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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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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Direct Line = 416 319 5769
Office = 905 829 2653
Email = firstname.lastname@example.org
Funding businesses in Canada often comes down to recognizing what type of business financing loans make sense for your firm. In fact not properly being able to ascertain what type of finance is needed, makes sense, or that your company is qualified for is what it's really all about. Let's dig in.
Part of the confusion around picking the right type of financing revolves around understanding the sometimes subtle ( and sometimes not so subtle !) differences between ' working capital ' , ' cash flow', 'profits' and ' asset turnover '.
We all should be familiar with the idea that profit isn’t cash and many a great company has stumble and fallen around missing that difference. There a classic example of that in the U.S. that is used in text book studies - it revolved around the dept store W.T. Grant. It was a public company, seemed to be doing well (key word = ' seemed ‘) and went under to the surprise of all, including shareholders! The reason - things in paper looked great, assets were huge. The problem - assets weren't turning and there was no real cash. After the company went under the accounting industry went on to invent the ' cash flow ' statement which is not a part of every financial statement.
The reasons that cash and profit don’t equate often come down to the asset turnover we have talked about. As your firm builds up inventory and then sells products on credit terms a huge gap develops between paper profits and cash in the bank.
Companies finance working capital, which then becomes cash via short term credit facilities. In Canada these facilities should be financed via:
Bank credit lines
Commercial A/R financing facilities
Inventory financing arrangements
Tax Credit Financing
Non Bank ABL Asset based credit lines
The ability to turn receivables and inventory into cash is the ultimate measure of success of a business.
The business owner/ financial manager should also be watching cash availability and assets needed to run and grow the business. Here asset financing strategies are key - they include:
Sale Leaseback strategies
The key point owners/managers need to recognize in acquiring capital assets is that these assets will typically be used over several years, so it doesn’t not make sense to deplete cash and credit lines today for benefits that will be received over time.
Always remember to ensure that working capital and cash flow needs cover your ability to pay down debt and purchase or finance new assets needed in the business.
If you're focused on properly recognizing the right type of business financing loans and asset monetization strategies for your company seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in business funding that matches your needs.