YOUR COMPANY IS LOOKING FOR SOLUTIONS FOR A CASH FLOW PROBLEM OR CHALLENGE!
Mastering Cash Flow Solutions
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
Unlock your business's potential with solutions that transform cash flow challenges into opportunities for growth!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Cash Flow Solutions that solve the issue of working capital and cash flow management – Save time and focus on profits and business growth opportunities
Introduction
Your business cash flow problem can often be avoided or fixed by examining your balance sheet and implementing traditional or alternative solutions that address that problem and challenge around the need to manage cash flow.
Achieving Business cash flow is a company lifeline and provides a strategic advantage in financial health. Secure the capital necessary for day-to-day operations, growth, and expansion in today's competitive business environment.
Understanding the Balance Sheet
Canadian business owners and financial managers always look at their income statement, not the balance sheet or the always-forgotten cash flow statement! ( The most important one by the way )
We suppose it’s the entrepreneur in them that drives that focus - generating more sales and lowering or maintaining their costs. That sales number, in effect, becomes their 'business scorecard', which seems easily measured and facilitates compensation and egos!
But when your business suddenly faces a cash flow problem, those assets on the balance sheet will often be your only savior, if managed and financed correctly. You will win at the cash flow game when you understand how to manage and scorecard those balance sheet assets.
The Order of Assets and Their Importance
Getting converted! That's what balance sheet finance is about - turning those assets in a manner that generates cash flow and managing and arranging your liabilities so that they don't consume that cash.
In reality, those assets on the left-hand side of the balance have already arranged themselves in the proper order. By that, we mean they are listed in the same order, which always reflects their ability to be liquidated for working capital. Of course, that order is cash, inventory, receivables, and equipment. That's the pecking order of cash we could say.
Key Asset Types on Your Balance Sheet
Cash is cash on your balance sheet—not exactly a prolific statement, and most businesses in the Canadian small and mid sectors don't typically show a lot of cash on the balance sheet. It's, therefore, time to move on to the A/R—here, your credit extension to clients becomes critical in the entire process.
Inventory and equipment make up the balance of the balance sheet, with inventory varying in nature - it might be raw materials, work your firm has in the process, or goods ready to ship.
Financing Solutions for Your Balance Sheet
If you are fortunate enough to have a balance sheet and income statement that meets a Canadian chartered bank approval, your saviour in a business cash flow problem is a bank line of credit. The bank secures your assets, and you borrow against them based on agreed-upon borrowing margins.
But what if your firm can't finance balance sheet assets? That’s when the overall financial health of your company becomes critical - in effect, The patient is at risk!
Tools and Ratios for Effective Management
Cash flow challenges become readily apparent when sales are growing, and receivables and inventory are building. As your company ages, some of that A/R and inventory become uncollectable or unsellable.
The business owner has a tool or tools to measure cash flow and operating performance. We have always called them 'relationships' - the textbook calls them 'ratios'. The relationship between certain balance sheet items allows you to keep a score in business. Simple tools such as day's sales outstanding, inventory turnover, and debt to equity are great scorecards for your business.
Alternative Financing Solutions
In Canada, you have a solid handful of solutions for financing your balance sheet and preventing those cash flow problems that can bring the patient to near-death mode if not appropriately managed.
Those solutions include bank facilities, and when they can't be attained, other alternative finance solutions include :
Receivable financing
Inventory finance
Short term working capital loans / merchant cash advances
Asset-based non-bank lines of credit
Tax credit monetization
Supply chain finance - aka purchase order financing
Key Takeaways
Focusing on cash flow management, short-term financing, invoice financing, business lines of credit, and expense reduction strategies can give businesses 80% of the foundational knowledge required for effective cash flow optimization.
Efficient cash flow management ensures that a business understands its financial inflows and outflows, enhancing decision-making capabilities.
Short-term financing and invoice financing offer immediate solutions to cash shortages to manage cash flow needs, enabling businesses to continue operations without interruption.
Access to a business line of credit offers flexible funding that can be used as needed, ensuring that growth opportunities are never missed due to lack of funds.
Lastly, implementing expense reduction strategies and cash flow management strategies can significantly improve a company's financial health by freeing up more cash for investment in growth opportunities.
Conclusion
Don't focus solely on the income statement - properly exploit and manage that balance sheet!
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor on cash flow problem solutions.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
How do business cash flow financing solutions benefit companies struggling with liquidity?
They provide essential strategies to manage common cash flow problems and improve liquidity, ensuring businesses have the funds for day-to-day operations and growth opportunities via positive cash flow.
What types of financing are available to improve my business's cash flow?
Options include short-term loans, invoice financing, lines of credit, and more, each designed to meet different needs and financial situations with a focus on healthy cash flow.
Can managing expenses directly impact my business’s cash flow?
Yes, effective expense management and preparing projections around incoming cash flows can significantly improve cash flow by reducing unnecessary outflows and reallocating resources to more critical business areas around the cash flow budget.
How does invoice financing work as a cash-flow solution?
Invoice financing allows businesses to receive advance payments on outstanding invoices, providing immediate liquidity in your business operations to cover expenses in cash flow issues without waiting for customer payments.
Why is a business line of credit considered a flexible cash flow solution?
A business line of credit offers access to funds up to a certain limit. The business can draw upon this when it determines how much cash is needed, making it an adaptable solution for managing net cash flow fluctuations.
What is the difference between cash flow and profit?
Cash flow refers to the actual movement of money/cash inflows in and out of business, indicating its liquidity. At the same time, profit measures the financial gain after all expenses have been subtracted from revenue, reflecting the company's profitability over a period.
What role does financial forecasting play in cash flow management?
Forecasting helps businesses predict future income and expenses, enabling proactive cash flow management. It aids in planning for growth, identifying potential shortfalls in net cash flows, and making informed financial decisions.
Can technology improve cash flow management?
Modern financial software and technologies provide real-time data analysis, automate billing and invoicing processes, and offer insights into cash flow trends, significantly improving cash flow management efficiency.
What is the impact of emergency fund planning on business continuity?
Emergency fund planning based on a good cash flow forecast and budget ensures a business has reserves to cover unexpected expenses or downturns. This reduces the need for last-minute financing solutions and contributes to the business's overall stability and continuity to cover business expenses.
How does improving cash flow contribute to a business's growth?
Improving cash flow increases the available capital for investment in growth opportunities, such as expanding operations, entering new markets, or developing new products, thereby driving business expansion and success.
What are some common pitfalls in cash flow management?
Common pitfalls include failing to monitor cash flow regularly when in a negative cash flow position, underestimating the importance of timely invoicing and collections, overlooking the need for a cash reserve, and not focusing on seasonal fluctuations in business.
How can a business effectively balance its short-term and long-term financing needs?
A company can do this by using short-term solutions like invoice financing or lines of credit for immediate needs while securing long-term loans for larger investments. Regular financial planning and analysis of the firms cash flow statements are crucial to determining the optimal financing options mix.
