YOUR COMPANY IS LOOKING FOR BUSINESS LIQUIDITY SOLUTIONS!
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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
"Stop letting outdated lending models hold your business back - discover financing that actually fits your growth plan."
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Finance and working capital solutions – Save time, and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Business Liquidity and Solvency: Business Finance Companies
Business liquidity, we’ve found, means different things to different people.
So… don’t take this the wrong way, but do you understand ‘solvency finance’ issues regarding your firm’s current and long-term cash flow needs? Understanding these issues can significantly improve clients' financial management. Let’s dig in.
Effective cash flow management can enhance customer satisfaction by providing tailored financing solutions.
BREAKING FREE FROM THE BUSINESS FINANCE SQUEEZE
Finding the right business financing feels like navigating a maze in today's market. Traditional lenders often impose rigid requirements, leaving Canadian business owners frustrated and growth opportunities untapped.
3 Uncommon Takes on Business Finance Firms
- Business finance companies often provide better value through industry expertise than traditional Canadian banks, which offer lower interest rates as a key attraction
- Specialized lenders can reduce overall borrowing costs by matching financing types to specific business cycles
- The most successful business finance relationships often begin during strong financial periods, not during urgent needs
Let the 7 Park Avenue Financial team show you how Business finance companies bridge this gap by offering flexible solutions, faster approvals, and customized terms that align with your company's unique needs and potential.
What is Business Liquidity?
Business liquidity refers to a company’s ability to meet its short-term financial obligations, such as paying bills, salaries, and debts, using its liquid assets.
Liquid assets can be quickly converted into cash, such as cash, accounts receivable, and inventory. A business with high liquidity is better equipped to handle unexpected expenses, take advantage of new opportunities, and maintain a positive cash flow.
Ensuring your business has sufficient liquidity is crucial for its day-to-day operations and overall financial health.
Managing Cash Flow
Effective cash flow management is crucial for businesses to maintain liquidity and achieve long-term success.
This involves monitoring and controlling the inflow and outflow of cash, as well as managing accounts receivable, accounts payable, and inventory.
By maintaining a healthy cash flow, businesses can reduce the risk of insolvency, invest in growth opportunities, and improve their overall financial stability.
Implementing strategies such as timely invoicing, negotiating favourable payment terms with suppliers, and regularly reviewing financial statements can help businesses manage their cash flow.
The Fundamentals of Business Solvency
The challenge around understanding your business's overall liquidity revolves around long-term commitments, recognizable by the term 'solvent.'
As all business owners and financial managers know only too well, businesses operate in the short term, requiring 'real cash' to make their commitments.
Solvency vs. Liquidity
While often used interchangeably, solvency and liquidity are distinct financial concepts. Solvency refers to a company’s ability to meet its long-term financial obligations, such as paying off debts and meeting financial commitments.
Liquidity, however, refers to a company’s ability to meet its short-term financial obligations. A business can be solvent but illiquid, or vice versa.
For example, a company may have many assets, but if those are not liquid, it may struggle to meet its short-term financial obligations. Understanding the difference between solvency and liquidity is essential for effective financial management.
Assets vs Liabilities Perspective
Another way to explain the situation is that when lenders and investors look at your firm’s overall financial status, they use data analysis to assess it in terms of all your assets versus your liabilities. More assets are better!
Long-term Health Versus Day To Day Operations
Your goal? To ensure your company has long-term health and meets its daily commitments. Although it shouldn’t be the case (but unfortunately is), many owners/managers are ‘distracted’ by paper profits and sales growth, not foreseeing the ‘liquidity’ crisis coming down the road.
Financial assistance can help businesses manage their projects, ensure they have the necessary resources for growth, manage cash flow, and facilitate specific purchases.
Factors Affecting Business Solvency
Several factors can impact a business’s solvency, including:
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Debt-to-equity ratio: A high debt-to-equity ratio can indicate a higher risk of insolvency.
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Interest rates: High interest rates can increase the cost of borrowing and reduce a business’s ability to meet its financial obligations.
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Cash flow: A business with a poor cash flow may struggle to meet its short-term financial obligations.
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Asset management: Poor asset management, such as over-investing in non-liquid assets, can reduce a business’s liquidity and increase its risk of insolvency.
By monitoring these factors, businesses can take proactive steps to maintain their solvency and ensure long-term financial health.
Asset Management Challenges
However, we're the first to mention that assets poorly managed or valued or the lack of current asset turnover again brings us back to our point—you're solvent on paper but facing failure in liquidity.
Banking Relationships and Financing
Canadian chartered banks are the best for providing a wide range of financial services, including capital, when your business and the economy are in ‘good times.’ When does that change? Banks are rightfully unprepared to finance financial losses, spiralling sales, etc.
Government-Backed Financing Programs
Government-backed financing programs can give businesses access to capital and help them maintain liquidity. These programs often offer favourable interest rates, flexible repayment terms, and reduced risk for lenders. The best example of a government-backed financing program is:
Canada Small Business Financing Program (CSBFP) in Canada
This program helps businesses access the financing they need to maintain liquidity, invest in growth opportunities, and achieve long-term success. By leveraging these resources, companies can navigate financial challenges and secure the capital necessary for sustainable growth.
Alternative Financing Solutions
How, then, does the business owner/manager finance itself adequately and avoid the dreaded ‘cash crisis’ that almost all businesses, large and small, face simultaneously?
One solution is ensuring that a business credit line augments your available cash. Canadian businesses can access either bank revolving facilities or, if they don’t qualify, ‘ASSET BASED LINES OF CREDIT—‘ABLs, which are available from commercial lenders.
Toronto is a hub for alternative financing solutions and fintech innovation. A significant concentration of talent and major financial institutions drives growth and innovation in the sector.
Management Strategies
Typically, combinations of management activities are required to ensure proper liquidity, including structuring credit lines that make sense, managing payables, and addressing key profit/margin issues.
Financial Assessment Tools
Bankers, friendly Bay street guys, and other commercial lenders have various time-test tools to assess your solvency and liquidity quickly. These ‘ratios’ include net working capital calculations, debt-to-equity tests, interest coverage, and asset turnover.
Global financial standards and metrics are used worldwide to assess business solvency and liquidity.
Knowing how these tools measure your company is an excellent asset for any owner/mgr.
Types of Business Financing
Financing mechanisms that help you to both manage liquidity and solvency include:
Key Takeaways
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Credit assessment fundamentals drive lending decisions through proven risk evaluation methods.
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Cash flow analysis reveals business health more accurately than traditional credit scores alone.
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Collateral requirements vary significantly based on business model and industry type.
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Repayment structures must align with business revenue patterns to ensure success.
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Understanding cost of capital helps optimize financing choices for maximum ROI
Conclusion - Business Financing Options In Canada
Are you focused on ensuring you've got both the tools (to measure) and the solutions (to solve) liquidity and solvency issues?
Call 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor who can assist your firm.
FAQ
What makes business financing companies different from traditional banks?
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Faster approval processes
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More flexible qualification criteria
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Industry-specific expertise
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Customized funding solutions
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Relationship-based lending approach
How can alternative financing improve my business cash flow?
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Immediate access to working capital
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Flexible repayment terms
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Revenue-based financing options
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Seasonal payment adjustments
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No fixed monthly payments
What types of businesses benefit most from finance companies?
How quickly can I access short term working capital funding through a business finance company?
What collateral options does a business finance company accept?
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Equipment and machinery
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Accounts receivable
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Purchase orders
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Real estate
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Inventory
What financial documents do I need to prepare?
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Last 6 months bank statements
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Recent financial statements
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Tax returns from past 2 years
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Current accounts receivable aging
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Business plan for growth financing
How do business finance firms determine rates?
What are typical approval requirements?
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Minimum 6 months in business
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Monthly revenue thresholds
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Basic credit requirements
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Industry-specific metrics
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Cash flow projections
How are repayment terms structured?
How do financing firms evaluate applications?
What makes a strong financing application?
