Working Capital Funding Working Capital Financing | 7 Park Avenue Financial

YOU WANT WORKING CAPITAL FINANCING AND WORKING CAPITAL FUNDING SOLUTIONS! 

SOURCES OF CASH FLOW FOR SMALL BUSINESS OWNERS

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        Financing & Cash flow are the biggest issues facing businesses today

   ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

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SUCCESSFULLY ACCESSING WORKING CAPITAL FINANCE SOLUTIONS IN CANADA 

Do we really even have to mention it?  A major CFO survey stated that 'Cash flow is Top Concern Priority ....'. When has working capital financing / steady cash flow,  and working capital funding in general ever been more important?

WORKING CAPITAL FINANCING FOR THE ENTREPRENEUR IN CANADA 

Let's take a look at the Canadian situation and how you can solve some of those working capital challenges that were reiterated concerns in the survey, which was done, by the way by TD. And by the way, putting 'surveys' aside, we'll offer some 'real world' solutions to some of the issues highlighted in the bank survey!

GETTING YOUR WORKING CAPITAL STRATEGIES IN PLACE 

Intensity? The survey actually used that word when Canadian business owners and financial managers described their necessary day to day attention to working capital management.  As a business owner, you have to look at your overall structure and ensure you can manage cash flow on a day to day basis - a top priority for many businesses.

The survey intimated that although you could cut costs to manage and conserve cash flow most Canadian business owners don’t feel that’s the optimal strategy, only 7% actually.

Access to working capital lenders  and working capital funding was a major concern by respondents. We are reminded of headlines that say things like ‘90% of all jobs aren’t advertised.

 WHAT ARE WORKING CAPITAL STRATEGIES  - FUNDING WORKING CAPITAL

Well, do you know what? When we sit down with clients we strongly feel that they often don’t understand that 90%of financing options aren’t generally known to Canadian businesses. Did you know there are hundreds of non-bank finance entities - not a  bank or credit union  - and all very unique in nature,  revolving credit facilities for financing receivables, inventory, purchase orders (yes, purchase orders!), tax credits (you can finance a tax credit? - YES, you can!).

 TYPES OF WORKING CAPITAL FINANCE  

Many smaller firms are accessing short term working capital loans, also known as merchant cash advances. This short-term business loan is expensive but easily accessible with periodic payments tailored to a business's needs.

Government small business loans are utilized by thousands of firms to finance equipment, leasehold improvements and real estate as opposed to financing working capital needs  - allowing a firm to use its internal cash flow for day-to-day business needs such as trade finance accounts payable / lease payments, etc.

The survey indicated that technology is by far the top area of planned capital investment, and you should be aware there are a number of solid capital and operating lease solutions that provide you with total flexibility in acquiring, and more importantly, using technology.

Alternately the Canadian lease financing industry is back on its feet and numerous solutions for equipment acquisition via leases, loans, bridge loans, etc. are available.

Want those real-world alternative financing solutions we talked about -  many firms can't access working capital finance from banks so they consider non-bank asset-based lines of credit as an alternative to a bank revolving credit facility/working capital line of credit,  or receivables discounting. Businesses pay interest only on the amount of facility that is drawn down per payment terms under the agreement as they offer their own regular customers payment terms.

Your cash flow is at risk if you aren’t properly managing your accounts receivable and financing it in a manner that suits your firm’s business model and cash conversion cycle. The ability to shorten the manufacturing and payment process in your company is key to a successful business model in managing the company's current assets on your balance sheet and maintaining a positive current ratio while funding current liabilities / short term obligations.

CONCLUSION - THE IMPORTANCE OF WORKING CAPITAL  FUNDING SOURCES FOR BUSINESS  

Are you looking to fund your business's investments in short term assets such as receivables, inventories, etc to get the liquidity you need to run your business on a day-to-day basis? The good news is there are many types of traditional and non-traditoinal financing that can be tailored to your unique business model as your company grows and matures.

You could, of course, stop your life and spend a lot of time investigating these solutions around working capital funding strategies. A better solution? Speak to  7 Park Avenue Financial,  a trusted, credible, and experienced business financing advisor to source  the working capital financing and working capital funding they need for short-term liquidity and long-term survival for small businesses

FAQ: FREQUENTLY ASKED QUESTIONS/ PEOPLE ALSO ASK /MORE INFORMATION  

 What is working capital financing? 

Working capital financing and funding is the ability of a company to borrow funds or monetize current assets to fund day-to-day operations for key business activities such as payroll, and product purchases. These funds are typically not used for long-term acquisition of assets.  If a firm has current liabilities in excess of current assets it reflects a  negative working capital position.  Many businesses access a line of credit - this credit line provides short-term working capital.

Good working capital management reflects overall liquidity and efficiency of operations.

What is a working capital revolver credit line? 

Working capital revolving facilities allow a company to borrow based on the level of accounts receivable and inventory on the balance sheet at any given time. These are secured via a non-bank asset-based line of credit and funds are drawn down consistently based on the level of sales and a/r and inventory.

Banks provide similar facilities via unsecured credit revolvers that are also typically tied to a personal guarantee of the owner/owners.

 What are the pros and cons of working capital financing solutions? 

There are significant advantages to cash flow financing solutions - Many solutions are lower cost and this type of business funding does not dilute owner equity. Many facilities allow a business to grow and expand with business needs as sales grow. Cash flow issues around seasonality or high growth can be managed with working capital finance solutions.

Issues that businesses should consider include potentially higher costs,  credit approval requirements, and the need to maintain ratios and covenants that are required in some forms of short-term funding. Businesses without proper financial statements and good business practices find it difficult to attract cash flow financing.

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