Cash Flow Financing Problems Solutions Business | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR  CASH FLOW FINANCING

SOLUTIONS!

Looking To Solve Small  Business  Cash Flow Problems?

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

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

CASH FLOW FINANCING FOR YOUR BUSINESS NEEDS - ADDRESSING THE PROBLEMS.. AND SOLUTIONS! 

Cash flow financing for your business. We're sharing some solutions and tips on fighting cash flow problems and the challenges they bring to your business.

IS YOUR BUSINESS CAPITAL A TEMPORARY OR PERMANENT PROBLEM?    

Whether your financing challenges as a business owner are temporary or seem to be occurring all the time the Canadian business owner and financial manager are always looking for a fix to that dilemma when it comes to common cash flow problems.  So our focus on strategies and straightforward cash flow business financing methods that... you got it... fix the problem.  

WHAT IS CASH FLOW FINANCING  

Cash flow financing is a method of business funding based on loans that are backed by the anticipated and projected cash flows of the business. Cash flows generated from the business are the collateral to repay the loan.

Tip # 1 - WORKING CAPITAL MANAGEMENT

Don't pay anyone! Well, we're kidding of course, but a better way of saying what we intended to mean is that you can manage a lot of your cash by using an internal solution... payables management. The trick of course is having key vendors and supplies that value your business and want to work with you to keep your business - somewhat of a classic win/win scenario, don't you think. 

The ability to turn your stated 30-day terms into 60 and 90 days with your vendors allows many companies to actually become self-financing. That's almost cash flow nirvana - not borrowing and growing your business around your company's expected cash flows.  It's no secret that some of the largest companies in the world pay firms such as yours slowly just to optimize their corporate cash flow. The nerve of those guys. 

Our final point on this technique is simply that you don't want to end up ruining a key supplier/vendor relationship, so a proper sharing of the facts keeping in mind the value of the relationship is critical.

Tip # 2- ASSET TURNOVER 

Accelerate collections, finance receivables, and better yet... do both!  When we talk to clients about their cash flow financing challenges it’s often about their customers owing them money and not paying.

The internal things you can do to fix this problem are of course to be more firm with collections and enforce your terms. Big companies hold shipments to their clients, so you should not be afraid to also. We'd also consider raising prices for clients that don't pay.  Just keeping a constant watch on your days sales outstanding or collection period is going to make you a true  ' Master' of business solutions and solving those working capital problems.  

PROMPT PAYMENT DISCOUNTS LOWER PROFIT BUT INCREASE CASH FLOW  

Business owners might also want to offer a discount for prompt payment. One key point here is that you need to have some decent gross profit margins on your products and services when it comes to offering a typical 2% discount for prompt payment. But don't forget also that you can take those same funds you receive and take discounts with your own suppliers.  Another key concept here is to understand your borrowing rates and benchmark them against discounts you might offer for prompt payment

 UNDERSTANDING CASH FLOW VS. ASSET BASED LENDING DIFFERENCES 

Companies of all sizes rely on business capital that is borrowed to run their operations  - businesses have more financing options than consumers - which is why the business owner should understand Canadian Business Financing options.

While many companies can borrow from traditional financing institutions such as banks to finance operations, they also are in a position to borrow from banks around acquisition financing needs or acquiring assets or technology in their business.  Business loans come under the category of secured and unsecured loans - cash flow-based funding relies on cash inflows of the business as collateral while asset-backed lending secures business collateral.

While balance sheet assets such as  a/r, inventory, fixed assets and commercial real estate collateralize the asset-based loan while cash flow-based loans are secured by the cash flows of the business . Businesses that might not be asset or capital-intensive will often rely on cash-flow finance solutions while asset-intensive companies can rely on the assets on the balance sheet to secure financing . Companies with either good assets, good cash flows, or a combination of both will usually be successful in gaining financing.

9 SOLUTIONS TO BUSINESS CASH FLOW / WORKING CAPITAL FUNDING

Solutions for cash flow problems abound in Canada. It's all about picking the right one for your firm.

They include:

A/R Financing / Asset Based Lines Of Credit - The Asset-based lending solution

Asset-based loans and lines of credit allow a business to fund their operations based on asset values of balance sheet assets - typical assets financed in an ABL LINE OF CREDIT include inventories, accounts receivables, and other balance sheet assets such as equipment, commercial real estate, and potentially intellectual property. Cash flow is a secondary consideration of the asset-based lender.

In the case of business default, the asset-backed lender relies on the collateral secured under the term loan or business credit line.

Companies that choose ABL Lending are usually in asset-intensive industries and have lower earnings and profit margins.

Asset-based lenders base lending on certain loan-to-value relationships on key asses in the business  - Advance rates will range based on overall credit quality and collateral asset value.  Loans are secured by liens on assets that are pledged to the lender.  Depending on the size and quality of the assets a due diligence process has a high value in the loan approval process - in larger transactions financial statements, tax filings, and asset appraisals may come into play and will ultimately affect the interest rate and pricing and terms on the credit agreement.

The most popular form of asset-based lending solution is the factoring solution which finances accounts receivables. That type of funding allows the business to cash flow sales immediately as it sells its product and services on trade credit terms to clients. 

Inventory Loans

Factoring - Invoice financing helps firms who cannot achieve bank credit financing - in many cases factoring solutions help clients fund larger transactions from clients or government accounts - The ability to borrow funds against amounts due from the client based allows a business to receive up to 90% of invoice value as soon as invoices are generated for products and services delivered.

Businesses that have a good client base and who extended trade credit to clients can qualify for invoice financing.

Access to Canadian bank credit/line of credit -

Business credit lines via bank loans and bank financing allow businesses to access capital to fund daily operations as well as overcome the cash flow gap that might be seasonal in nature to a business or industry. By securing a one-time line of credit facility approval the company has a predetermined amount of capital  - allowing the business to meet obligations to vendors.

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow  Business loans

Royalty finance solutions

Working Capital Loans - short-term loans, business credit cards, Merchant Cash Advances  -

Short-term working capital loans, also called Merchant Cash Advances are short-term business loans that are paid back from future anticipated sales and differ from traditional bank loans. The loan is a lump sum installment loan and is repaid from a calculated formula around the sales of the business - typically 15-20% of annual sales will define a maximum loan amount -  Amortization terms are shorter in nature and are typically   12-24 months - the capital cost is higher and business owners pay a higher interest rate on this loans are high but the loans are readily accessible from non-bank lenders and online lenders. Financing requires monthly payments or bi-weekly payments on installments.

CONCLUSION -  FINANCING OPTIONS TO IMPROVE YOUR BUSINESS  

There are many ways a business can utilize financing options to fund business and grow - In some cases, the focus is on inventory purchases and the acquisition of long-term equipment and assets via a lease or equipment loan. All businesses have a certain level of seasonality and peak sales revenues requiring more cash flows at specific times in the year.

Some businesses require assets to maintain brick-and-mortar locations, while the digital economy requires technology financing to fund operations.

Certain companies can benefit from one-time opportunities to purchase assets and inventory or hire additional staff to fund growth via preparation around a  conservative cash flow projection

How Do Businesses solve cash flow problems? Ensure you are aware of lines of credit options both in traditional and alternative financing. The ability to demonstrate proper financial statements and asset turnover and prompt client invoicing via cash generated is key. At 7 Park Avenue Financial, we ensure our clients have proper business plans and cash flow projections that help guarantee financing success.

Does Your Company Have Cash flow issues? For cash flow management and quick funding and low rates relative to your required cash flow solutions and business credit profile seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business problems via real-world solutions.

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