YOUR COMPANY IS LOOKING FOR WORKING CAPITAL SOLUTIONS!
CASH FLOW MANAGEMENT STRATEGIES AND SOLUTIONS TO IMPROVE CASH FLOW
UPDATED 06/01/25
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
WORKING CAPITAL SOLUTIONS THE COMPETITION DOESN'T WANT YOU TO KNOW ABOUT
Solutions to working capital problems for Canadian entrepreneurs work best when they come from the real world. We can call it ' main street financing '.
Yes, you're right - this isn't the time for ' crowdfunding ' !... what a concept that is .. having a million people send you $1. We wish we had thought that one up.
When Profitable Businesses Face Cash Crunches
Your business is profitable on paper, but your bank account tells a different story.
Outstanding invoices accumulate while bills require immediate attention. This cash flow gap threatens everything you've built.
Let the 7 Park Avenue Financial team show you how Cash flow business loans provide immediate working capital based on your revenue patterns, not just credit scores, keeping your business moving forward when timing creates temporary shortfalls.
THE MOST COMMON CASH FLOW PROBLEMS IN SMALL BUSINESS
What then do the Canadian business owner and financial manager do regarding cash flow problems and working capital solutions when cash flow shortfalls are tightest?
Even well-operated companies require cash flow solutions for their profit and growth objectives; clients of 7 Park Avenue Financial tell us they just want to know how to get there.
We will discuss the common causes of cash flow shortages and what is at the root of these poor cash flow problems -
Obvious issues are typically slow-paying customers or the seasonality that might occur in any business or industry. Many businesses also encounter unexpected expenses.
IS YOUR BUSINESS EXPERIENCING ANY OF THESE COMMON CASH FLOW PROBLEMS AND CHALLENGES?
Inability to pay bills and meet vendor/supplier obligations
Unable to meet obligations around long-term debt financing
Missed opportunities for growth
Excessive reliance on the owner's personal funds to avoid a cash flow crunch
Inability to meet payroll obligations
Reduced vendor and employee satisfaction and morale
High growth leads to lower cash flows as profits do not equal cash in a business. Expanding and a focus on growing quickly will always lead to a loss of cash flow as additional staff and investments will require external business financing
BOUNCING BACK TO POSITIVE CASH FLOW
Cash flow is of course, 'fuel' that will drive the combinations of growth and more profits, and allow you to run day-to-day operations with greater ease.
Your working capital is tied up in the current asset accounts on the balance sheet - that includes cash on hand, accounts receivable and inventories for those businesses selling products versus services.
It's all bout cash going out versus cash coming in! Liquidity problems will lead to the ineffective running of the business, and cash flow is always seen by business lenders as a key financial indicator of business financial health. Fast-growing and profitable businesses can easily have cash troubles.
2 WAYS TO ACHIEVE THE OPTIMAL BALANCE IN YOUR CASH FLOW
Cash flow problems and growth goals are usually tied together in some manner. Problems for small businesses can be solved by a business owner by focusing on two key areas :
SALES .. AND ASSET TURNOVER!
Asset turnover is sometimes a bit of a surprise to business people who aren't necessarily grounded in finance, but the issue of turning over your assets, in fact, opens up a wide variety of potential solutions, most notably:
MONETIZING AND CASH-FLOWING YOUR BUSINESS ASSETS
By financing your assets and at the same time focusing on better turnover, your overall profit/growth situation improves, almost immediately. It’s all about ensuring your cash reserves :
Turning Inventories
Collecting Receivables Faster
Financing Long-Term Assets Profitably
SOLUTIONS TO WORKING CAPITAL & CASH FLOW NEEDS - TRADITIONAL AND ALTERNATIVE CASH FLOW FINANCING OPTIONS
Working Capital Facilities - term loan / short term
Short Term 12-Month Working Capital Loans Paid From Future Sales - cash flow based lending
Receivable Financing / Factoring / Confidential Receivable Finance
Asset-Based Lending / Non-Bank Asset-Based Business Lines Of Credit
Chartered Bank Solutions
Inventory Financing
Leasing / Sale Leaseback
Tax Credit Monetization
Government loans / Canada small business financing program
P O Financing / Supply Chain Financing
All these key solutions can be structured from both traditional and alternative finance firms.
Even better, certain solutions, structured properly, can be cobbled together to increase your firm's total access to credit. It's all about monetizing the balance sheet and your sales!
So how does the business owner/financial manager actually figure out how much to borrow, and then whether for its short-term financing needs?
And don't forget the overriding question, which is knowing how to balance the eternal questions of more debt or adding equity, as examples of cash flow problems that must be addressed.
Remember that many of the cash flow solutions here monetize assets and sales and don't require ANY dilution of equity! That's a good thing from the business owner's point of view.
For companies that have inventory, it all starts at some sort of production cycle... but even service industries in technology or other areas have their flavour of a working capital cycle.
A very simple rule to address working capital problems is that whenever your receivables and inventory grow, you are going to have to address more working capital solutions... It's as simple as that.
28% of small business owners say they lose sleep over cash flow problems; 48% say they pay others before paying themselves; and 28% have experienced cash flow problems such as postponing hiring - SOURCE: STAPLES
Case Study
Challenge: A Toronto-based catering company faced a 60-day cash gap when their largest client delayed payment on a $45,000 invoice, threatening their ability to fulfill upcoming contracts and pay staff.
Solution: The business secured a $30,000 cash flow business loan within 48 hours, providing immediate working capital to maintain operations and fulfill pending contracts worth $85,000.
Results: The company completed all contracted work, maintained their reputation, and when the delayed payment arrived, they had generated additional revenue that more than covered the loan costs while establishing a reliable funding relationship for future growth opportunities.
CONCLUSION - CASH FLOW MANAGEMENT STRATEGIES FOR WORKING CAPITAL
All business owners know the frustration of watching profitable deals slip away because cash is tied up in outstanding invoices, but cash flow business loans transform this common challenge into a competitive advantage
Discover how you can address cash flow challenges... the right way. That is of course, if your crowdfunding strategy doesn't work... and you can pretty well count on that one! Talk to our team about your business survival plan via healthy cash flow!
There are many different types of working capital solutions for your business. as in all aspects of business financing, there are advantages and disadvantages to each solution.
Making the right decision around the best solution for your company is job #1 for small business owners.
Cash shortages have numerous negative effects on a business, and 'cash-strapped' businesses have problems that must be addressed.
The ability of a business to achieve positive cash flow and positive net working capital becomes the lifeblood of the company.
Liquidity shortages are common in the majority of small businesses in Canada. Planning around effective cash flow management empowers your business to grow and succeed.
A Small business cash flow problem can devastate a business.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What are cash flow problems, and how do they affect businesses?
Cash flow problems arise when inflows of cash into the business exceed current obligations.
That's when a business is challenged to pay accounts payable and meet payroll obligations. Naturally, growing the business in that situation is very difficult. Common causes of funding shortages include:
Low profitability - price rises won't always discourage clients and may also lead to perceived value for products and services
Overinvesting
Rapid expansion without financing in place - Uncontrolled business growth leads to cash shortfalls for businesses, over-forecasting growth and expenses. it is important to distinguish between profitability and cash flow.
High fixed costs
Unexpected expenses
The owner draws from the business
Poor inventory and a/r management
Seasonal fluctuations in sales
What is working capital, and how can it help businesses solve cash flow problems?
Working capital is the funds that a company has available to fund day-to-day operations. Key balance sheet accounts such as inventory and accounts receivable are key components of working capital. Companies should review trade credit payment terms and focus on enforcing sound credit and collection policies.
If a business improves its working capital it can cover day-to-day operations and consider growth opportunities - Numerous small business financing solutions can be addressed to fix cash flow challenges - they include cash flow based short-term working capital loans known as merchant cash advances with lump sum payments, as well as other solutions such as invoice financing/factoring - Business lines of credit are the optimal solution. Cash flow statements in business financial statements outline the sources and uses of cash in a business.
How do different working capital solutions work, and what are their advantages and disadvantages?
Different working capital solutions work in different ways - for example, businesses utilizing factoring financing can sell invoices to third-party commercial financing companies, enabling the business to achieve immediate cash as sales revenues are generated. Inventory financing to fix cash flow problems can be combined with numerous asset-backed lending solutions, with inventory being used as collateral for a borrowing base in combination with accounts receivable.
What can businesses do to prevent cash flow problems in the first place?
Businesses can prevent cash flow problems around poor cash flow management via financial planning in a variety of ways, including the preparation of proper cash flow forecasts and projections around cash flow management and funding needs for a healthy cash reserve based on sales and the timing of receipts from customers.
Creating a short-term business survival plan should be a priority, focusing on issues such as profit and expense reduction. In certain situations, a scaling-back plan should be initiated.
In some cases, payment terms can be negotiated with key vendors and clients. Expense reduction around variable costs can also be addressed to ensure enough cash on hand. The goal is to be proactive from a prevention point of view.
Businesses also can refinance existing debt, allowing the business to achieve lower payments and lower financing costs. High-interest loans should be avoided if possible. Supplier financing can also improve the cash cycle.
How do you manage cash flow and working capital?
Tips to improve working capital management and manage cash balances & cash outflows include:
Reduce inventory and a/r investment via more effective asset turnover around days sales outstanding for outstanding receivables / slow payments , as well as inventory turns in the business's cash flow cycle
Manage accounts payable - late payments to suppliers improves good cash flow but should not be done at risk of supplier relations
Investigage short term financing for current assets and business growth via a cash flow budget - Financing via confidential invoice discounting allows a business to bill and collects its own invoices while maintaining healthy cash reserves as sales are generated
Increase profit margins with a focus on gross margins and a more profitable business
Create proper cash flow projections with the help of proper accounting software to help determine how much cash the business needs
What types of businesses qualify for cash flow business loans?
Cash flow business loans are designed for established businesses with consistent monthly revenue, typically requiring at least $10,000 in monthly sales and six months of operating history.
How quickly can I access funds through a cash flow business loan?
Cash flow business loans typically provide funding within 24-48 hours of approval, with some lenders offering same-day funding for qualified applicants.
What documentation is required for cash flow business loan applications?
Cash flow business loan applications require recent bank statements, revenue documentation, and basic business information, with most lenders requesting 3-6 months of financial records.
How do repayment terms work for cash flow business loans?
Cash flow business loan repayments are typically structured as daily or weekly automatic deductions based on a percentage of your daily sales or fixed payment amounts.
What are the costs associated with cash flow business loans?
Cash flow business loan costs vary by lender and risk factors, typically ranging from 10-50% factor rates, which represent the total cost of borrowing rather than annual interest rates.
Who qualifies for cash flow business loans in Canada?
Cash flow business loans in Canada are available to businesses with consistent revenue streams, typically requiring minimum monthly sales and established operating history.
What industries benefit most from cash flow business loans?
Cash flow business loans serve retail, restaurants, service businesses, and seasonal companies that experience regular revenue but face timing challenges with cash availability.
When should businesses consider cash flow business loans?
Cash flow business loans make sense when businesses need immediate working capital, face seasonal fluctuations, or want to capitalize on growth opportunities without waiting for traditional financing.
Where can Canadian businesses find reputable cash flow business loan providers?
Cash flow business loan providers include alternative lenders, online platforms, and specialized financial institutions that focus on revenue-based lending solutions.
Why do cash flow business loans have different approval criteria than traditional loans?
Cash flow business loans emphasize revenue consistency and business performance over collateral requirements, making them accessible to businesses with strong sales but limited assets.
How do cash flow business loans differ from traditional bank loans?
Cash flow business loans offer faster approval, flexible repayment terms based on revenue, and less stringent credit requirements compared to traditional bank unsecuredloans / financing options.
How do cash flow business loans improve business operations?
Cash flow business loans provide immediate working capital that allows businesses to maintain operations, take advantage of opportunities, and smooth out revenue fluctuations without disrupting daily activities.
What competitive advantages do cash flow business loans offer?
Cash flow business loans enable businesses to take early payment discounts, stock inventory strategically, and respond quickly to market opportunities without waiting for traditional loan approvals.
How do cash flow business loans support business growth?
Cash flow business loans fuel growth by providing capital for marketing campaigns, inventory expansion, equipment purchases, and staffing increases when revenue projections support higher investment levels.
What flexibility benefits come with cash flow business loans?
Cash flow business loans offer flexible repayment schedules that adjust to business revenue patterns, allowing businesses to pay more during strong periods and less during slower times.
How do cash flow business loans reduce financial stress for business owners?
Cash flow business loans eliminate the anxiety of cash shortfalls by providing predictable access to working capital, allowing owners to focus on growth rather than day-to-day cash management concerns.
Are cash flow business loans considered debt or equity financing?
Cash flow business loans are debt financing instruments that provide capital in exchange for repayment with fees, without requiring business owners to give up equity or ownership stakes.
Can businesses with poor credit still qualify for cash flow business loans?
Cash flow business loans may be available to businesses with poor credit if they demonstrate strong revenue patterns and consistent cash flow, though terms may vary based on risk assessment.
What happens if a business cannot make scheduled cash flow loan payments?
Cash flow loan default consequences vary by lender but may include additional fees, modified payment terms, or in severe cases, collection actions against business assets.
Do cash flow business loans affect business credit ratings?
Cash flow business loans may impact business credit depending on whether lenders report to credit bureaus, with positive payment history potentially improving credit scores over time.
Can cash flow business loans be used for any business purpose?
Cash flow business loans typically allow flexible use of funds for working capital needs, though some lenders may restrict usage for certain purposes like debt consolidation or equipment purchases.
What factors determine cash flow business loan approval rates?
Cash flow business loan approval depends on monthly revenue consistency, business operating history, bank account activity, and overall financial health rather than traditional credit metrics alone.
How do lenders calculate cash flow on merchant cash advances?
Cash flow business loans , aka MCA's.. amounts are typically calculated as a multiple of monthly revenue or credit card sales, with most lenders offering 10-200% of average monthly sales based on business performance and risk factors. Borrower's credit score is imporant.
What makes cash flow business loans different from merchant cash advances to borrow money?
Cash flow business loans often provide more favorable terms and structured repayment schedules compared to merchant cash advances, though both products serve similar working capital needs for businesses.
Citations / More Information
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Bank of Canada. (2024). "Small Business Credit Conditions Survey." https://www.bankofcanada.ca
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Canadian Federation of Independent Business. (2024). "Cash Flow and Payment Practices Report." https://www.cfib-fcei.ca
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Statistics Canada. (2024). "Small Business Financing Profiles." https://www.statcan.gc.ca
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Innovation, Science and Economic Development Canada. (2024). "Key Small Business Statistics." https://www.ic.gc.ca
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Business Development Bank of Canada. (2024). "Alternative Financing Study." https://www.bdc.ca
