YOUR COMPANY IS LOOKING FOR CASH FLOW FINANCING!
THE PERFECT FINANCING AND CASH FLOW FORMULA?
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
Is there a cash flow management formula (or formulas) that can help the business owner/financial manager with cash flow financing solutions? Your ability to re-engineer your financing as needed is key to business success. Let's dig in.
IT'S ALL ABOUT PROFITS AND ASSET TURNOVER
It's your operating assets that fundamentally generate profit and getting the right financing in place for those assets is key. Understanding the relationship between sales on your income statement and accounts receivable is also critical
MEASURING CASH FLOW
Although every aspect of the balance sheet, liabilities included affects operating cash flow we can place a lot of emphasis on financing current assets for cash flow. Those current assets on the balance sheet typically include receivable’s inventories and your prepaid expenses. There are numerous ways to measure cash flows - one example is to monitor current liabilities to cash flow ratio. Cash flow from operations is the measurement of your asset turnover in assets and is your net income plus or minus those changes in working capital components on the balance sheet.
STAY LEAN !
In theory, it's possible to have a ' lean' working capital position. While the business owner/manager wants to have optimahttps://www.investopedia.com/terms/f/freecashflow.aspl working capital and cash flow just simply turning over your inventories, keeping lower inventory on hands, and collecting accounts receivable when due helps you stay ' lean'.
PROPER FINANCING EQUALS BUSINESS HEALTH
Financing activities and solutions for small business, done properly, will reflect the financial health of your company via your financial statements. Focus on positive cash flows and your ability to stay current with payables and other short term obligations such as lease and loan payments. The ability to have enough cash after you cover operating expenses allows your company to consider growth objectives in a positive manner.
HOW DO BUSINESSES FUND WORKING CAPITAL NEEDS?
What are the methods that Canadian business utilizes to finance current assets and fund current liabilities on a day to day basis .? Typically they are bank operating lines, non-bank working capital facilities (they finance a/r and inventory and equipment under 1 credit facility)... as well as certain key ' niche ' financing solutions such as tax credit financing and Factoring.
Business owners/managers quickly realize that almost never does profit equal cash flow. There's a great old saying around that: ' IF WE'RE IN THE BLACK WHERE THE HECK IS THE GREEN?!) The reality - cash flow from your firm's operating profits move in the opposite direction to your changes in operating assets. That’s a tough one for many of our clients to grasp sometimes. Large corporations measure their free cash flow.
CASH OUTFLOWS
What you do with your cash flow also affects your cash flow, right? Typical uses include the replacement of assets. (This cash outflow can often be alleviated through the use of EQUIPMENT LEASE FINANCING). Surplus cash can also go to the owner’s accounts or to pay off term debt. The actual ' cash flow statement' of your financials (rarely read by the business owner by the way?) shows you exactly how all that transpires.
You can achieve a better cash flow management formula for your company by spending a bit more time on cash flow planning. That saves a lot of emergency running around when growth kicks in and you haven’t planned for it. Most lenders you will deal with will also respect you more (and lend you more) if you show better cash flow planning.
Never forget that all the benefits of sales and additional profits are offset by a cash flow drain on your business. It’s a common saying in business that you have to spend cash to get cash, right?
CALCULATE YOUR CASH NEEDS REGULARLY
Business owners should always be able to calculate operating cash needs. In the short term the amount of cash you need is a ' must know' to be successful in business. Cash generated and your ability to fund short term obligations is critical.
CONCLUSION
Can you honestly say your business has a total handle on cash working capital challenges and solutions? Consider seeking out and speaking to a trusted, credible and experienced CANADIAN BUSINESS FINANCING ADVISOR who can assist you in developing the right finance ' formula' for your business growth
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Stan Prokop
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