YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email Address - sprokop@7parkavenuefinancial.com
Working capital financing transforms your unpaid invoices into immediate cash, providing a crucial lifeline for businesses in Canada.
Unlock your business potential with working capital financing and boost your cash flow today!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer WORKING CAPITAL FINANCING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
CANADIAN BUSINESS FINANCING WITH THE INTELLIGENT USE OF EXPERIENCE
REVERSING THAT NEGATIVE WORKING CAPITAL FEELING!
Working Capital Financing – Canadian business owners want to maximize the utilization of their receivables, inventory and incoming orders and contracts to leverage working capital.
INTRODUCTION - WORKING CAPITAL FINANCING BUSINESS LOANS IN CANADA
Working capital financing solves the challenge business owners face. These solutions allow companies to leverage their current assets, such as receivables and inventories, to access immediate funds, enhancing liquidity and stability. SME's and large enterprises can unlock new opportunities for growth and success.
The goals are very clear: grow business revenues and profit with the right combination of internal growth, borrowing from banks and others, and achieving the best blend of working capital and cash flow by leveraging those current assets.
Long-term debt or additional new equity is not often the business owner’s choice when arranging more working capital and cash flow. Most businesses and business owners will avoid extra expenses around interest rates and financing as they focus on more cash during a busy season or fulfill large orders and contracts.
At 7 Park Avenue Financial, we meet with many business owners who tell us they have the opportunity to increase sales significantly. They need a financial strategy to grow those profits and equity while minimizing loan interest and other external financing costs.
When a business implements a proper working capital solution, it has the potential to reduce or minimize debt and increase bottom-line equity or value. It is about achieving the optimal working capital ratio, which is often industry-specific. The cash conversion cycle for many industries is vastly different, given that a/r and average inventory turns differ in various industries.
Our point is simply that if your business can absorb a reduction in its gross margin (the cost of working capital associated with receivables, inventory, and PO financing), you can avoid debt and equity scenarios and still grow your business!
Business owners want to achieve results as they try to understand and calculate working capital needs around the balance between accounts payable and accounts receivable while managing cash and short-term obligations.
LOOKING FOR AN EXAMPLE OF WORKING CAPITAL SOLUTIONS ?
Cash flow solutions such as factoring, invoice financing, and our recommended favourite,' Confidential Receivable Financing,' are most often associated with cash flow financing your current accounts receivable. As an example, it's about waiting for manufacturers for the manufacturing and payment process to complete the cycle.
It's a solid solution to a traditional line of credit - allowing you to bill and collect your own A/R and maximize business opportunities. Little emphasis is placed on the owner's credit score, and it's an alternative to a short-term loan, which is a long-term obligation that brings debt to the balance sheet and requires more effort toward lender approval requirements.
Extending credit payment terms or other special credit terms to clients may increase sales, but at the same time, it puts pressure on your company's liquidity in funding your business to allow you to meet current accounts payable liabilities to pay suppliers, make loan payments, hire staff, etc.
In some cases, many companies may be required to pay for raw materials significantly in advance to satisfy the client needs of their largest or best customers in existing or new markets or for a new contract or order that has an immediate short-term need. Some companies need to increase working capital in the summer months in advance of the holiday seasons, etc.
It is important to note that inventory financing, a subset of asset-based lending, can also provide substantial day-to-day operating capital. Of course, your company will only pay interest on what you draw down on your facility as you work to achieve positive net working capital.
True asset-based lending facilities that encompass the financing of inventory, receivables, and equipment and even allow borrowing power against owner real estate provide a real, shall we call it, holistic approach to Canadian business finance. Even purchase orders can be financed as a subset of asset-based financing.
The challenge for the Canadian business owner and financial manager is to grow the business and understand the cost of increased company sales under various financing methods.
New clients at 7 Park Avenue Financial are often surprised to learn how much their business can change by simply analyzing their additional working capital financing choices.
Using factoring or inventory financing as a cash flow supercharger is often the best strategy for enhancing working capital. Most non-financial business owners do not appreciate the power of working capital turnover and are focused on repayment meaning.
There are all sorts of tools that your business can very easily use to monitor your working capital needs. One is simple - you must monitor your working capital to sales ratio.
WHAT IS WORKING CAPITAL?
How do we calculate the working capital to sales ratio? It’s easy. Working capital is essentially your current assets minus your current liabilities. Take that number from the balance sheet and divide it by sales. If you have a low ratio, your ability to generate cash flow is more robust.
ASSET TURNOVER IS KEY
The solution for Canadian business owners is to maximize the turnover of current assets such as receivables and inventory via working capital facilities.
Suppose those facilities can’t be arranged with a bank. In that case, you have the option of working capital lines of credit and asset-based lines of credit that will cover unpaid invoices/ receivables, inventory and even, under any circumstances, bulges for new contracts and purchase orders.
Working capital facilities via asset-based lending business credit lines, factoring, inventory financing, or purchase order financing maximize your cash flow. However, they also cost more, and many Canadian businesses simply focus on the cost, not the true long-term benefits.
Working capital loans can also be accessed - typically repayable over 12 months and based on your sales formula.
While short-term working capital loans are expensive, they provide quick and easy access to cash. It's a new form of short-term business loan that arose out of the merchant cash solution that originally was aimed at retailers. Business credit cards are also often utilized for quick cash flow needs to cover any short-term gap in funding and alleviate the need for a long-term loan and periodic payments that come with bringing long-term debt to the balance sheet.
Equipment financing solutions for fixed assets and technology are best addressed by long-term financing, such as equipment leasing or term loans, with the goal of conserving day-to-day cash. Properly financing long-term assets is key to business growth and cash management.
However, they fail to measure the cost of carrying those receivables and the cost of not turning over that inventory efficiently. These two costs alone can, in some cases, erase the cost of financing under a working capital and cash flow facility.
How does a business compute its cost of credit? The formula relates to your firm not taking credit and payment terms extended by suppliers. Your supplier gives you terms that specify a payment date, the amount of the discount if you pay early, and, of course, the due date. The cost of NOT taking that discount is vast!
Most owners don’t realize that. If your firm can negotiate better prices by utilizing working capital financing strategies such as factoring and inventory financing and purchase order financing you have just become the best comparison shopper in business!
The cost of not taking trade credit discounts is very high when your business can take those discounts via aggressively financing your receivables and inventory. Utilize great working capital strategies; you will find that the cost of paying in full is higher than that of a working capital facility to cash flow those receivables and inventory!
THE COST ASSOCIATED WITH WORKING CAPITAL FINANCE SOLUTIONS
Non-bank, non-regulated commercial finance companies that offer cash flow solutions in Canada have traditionally been somewhat cumbersome for the Canadian borrower and often mirror the Canadian chartered bank borrowing experience.
The bank's focus on long-term loans is often not what the client is looking for. That is changing rapidly with the rise of online finance and peer-to-peer lending. The types of working capital provided by banks often involve lengthy application processes and solutions such as long-term loans.
Online providers utilize slick software solutions that are focused on speedy approvals. Although these solutions come at much higher costs, they can help satisfy a large order that might arise from your client base.
We recommend utilizing a business finance expert to determine which online solution, if any, is recommended for your firm. Also, it's important to note that typically, working capital providers have no geographic boundaries and operate throughout Canada.
In summary, the cost of not taking trade credit discounts is very high when your business can take those discounts via aggressively financing your receivables and inventory as you focus on internal cash flow.
KEY TAKEAWAYS
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How Working Capital Financing Works: Understanding the basic mechanics of converting invoices into cash.
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Benefits of Working Capital Financing: Grasping the key advantages for businesses, such as improved liquidity and stability.
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Eligibility Criteria: Knowing what makes a business qualify for this type of financing.
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Costs and Fees: Being aware of the financial implications and expenses involved.
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Impact on Cash Flow: Recognizing how it directly affects a company’s financial health.
CONCLUSION - SMALL BUSINESS LOANS AND CANADIAN BUSINESS FINANCING SOLUTIONS
Small business owners always want to know their business finance options. Many businesses recognize positive working capital is essential. Still, as a business owner, they want a real-world solution to their particular company or industry challenges around extra working capital or low working capital reality.
Financing all your business needs can come from several sources—talk to the 7 Park Avenue Financial team for more information about business funding you can take advantage of.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor with a track record of business finance experience who can assist you with loan and cash flow needs.
FAQ: FREQUENTLY ASKED QUESTIONS
What can a working capital loan be used for?
Working capital loans can help you manage the cash flow gaps of everyday business expenses and fund payroll, rent or operational costs during slow seasons.
They can also be used during the slow season, when cash flow may become tight, because they will help you manage those gaps in your funds without running out! A company's current assets are key to understanding cash flows and net working capital in a working capital financing solution.
How does factoring in working capital financing work?
It involves financing unpaid invoices to a financing company in exchange for immediate cash.
What are the benefits of working capital financing?
The benefits include improved cash flow, access to immediate funds, and reduced financial stress around working capital management. A business line of credit is the most common solution to secure financing - Small firms often utilize the merchant cash advance.
Who is eligible for working capital financing in Canada?
Eligibility typically requires a business to have a stable customer base, outstanding invoices, and a good credit history.
How much does working capital financing cost?
Costs vary but generally include a percentage fee based on the invoice value and additional service fees. Supply chain finance, such as PO Financing, is valuable but more expensive.
Can working capital financing positively impact my cash flow?
Yes, it provides immediate funds to help manage expenses, invest in growth, and maintain financial stability.
How does working capital financing via a factoring solution differ from a traditional loan?
Unlike conventional loans, to finance working capital does not require collateral and is based on your outstanding invoices.
What industries benefit most from financing working capital?
Industries with long payment cycles, such as manufacturing, retail, and services, benefit greatly.
Are there risks associated with working capital financing?
Potential risks include fees and reliance on the financing company for cash flow.
How can I find a reputable working capital financing provider in Canada?
Research providers, read reviews, and compare terms to find a reliable partner such as 7 Park Avenue Financial
What documents are required to apply for working capital financing?
Typically, you'll need financial statements, a list of outstanding invoices, and customer details.
