YOUR COMPANY IS LOOKING FOR BUSINESS CASH FLOW SOLUTIONS!
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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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EMAIL - sprokop@7parkavenuefinancial.com
Business cash flow or the lack thereof can provide some hard lessons for the Canadian business owner / financial manager. How does the owner/manager separate the ' wheat from the chaff ' when it comes to solutions offered by finance companies and banks. What other solution can be addressed, outside of seeking external financing? Let's dig in.
THE IMPORTANCE OF ACCESS TO WORKING CAPITAL
You won't find too many business people disagreeing with the fact that your cash flows and access to working capital is important. It's easy to see the cash going out, it's more challenging to manage the cash coming in.
When it comes to financing solutions to address our subject manner they are more numerous than you might think. Canadian commercial finance companies offer a plethora of solutions outside of bank finance.
They include:
A/R Financing
Inventory Loans
Access to Canadian bank credit
Non bank asset based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance
Securitization
THE COST OF CAPITAL VERSUS ACCESS TO CAPITAL
Generally, non-bank solutions cost more, but it can also be quite easily said they are more attainable than Canadian commercial bank approval for your financing needs. Borrowers in the SME (small to medium enterprise) commercial finance sector must have a least a couple of years of business success when it comes to accessing bank credit.
QUALIFYING FOR BUSINESS FUNDING FOR YOUR CAPITAL NEEDS
If your company can demonstrate it has real financial statements, profits, some equity in the business, and reasonable personal credit histories of the owners ... well... from the bank's perspective... You're in. Bank credit lines are great solutions for the proverbial ' overdraft '.
GROWTH RATES
So we have tabled two external paths in financing cash flow. But wait! There's More! as our favourite K-TEL announcer used to say. In reality, if you are growing at a modest rate your access to cash flow can easily come from within.
ASSET TURNOVER AND PROPER FINANCING IS KEY
From within? Simply speaking it’s about focusing on better asset turnover in the areas of inventory and accounts receivable. Putting a simple system in place to verify and manage your day’s sales outstanding in A/R, or your inventory turnover will allow you to bring cash in more quickly.
GROWTH REQUIRES MORE INVESTMENTS IN CURRENT ASSETS
We referenced your business growing at a ' modest rate'. In reality, if you are in high growth mode, or have large, perhaps seasonal, bulges in your business you will most likely be forced to address external financing, no matter how well you manger current assets. That’s simply because sales growth is hungry, it eats cash as you build up A/R an inventory and wait for clients to pay.
IS ASSET BASED LENDING THE SOLUTION YOU ARE LOOKING FOR
Often the best solution for a company that can’t access bank credit but has solid growth possibilities is in fact asset-based lending. This solution, typically via commercial finance companies, margins inventory and A/R on an ongoing basis, giving you all the business cash flow you need.
ASSET ACQUISITION NEEDS
If your business is asset-intensive it's important also to consider asset financing solutions that won't deplete working capital. That typically involves looking at a lease financing or sale-leaseback solution.
CONCLUSION
If you're looking to separate the wheat from the chaff in business cash flow alternatives seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your firm's growth needs.
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Stan Prokop
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