Tweet

The Reality Around Working Capital And Cash Flow Business Financing In Canada

Guest post by: Stan Prokop

Article Overview: Information on working capital and short term cash flow solutions for Canadian business financing . How to address daily cash flow needs without the need to borrow or invest in long term capital

The Reality Around Working Capital And Cash Flow Business Financing In Canada

Your access, and the way you manage your firms working capital and cash flow play a key role in business financing and your firm's growth and overall well being. We rarely get an argument on that one.

Your ability to get financing on items such as fixed assets, a/r, and inventory will ultimately depend on how successful and also how fast your company can grow .

Clients are somewhat amazed when we tell them that we can pinpoint the exact time when they will stop being successful! What do we mean by that? Simply that you have a great little tool to determine when you need that extra capital in your business. Most small and medium sized businesses haven't heard of it, we can assure you larger more sophisticated corporations have a total handle on this one.

So whats the tool - it's called the Sustainable growth ratio and it's a simple formula that shows you the most your firm can grow without bringing in new capital. For example, if you want to get a shareholder return on your total capital in the business of 20% you can re invest all your earnings and keep your relative overall financial position the same. Want to grow faster, then access more outside capital .Simple as that.

However accessing more capital from the viewpoint of our clients is either difficult, or undesirable - i.e. reducing their ownership interests, etc. So whats the choice. It's simply monetize your business financing assets such as receivables, inventory and unencumbered assets and create working capital and cash flow via asset turnover.

You create cash flow financing internally be addressing how you finance receivables, inventory, and accounts payable. Accounts payable you ask?! Yes, simply because as you slow your payables you generate real cash flow progress. Naturally there is a fine line here between generating that cash and alienating your valued suppliers!

We never want to be accused of talking about the problems and not the solutions, and we mean real world solutions, not textbook solutions to Canadian working capital financing.

So let's recap the solutions and why and when they might make sense. The easy, quick, go to solution is working with a commercial banker to determine if you qualify for bank financing from an operating line of credit point of view. We surmise that if you have all the access to bank credit you need you wouldn't be here reading our solutions proposed!

Other real world alternatives for cash flow financing in Canada, some of which are even unknown to our clients include based lending']);"> asset based lending facilities that are non bank in nature - basically lines of credit from private finance firms. Other solutions include confidential invoice discounting, and purchase order financing, which also occasionally dovetail into the financing of your inventory either prior to purchase or when its on your shop floor .

In summary, we spoke of your desire or inability to attract long term capital to your business, the solution being short term working capital decisions around how you finance on a day to day basis. Speak to a trusted, credible an experienced business financing advisor on how to access the Canadian business financing you need. Today !

Related Articles
  Working Capital Finance Loan Advice – What Business Credit Is Available For Your Firm ?
  Sources of Financing for Working Capital Cash flow in Canada
  Working Capital Financing – Commercial Financing Solutions
  How The Right Factoring Firms in Canada Can Provide Financing Factor Facilities Confidentially
  Working Capital Loans – Cash Flow Business Financing Canada
  How Merchant Advance Capital Works in Canada And Why Retail Merchant Financing Produces Cash Flow Today
  Working Capital and Business Lending in Canada Without the Voodoo!
  Working Capital Financing Canada – For Sales and Growth
  Factoring In Canada – Invoice to Cash Conversion – Benefit of Alternative Financing
  Asset Based Line Of Credit vs. Factoring in Canada
  Get Approved For Cash Flow Funding Via A Merchant Cash Advance In Canada
  Factoring and Accounts Receivable Financing In Canada
  Business Inventory and Purchase Order Financing Canada
  Someone’s Got Your Back On Cash Flow Solutions ! Canadian Working Capital Management
  Sred Credits – How To Finance Your Claim for Immediate Cash Flow
  Equipment Leasing Canada - Your best rates, Your best Terms!
  Financing for Equipment – Canadian Equipment Capital Options
  Asset Based Line Of Credit and Working Capital
  Is Your Company In A Constant Whirligig On Business Cash Flow & Working Capital Funding Challenges ?
  Business Working Capital Financing

Article Tags: business financing, canadian business, cash flow, working capital



Related Forum Posts
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
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
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!
Del Castienne - International Business and Project Brokers - In addition to the above, Del Castienne is an international brokerage firm specializing in various entrepreneural services. Del Castienne is more than just a brokerage, as we facilitate Private International Venture Capital for Business and Projects from Commodity Speculation Transactions, MBO, MBI, M&A, Bridging Finance, Patents, Branding, JV, Corporate Advisory Services, Business Plan Development, etc.. Del Castienne is linked to 1200 private international Venture Capital consortiums and Funding Syndicates with a funding capacity of $ 115 billion and 5000 international Investment Bankers and Business & Project Brokers. This in itself should provide you with a gateway to the best source of funding in the world. Through Del Castienne any entrepreneur can have up to a potential success rate of 25% (conditions apply) with absolutely no up front costs. Del Castienne charges a maximum of 5% commission which is far below the international standard of 10% - 12% on project value. If you are tired of running back and forth with countless dissappointments, please give us an opportunity to assist you. Our minimum Venture Capital amount is $1 million and we a Commitment Letter can be provided with in 30 days after formalities are in place and your information was received.
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital


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

Creating a Better Place to Work

How to choose your executive coach -1

Are You Too Good for Your Job?

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.