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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
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"Business opportunities are like buses; there’s always another one coming." – Richard Branson
Struggling to meet everyday financial obligations? Discover how working capital financing can be the game-changer your business needs.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Working Capital Financing and cash flow 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 in Canada
Working capital cash flow financing challenges. Create huge ‘ Creativity Deficits ‘ in the minds of Canadian business owners and financial managers.
They tell us they are constantly looking for a finance solution without an ‘ expiry date ‘! Maintaining sufficient working capital is crucial for effective business operations and growth, as it allows companies to cover short-term obligations and fund operations without incurring debt.
We’re happy to share some of those solutions. Let’s dig in.
THE CASH CHALLENGE OF SMALL BUSINESSES IN CANADA
If you think when you’re watching the business news that only large corporations are addressing cash flow issues, imagine what the SME Commercial companies in Canada must address.
How does the business conserve cash and arrange financing that is ‘ evergreen ‘ in nature - allowing you to utilize assets and sales to cash your operating and growth needs while ensuring adequate working capital to manage day-to-day business operations and financial obligations?
UNDERSTANDING DIFFERENCES IN WORKING CAPITAL AND CASH FLOW IS KEY
We have found that business people often confuse working capital and cash flow.
Your day-to-day working capital is made up of your investment in A/R and inventory, and at the same time, it recognizes accounts payable. Effective working capital management is crucial for optimizing cash flow and meeting short-term liabilities. Poor payables management often destroys key supplier relationships.
It’s important to use your cash flow for the right types of financing. For assets with a longer economic life, you should utilize equipment leases.
CONSIDER ALL FORM OF TRADITIONAL AND ALTERNATIVE FINANCING IN CANADA - WHICH ONES SUIT YOUR NEEDS
Don’t also forget that existing assets can be refinanced via sale-leaseback strategies, bridge loans, or refinancing of any of your company’s commercial real estate - even 2nd mortgages can bring additional capital into your business.
Secured working capital loans require collateral and are an option for companies with valuable assets. Government-guaranteed business loans can help finance leasehold improvements and fixed asset needs. Rates and terms are excellent, commensurate with the same financing the ‘ big boys ‘ access.
THE IMPORTANCE OF A BUSINESS CREDIT LINE OF CREDIT
A commercial business credit line is any business's ultimate short-term financing tool. The working capital ratio is a key metric for assessing a company's liquidity and ability to meet short-term obligations by comparing its current assets to current liabilities.
Banks do that best and at the lowest cost. Not every business qualifies with demanding criteria such as high owner net worth, personal guarantees, and debt and cash flow covenants that meet bank standards.
While banks have the lowest cost of capital and ample capital, not everyone qualifies.
WHAT TO DO WHEN THE BANK SAYS NO!
What is the solution for not qualifying at the bank? The good news is that multiple sources of short-term financing exist: A merchant cash advance is a quick, unsecured financing option for small and medium-sized businesses.
Non-bank asset-based lines of credit
Inventory financing
Refundable tax credit finance loans ( SR&ED Credits )
WHAT IS THE BEST FORM OF SHORT TERM ALTERNATIVE FINANCING
A/R Financing (We always recommend CONFIDENTIAL RECEIVABLE FINANCING): Here, you bill and collect your receivables without notifying suppliers, clients, etc.
Unlike traditional bank loans, which often involve lengthy application processes and extensive paperwork, this method provides faster access to funds. You control cash needs and flow.
WORKING CAPITAL TERM LOANS INJECT PERMANENT WORKING CAPITAL INTO YOUR BUSINESS
Remember also that a company can inject ‘permanent working capital’ via a working capital term loan.
It’s simply a cash flow with fixed repayment terms. However, that solution brings debt onto the balance sheet and is very different from ‘monetizing’ the company's current assets, such as accounts receivable, inventory, and equipment.
Naturally, bank and working capital term lenders also like to see healthy owner capital injections—which, our clients tell us, is not always possible!
The two main criteria for working capital loans are a good cash flow ratio and reasonable debt/equity.
We’re always amazed at business owners or their managers running significant businesses without proper planning using things such as a simple cash flow forecast.
One famous saying tells us that ‘revenue is vanity, profit is sanity, but cash flow is king’!
STICK TO ASSET TURNOVER FUNDAMENTALS!
Remember that true cash flow success is not just access to the financing solutions we've mentioned—you must also turn inventories and grant prudent credit.
KEY TAKEAWAYS
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Cash Flow Optimization: Maximizing available cash for daily operations with strategic financing.
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Liquidity Management: Ensuring sufficient funds for obligations and opportunities.
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Flexible Financing Options: Identifying various loan types like lines of credit and invoice factoring.
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Risk Mitigation: Addressing financial risks through planned working capital solutions.
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Operational Efficiency: Streamlining processes to make the most of available capital.
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Working Capital Funding: Providing businesses with fast access to financial resources to address short-term cash flow needs, enhance operational flexibility, and support growth initiatives.
CONCLUSION
Those basics will allow you to foresee potential ' bulges' in cash flow needs and have better negotiating leverage with your bank or a commercial finance firm.
Regardless of size or industry, every business relies on working capital financing to stay competitive and meet daily operational expenses.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can put you on track to permanent solutions to Canadian business financing challenges.
FAQ
What is working capital financing?
It provides businesses with the funds needed for day-to-day operations, helping them manage expenses, payroll, and growth opportunities.
How does working capital financing work?
A working capital loan or asset monetization allows businesses to borrow against current assets, such as invoices or inventory, ensuring immediate access to cash for ongoing needs. Lenders often consider a company's assets as security when providing these funds.
What are common types of working capital finance solutions?
Popular options include short-term loans, lines of credit, invoice financing, and trade credit, each tailored to specific business needs.
Why is working capital financing important?
It supports operational liquidity, enabling businesses to maintain smooth operations, handle unexpected costs, meet financial obligations, and invest in growth.
How can I qualify for a working capital finance solution?
Eligibility depends on factors like credit history, cash flow, and existing assets. Lenders assess these to determine loan approval and terms for term loans or a revolving credit facility.
What is the difference between working capital and fixed capital?
Working capital covers daily operational costs, while fixed capital funds long-term investments like machinery or real estate. Fixed assets, such as equipment and buildings, are often used as collateral for borrowing through asset refinancing, providing security to lenders.
How can I improve my business’s working capital?
Focus on efficient invoicing, managing receivables, controlling inventory, and negotiating better supplier payment terms.
What are the risks of not having enough working capital?
Insufficient working capital can lead to cash flow problems, missed payments, and an inability to take advantage of growth opportunities.
How does seasonal business affect working capital needs?
Seasonal businesses may require additional working capital during peak periods to manage higher expenses and inventory needs.
What are my alternative financing options if I don’t qualify for traditional working capital loans?
If traditional options are not viable, consider invoice factoring /invoice finance, merchant cash advances, or crowdfunding. Secured working capital loans are also available.
What factors should I consider when choosing a working capital financing option?
Evaluate your cash flow needs, repayment ability, loan terms, and flexibility to select a financing solution that aligns with your business goals. For instance, a working capital loan can be ideal for financing operational expenses without restrictions, ensuring smooth business operations during cash flow shortages or expanding into new regions.
How quickly can I access funds through working capital financing?
Approval times vary, but some options, like invoice financing and lines of credit, can provide funds within days.
Can working capital financing be used for growth initiatives?
Many businesses use it to cover operational costs, expand services, increase inventory, and hire. Effective working capital management is crucial in these scenarios to optimize cash flow and meet short-term obligations, ensuring liquidity for daily operations and supporting growth initiatives.
ABOUT 7 PARK AVENUE FINANCIAL
7 Park Avenue Financial originates traditional and alternative financing and asset-based financial services providers that offer lease financing, cash flow and working capital financing, and business acquisition loans.
The company works closely with clients to develop key business strategies based on their unique needs. The company is committed to providing the highest level of customer service and innovation to help businesses succeed.
Combining our experience and solutions, we help our clients achieve profitable cash flow and debt financing and streamline the process with a full range of credit offerings.
