YOUR COMPANY IS LOOKING FOR BUSINESS CASH FLOW FINANCING!
Solutions For Business Capital Finance For Your Business
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
Our preference for cash flow financing for Canadian business is to learn from an expert. One of the most famous industrialists of all time once said ' the only irreparable mistake in business is to run out of cash ... when you run out of cash they take you out of the game.
THE ' FIX ' IN WORKING CAPITAL
No Canadian business owner or financial manager wishes to be ' taken out of the game ‘. So let's look at some of the analysis, as well as ' the fix ' when it comes to financing your working capital and cash flow solutions.
JUGGLING PROFITS AND SALES
We always are a little wary in initial discussions with clients around how they are doing when they are only focusing on just profits and sales, which are great by the way. But the juggling act around sales growth and profits, to use one analogy, also revolves around the spinning knives of cash on hand.
Confusion reigns supreme around even the terminology on cash, cash flow, and working capital. Naturally actual real cash on your balance sheet, i.e. your bank account, is your business lifeline. Cash flow on the other hand revolves around the changes in your working capital accounts, which, by the way, includes payables also with respect to your ability to show cash generated in the business.
Your working capital, on the other hand, is really the value of our working capital accounts, i.e. receivables and inventory, and how they relate to your payables.
Financing solutions for Canadian business working capital are numerous.
12 SOLUTIONS FOR CASH FLOW AND CAPITAL
Cash flow and working capital solutions include:
Receivable Financing/ Securitization
Inventory Finance
Equipment Leasing
Supply Chain/PO finance
Bridge Loans
Canadian Chartered Bank Facilities
ABL Asset Based Lending
Royalty Financing
Tax Credit Monetization
Cash flow loans
Subordinated Debt
Government Business Loans Canada
Which of these solutions work best for your firm? Although sales generate cash it’s used to support your vendors, payroll, utilities, etc., and etc. ! Those sales however convert to receivables, and those can be easily monetized by all of the solutions we note above, with the exception of the working capital term loan.
DEBT VERSUS CASH FLOW SOLUTIONS
Term loans are debt, and if you don't necessarily want to take on more debt and interest expense its more often than not best to use financing that converts inventory, receivables, and purchase orders to cash.
However, business owners should note that if they can balance the debt versus equity equation a cash flow working capital term loan is valuable in financing some of the long term goals and strategies of the company that might include investments in sales staff and marketing, product or process development, as well as injecting permanent working capital into the company when other resources such as business lines of credit are tapped out. Cash flow typically is granted on the basis of your company's ability to demonstrate cash flow generating ability - and as such normally don't require collateral or strong emphasis on personal guarantees.
Typical terms for these loans are 3-5 years, so payments become manageable and many business owners are taking advantage of short term working capital loans that have arisen in the alternative financing marketplace.
DON'T FORGET THE ' MATCHING PRINCIPLE ' IN CANADIAN BUSINESS FINANCING
The matching principle is important in cash term loans, as you should strive to match the term of the loan with the nature of the return on the use of the capital. It would be very unwise to take on a short term loan to pay for a long term asset!
Oh and by the way, that sure beats putting more equity into your company or selling assets. (Selling non-performing assets or looking at a sale-leaseback is not necessarily a bad thing by the way). Putting cash back into the income statement via a leaseback on real estate or an owned asset is a time tested strategy.
RECOGNIZE THESE SIGNS OF CASH FLOW DOOM IN YOUR COMPANY?
Remember today’s motto though, don't run out of cash or your ability to access cash. The most serious signs of cash flow doom are usually quite obvious: serious losses, inability to access traditional financing, lack of assets to finance new cash flows.
Can we learn anything else from those confessions of a cash flow manager? Understanding the past sometimes helps, so knowing your historical peaks and valleys is a good thing, and your ability to plan and demonstrate future cash flow needs sure helps!
And the tools you'll need? Very basic: cash balance and aged receivables and payables. A look into future sales projections sure helps.
CONCLUSION
In summary, while stretching suppliers or bringing in new ownership and equity work, they aren’t desirable. Sales are good, in fact, they are great, but focus on financing solutions and management tools that convert working capital assets to cash. Understanding your cash flow statement is also key to business financing success - it's the 3rd part of your financial statements after the balance sheet and income statement, helping you to understand the route to positive cash flow. Technically its called the ' cash flow from financing activities ' statement.
Speak to a trusted, credible and experienced Canadian business financing advisor on your firm's ability to achieve the right type of positive cash flow financing to complement sales and .. hopefully, profits.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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