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Financing & Cash flow are the biggest issues facing business today
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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
Working capital finance might just be a good thing to ' pre - order ' when it comes to an owners'/financial managers search for a business credit loan financing. We're ' unfiltering ' some of the reasons and benefits for that type of thinking and planning. Let's dig in.
Your company's ability to both generate cash and properly finance your assets is often termed the ' lifeblood' of your business. Technically speaking working capital seems pretty simple - only requiring a quick look at your balance sheet and subtracting ' current liabilities' from ' current assets'.
But the real issue, practically speaking in our ' unfiltered' format is that you need to ensure you have a path to liquidity for those liquid/near liquid assets on the balance sheet. How you manage and finance them is really the key to business health. By the way, lenders, or even investors will always look at all that as a key metric around whether your firm will get a business credit loan or investment of some sort.
The other benefit of working capital finance, other than general ' business health' we've referred to is that a positive flow of funds in your business allows for growth and expanding your products and services.
On the other side of the coin what really happens when you've got negative working capital? It's here that your financial creditors and suppliers raise the ' red flag’. Ironically this might even be in a time when your sales are growing, with the real picture being that money tied up in receivables and inventories is simply not moving.
The whole issue of ' assets' is key to cash flow and working capital finance. Even though your assets might be sizeable on the balance sheet if you don't have operating liquidity you won't stay in business over the long term - instead your company is working its way downward to that 'edge of slippery slope''. Whether you're a start up or an established business the same challenge needs to be faced - ensuring that revenue monetization covers operating expenses.
While various simply analytical tools are available to monitor and assess your working capital finance needs one of the best ones is the ' turnover ratio ' - taking your net annual sales and dividing it by the average working capital during that time period. Safe to say that only businesses relying on investing in A/R and inventories have this challenge- as retail or ' all cash ' firms generate cash quickly.
The policies and techniques we've highlighted are the essence of achieving a business credit loan - including tactics such as financing assets properly and managing expenses.
The actual financing tools for a business credit loan and asset monetization are numerous. They include:
Bank and Non Bank revolving credit lines
Sale leasebacks of owned assets
Tax credit financing
Royalty finance solutions
Good financial planning will allow you to anticipate (aka ' pre order ') working capital finance solutions that make sense for your firm or industry. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you with an ' unfiltered' view of cash flow needs.