YOUR COMPANY IS LOOKING FOR THE RIGHT
WORKING CAPITAL SOLUTIONS!
THE ASSET BASED LENDING SOLUTION TO BUSINESS CAPITAL
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
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"The most important word in the world of money is cash flow. The second most important word is leverage." - Robert Kiyosaki.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Cash flow solutions 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”
Business Cash Flow Solutions
Cash flow finance solutions are all about transforming your sales revenue into cash flow for your company, which is crucial for sustaining business operations.
Sometimes, it’s easy, but more often than not… it isn’t. Various forms of asset financing are available to close cash flow gaps - they come with different costs, structures, and implications. Let’s dig in.
WHAT IS THE DIFFERENCE BETWEEN WORKING CAPITAL AND CASH FLOW
One of the things that business owners don’t often recognize is the need to take a hard look at the difference between working capital and a business's cash flow.
What? There’s a difference? There sure is, we tell our clients. The textbook situation occurs when your sales are growing, things are great, your accountant tells you that you’re making a profit…, and the only issue is that you feel you’re constantly in a cash flow crisis around unexpected expenses and business obligations.
WHAT IS THE CASH CONVERSION CYCLE IN CASH FLOW MANAGEMENT?
The best way to view it is to view cash flow as funds generated at specific times.
Understanding the cash conversion cycle is essential for creating an accurate cash flow forecast, which helps in anticipating potential financial issues. It relates directly to what we call the ‘ cash flow conversion cycle, ‘ which simply tracks the time it takes for money to flow through your business… and end up in the bank.
PROFITS DO NOT EQUAL CASH
The profits you show on your income statement rarely approximate the cash you have in the bank.
How does the business address financing the working capital accounts: receivables, inventory, and work in process? Numerous solutions are available. A few bring new debt on the balance sheet, which often isn’t desirable (for example - a working capital term loan).
The only issue is that you feel you’re constantly in a cash flow crisis, one of the typical cash flow problems businesses face.
HERE ARE CANADIAN BUSINESS FINANCING SOLUTIONS YOU CAN ACCESS TODAY AT 7 PARK AVENUE FINANCIAL
The other solutions which typically ‘monetize’ your working capital accounts simply cash flow your assets - into capital… today.
Effective management of cash outflows is crucial to ensure that your business maintains a positive cash flow. What are those solutions to borrowing money?
They typically include:
Canadian chartered bank lines of credit
Non-bank asset-based lines of credit
Inventory Finance
Receivable finance
Tax Credit Monetization (Financing your SR&ED claim)
Working Capital term loan
Government Loans
Saas Financing
Unsecured Cash Flow Loan
Purchase Order Financing
Sale-leaseback of owned assets
WHAT IS THE BANK CRITERIA FOR BUSINESS CASH FLOW FINANCING
Certain cash flow finance solutions require traditional credit criteria, which are essential for assessing a company's financial health. For instance, banks insist on and require clean, strong balance sheets, profits, and solid historical cash flow.
Thousands of business owners and financial managers can’t meet these criteria, so other solutions are still relatively easily attainable - they often come at a higher cost but still provide all the capital you need.
THE NON BANK ASSET-BASED BUSINESS CREDIT LINE
An example - The non-bank asset-based line of credit. It provides a revolving credit facility that monetizes your A/R, inventory and equipment into one business line of credit.
Understanding net cash flow is crucial for evaluating the effectiveness of asset-based credit lines in improving your business's liquidity. While often 2-3 times more expensive than current low bank rates it’s still a solid method of achieving cash flow finance.
KEY TAKEAWAYS
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Working capital management forms the foundation of effective cash flow solutions.
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Accurate forecasting enables businesses to anticipate and address potential cash shortages.
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Optimizing accounts receivable processes accelerates cash inflows and reduces outstanding balances.
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Invoice factoring provides immediate access to funds tied up in unpaid invoices.
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Supply chain finance improves relationships with suppliers while extending payment terms.
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Implementing robust treasury management systems and good cash flow projections streamlines financial operations and enhances visibility.
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Utilizing dynamic discounting incentivizes early payments and strengthens supplier relationships.
CONCLUSION
We mentioned already that profits and assets don’t equal cash, but having positive cash flow is essential for maintaining financial health.
If there is any good news in this statement it’s that if you do have positive working capital - i.e. assets to cover your short and long-term liabilities you are solvent.
But how you manage and finance those assets will ultimately determine the success of your business.
If you are looking for ways to transform assets into cash and manage growth.
Call 7 PARK AVENUE FINANCIAL, a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow needs.
FAQ
How can Cash Flow Solutions improve my business’s financial health?
Cash Flow Solutions enhance financial health by optimizing working capital, accelerating cash inflows, managing outflows more effectively, and improving liquidity and operational efficiency.
What are the long-term benefits of implementing Cash Flow Solutions?
Implementing Cash Flow Solutions leads to better financial planning, reduced reliance on external financing, improved supplier relationships, and increased ability to invest in growth opportunities.
Can Cash Flow Solutions help my business during economic downturns?
Yes, Cash Flow Solutions provide businesses with the tools to weather economic uncertainties by improving cash flow visibility, identifying potential shortfalls, and implementing strategies to maintain financial stability.
How do Cash Flow Solutions impact my ability to secure financing?
By improving your cash flow management, these solutions enhance your company’s financial profile, making it more attractive to lenders and potentially securing better terms for financing.
Will Cash Flow Solutions help me make better business decisions?
Absolutely. Cash Flow Solutions provide real-time insights into your financial position, enabling more informed decision-making regarding investments, expansions, and operational changes.
What role does technology play in implementing Cash Flow Solutions?
Technology plays a crucial role in Cash Flow Solutions, offering advanced analytics, automation of financial processes, and real-time reporting capabilities that enhance decision-making and efficiency.
How do Cash Flow Solutions differ for small businesses versus large corporations?
While the principles remain similar, Cash Flow Solutions for small businesses often focus on immediate liquidity needs and basic forecasting, while large corporations may implement more complex strategies like cash pooling and sophisticated treasury management systems.
Are there industry-specific Cash Flow Solutions?
Yes, many industries have unique cash flow challenges and solutions. For example, retail businesses may focus on inventory management, while service-based companies might prioritize accounts receivable optimization.
How often should a business review and adjust its Cash Flow Solutions?
Businesses should regularly review their Cash Flow Solutions, ideally quarterly, but also in response to significant market changes, growth phases, or financial challenges to ensure strategies remain effective and aligned with business goals.
What are the potential risks of implementing Cash Flow Solutions?
While generally beneficial, some risks include overreliance on short-term solutions like factoring, potential strain on supplier relationships, and the need for staff training to use new systems or processes effectively.
What is the primary goal of Cash Flow Solutions?
The primary goal of Cash Flow Solutions is to optimize the timing and amount of cash inflows and outflows, ensuring businesses have sufficient liquidity to meet obligations and fund growth opportunities while maximizing financial efficiency.
How do Cash Flow Solutions differ from traditional financial management?
Cash Flow Solutions focus specifically on managing and optimizing the cash movement through the business, often utilizing innovative financial products and technologies. Traditional financial management may have a broader scope, including accounting, reporting, and long-term financial planning.
What key indicators must a business need to implement Cash Flow Solutions?
Key indicators include frequent cash shortages, difficulty paying suppliers on time, slow customer payments, excessive reliance on credit lines, and inability to take advantage of growth opportunities due to lack of available funds.
What is Working Capital Management and why is it essential for businesses?
Working Capital Management optimizes a company's assets and liabilities to ensure efficient operations and maximum profitability. It involves managing inventory, accounts receivable, accounts payable, and cash. This practice is crucial for businesses as it helps maintain liquidity, improve cash flow, and enhance overall financial health, enabling companies to meet short-term obligations and invest in growth opportunities.
How does Cash Flow Forecasting benefit a company's financial planning?
Cash Flow Forecasting is a technique used to predict a company's financial position by estimating upcoming cash inflows and outflows. This practice benefits companies by providing insights into potential cash surpluses or shortages, allowing for better decision-making regarding investments, expenditures, and financing needs. Accurate forecasting helps businesses avoid cash crunches, plan for growth, and maintain financial stability in changing market conditions.
What strategies can businesses employ for Accounts Receivable Optimization?
Accounts Receivable Optimization involves improving the efficiency of collecting payments from customers. Strategies include implementing clear credit policies, offering early payment discounts, using automated invoicing systems for payment processing, following up promptly on overdue accounts, and segmenting customers based on payment behaviour. By optimizing accounts receivable when cash flow problems occur, businesses can accelerate cash inflows, better manage cash flow, reduce bad debt, and improve overall cash flow management.
What is Invoice Factoring, and how can it help improve a company's cash flow?
Invoice Factoring is a financial transaction where a business sells its accounts receivable (invoices) to a third party (factor) at a discount in exchange for immediate cash. This practice can significantly improve a company's cash flow by providing quick access to funds that would otherwise be tied up in unpaid invoices. It's particularly beneficial for businesses facing long payment terms or those in need of immediate working capital to fund operations or growth initiatives.
How does Supply Chain Finance work, and what are its advantages for both buyers and suppliers?
Supply Chain Finance is a set of solutions that optimizes cash flow by allowing businesses to lengthen their payment terms to their suppliers while allowing their suppliers to get paid early. In this arrangement, a financial institution pays the supplier early at a discount, and the buyer pays the financial institution later. This practice offers advantages such as improved working capital for buyers, earlier payment for suppliers, strengthened supplier relationships, and overall supply chain stability.
