YOUR COMPANY IS LOOKING FOR CASH FLOW FINANCING SOLUTIONS!
YOUR BUSINESS FIX FOR COMMON CASH FLOW PROBLEMS
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"Revenue is vanity, profit is sanity, but cash is king." - Unknown
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Funding for solving cash flow problems – Save time, and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Solving Business Cash Flow Problems: Financing Challenges
Business cash flow problems often feel like placing business owners and financial managers in a sort of ‘survival course’ due to their impact on day-to-day business operations and overall financial health.
When a business knows how to measure, improve, and source cash flow solutions, it is sufficient to say things can only improve! Let’s dig into those cash flow issues for small business owners and .. solutions!
ADDRESSING COMMON CASH FLOW PROBLEMS IN SMALL BUSINESSES IN CANADA
Even the largest corporations in the world recognize the need for managing a business's cash flow and access to financing solutions.
An even more concentrated effort is required for businesses in the SME commercial sector.
DON'T GET CAUGHT OFF GUARD WITH BUSINESS FUNDING NEEDS
We meet with many business owners/managers who sometimes seem ‘ blindsided’ by the external environment.
That’s why it’s important to spend some time planning - in effect, it’s all about the ‘ what if ‘. Creating a cash flow forecast helps businesses anticipate their cash needs and avoid financial shortfalls. In effect, you’re attempting to link your sales to collections, other loan payments.
ARE YOU ADDRESSING THESE POTENTIAL CASH FLOW MISTAKES
Where business owners/managers miss the boat, either in a small way or entirely, is forgetting the changes that happen in working capital accounts, simply speaking, the changes in A/R and inventory that, over time, constantly change your cash needs.
It's also important to understand that you must forget about the ' cash flow' that goes into investing in equipment and technology.
It's important to mention here that financing solutions such as EQUIPMENT LEASING make perfect sense almost always, as a business can match the future benefits of assets to cash outflows.
CAUSES OF CASH FLOW PROBLEMS
An excellent way to solve a cash flow problem is by assessing the ‘gap’ that arises in business as funds go in and out of your business. That gap highlights the causes of cash flow crunches for business owners who need to increase cash flow.
One method of ‘fast-tracking’ business cash flow is to look closely at how you manage and finance your A/R as well as offering multiple payment methods.
Many firms offer or consider offering their clients a ‘discount’ for prompt payment for business credit. Many customers can’t or don’t buy into this method. And indeed, all of your customers in total would never all at once buy into paying you promptly.
A cash flow shortage can impact daily operations, making proactive management strategies essential.
The discount/factoring fee is a 1-2% reduction in your profit margin but delivers instant cash flow!
Having enough cash is a reasonable trade-off over the long term. The ability to find a solution to get paid for short-term, day-to-day funding needs is precisely what you have been looking for.
Every business owner wants to be able to pay their bills on time and maintain valuable vendor/supplier relations rather than constantly struggling with poor cash flows. Cash flow shortfalls can occur due to uncontrolled business growth, so accurate forecasting is crucial.
An alternative solution to achieving complete success with this strategy is to finance your receivables through a discount receivable financing program.
That 2% that you considered offering your clients prompt cash payment is essentially the same cost as utilizing a program such as CONFIDENTIAL RECEIVABLE FINANCING. The difference is, of course, that you are in charge, as any or all of your sales can be converted into immediate cash flow.
If you can demonstrate you are eligible for bank financing, it’s clear that that same cash flow benefit can be achieved. However, it would help if you established a solid historical cash flow, profits, positive shareholder equity, and personal covenants from owners.
5 SOLUTIONS TO BUSINESS CAPITAL NEEDS
Accessing capital is a common challenge for businesses, especially during growth or unexpected expenses.
Fortunately, there are several solutions to business capital needs, each with its advantages and disadvantages. Here are five common solutions to consider:
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Business Loans: Business loans are a traditional source of capital for businesses. They can be used for various purposes, such as expanding operations, purchasing equipment, or cover unexpected expenses. Business loans can be secured or unsecured, and interest rates vary depending on the lender and the business’s creditworthiness.
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Lines of Credit: A line of credit is a type of loan that allows businesses to borrow and repay funds as needed. It can be used to cover short-term expenses or to finance long-term projects. Lines of credit often have variable interest rates and may require collateral.
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Invoice Financing: Invoice financing allows businesses to borrow against outstanding invoices, improving cash flow and reducing the risk of late payments. While it can be more expensive than traditional loans, it provides quick access to capital, which can be crucial for maintaining positive cash flow.
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Asset-Based Financing: This type of financing uses a business’s assets as collateral. It can be used to finance large purchases or cover unexpected expenses. Although asset-based financing often has higher interest rates than traditional loans, it provides access to larger amounts of capital, helping to solve cash flow problems.
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Equity Financing: Equity financing involves selling ownership shares in the business to investors. It can be used to finance long-term projects or expand operations. While it can be more expensive than traditional loans, it provides access to larger amounts of capital and can help reduce debt, ensuring a steady cash flow.
PREVENTING FUTURE ISSUES
Preventing future cash flow issues requires planning, monitoring, and adjusting. Here are some strategies to help avoid future cash flow issues:
Cash Flow Forecasting: Predict future cash movements using historical data and trends to identify potential issues before they arise.
Cash Reserve Management: Build a financial safety net by consistently saving a portion of profits for unexpected expenses.
Expense Management: Control costs through supplier negotiations and cost-saving measures to optimize cash outflows.
Revenue Management: Implement effective pricing and sales strategies to maintain steady cash inflows as well as offering discounts for early payments
Cash Flow Monitoring: Review statements regularly to proactively spot trends and address potential problems.
IMPLEMENTING CASH FLOW MANAGEMENT INTO YOUR BUDGET
Implementing cash flow management into your budget involves planning, monitoring, and adjusting.
Here are some steps to implement cash flow management into your budget:
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Identify Cash Inflows and Outflows: Identify all cash inflows and outflows, including revenue, expenses, and capital expenditures. This comprehensive view will help in creating an accurate cash flow budget.
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Create a Cash Flow Budget: Develop a budget outlining projected cash inflows and outflows. This budget will be a roadmap for managing cash flow and ensuring financial stability.
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Monitor and Adjust: Regularly monitor cash flow and adjust the budget as needed. This ongoing process will help identify potential cash flow issues and make necessary adjustments to stay on track.
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Implement Cash Flow Management Tools: Use cash flow management tools, such as cash flow forecasting and cash reserve management, to enhance your budgeting process. These tools can provide valuable insights and help you make informed decisions.
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Regular Review and Adjustment: Consistently review and adjust the cash flow budget to ensure it remains accurate and effective. Regular reviews will help identify trends and make proactive adjustments to maintain positive cash flow.
By following these steps and incorporating cash flow management into your budget, you can ensure a steady cash flow and financial stability for your business.
6 SOLUTIONS TO BUSINESS CAPITAL NEEDS
Other methods to ‘survive’ and win regarding the cash flow gap include:
A/R Financing
Inventory financing
Merchant advances
Asset-based non-bank lines of credit
Tax credit Monetization (SR&ED BRIDGE LOANS)
Purchase Order Financing
A cash flow statement provides insights into a business's financial health and helps manage cash flow effectively. It shows available cash, short-term investments, and other assets, which are crucial for managing finances, especially when unexpected expenses arise.
KEY TAKEAWAYS
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Accurate cash flow forecasting is the cornerstone of financial stability, enabling proactive decision-making and crisis prevention.
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Strategic accounts receivable management transforms payment collection into a streamlined process, dramatically reducing wait times.
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Alternative financing solutions provide immediate working capital without traditional lending restrictions.
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Inventory optimization techniques significantly reduce tied-up capital while maintaining operational efficiency.
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Digital payment systems accelerate cash inflow while reducing processing costs and human error.
CONCLUSION - CASH FLOW PROBLEMS AND SOLUTIONS
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in running and finishing the working capital survival challenge!
FAQ
What immediate impact can cash flow solutions have on my business?
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Immediate working capital availability
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Reduced stress on daily operations
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Enhanced supplier relationships
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Improved employee satisfaction
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Better strategic planning ability
How does improved cash flow affect my growth potential?
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Enables quick response to market opportunities
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Supports expansion initiatives
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Allows bulk purchase discounts
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Strengthens vendor negotiations
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Increases competitive advantage
Will better cash flow management reduce my operating costs?
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Eliminates late payment penalties
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Reduces emergency funding needs
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Optimizes inventory carrying costs
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Improves supplier terms
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Minimizes expensive short-term borrowing
What financing options preserve my business relationships?
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Supply chain financing
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Invoice factoring
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Revenue-based financing
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Asset-based lending
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Merchant cash advances
How quickly can I implement new cash flow strategies?
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Digital payment systems: 24-48 hours
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Invoice factoring: 3-5 days
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Inventory optimization: 1-2 weeks
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Payment terms restructuring: Immediate
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Cash flow forecasting: Same day
Do I need perfect credit for cash flow financing?
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Many solutions focus on business performance
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Asset-based options available
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Revenue-based alternatives exist
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Multiple qualification factors considered
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A credit score is just one element
What documents do I need to apply for funding?
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Bank statements (3-6 months)
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Financial statements
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Tax returns
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Accounts receivable aging
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Client contracts/invoices
How does seasonal business affect solutions?
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Specialized seasonal financing available
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Flexible payment structures
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Revenue-based options adapt automatically
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Industry-specific solutions exist
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Custom repayment terms
Can I combine multiple cash flow solutions?
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Strategic layering possible
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Complementary funding options
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Integrated approach benefits
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Professional guidance recommended
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Cost-effective combinations
What red flags indicate cash flow problems?
How do different industries handle cash flow differently?
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Retail requires inventory management focus
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Service businesses prioritize invoicing
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Manufacturing needs equipment financing
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Construction uses progress payments
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Technology leverages subscription revenue
What role does technology play in cash flow management?
When should I seek professional cash flow help?
How does the business prepare an emergency fund?
Building an emergency fund is important in preventing future cash flow issues. An emergency fund provides a cushion against unexpected expenses or revenue shortfalls. Here are some steps to build an emergency fund:
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Determine the Size of the Fund: The size of the emergency fund will depend on the business’s cash flow needs and expenses. A general rule of thumb is to save 3-6 months’ worth of expenses to ensure adequate coverage.
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Choose a Savings Vehicle: The emergency fund can be saved in various vehicles, such as a savings account or a money market fund. The chosen vehicle should be liquid and easily accessible to ensure funds are available when needed.
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Set Aside a Portion of Profits: A portion of profits should be set aside each month to build the emergency fund. The amount set aside will depend on the business’s cash flow needs and expenses, but consistency is key to building a robust fund.
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Monitor and Adjust: The emergency fund should be regularly monitored and adjusted as needed. As the business’s cash flow needs and expenses change, the fund should be adjusted to remain adequate.
What are best practices for long-term success?
Best practices for long-term success involve planning, monitoring, and adjusting. Here are some best practices for long-term success:
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Cash Flow Management: Effective cash flow management is critical for long-term success. It involves monitoring and controlling cash inflows and outflows to ensure a steady cash flow and financial stability.
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Expense Management: Controlling business expenses is essential for long-term success. Regularly reviewing and optimizing expenses can help improve profit margins and maintain positive cash flow.
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Revenue Management: Monitoring and controlling business revenue is crucial for long-term success. Effective sales strategies and pricing models can help increase cash inflows and support business growth.
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Cash Reserve Management: Setting aside a portion of profits as a cash reserve is essential for long-term success. A well-managed cash reserve can provide a financial buffer against unexpected expenses and revenue shortfalls.
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Regular Review and Adjustment: Regularly reviewing and adjusting financial strategies is key to long-term success. By consistently monitoring cash flow statements and identifying potential issues, businesses can make informed decisions and avoid cash flow problems.
