Tweet

Staying Afloat via cash flow financing – Cash Flow for Business Solutions

Guest post by: Stan Prokop

Article Overview: Information on 5 methods to access cash flow for business and working capital solutions in Canada . Measuring the working capital challenge and accessing cash flow financing that works is a priority for Canadian business today

Staying Afloat via cash flow financing – Cash Flow for Business Solutions

So we're all in agreement, right ? - staying afloat is better than sinking... and talking to clients seeking cash flow for business seems to be mostly what we are doing these days. Cash flow financing for your business, whether you like it or not is at the top of the ‘ worry pile’ for Canadian business owners these days.

We'll discuss the problem, how you measure the problem, and, most importantly, some great solutions both traditional and alternative. And by the way, alternative is fast becoming traditional, but more about that later!

In talking to clients about business financing and business cash flow we always get the distinct impression they feel their business is unique - and that may be so but the truth of the matter is that the cash flow financing challenges you face are being faced by everyone else in and out of your industry.

As a business owner you can be forgiven for thinking your business cash flow financing challenges are unique, probably because of the mix. What do we mean by the mix? Simply that each h company and industry has difference levels of inventory, receivables, payables, all of which factor uniquely into the working capital challenge.

In fact, whether you like it or not, about 80%, yes 80% of all you assets are in receivables, inventory, and to some extent prepaid.

Your ability to ' turnover' these assets is what makes your business successful, or not.

Each industry has different gross margins, and if you have great gross margins then you can withstand a bit less turnover that is required in inventory and receivables. If you are in a low gross margin business turnover is absolutely critical. And you measure that turnover by three key metrics, inventory turns, days sales outstanding or collection turnover, and finally days payable outstanding.

Turnover drives working capital and many business owners kind of know that, but more often than not aren’t focusing on improving that turnover.

So , lets get back to staying afloat , which is what its all about !There are a number of cash flow financing solutions that allow you to address cash flow financing for your business . If it was a perfect world you would have all the liquidity you need from you bank, but bank financing is always a challenge for business, and in many cases inventory is not part of the financing mix that is available.

There are at least 5 great cash flow for business solutions available to help you succeed in Canadian business financing. These include the selling of your receivables, which can be done confidentially, and thereby generating instant cash flow for your company. For firms with 250k+ in assets and receivables you are in a position to be a candidate for a fully margined A/R and inventory working capital facility, available through a non bank solution. Larger firms with significant investments in working capital (receivables and inventory) are eligible for based lending']);"> asset based lending which is in our opinion the ultimate Canadian working capital solution.

Most business owners don’t know they can access cash flow financing via the financing of Purchase Orders (p o’ s) and contracts. They allow you to consider orders significantly higher than you could have ever handled in the past. And, finally firms with relatively good financial standing can access unsecured cash flow working capital term loans via non bank lenders.

So whats it all about. We think we have been fairly clear, and hope you agree. It’s about understanding your cash flow financing challenges, measuring them via the turnover of working capital accounts, and finally, accessing any one of the five, yes 5! solutions we have provided .

Speak to a trusted, credible and experienced Canadian business financing advisor as to what makes sense for your firm.

Related Articles
  5 Smart Simple Canadian Working Capital Cash Flow Financing Loan Techniques !
  Business Cash Flow Financing Problems ? Here’s Some Solutions
  Inigo Montoya’s Guide to Cash Flow Financing . The Business Working Capital Loan demystified !
  Failure & Success – Let Mezzanine Financing & Subordinated Cash Flow Loans Be The Difference !
  Confused About Canadian Working Capital Finance ? Cash Flow Financing Techniques That Work
  nterested In Understanding Business Working Capital in Canada ? Cash Flow For Operational Needs
  Where’s the Cash Working Capital and Cash Flow Loans and Finance For Canadian Business
  Why A Merchant Cash Business Advance Makes Sense for Cash Flow
  Stop Dreading Working Capital Financing - Cash Flow Lending and Loans that Make Sense
  Say Yes To Canadian Working Capital Solutions - Say No To Financing Cash Flow Obstacles !
  Want To Finance Working Capital ? Here’s Your Sources Of Cash Flow Financing
  5 Revolutionary Breakthroughs In Working Capital Business Loans & Cash Flow In Canada !
  Discover 7 Common Causes of Cash Flow Problems in your Business before it is Too Late
  How Merchant Advance Capital Works in Canada And Why Retail Merchant Financing Produces Cash Flow Today
  How Canadian Cash Flow Finance & Mezzanine Lending & Financing Differs From Lenders Offering ABL Solutions
  CASH FLOW - You're Forgiven for Misunderstanding the Term!
  2 Things You Need to Know About Business To Business Merchant Cash Advance Loans
  Carrying On Without Cash Flow Is Not An Option ! Analysis and Solutions For Canadian Business
  Surviving A Working Capital Financing and Funding Challenge
  Here’s Some Keys To Unlock Business Operating Cash Flow With Solutions That Work

Article Tags: cash flow financing, cash flow for business



Related Forum Posts
Re: Improving Cash Flow - Thanks for your information. guide on how to avoid the problems of over trading. <-- Where is this guide? Any URL? guide on debt factoring and invoice discounting: the basics. <-- Where is this guide? Any URL? I just want to learn more about this. I am also looking for a good article on: What exactly is Cash Flow? Ways to improve cash flow at individual level and organizational level? I think it is a problem of thinking and mind sets problem. If we can change the way of spending, we can have more Cash. Robert
Re: Website Name Help - Its good that you have come up with the idea of setting up a website for your business. Now As it is into Business Solutions, I would recommend that you also include this into the name of the website. This will help you getting better results as far as SEO is concerned. You can start building a brand with this name. As you have already got the name booked, you can try changing it to something on the lines of Business Solutions as in azimabusiness or azimabusinesssolutions. Its a long name but still is good from the SEO point.
Improving Cash Flow - How do I improving Cash Flow? What the best way to improve it to another 100% growth YOY? Has anyone does this or achieved this using online marketing? Thanks, Roberts
Tax returns! - Well, this is new on me. i had no idea you could sell a site off. If it's anything like purchasing a non-internet business then you need to check into multiple things. Will you need to finance to purchase? If so, you'll need to calculate the cash flow. Also, find out if there will be any add backs to the cash flow, for example, are there other workers invovled to keep the site running...perhaps workers you won't need when you take the site over? Their salaries can be added back to the cash flow if you will not need them. You must see the top page of the last year tax return (never go off just the P & L's). Did the seller run anything personal thru the tax returns that you wont? That's also considered an add back to the cash flow. What is the gross sales for the 12 months? What is the net income for the 12 months? Make sure the purchase price is justified. You can calculate a ball park range on this by doing 30 - 50% of the gross sales for the year or 3- 5 times the net earnings. What is the web traffic like? Is it steady? Do you have time to run the site or will you need to hire someone to manage it? Make sure the business is supporting itself and is profitable. Does the seller have an initial business plan from when they bagan the business, so you can look it over?
Securing Financing - This is a short article that a friend of mine put together. He's a business banker and it seems that he would be the right person to put the info together. He compiled it for inclusion in a book about opening a pizza shop. There could be some useful info here - In order for a bank to even consider financing for a business loan such as a pizza restaurant, the first step is to have good personal credit. If you have previous credit issues that have lowered your credit scores, make sure you are prepared to either hear, “No”, or “Please explain this (these) credit marks.” If you have not demonstrated the ability to manage your own personal finances then most likely you will not have the opportunity to manage the financing from a bank for a business. When you make the initial contact with a bank, ask to speak to a commercial loan officer. Other types of loan officers include consumer (think car loans) and mortgage (think home purchases and home equity loans). The commercial loan officer will be able to provide a list of things you will need to give him/her in order to consider the restaurant financing. Information required for a new business most likely will include the following: Personal financial statement (Assets – Liabilities = Net Worth) Personal tax returns (two years) Business Plan If leasing property, copy of the lease agreement If purchasing property, copy of the sales contract Personal History / Resume (may not be required but is very helpful) If an existing business, add the following to the list above: Business tax returns (two years) Copy of State Corporation Commission Certificate Copy of Federal Tax Identification Number or Employer Identification Number (EIN) Copy of Articles of Incorporation (if corporation) Copy of Operating Agreement (if partnership) One common mistake a new business owner often makes with regard to financing is that one loan will cover all the financing needs. This is typically not the case and can lead to cash flow problems that could result in default on the loan, which is not what the lender or borrower want. In most cases, either two or sometimes three separate loans would be appropriate. For instance, if one is purchasing real estate then a long-term mortgage loan would be appropriate to finance that purchase. However, the pizza restaurant may need to purchase equipment and have cash available monthly to meet payroll and purchase rolling inventory. An equipment loan could take the form of a five or seven year loan with a fixed monthly payment much like a car loan. A line of credit, on which one would pay interest monthly on the outstanding balance, may be prudent for short-term cash flow purposes. All three should be addressed in the business plan and discussed with the commercial loan officer. Chris


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Do You Have An Entrepreneurial Vision?

Effective Leadership

Purchasing Real Estate using the SBA 504 Loan

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.