YOUR COMPANY IS LOOKING FOR THE SECRET TO UNLOCKING
CASH FLOW AND WORKING CAPITAL!
WORKING CAPITAL MANAGEMENT / FINANCING 101!
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
"The secret of getting ahead is getting started. The secret of getting started is breaking your complex, overwhelming tasks into small manageable tasks, and then starting on the first one." - Mark Twain
Struggling to keep your business afloat? Discover how to conquer the working capital funding gap and unleash your company's true potential.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer cash flow financing solutions and 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”
Working Capital Funding Gap and Cash Flow Financing - Canada
Cash flow finance in Canada can help manage a company's current assets and solve your working capital problem.
We say yes, with one caveat—it must be done correctly. That’s the key. It’s almost as if we’re ‘declassifying’ some secret documents unknown to others. At least, that’s how it feels when we speak to business owners grappling with their business financing challenges.
It’s all about fixing negative working capital.
PROPER UTILIZATION OF DEBT
Debt or monetization of your assets to generate cash flows isn’t always a good thing, but actually, top experts in finance have suggested over the years that through proper financial analysis and utilization of debt, many companies can add to the overall value of their company by 10-20% if they are using debt properly, deducting interest and finance charges, etc. -
The bottom line? Proper working capital techniques and asset turnover to cover obligations due within one year instead of long-term debt. Receivables converted into cash, for example, greatly enhance your overall cash flow position.
IS DEBT SUITABLE FOR YOUR COMPANY'S CASH FLOW
But with that financing comes the restrictions imposed by lenders or simply the suitability of certain financings for your firm, which can impact your company's ability to meet its financial obligations.
A lot of business finance solutions look good on paper. Still, they might not work for your company when accessing enough cash for your business funding needs via assets and liabilities finance and management.
WORKING CAPITAL NEEDS TO BE FLEXIBLE
Should you have any specific goals when searching for optimal financing methods?
One of the most important goals is ensuring sufficient working capital to meet your needs.
We meet so many clients who have locked themselves into some form of debt or asset monetization strategy and have done one thing: Making it impossible to raise more capital! Simple techniques such as more effective accounts payable management also increase cash flow.
That might be because of the security you have offered up or been asked for.
When that occurs one other ‘bad thing’ is that you are now operating and running your sales strategies differently because you are locked into a financing arrangement that does not allow flexibility.
One other point of caution: entering into the wrong type of working capital/debt financing forces you to consider making changes in your expenses and budget and makes you less aggressive in exploring or taking on new sales opportunities and contracts.
There is one benefit in that though… unfortunately it’s the benefit of your competitors, who sense weakness and attack from the rear!
WATCH OUT FOR LOAN COVENANTS AND RATIO RESTRICTIONS
Remember also that when you enter into working capital problem resolution financing, you must consider your short-term obligations and the world of loan covenants, offering up personal collateral in some cases.
If you are highly leveraged, that will become a regular issue with you all the time, forcing many business owners and managers to refocus on what they do best—running their company and growing sales and profits—improving their net working capital position.
Your cash flow statements, which are part of your firm’s financing statements (see ‘cash flow from operations’ in your financial stats), will reflect your sources and uses of cash. Understanding where cash inflows can improve is key to business financial success.
SOME POPULAR AND ACCESSIBLE CANDIAN BUSINESS FINANCING SOLUTIONS
There are many types of debt or asset monetization solutions that, if done properly, allow you to achieve the right amount of cash flow you need.
Some of those for your working capital and cash needs include:
A/R Financing - Accounts Receivable / Accounts Finance Factoring
Inventory Loans
Access to Canadian bank credit
Non bank asset based lines of credit - Financing the balance sheet
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Government Of Canada Small Business Loan Program - The Guaranteed federal business loan
Short Term Working Capital Loans / Merchant Advances - typically repayable over a 12-month term
If appropriately used, those financing mechanisms allow you to take on the right amount of debt, achieve stronger sales revenues, and ensure you can pay suppliers on time.
KEY TAKEAWAYS
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Cash flow forecasting: Predicting future cash inflows and outflows to anticipate funding needs
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Working capital optimization: Streamlining inventory, receivables, and payables management
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Financial ratio analysis: Using key metrics to assess liquidity and identify potential gaps
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Short-term financing options: Understanding various funding solutions for immediate needs
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Cash conversion cycle: Grasping the time between cash expenditure and collection from sales
CONCLUSION
The working capital funding gap presents a formidable challenge for Canadian businesses, often determining the line between growth and stagnation.
So, have we ' declassified' some of the info the business owner/manager needs to solve the eternal working capital problem?
We hope so. Businesses should pay attention to current and anticipated funds flows to balance their overall financial policy and achieve free cash flow. Business capital and cash flow are at the heart of your business and overall capital structure and will translate into better numbers in your income statement.
At 7 Park Avenue Financial, we try to avoid many of those ' textbook' decisions around current assets/current liabilities and ' current ratio' jargon—the ' working capital formula '—but sometimes, you can't avoid them in the short term!
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with financial performance solutions and sources of capital that work... for your company.
FAQ
Working Capital Funding Gap: How can it impact my business growth?
Addressing this gap can provide the necessary funds to seize growth opportunities, invest in inventory, or expand operations without compromising day-to-day cash flow.
What are the long-term benefits of resolving a working capital financing gap?
Resolving this issue can improve financial health and stability, increase creditworthiness, and enhance the ability to weather economic downturns or unexpected challenges. Businesses will also find it easier to fund work in progress and purchase raw materials and other supplies.
How does bridging the working capital funding gap affect my relationships with suppliers?
By addressing this gap in your company's money and in your corporate finance challenge, you can maintain timely payments to suppliers, potentially negotiate better terms, and strengthen these crucial business relationships.
Can resolving a working capital cycle funding gap improve my competitive edge?
It can provide the financial flexibility to invest in new technologies, fund operating expenses, marketing initiatives, or product development, keeping you ahead of competitors.
What impact does solving the working capital funding gap have on employee satisfaction?
Addressing this issue ensures timely payroll and can fund employee development programs, leading to higher job satisfaction and reduced turnover.
What exactly is a working capital funding gap?
The shortfall between a company's current assets and liabilities indicates a lack of short-term liquidity to cover immediate operational needs.
How can I identify if my business has a working capital funding gap?
Analyze your working capital ratio (current assets divided by current liabilities) and cash conversion cycle to spot potential gaps in your short-term financing.
Are there industry-specific factors that contribute to working capital funding gaps?
Factors like seasonal demand, long production cycles, or extended payment terms in specific industries can exacerbate working capital challenges.
What role do accounts receivable play in the working capital funding gap?
Delayed customer payments can significantly widen the gap, making efficient accounts receivable management crucial for maintaining healthy cash flow.
How does inventory management relate to working capital funding gaps?
Excess inventory ties up cash and can contribute to funding gaps, while insufficient inventory may lead to lost sales and reduced working capital.
Working Capital Funding Gap: What are some unconventional methods to address it?
Consider peer-to-peer lending platforms, crowdfunding for specific projects, or exploring supply chain financing options to bridge the gap creatively.
What psychological barriers might prevent business owners from addressing their working capital funding gap?
Fear of taking on debt, overconfidence in future sales, or reluctance to change established financial practices can hinder proactive management of working capital challenges.
