YOUR COMPANY IS LOOKING FOR WORKING CAPITAL BUSINESS FINANCE FUNDING!
Boost Your Business Operations with Tailored Working Capital Financing
Business Financing Solutions You Are Looking For!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
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
"Exploring the various types of working capital finance solutions is essential for any business looking to sustain and grow in a competitive landscape."
"Need cash flow solutions? Discover how the right working capital financing can transform your business today!"
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer different types of Working Capital Financing solutions that solve the issue of Cash Flow! – Save time and focus on profits and business opportunities
Introduction
Working capital financing comes from your firm’s requirement to meet cash needs. Of course, this is not the type of business finance and funding you need to acquire assets such as equipment to manage your business and fulfill operating capital needs.
Understanding the Types of Working Capital Funding Options is a cornerstone for maintaining smooth operations and fostering growth. Talk to the 7 Park Avenue Financial team to ensure your business stays ahead of its financial needs and thrives in a challenging economy.
Understanding Your Cash Flow Needs
How can the Canadian owner and business manager determine the amount of cash flow needed and the best way to solve the problem—i.e., a solution?
Your Trading Cycle
The way to do that is to spend some time on what's known as your 'trading cycle'... aka 'cash flow cycle'. When new clients of 7 Park Avenue Financial ask, 'How is working capital finance?', the answer is a lot more basic than they are expecting - simply that it is managing payables and ensuring asset turnover in A/R and inventory is commensurate with sales growth - and if not, identifying the financial solutions that will address the gap! In some cases, more permanent working capital, business credit lines, or short-term working capital loans will address 'the fix'.
It's all about understanding how your payables arise and how the products and services you purchase translate into either inventory or directly to sales. And here’s the secret: The speed, or total time, it takes for all that to happen determines your cash flow and working capital funding needs.
Calculating Your Cash Needs
To make the actual calculation work, you need to look at turnover in your receivables, inventories (if applicable), and payables. Payables are 'cash outflow,' but they are still vital in our calculation.
Most business owners or financial managers intuitively know how long it takes them to collect their sales receivables. The number of days of sales you have tied up in receivables is calculated by taking your average A/R balance and dividing it by your average daily sales. Hopefully, every business owner has quick access to that data. If he or she doesn't, we suggest... there's a problem!
Not every company has inventory, but if your firm does, the additional product you have to carry translates into extra cash needed.
Remember also that those two asset categories, receivables and inventory, are your primary borrowing collateral in working capital funding. Also, note that typically, with a standard bank arrangement, you can typically borrow 75% of your total receivables and (hopefully) some type of percentage against your inventory.
Financing Options for Working Capital
One alternative to traditional bank financing in Canada is asset-based lending. It's important to note that typical A/R advances are 90% of total A/R and a healthy borrowing base against inventory. (Every company and industry is a bit different when it comes to inventories.)
Addressing Cash Flow Challenges
It's true in Canadian business that if your business grows, it needs money. And don't forget that many businesses also have to juggle the seasonality of sales and buildups in A/R and inventory. Think of it this way—Receivables Eat Cash! That's one reason why high-growth companies that seem to be making money have huge negative cash flow problems that need to be addressed.
How does the Canadian business owner address these challenges?
The solutions are readily available:
Conclusion
Whether you need a business loan to fund startups or if your firm is growing or considering acquisitions, Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor.
When it comes to determining both what your working capital and business finance funding need is let our team help.
FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
How does working capital financing benefit a small business?
Working capital financing helps small businesses maintain smooth operations and support growth by ensuring there's always enough cash to cover short-term obligations.
What type of working capital finance is best for startups?
Startups often benefit from short-term loans and accounts receivable financing, providing quick access to cash without needing extensive credit history. Government-guaranteed small business loans are widely used by Canadian startups and early-stage businesses.
Can inventory be used to secure working capital financing?
Inventory financing allows businesses to use their stock as loan collateral, freeing up cash flow without selling assets.
How quickly can a business access funds through factoring?
Factoring provides businesses with immediate access to cash by selling their unpaid invoices at a discount to a third party.
What's the difference between asset-based lending and traditional loans?
Asset-based lending relies on the value of assets like inventory and receivables for loan collateral, offering more flexibility than traditional loans based on creditworthiness and traditional cash flow analysis
What is trade credit management?
It involves negotiating payment terms with suppliers to optimize cash flow and extend the time to pay for goods and services. Managing trade credit also includes validating customers' financial stability and ability to pay to terms.
How do merchant cash advances work?
Businesses receive an upfront cash sum in exchange for a percentage of future sales in a merchant cash advance, providing a flexible financing option tied to revenue.
Are government loans a good option for working capital financing?
Government SBL loans under the Canada Small Business Financing Program offer favourable terms for small businesses, making them a solid choice for those who qualify.
How do bank overdraft facilities function as working capital financing?
Bank overdrafts allow businesses to temporarily exceed their account balance, providing immediate access to funds for short-term needs. Canadian banks offer the lowest interest rates for financing.
What role does credit score play in securing working capital financing?
A good credit score can significantly improve a business's chances of securing favourable financing terms, though some options focus more on assets or sales volume.
How should a business choose the right type of working capital financing?
Businesses should consider their cash flow cycle, the value of their assets, and their financing needs to select the most appropriate working capital solution.
