAGER " of working capital solutions for your firm.

 

If you're looking for cash flow working capital finance solutions for short term or long term needs speak to a trusted, credible and experienced Canadian business financing advisor  at 7 Park Avenue Financial on how to achieve the right solutions for financing your firm for health, growth and success.

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

 

 

 

 

 

 

Two Unique Canadian Cash Flow Strategies

Canadian business owners and/or their financial managers might not necessarily be fully familiar with two sold financing strategies, the sale leaseback of assets, and the potential ability to enter into a securitization facility. Let's cover off some basics.

 

CONSIDER THESE ADDITIONAL IMPLICATIONS IN EVALUATING SALE LEASEBACCKS

 

When it comes to a  sale leaseback scenario there are some accounting, tax and financial statement issues that we also encourage clients to consider. It might be time to give your accountant a call!

 

WHY A SALE LEASEBACK

 

So when in fact does doing a sale leaseback make sense? Although it is often used when the company cannot obtain bank financing, that is not always the case and it's still a beneficial long term strategy when your company requires a capital infusion of some sort.

 

The interesting thing about this method of refinancing is that quite often the assets in questions are of value, and are not pledged to another lender. They belong to the company and can assist the company who is, as the expression goes ' asset rich ' but ' cash poor '.

 

WHAT ASSETS MIGHT BE CONSIDERED IN THE SALE LEASEBACK PROCESS

 

Typical assets that are used in a sale leaseback include phone and computer systems, manufacturing equipment, heavy construction machinery, rolling stock, real estate,  ... etc!

 

The strategy itself could not be more simple- your company sells the assets, or real estate,  to a leasing or finance firm in exchange for immediate working capital. The asset or assets in question are simply leased back to the business with the full intention of reacquiring the asset.

 

One area of caution is that complications can ensure when its time to confirm you have the ability to enter into a transaction such as this. Simply speaking, other creditors of your firm may be asked to confirm they hold no security in the collateral being refinanced... that just makes sense.

 

UNDERSTANDING THE TRUE VALUE OF YOUR ASSETS

 

Because different assets have different life cycles and value its important to get a firm understanding upfront as to the true total financing capability you can extract from this type of transaction.

 

Payments under a sale leaseback loan or lease are commensurate with your credit quality as well as the true liquidation value of the assets. That’s not how you might look at the transaction, but we assure you the lender does! It's all about the balance sheet!

 

WHAT IS SECURITIZATION

 

On to our other relatively unused and unknown financing,  ' SECURITIZATION '.  If your firm is over-leveraged or simply doesn’t have access to the liquidity you need.

 

In some ways securitization is a more complex type of sale leaseback - however, instead of financing your hard assets you are financing future cash flows that come from receivables, or what we can broadly call ' cash flow contracts '.  Oh, and by the way, larger public companies do this all day, every day as a way to enhance balance sheets.

 

Although some of the mechanics of a securitization might be viewed as complex by a small firm, medium-sized or larger firms simply collateralize those rights to collect in their A/R or contracts. They more often or note are responsible for any shortcomings in future collections.

 

Naturally for the securitization lender they are looking at both sides of the coin, the quality of your cash flows coming in, as well as the overall credit quality of your customer base. Here issues such as concentration, geography, type of asset, etc come into play for the final financing decision. Lenders can protect themselves even more by holding back some of the funds; in effect, they are over collateralized.

 

So, whether it’s a leaseback transaction of hard assets or securitization of cash flows your company might to well to investigate each method to see if it works for your firm.

 

CONCLUSION

 

More and more businesses in Canada, pandemic times included, are looking at commercial financing solutions such as the leaseback transactions to bring additional liquidity into the business. It is a complementary solution to existing credit facilities that might be in place such as senior lender credit lines, etc.

 

The ability to also potentially negotiate repayment under current cash flow circumstances is also appealing to business owners, as well as our aforementioned interest rate consideration.

 

While in some cases the consideration around a leaseback might be simply the current low-interest-rate environment, it more often than not is cash-flow considerations. The ability to use the assets in your business to evaluate cash flow options is simply additional financial flexibility in your capital structure goals.

 

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in evaluating these great, and unique business financing mechanisms.

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020