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Financing & Cash flow are the biggest issues facing business today
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
Turnaround financing in Canada is a restructuring of your finance arrangements. This might come out of a fall in fortunes or even a crisis of sorts. Knowing what steps to take at that time is key, including the expert help of a specialist. Let's dig in.
Naturally, the goal of any business owner / financial manager in a turnaround situation is to ensure stability in the business while at the same time ensuring there are possibilities for survival, and yes... growth again. Unfortunately, at this time, the confidence of any existing lenders is at an all-time low and must be dealt with.
One basic formula for such a change in finances is to assess your funding possibilities from two sources - internal, plus of course, focusing on new external lenders who, more often than not at this point, will be focusing on the actual value of your business assets. In certain cases, this might be a prudent time to consider the sale of certain assets, or, if they are critical to the business and unencumbered, a sale-leaseback might be appropriate.
While equity capital from owners or an outside investor might also do the trick, your business none the less will still no doubt require some fundamental changes. Suffice to say that owner or outside equity chances are also at an all-time low during this transition period.
The issue of personal guarantees is always a thorny one with the owners of the business. Whether guarantees were in place prior, it's safe to say they will probably be a part of any new financing to some or all extent.
The question any asset or non-asset-based lender will ask during this period is pretty simple. You cannot ' PROCEED TO GO ‘without some solid proof of the company's ability to generate or have cash in the future. One of the key areas lenders will also focus on is to ensure all arrangements with CRA / REVENUE CANADA are brought up to date, have a pay-down arrangement in place, or most likely, will be taken out with new financing.
If you thought a CASH FLOW FORECAST was a textbook item in the past, welcome to the real world; at this point, it's key to present a realistic sales and cash flow forecast for the business. This should be utterly realistic at this point and reflect the real sales and cash inflows and outflows of the business.
The combination of a realistic turnaround plan, your cash flow forecast, and how you are going to handle and refinance existing assets helps guarantee a successful turnaround. Many types of financing can address your business's turnaround - they include Asset-based lending, receivable financing, equipment/sale-leaseback scenarios, etc.
If you're looking to 'spring forward' and not look back on a successful restructuring, seek out and speak to a specialist in this area, a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.
Stan Prokop
