YOUR COMPANY IS LOOKING FOR BUSINESS CASH FLOW
RECEIVABLE INVENTORY FINANCE 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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Struggling with managing your business’s cash flow? Discover how Business Cash Flow Loans can be the lifeline you need.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer BUSINESS CASH FLOW LOANS 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 CASH FLOW FINANCING
Business cash flow and working capital. U.S. financier Harold Geneen once said that you could make almost any mistake in business and be forgiven or remedy that, but 'when you run out of cash, they take you out of the game. ‘ We agree!
Therefore, the financing, management, and solutions involved in receivables and inventory finance are key to the success of the Canadian business owner and financial manager.
Understanding Business Cash Flow Loans: The Profit Versus Cash Flow Difference
While profit is the measurement of the income statement, many challenges and problems arise when cash and working capital are not managed.
It’s a constant juggling act. There is an excellent analogy about how you juggle the bowling pins of business to generate profits, but the spinning knives determine cash balances and the pitfalls. It seems we’re full of sayings and analogies today…
Business cash flow is, of course, the lifeblood of your company’s operations.
Cash and cash flow are the difference between your balance sheet and income statement. Your balance sheet presents dollar amounts at any point in time, plus the changes in those dollar amounts that determine your working capital financing performance while identifying needs.
The changes in your working capital accounts determine your cash flow.
While sales generate cash, you use that cash to purchase goods and services, pay your staff, rent, utilities, loan payments, etc.
Both cash flow and business assets are crucial for securing favorable loan conditions. Lenders evaluate these factors to determine lending eligibility and terms. Future cash flow is also critical in managing working capital and securing loans.
HOW DOES ACCOUNTS RECEIVABLE AFFECT CASH FLOW? INVENTORY ALSO?
As sales fluctuate and assets and liabilities change, the business owner and his or her management team can spot problems in working capital/cash flow, which can also impact the business credit history.
As receivables are built up, hopefully commensurate with sales, cash flow goes down, and inventory goes the same. Inflows of cash come from collection and efficient turnover of a/r and inventories.
Credit history is a crucial factor in determining loan eligibility and interest rates.
It’s a constant balancing act, as every business owner knows, and the alternatives can be very costly. You can increase your equity in the firm, but that’s costly and means giving up some measure of control. Asset sales are also, generally, not desirable.
4 WAYS TO INCREASE CASH - BUSINESS CASH FLOW LOANS
So we have made it clear that you can increase cash by one of several methods:
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TAKE ON DEBT - Businesses can borrow money through various lending options, such as cash flow and asset-based lending. These loans are structured and underwritten based on projected future cash flows or the liquidation value of assets.
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INCREASE OWNER EQUITY BY OWNERSHIP DILUTION
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SELL MORE AND COLLECT MORE - Convert non-cash assets such as A/R and inventories to cash
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REDUCE COSTS
Cash flow financing is a specific type of financing that enhances a business's liquidity by focusing on its financial history and cash flow situation. It is particularly beneficial for small businesses facing urgent capital needs.
Suffice it to say that number 3 is our favourite!
ASSET TURNOVER IS THE KEY-
How to increase cash flow & understand working capital changes with invoice financing
When your sales are growing and you properly turnover your receivables, you can avoid a cash crisis.
If you don’t have proper inventory finance of receivable financing facilities, vendor relationships can get severely strained.
Solid financial solutions exist for firms struggling with profitability or for Canadian business owners and financial managers unable to raise equity.
Bank financing might be available, but many times it is not. As we have said in the past, even growth can be a double-edged sword. Great companies disappear when their cash reserves or financing procedures become insufficient to finance their growth.
Cash flow lending evaluates a company's anticipated revenue and current cash flow for loan approval, offering flexibility and accessibility without requiring collateral, though it may come with higher interest rates.
Additionally, unsecured loans can be an option for businesses seeking to manage cash flow without collateral.
SOLUTIONS TO BUSINESS CASH FLOW - MERCHANT CASH ADVANCES
In Canada, solutions to business cash flow, receivables, and inventory finance are abundant, including various business loans tailored to meet different financial needs.
They include
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
Merchant cash advance, a flexible financing option based on projected future sales, provides quick cash flow solutions with repayments tied to daily sales, though it can be costly.
Online lenders offer accessible and efficient application processes, making them a flexible option for small businesses seeking cash flow financing.
KEY TAKEAWAYS
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Understanding the core structure of Business Cash Flow Loans allows you to grasp 80% of their utility.
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Recognizing the benefits and drawbacks provides a comprehensive overview of their impact.
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Identifying eligibility criteria gives insight into whether your business qualifies.
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Learning about the types of loans available ensures you choose the best fit for your needs.
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The application process reveals how to secure the funds effectively.
CONCLUSION - RAISING WORKING CAPITAL
Business Cash Flow Loans are essential for ensuring a company’s financial health during periods of fluctuating revenue.
Businesses need to understand the cash flow statement.
The 3rd part of your financial statements shows you where the cash came from and where the cash went.
It ties the balance sheet and income statement together, showing how you have funded your business and succeeded or failed in asset turnover.
Invest the time in understanding your financials. Understanding inventory and accounts receivable on the cash flow statement is critical to achieving optimal business capital and ultimate cash flow success.
‘NWC’, or net working capital, can be quickly calculated by business owners - subtract current liabilities from current assets. It’s a quick snapshot of whether you are winning in the working capital game.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor, for tips on finance on how you can manage and solve business cash flow and operating working capital challenges.
While traditional bank loans often have stringent qualification criteria, alternative lending options can provide faster access to capital with more lenient requirements, making them a viable choice for businesses needing immediate funding.
FAQ
What are Business Cash Flow Loans?
They are financing options designed to help businesses manage their cash flow by providing quick access to working capital.
How can Business Cash Flow Loans benefit my company?
These loans offer immediate funds to cover operational expenses, invest in growth opportunities, and avoid cash flow disruptions.
What are the typical requirements for obtaining a Business Cash Flow Loan?
Lenders usually require a strong business history, proof of consistent revenue, and a clear loan repayment plan.
How do Business Cash Flow Loans differ from traditional loans?
Unlike conventional loans, Business Cash Flow Loans focus on a business’s cash flow rather than fixed assets, allowing for faster approval and disbursement.
What should I consider when choosing a Business Cash Flow Loan?
Evaluate the loan’s interest rates, repayment terms, and the lender’s reputation to ensure it aligns with your business needs.
How do Business Cash Flow Loans impact my business’s credit rating?
Timely repayment of Business Cash Flow Loans can improve your business credit score, while missed payments may harm it.
Are Business Cash Flow Loans suitable for startups?
While more established businesses are typically favoured, some lenders offer options tailored to startups with solid growth potential.
Can I use a Business Cash Flow Loan for any business expense?
These flexible loans can be used for various expenses, including payroll, inventory, and expansion projects.
How do I determine the right amount to borrow with a Business Cash Flow Loan?
Consider your business’s cash flow needs, repayment capacity, and future revenue projections to determine the appropriate loan amount.
What happens if I can’t repay my Business Cash Flow Loan on time?
Failure to repay can lead to additional fees, a damaged credit rating, and potential legal action by the lender.
What are the main types of Business Cash Flow Loans available?
Common types include merchant cash advances, invoice financing, and short-term loans tailored to different business needs.
How quickly can I access funds with a Business Cash Flow Loan?
Depending on the lender, funds can be available within 24 hours after approval. Credit lines take a bit longer.
What factors influence the interest rates on Business Cash Flow Loans?
The business’s credit score influences interest rates, the owner's personal credit score, revenue stability, loan amount, and repayment terms.
