YOUR COMPANY IS LOOKING FOR SOLUTIONS FOR YOUR BUSINESS OPERATING CASH FLOW PROBLEM!
How To Improve Cash Flow Issues & Working Capital For Small Business
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses 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
"Stop watching opportunities slip away because of cash flow constraints – transform your business's financial future today."
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Cash Flow 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”
Cash Flow Solutions: Solving Problems
Here's to not losing your keys. We're talking about the keys to unlocking business operating cash flow and the solutions that come with that Canadian business financing challenge.
Cash flow problems should be identified as the obvious early warning sign of business failure!
We're big fans of confusion because, hopefully, it enhances our reputation of providing clarity around issues such as business cash flow difficulties!
That term often confuses many business owners and financial managers and impacts your ability to pay recurring bills and other business expenses as well as overhead costs / overhead expenses. Even issues such as revolving around customer churn can impact your financial plan.
TURN YOUR CASH FLOW CRISIS INTO BUSINESS SUCCESS
It's no fun facing a cash flow gap that threatens your day-to-day operations - Without the cash flow/working capital you need, you're faced with growth challenges, even payroll struggles. Talk to the 7 Park Avenue Financial team on cash flow solutions that are flexible and geared to your business needs.
DID YOU KNOW
- 82% of business failures are due to poor cash flow management
- 60% of Canadian small businesses face cash flow challenges
- Average payment delays increased 30% since 2020
- 40% improvement in cash flow with proper management systems
- 25% of businesses lose opportunities due to cash flow constraints
UNDERSTANDING CASH FLOW
What is cash flow?
Cash flow refers to the movement of money into and out of a business over a specific period. It’s a critical aspect of a company’s financial health, as it determines the ability to pay debts, invest in growth opportunities, and maintain daily operations.
Cash flow can be positive, negative, or neutral, depending on the balance between cash inflows and outflows.
Positive cash flow means more money is coming in than going out, which is ideal for sustaining and growing the business. On the other hand, negative cash flow indicates that a company is spending more than it earns, which can lead to financial troubles if not addressed promptly.
Is cash flow the same as profit?
No, cash flow and profit are not the same thing. Profit refers to the amount of money a business earns after deducting all its expenses from its revenue.
It’s an accounting measure that shows a business's financial success over a period. Cash flow, however, refers to the actual movement of money into and out of the business.
A company can be profitable on paper but still face cash flow problems if it has a large amount of accounts receivable or inventory that isn’t being converted into cash quickly enough.
For instance, you might have made significant sales this month, but if your customers haven’t paid yet, you won’t have the cash to cover your immediate expenses.
What does ‘cash is king’ mean?
The phrase “cash is king” underscores the importance of sufficient cash for a business to operate effectively.
Cash is the lifeblood of any business, enabling it to pay bills, invest in growth opportunities, and respond to unexpected expenses or revenue shortfalls. Even a profitable business may struggle to survive without a healthy cash flow.
This is why managing cash flow is crucial; it ensures that a business can meet its financial obligations and thrive. In essence, readily available cash provides the flexibility and security needed to navigate the ups and downs of business operations.
WHO IS LOOKING AT YOUR CASH FLOWS
The reality is that you will ultimately be judged by others, i.e. suppliers, bankers, lenders, lawyers, and other professionals, as to how well you manage and understand the business concept of your ability to fund your business and pay interest on funds borrowed on any outstanding balance.
That cash flow plan is one of the most essential documents in your business. A cash flow budget is a strategic tool for estimating cash receipts and expenditures for a specific period, highlighting its importance in identifying potential negative cash flow situations.
Where confusion reigns is that it is often intermingled with profits, income and revenue, which are all pure accounting terms.
CASH DOES NOT EQUAL PROFITS - SPOILER ALERT!
As we have pointed out in the past, cash does not, we repeat, does NOT equal profits in a business model,
The short example is that your firm probably has a payroll this week but, in fact, has not collected monies owing to you for sales you have made previously, perhaps a month or so ago.
WHAT DOES A CASH FLOW STATEMENT TELL YOU ABOUT YOUR BUSINESS?
As we have pointed out, although you have recognized that revenue, you have not been paid from existing customers.
The short comment… It’s pretty simple: You don’t pay bills with revenue; you just pay cash! Understanding the three parts of a business financial statement, the cash flow statement will help business owners understand the flow of funds in their business.
Cash flow projections are essential for forecasting a business's financial future, and regularly updating them is crucial for informed decision-making.
When the small business owner demonstrates true control over his business, he or she enhances his or her reputation with a lender, whether that is a banker, a commercial finance company, a lessor, etc.
Your ability to accept credit cards or online payments via your bank or accounting system nowadays is a funding bonus!
Collecting interest on late payments from clients is not the best way, and is a challenge as you wish to maintain goodwill and avoid financial problems with key customers.
30 days certainly is no longer the norm! Monitoring cash outflows is essential for understanding negative cash flow situations and managing expenditures effectively.
Sometimes, a nominal price increase in your products or services can cover additional financing charges to carry accounts receivable and inventory levels you require.
So, what keys can small businesses use to unlock their firm's financing power? And how much cash does their business need?
One way is to maximize the management of accounts payable and trade credit. Appropriately and effectively managing that time lag between receipt of goods and services and payment enhances operating cash flow. Naturally, you don’t want to abuse supplier credit.
Managing fixed assets properly is another key to unlocking working capital around your financial statements. Watch your fixed assets to sales ratio; you might even consider a sale-leaseback on unencumbered assets.
Inventory is a huge cash trap for which you need a great key. Monitor inventory performance and the amount of product you carry to ensure a good cash reserve.
THE KEY TO UNLOCKING CASH FLOW FORECAST POWER / MORE CASH FOR SMALL BUSINESS OWNERS
Lastly, and perhaps most importantly, the key to unlocking business funding power is in your receivables - when your customers pay! A good customer is hard to find!
HOW DO BUSINESSES SOLVE CASH FLOW MANAGEMENT PROBLEMS
Have a solid credit policy and ensure your A/R is financed properly, either through a bank account/business credit line, or third parties such as a commercial receivable finance company payment provider and invoice factoring.
That latter strategy can turn your company into an accurate cash flow machine if managed properly through proper analysis of your cash flow statements and a good cash flow forecast - your credit replenishes as you generate new sales!
To manage cash flow effectively, consider using Excel to forecast financials and implementing practical tools like accounting software.
The ability to invoice clients quickly through your accounting software is also a key funding advantage for your business - Money sooner is better than later!!
It is important to maintain realistic payment terms with key customers to allow clients to pay faster. Some small businesses may have to resort to a short-term solution, such as a working capital loan.
Net cash flow is a key figure representing a company's overall cash position and is significant in assessing financial health.
CASH FLOW FORECASTING
What is cash flow forecasting?
Cash flow forecasting predicts a company’s future cash inflows and outflows over a specific period.
It involves analyzing historical financial data, industry trends, and market conditions to estimate future cash flow. This practice is essential for effective cash flow management, as it helps businesses anticipate potential cash shortfalls and make informed decisions.
By forecasting cash flow, businesses can identify periods when they might face liquidity issues and take proactive measures to ensure they have sufficient cash.
This could involve adjusting operations, securing additional financing, or optimizing payment terms with suppliers and customers. In short, a well-prepared cash flow forecast is vital for maintaining a steady cash flow and avoiding cash flow problems.
KEY TAKEAWAYS
-
Revenue Pattern Analysis transforms business predictability.
-
Strategic timing maximizes supplier payment discounts
-
Automated collection systems dramatically reduce delays
-
Real-time cash flow monitoring prevents costly surprises
-
Seasonal adjustment strategies protect working capital
-
Cash flow budget estimates forecast cash receipts and expenditures, helping businesses anticipate negative cash flow situations
CONCLUSION - HOW TO SOLVE CASH FLOW PROBLEMS
Remember that you're in control of those keys to unlocking business operating cash flow for small businesses.
Financing solutions are also available to enhance those ' keys ' - Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor, about those cash flow solutions that might work for your firm.
FAQ
What makes business cash flow financing solutions different from traditional loans?
-
Flexible repayment structures
-
Revenue-based qualification
-
Faster approval process
-
Less documentation required
-
No fixed monthly payments
How can cash flow solutions improve my business operations?
-
Immediate access to working capital
-
Ability to seize bulk purchase discounts
-
Enhanced supplier relationships
-
Improved inventory management
-
Reduced financial stress
What types of businesses benefit most from cash flow solutions?
-
Seasonal operations
-
High-growth companies
-
B2B service providers
-
Retail operations
-
Manufacturing businesses
How do cash flow solutions adapt to business cycles?
How do businesses solve cash flow problems?
Companies can solve cash flow problems by preparing accurate cash flow forecasts - Many industries have seasonal business operations -
Seasonal businesses can improve cash flow management by monthly business budgeting and ensuring the firm has access to a line of credit. Invoicing quickly when products or services are delivered. The ability to stretch out payables while maintaining good vendor relations is key . Maintaining a focus on expense reduction and accepting online payments and credit cards where possible is important.
