YOUR COMPANY IS LOOKING FOR CASH FLOW FINANCING!
SHORT TERM WORKING CAPITAL FOR CANADIAN BUSINESS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the most significant issues facing business today.
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT US
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
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Cash Flow Financing 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”
WORKING CAPITAL FINANCING SOLUTIONS
More often than not, business cash flow is' top of mind ' when solving the working capital conundrum for Canadian business owners and managers.
Typically, clients we meet want to reverse the shortage and learn about other options. Let's examine the issue.
The Working Capital Crisis: Why Canadian Businesses Are Struggling and How to Break Free
Running out of working capital can paralyze business growth. Every day, Canadian entrepreneurs watch opportunities slip away because they lack the funds for inventory, payroll, or expansion.
Let the 7 Park Avenue Financial team show you how strategic working capital financing solutions exist that can transform your cash flow challenges into opportunities for growth.
3 Uncommon Takes:
- Working capital financing should be secured before it's needed, not during a crisis
- Traditional bank financing isn't always the best solution - alternative lenders often provide more flexibility
- Seasonal businesses should structure working capital financing around their peak seasons, not annual averages
Overcoming the Challenge of Self-Financing in a Growing Business
All business owners / financial managers know that moving a business forward is challenging.
Understanding cash flow management is crucial as it helps comprehend how money circulates within a business.
Factors affecting cash flow include if and how your sales revenues are growing, what financing your business can bear/attract, and the inability to address financial distress at certain times. Of course, the perfect world lets you ‘self-finance operations and borrow at low rates only when needed.
The bottom line is that it’s rarely a perfect world.
Even managing short-term liabilities such as accounts payable is key to long-term success in managing financial obligations as reflected on the balance sheet.
UNDERSTANDING WORKING CAPITAL
What is working capital?
Working capital is the lifeblood of any business, representing the funds necessary to manage day-to-day operations.
Working capital is a critical measure of a company’s liquidity and overall financial health. Essentially, it is the difference between a company’s current assets and current liabilities.
Positive working capital indicates that a business can cover its short-term obligations and invest in growth opportunities. Conversely, negative working capital suggests potential financial difficulties, making it challenging to pay creditors or avoid bankruptcy.
Maintaining a healthy working capital balance is crucial for sustaining business operations and fostering growth.
Working capital formula
The working capital formula is straightforward yet powerful: Working Capital = Current Assets – Current Liabilities. This calculation provides a snapshot of a company’s short-term financial health. Current assets include cash, accounts receivable, inventory, and other assets that can be converted into cash within a year. On the other hand, current liabilities encompass obligations such as accounts payable, wages, taxes payable, and the current portion of long-term debt due within one year. By regularly monitoring this formula, businesses can ensure they have sufficient resources to meet their short-term obligations and invest in future growth.
Components of working capital
Working capital comprises two main elements: current assets and current liabilities. Current assets are economic benefits a company expects to receive within 12 months, such as cash, accounts receivable, and inventory.
These assets are crucial for funding daily operations and supporting business growth. Current liabilities, on the other hand, represent all debts a company owes or will owe within the next 12 months. This includes accounts payable, short-term debt payments, and the current portion of deferred revenue.
Understanding and managing these components effectively is essential for maintaining a healthy working capital balance and ensuring the smooth operation of the business.
WHEN SHOULD A BUSINESS ACCESS EXTERNAL CAPITAL
So, how does the owner/manager determine when and how to access working capital solutions? A cash flow loan can be a short-term solution for increasing working capital without compromising the company's financial health.
Remember that managing and accessing capital forces your behaviour regarding investing in new assets, growth strategies, etc.
Individual clients we meet have an even more significant challenge - addressing export markets and non-North American clients. More often than not, traditional and alternative lenders insist on things like credit insurance, letters of credit, etc.
These financing solutions support business growth, manage cash flow, and ensure financial stability.
HERE'S A RECAP OF CANADIAN BUSINESS FINANCING SOLUTIONS, INCLUDING WORKING CAPITAL LOANS
Interested in a recap of your actual business cash flow solutions in Canada? They include:
A/R Financing / Invoice financing / Accounts Receivable Funding Solutions
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
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance
Working Capital long-term loans
Securitization
These financing solutions support business growth, manage cash flow, and ensure financial stability.
WHAT ARE 4 WAYS TO ACCESS BUSINESS CASH FLOW, INCLUDING ACCOUNTS RECEIVABLE?
Any business financing solution you undertake should focus on how it will either operate or grow the business.
Understanding past and projected cash flows is crucial for making informed financial decisions regarding investments in long-term assets.
You are only going to access incoming cash from the following methods:
Generating sales and collecting accounts receivables - Managing current assets and current liabilities
Borrowing
Financing Assets
Selling Assets
We note that selling assets is rarely the optimal owner strategy, but refinancing them using techniques such as the sale-leaseback option is a reliable approach.
Remember also that borrowing involves taking on debt, so managing and monetizing existing assets is, more often than not, the way to run/grow your business.
4 EFFECTIVE WAYS TO MANAGE YOUR BUSINESS CASH FLOW MANAGEMENT
All too often, clients we meet and talk to are flummoxed by the fact that sales and (paper/accounting) profits are significant… so they wonder why they are going broke!
Here are rules to live by:
Maintaining a cash flow forecast. The working capital ratio is a key financial metric that helps businesses assess their liquidity and ability to meet short-term obligations, determining whether a company has sufficient working capital to operate effectively.
Oversee term debt obligations.
Using short term cash flow financing only when needed
Establishing bank or non-bank credit lines
STARTUP FINANCING IS A CHALLENGE - TALK TO 7 PARK AVENUE FINANCIAL ABOUT FINANCING YOUR START UP
Startup or early-stage firms will also find it more challenging to arrange cash flow financing.
The company's current assets are essential in determining its financial health and evaluating liquidity, as they are contrasted with current liabilities to assess operational efficiency. Firms that are primarily inventory-based also face that challenge.
CASE STUDY
A Canadian mid-sized marine equipment supplier in Halifax faced critical seasonal challenges that threatened their growth potential.
During peak shipping seasons (April to September), they struggled to maintain adequate inventory levels while managing extended payment terms from their commercial clients. With $5M in annual revenue, they found themselves turning away nearly $2M in potential orders due to inventory constraints.
Key Problems:
- 45-60-day payment terms from commercial clients
- Peak season inventory requirements of $1.2M
- Supplier demands for payments within 30 days
- Limited traditional bank financing due to the seasonal nature
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The Working Capital Solution: After careful analysis the company secured a flexible working capital financing package that included:
- $800,000 revolving inventory financing line
- $500,000 accounts receivable financing facility
- Seasonal adjustment provisions allowing 25% higher limits during peak months
Immediate Benefits:
- Inventory Management
- Increased stock levels by 40% during peak season
- Reduced stockouts by 85%
- Secured volume discounts from suppliers
- Implemented just-in-time ordering for specialty items
- Cash Flow Improvements
- Reduced cash conversion cycle from 75 to 35 days
- Eliminated early payment discounts to customers
- Captured 4% supplier discounts through early payments
- Maintained consistent positive cash flow throughout the year
- Operational Efficiency
- Hired additional seasonal staff earlier in the season
- Invested in inventory management software
- Improved warehouse utilization by 30%
- Reduced emergency shipping costs by 60%
Financial Impact:
- Revenue increased 65% during peak season
- Gross margins improved by 7% through volume discounts
- Operating costs decreased by 12% relative to revenue
- Market share grew by 25% within 12 months
Long-term Strategic Benefits:
- Supplier Relationships
- Negotiated better terms with key suppliers
- Became the preferred distributor for two major manufacturers
- Secured exclusive territorial rights for premium product lines
- Reduced lead times by 40%
- Customer Relationships
- Ability to support larger customer orders
- Reduced customer turnover by 35%
- Increased average order size by 45%
- Expanded product range by 30%
KEY TAKEAWAYS
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Understanding the cash conversion cycle drives optimal financing decisions
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Effective receivables management maximizes available working capital
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Strategic inventory control reduces financing needs substantially
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The timing of financing matters more than the total amount available
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Maintaining strong banking relationships enables better terms
CONCLUSION
A small business will always find it challenging to manage short-term obligations, and the amount of working capital needed will always be top of mind for the business owner.
If you don’t like your current working capital financing situation, our bottom line is to reverse that feeling.
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist you with your business capital needs.
FAQ
What documentation do I need for working capital financing? Key requirements include:
How much working capital financing can my business qualify for? Qualification amounts typically range from:
How does working capital financing improve business growth?
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Enables quick response to market opportunities
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Provides funds for inventory expansion
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Less focus on tangible assets
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Supports hiring during growth phases
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Allows for bulk purchase discounts
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Maintains operational flexibility
What makes working capital financing better than traditional loans?
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Faster approval process
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More flexible terms
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No fixed monthly payments with a line of credit solution
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Scales with business growth
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Lower documentation requirements
Can working capital financing help during slow seasons?
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Maintains steady cash flow
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Covers fixed expenses
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Enables inventory preparation
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Supports marketing initiatives
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Preserves business momentum
What exactly is working capital financing?
Working capital financing provides businesses with funds to cover day-to-day operational expenses and short-term financial obligations.
How long does approval take?
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Alternative lenders: 1-3 days
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Traditional banks / bank loans : 2-4 weeks
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Online lenders: Same day possible
How does working capital financing differ from traditional loans?
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Revolving credit structure to overcome cash flow gaps
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Less focus on business owner's personal credit and balance sheet fixed assets
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Based on business performance
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Flexible repayment options
