YOUR COMPANY IS LOOKING FOR WORKING CAPITAL STRATEGIES & FINANCE 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
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"Revenue is vanity, profit is sanity, but cash is king." - Unknown
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer 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”
Solving the Working Capital Challenges and Solutions!
Working capital management in Canada must make some business owners and financial managers surely feel sometimes that ‘ the end is near ‘.
It doesn’t have to be that way when it comes to fixing cash flow problems when focusing on techniques and solutions for ‘ the fix ‘ in the amount of cash you require. Let’s dig in.
Understanding negative working capital, where current liabilities surpass current assets, is crucial as it can indicate liquidity issues and operational inefficiencies that must be addressed.
BREAK FREE FROM THE CASH FLOW TRAP
Business owners and financial managers know the stress of dealing with cash flow challenges—it's like walking the tightrope between paying supplies, meeting payroll, and growing the business!
Let the 7 Park Avenue Financial team show you solutions to transform these challenges into new opportunities to grow your business.
UNDERSTANDING WORKING CAPITAL
Definition of Working Capital
Working capital is a financial metric measuring a company’s liquidity by calculating the difference between its current assets and liabilities.
It’s the capital available to fund a company’s day-to-day operations and short-term obligations. This metric is crucial because it indicates whether a company has enough assets to cover its short-term debts and continue its operations without financial strain.
Effective working capital management ensures that a business can maintain smooth operations, pay its employees and suppliers on time, and invest in growth opportunities. Working capital is the lifeblood of a company’s cash flow.
Importance of Working Capital Management
Effective working capital management is vital for maintaining a company’s financial health and ensuring long-term success.
By optimizing for more working capital, businesses can improve their cash flow, reduce the risk of liquidity crises, and make more informed decisions about investments and funding.
Efficient working capital management allows companies to enhance their financial performance, increase competitiveness, and achieve business goals.
It involves carefully managing the balance between current assets and liabilities to ensure the company can meet its short-term financial obligations while investing in growth opportunities without unnecessary expenses via working capital efficiency.
In short, mastering working capital management is key to sustaining a company’s financial health and driving long-term success.
SHORT-TERM CASH NEEDS FOR DAY-TO-DAY FUNDING FOR YOUR COMPANY'S WORKING CAPITAL
We’re the first to admit sometimes that the term ‘cash is king’ is somewhat of an overworked cliché, but when you’re in the real world (where we work and toil every day) achieving cash flow to run your company, pay your bills, satisfy your creditors and, oh yes, grow your business is .. Suffice to say… challenging!
It’s all about optimizing working capital, which involves managing the relationship between current assets and current liabilities on your balance sheet. This can put you in a positive net working capital position if managed properly.
That relationship is referred to in finance textbooks as your ‘current ratio‘. It measures the short-term obligations of current assets and liabilities and is also a solid measure of a company’s financial management prowess.
SEASONAL CASH BULGES OR CASH FLOW CRUNCHES
In many cases, cash problems revolve around what we could term ‘bulges’ or ‘seasonality’ in a business or industry.
It’s simply those times when revenue outpaces sales you would usually have at that time of year - perhaps due to a large contract, order, etc.
For retailers, it simply might mean Christmas! Negotiating favourable payment terms with suppliers can help manage cash flow during these periods by extending payment periods and improving financial stability.
At the other end of the extreme are start-up businesses that are struggling to achieve the sales growth they have projected while trying to contain their fixed costs.
REVENUE RECOGNITION / PROGRESS BILLINGS
Another key area of cash problem strife is the ' progress billings 'concept. We meet with many clients who have to bill their customers in stages. Typical scenarios include a down payment, interim billings, and final payment.
This whole process can almost always take 90 days, if not longer, depending on the industry and your company's cash position.
THE CASH FLOW FIX
So, how does the owner/manager address these issues?
To the extent they can, it’s precious to put a cash flow budget/estimate in place based on your historical experience. This will help you explain to banks and commercial lenders the reality of your situation and the amount of working capital you need.
Additionally, focusing on working capital improvement is crucial for managing cash flow effectively, as it helps identify gaps and opportunities for optimizing assets and liabilities.
CANADIAN BUSINESS FINANCING SOLUTIONS
Solutions that ' fix' working capital management problems include:
A/R Financing
Inventory finance
Working capital term loans
Commercial bank lines of credit
Non-bank asset-based lines of credit
Purchase Order Financing
Monetization of tax credits
Those solutions do not add long-term debt to the balance sheet and help make your firm's cash flow positive. They are short-term liabilities, not long-term debt.
MANAGING PAYABLES IS A KEY PART OF CASH FLOW MANAGEMENT
Remember also that accounts payable management is a key part of the accounting ‘cash flow equation’.
Delaying payables positively (negotiating favourable payment terms and better discounts and pricing) aids cash flow big time. How do you think big firms are so successful - it’s because they have ‘clout’.
PROFITS DO NOT EQUAL CASH FLOW - IT'S ALL ABOUT ASSET TURNOVER!
Remember also that in the nether world of accounting, profits don't equal cash flow, and the more inventories and receivables you have in place, the more financing with the above-noted mechanisms is necessary.
Naturally, your ability to turn over accounts receivable and inventory faster simply means better working capital management and positive cash flow through the management of those assets and liabilities and monitoring payment terms for your clients.
KEY TAKEAWAYS
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Cash conversion cycle optimization helps to optimize working capital and drives maximum efficiency
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Strategic supplier relationship management dramatically improves payment terms
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Accounts receivable acceleration techniques yield immediate cash flow impact
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Modern inventory management systems reduce capital requirements significantly
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Digital payment solutions streamline collections and disbursements effectively
CONCLUSION
Management of working capital is all about your cash conversion cycle, which is simply the amount of time it takes a dollar to flow through your company, from making a product with raw materials or providing a service to collecting cash from that generated revenue.
Looking for a turnaround in managing working capital and cash flows?
Call 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor who can ensure your ' to-do' list is achievable in business financing success.
FAQ
What collateral is required for working capital solutions? Several options exist:
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Accounts receivable
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Inventory
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Equipment
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Real estate
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Personal guarantees
How does working capital financing fuel business growth?
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Enables bulk inventory purchases at better prices
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Supports rapid expansion opportunities
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Provides cushion for seasonal fluctuations
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Allows hiring ahead of demand
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Strengthens supplier relationships
What advantages do modern working capital solutions offer?
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Faster approval processes
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Flexible repayment terms
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Lower collateral requirements
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Digital application platforms
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Real-time funding tracking
How can working capital optimization improve profitability?
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Reduces financing costs
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Captures early payment discounts
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Minimizes stockout situations
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Improves supplier pricing
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Increases operational efficiency
What makes working capital solutions better than traditional loans?
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Based on business performance
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Scales with your growth
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Usually requires no personal guarantees
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Preserves existing credit lines
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Offers faster processing
How do working capital solutions adapt to business cycles?
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Flexible during seasonal changes
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Adjusts to growth phases
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Accommodates industry patterns
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Supports unexpected opportunities
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Provides emergency funding access
What documentation is needed for working capital financing?
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Bank statements (last 6 months)
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Financial statements
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Tax returns
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Accounts receivable aging
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Business registration documents
How does credit scoring affect working capital applications?
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Business credit score impact
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Personal credit requirements
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Alternative evaluation methods
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Industry-specific considerations
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Credit rebuilding options
What are typical working capital financing terms?
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Duration options
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Interest rate ranges
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Fee structures
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Renewal possibilities
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Early repayment benefits
How quickly can working capital problems be resolved?
What risks should be considered with working capital solutions?
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Cost implications
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Commitment periods
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Collateral requirements
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Impact on relationships
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Exit strategies
How does working capital impact business valuation?
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Efficiency ratios influence multipliers
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Cash flow stability affects risk assessment
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Working capital management shows operational excellence
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Healthy ratios increase attractiveness
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Poor management reduces value
How do different industries approach working capital management?
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Manufacturing focuses on inventory
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Services prioritize receivables
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Retail balances seasonality
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Technology leverages subscriptions
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Construction manages project timing
