Inventory and Receivable Financing : Business Assets into Working Capital | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR  WORKING CAPITAL AND CASH FLOW SOLUTIONS!

Financing Working Capital Current Assets

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?

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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

 

 

 

 

Working capital financing in Canada. As a business owner or financial manager, are you 100% comfortable knowing when you really need to better manage your business's current assets?

 

 

Do you know the tools and solutions that come with that business loan short-term financing challenge? We think we do, so let’s dig in!

 

 

Cash Flow Predicament: Turning Assets into Opportunity

 

 

Your growing business faces a frustrating dilemma: substantial inventory and outstanding customer invoices, yet insufficient cash to fund daily operations or pursue growth opportunities. This capital gap strangles your potential exactly when you need liquidity most.

 

Let the  7 Park Avenue Financial team show you how Inventory Finance  and Receivable Financing via an asset based loan/credit line transform these "locked" assets into immediate working capital, providing the financial flexibility that enables companies to thrive without taking on traditional debt.

 

 

Uncommon Takes on Inventory and Receivable Financing

 

Inventory and receivable financing can strategically strengthen supplier relationships by enabling faster payments, potentially qualifying your business for previously unattainable volume discounts and preferred vendor status

 

Unlike traditional loans that appear as liabilities on financial statements, properly structured inventory and receivable financing can enhance your balance sheet metrics, potentially improving your business valuation during growth phases or exit planning.

 

 

DO YOU KNOW YOUR FINANCIAL STATEMENT KEY STATS?

 

 

When we talk to specific clients in hindsight about their inventory finance and the accounts receivable investment challenges they face daily, they are often surprised about how little they knew about some key basics about their current assets and liabilities.

 

Understanding terms such as the ' quick ratio ' and other solvency statistics in your financial statements is important.

 

That's because it’s difficult for some to cut through all the finance and financial statement jargon and concepts to figure out the real root of some of those challenges.

 

 

What aspect of the business couldn’t be more complicated today, whether it’s financing, growing your company, staying on top of the competition, maintaining payment terms to suppliers, etc?

 

 

We're not suggesting industrial espionage, but if you knew your competitor had very slow-moving inventory or uncollectible or very slow receivables, you would be in a great position to profit from and exploit market opportunities. Today's customers can't take advantage of their suppliers' cash discounts.

 

 

 

 

THE QUALITY OF YOUR A/R AND INVENTORY ALLOWS THEM TO BE FINANCED PROPERLY

 

  

 

That goes for your firm, too, which brings us to today's key subject: the quality of your current assets—i.e., A/R, inventory, and the need and ability to finance them properly.

 

 

One of the best ways you can interpret critical upcoming problems in our working capital and cash flow situation revolves around a few ' slick tricks' solutions, as we call them, around your accounts receivable and inventories.

 

 

CALCULATING DSO AND INVENTORY TURNS IS KEY

 

 

Most people and even stock analysts calculate a company's accounts receivable or industry status by calculating the day’s sales outstanding, i.e. DSO, or inventory turns. 

   

 

  

 

TRACK SALES GROWTH VIA THE SAME GROWTH IN A/R AND INVENTORIES - IT WORKS!  

 

 

 

   

But wait, there is even a better way to look at all this! And that is to monitor those two asset categories as they pertain to sales going up or down.

 

If you set up a simple tracking system that captures your sales, and a/r and inventory amounts over specific periods, i.e. monthly, quarterly, etc 

 

( By the time you get to annual, you can guarantee it will be too late !) you can spot poor collections in customer payments and growing inventories. International trade issues for out-of-country clients also present a funding challenge.

 

 

You just might find that sales growth, which hides many problems, is fast becoming your biggest problem.

 

And that's even when your income statement shows you're making a profit.  (Yes, profitable companies can go under!)

 

So the bottom line is that growth in accounts receivable and inventory on the company's balance sheet with stable or declining sales will signal huge upcoming cash flow problems in the immediate short term in your company's investment in those key current asset accounts.

 

 

At the same time, the Canadian business owner or manager will get a lot of comfort knowing that if their sales are growing and a/r and inventories are staying the same, declining, or growing commensurately, it will mean they're a winner in the cash flow and working capital game.

 

 

UNDERSTANDING ACCOUNTS RECEIVABLE FACTORING  METRICS - RECEIVABLE FINANCING PROBLEMS AND SOLUTIONS!

 

 

Let's try to illustrate a quick example, which is tougher when you don't have a chart.

 

But let's assume you are tracking A/R trade credit, inventory, and sales on a simple chart or spreadsheet. Let's assume for our sample that sales are growing by  20% ( congratulations, by the way ), but A/R seems to have ballooned to 100%  in that same period!!

 

 

What has happened? Simply put, your sales success has caused problems to shift into your A/R account. And that affects cash flow and cash in the bank around your short-term financing challenges.

 

  

   

SOLUTIONS FOR FUNDING WORKING CAPITAL VIA INVENTORY FINANCING & AR FINANCE  - HERE THEY ARE!     

 

 

The solution? Monitor those current assets, such as accounts receivable, as we have suggested, as you extend credit to clients.

 

Speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you to secure financing with working capital, receivable financing, and inventory finance solutions  that can eliminate negative working capital, such as:

 

A/R Financing

Inventory Loans

 

Working Capital Loan / Term Loan/Short-Term Working Capital Loan—Merchant advances for loans of less than a year duration are also available to businesses such as retailers.

Access to Canadian bank credit - Traditional financial institution

Non-bank asset-based lines of credit - The asset based lending solution

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

 

Etc!

  

 

Case Study: Benefits of Inventory and Receivable Financing  

 

A Toronto-based industrial equipment producer faced a critical challenge: 70% of their annual orders arrived between February and May, but production required inventory buildup starting in November. With $1.2 million in parts inventory needed and customers typically paying 60 days after delivery, the cash flow gap threatened operations and growth.

After implementing a combined inventory and receivable financing solution, the company secured 60% advance rates on their specialized inventory ($720,000 immediate capital) and 85% advances on invoices upon shipment. This restructured cash flow allowed them to:

• Increase production capacity by 35% without additional term debt

• Negotiate 12% supplier discounts through early payment options

• Accept 40% larger orders with confidence in working capital availability

• Reduce stress on their banking relationship during seasonal fluctuations

• Grow annual revenue by 28% while maintaining healthy margins

 

 

  

KEY TAKEAWAYS  

 

• Advance rates determine your immediate cash availability, typically 70-90% for receivables invoice financing and 50-80% for inventory. The balance is paid minus fees when customers settle invoices.
• Credit quality of your customers significantly impacts financing costs since lenders evaluate their ability to pay, not just your business history, making strong customer portfolios valuable collateral.
• Different structures exist with factoring, which transfers ownership of receivables to the finance company, while invoice discounting keeps ownership with your business but uses receivables as collateral until customer pays
• Industry specialization matters as lenders familiar with your sector understand inventory value fluctuations and customer payment patterns, often providing more favourable terms than generalist financiers.

 

  

 

 

 CONCLUSION   

 

A company is usually unable to fund its entire ' operating cycle ' by juggling accounts payable solely. External funding is needed more than the net profits generated.

 

Small businesses / Medium Businesses - You've got the power now!

 

Long-term working capital management is in sight! Short-term liabilities and obligations can now be more effectively managed daily. Financing the balance sheet does not necessarily mean taking on more debt, allowing a return to financial health.

 

Call  7 Park Avenue Financial  today. We're a trusted and experienced Canadian business financing advisor, solving your cash flow and working capital/business financing needs.

  

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION  

 

 What are accounts receivable and inventory financing? 

Accounts receivable loans and inventory financing uses key current assets, such as a/r and inventories, which allow businesses to secure business lending for short-term working capital needs via lines of credit or shorter-term working capital loans. That cash flow allows a company to address short-term debt and accounts payable liabilities and maintain a positive net working capital position.

Proper management of key balance sheet asses allows a company not to have to pursue equity financing from finance companies. Using a finance company or a bank line of credit to fund receivables and inventory is traditional working capital funding / receivable factoring.

 

Current assets on the balance sheet are financeable. A company's net profits help shore up working capital.

 

What is receivable financing?