YOUR COMPANY IS LOOKING FOR TURNAROUND FINANCING!
SHORT TERM FUNDING SOLUTIONS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"In the middle of difficulty lies opportunity." - Albert Einstein
Rescue your struggling business: Discover how turnaround funding can breathe new life into your company.
TURNAROUND FINANCING - CANADA
What is a business turnaround plan when it comes to financing? It's a financial recovery strategy that covers many issues, but our main focus today is on your core business challenge—cash flow in your restructuring process!
The Importance of Turnaround Funding: Cash Flow for Business in a Turnaround
All business owners and their financial mgrs. recognize the importance of cash flow and working capital at critical times in their business.
For most companies, cash is generated from accounts receivable and inventory sales, which come from sales revenues. Of course, the ultimate failure due to a lack of cash flow is business failure.
So, understanding the turnaround strategy requirements when it comes to funding your business often simply comes down to the turnaround financing solutions that are available to put in ‘ the fix ‘.
HOW DO YOU RECOGNIZE CASH FLOW PROBLEMS AND FINANCIAL DISTRESS
Realizing cash flow deficiencies is not always intuitive, especially when sales revenues are growing; fast-growing sales can mask many financial problems!
The good news is that some basic technical fundamentals help you assess the problem. Think of that type of analysis as being a business cash flow doctor.
Recognizing cash flow problems early can help alleviate financial pressures by optimizing capital structures and supporting businesses in managing debt effectively.
GET EXPERT HELP FOR YOUR BUSINESS FUNDING NEEDS
Are you seeking outside help from someone who understands your financials and business in restructuring finance?
Seek out a lender with substantial experience financing business restructuring, a solid track record, and the ability to facilitate cash flow turnarounds by offering solid and sometimes creative working capital solutions with a professional third-party perspective.
HAVE YOU HEARD ABOUT THE DOOMSDAY RATIO?
One way of looking at the seriousness of your cash flow challenge is a technique known as ‘DOOMSDAY RATIO‘.
So, what is that ratio, and what is its significance? It’s simply a ratio (we at 7 Park Avenue Financial have always called it a ‘relationship‘) of your cash on hand divided by current liabilities.
The final result is one of the most potent and effective solvency ratios (or relationships) that a business owner can utilize.
Business people might be aware of two similar ratios: the current ratio and the quick ratio. The current ratio includes the firm’s assets, accounts receivable, and inventory.
The Quick ratio did the same but excluded inventory. While not all ‘non-financial’ folks might like taking this detailed look at their financial statements, this hard look at your numbers will often reveal key insights into business financing turnaround needs.
The business owner can quickly see that the doomsday ratio focuses solely on Cash!
We can call it a very ‘demanding’ ratio because it focuses solely on the liquid gold within the company: cash! Strategic financial planning can help maintain a positive Doomsday Ratio by providing comprehensive financial guidance, investment advice, and risk management strategies.
ACCOUNTS RECEIVABLE TURNOVER AND STRATEGIC FINANCIAL PLANNING IS KEY
Although your firm’s accounts receivable and inventories are somewhat close to being cash, no matter how well they are managed, those two current assets aren’t cash yet. Everyone knows the day-to-day business challenges of converting receivables and goods into a final cash customer payment.
Asset-based lending can provide quick access to funds by leveraging accounts receivable.
The best way to view the Doomsday ratio is as an ongoing measure of the firm’s cash ‘buffer’.
The bottom line is that it will show the business owner the firm’s cash cushion. Business owners could even monitor the ratio daily, as it could warn against impending shortages of working capital.
Many business owners know that keeping cash on hand is also inefficient, particularly in today’s low-interest rate environment.
So it makes common sense that the doomsday ratio may, in fact, be less than ‘1’, but at least we have a number that we can monitor on an ongoing basis.
UTILIZING OPERATING LINES OF CREDIT EFFICIENTLY
Over time, each business has developed a philosophy and business practice regarding how much cash is kept on hand.
Naturally, it’s also evident and important to know that if you reduce your operating line of credit with your cash, you still have the total liquidity of your operating line. Still, you aren’t paying any interest to borrow.
That’s a good strategy. Turnaround finance can help businesses manage their operating lines of credit more effectively by providing targeted financial assistance to address underlying issues and implement structured recovery plans.
HOW CAN YOUR BUSINESS ACCELERATE CASH FLOW FOR YOUR SUCCESSFUL TURNAROUND
One method is to consider a receivable financing strategy that factors or sells your accounts receivable as your firm sells its products and services.
Our recommended solution for 7 Park Avenue Financial clients is a ‘ CONFIDENTIAL RECEIVABLE FINANCING ‘ solution, which allows you to bill and collect your own receivables while generating cash as you sell!
That strategy allows you to generate cash and maintain that positive ‘ DOOMSDAY RATIO’!
Consider any relevant financial analysis technique to monitor your business's cash flow/working capital.
WHAT IS YOUR BUSINESS TURNAROUND FINANCING SOLUTIONS PLAN
And don’t forget to see that CASH FLOW doctor who can implement solutions such as:
Choosing turnaround financing companies with a knowledgeable team and extensive experience in turnaround and restructuring financing is crucial.
A/R Financing
Inventory Loans
Access to Canadian bank credit
Non bank asset based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance
Securitization
KEY TAKEAWAYS
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Comprehensive financial analysis identifies core issues requiring immediate attention.
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Strategic cost-cutting measures rapidly improve cash flow position
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Negotiating with creditors buys crucial time for implementing turnaround plans
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Focusing on core competencies helps streamline operations and boost profitability
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Securing stakeholder support ensures the smooth implementation of turnaround strategies
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A viable turnaround strategy is essential for gaining lender support and demonstrating potential profitability - a strong business plan is needed
THREE UNCOMMON TAKES ON TURNAROUND FINANCE
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Turnaround funding can catalyze innovation, forcing companies to reimagine their business models.
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The psychological impact of securing turnaround funding often leads to improved employee morale and productivity.
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Turnaround funding can create unexpected opportunities for strategic partnerships with investors or industry peers.
CONCLUSION
Turnaround funding offers a second chance for businesses teetering on the brink of collapse.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who has a track record and turnaround expertise for refinancing your company properly -
Fix problems today and develop a long-term strategy for running and growing your business. Additionally, it is crucial to have a senior management team involved in the turnaround process.
FAQ
What are the main advantages of securing turnaround funding?
Turnaround funding gives struggling businesses essential capital to implement restructuring plans, improve cash flow, and regain profitability. It offers breathing room to address operational issues and pursue strategic changes for long-term success.
How can turnaround funding help improve my company's financial position?
By injecting fresh capital, turnaround funding allows businesses to consolidate debt, negotiate with creditors, and invest in efficiency improvements. This boost can help stabilize operations and create a foundation for future growth.
Will turnaround funding affect my ownership stake in the company?
While turnaround funding may involve equity dilution, it often preserves more ownership value than alternatives like bankruptcy. The exact impact depends on the funding structure and negotiations with lenders.
Can turnaround funding help attract new customers or partners?
Yes, securing turnaround funding can signal to the market that your business has a viable future. This renewed confidence can help attract new customers, partners, and even additional investors interested in your company's turnaround story.
How does turnaround funding differ from traditional business loans?
Turnaround funding is designed explicitly for distressed companies and often offers more flexible terms, a higher risk tolerance, and additional support from investors experienced in business restructuring. Traditional loans typically have stricter requirements and less tolerance for financial instability.
What qualifies a business for turnaround funding?
Businesses facing financial distress but demonstrating the potential for recovery through strategic changes and restructuring may be eligible for turnaround funding. Key factors include a viable core business, committed management, and a clear turnaround plan.
How long does the turnaround funding process typically take?
The timeline can vary widely, ranging from a few weeks to several months. Factors affecting the timeline include the complexity of the business, the severity of financial distress, and potential investors' due diligence requirements.
Are there any industries that are more likely to receive turnaround funding?
While turnaround funding is available across various sectors, industries with significant assets, substantial intellectual property, or essential services often attract more interest from turnaround investors. However, the viability of the turnaround plan is typically more important than the specific industry.
What role do turnaround specialists play in the funding process?
Turnaround specialists are experienced professionals who can assess a company's situation, develop restructuring plans, and help secure funding. They often work closely with management and investors to implement changes and monitor progress throughout the turnaround process.
How does turnaround funding impact existing creditors and suppliers?
Turnaround funding can benefit existing creditors and suppliers by increasing the likelihood of debt repayment and continued business relationships. However, negotiations may also involve restructuring existing debts or payment terms as part of the overall turnaround strategy.
What are the critical components of a successful turnaround plan?
A successful turnaround plan typically includes a detailed financial analysis, clear identification of problem areas, specific strategies for operational improvements, realistic financial projections, and a timeline for implementing changes. It should address stakeholder concerns and outline how turnaround funding will be utilized.
How do investors evaluate potential turnaround opportunities?
Investors assess factors such as the company's core business strength, management team capability, market conditions, and the feasibility of the proposed turnaround plan. They also consider the potential return on investment, the level of risk involved, and the company's assets and intellectual property.
What are some common challenges businesses face during the turnaround process?
Common challenges include resistance to change from employees or stakeholders, unexpected market shifts, difficulty in implementing operational changes quickly, managing cash flow during the transition, and maintaining customer and supplier relationships. Overcoming these challenges often requires strong leadership, clear communication, and adaptability.
