Why You Should Care About Business Solvency! Business Cash Flow And Working Capital Solutions In Canada
Stan Prokop
Canadian Business Financing | Cash Flow Financing | Asset Based Lending | Equipment Finance | Lender Financing | Purchase Order Financing | Acquisition Financing | SAAS Financing | Acquisition Financing
YOUR COMPANY IS LOOKING FOR? BUSINESS CASH FLOW SOLVENCY SOLUTIONS!
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 - [email protected]
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Cash flow challenges can stifle business growth, but innovative financing solutions like business cash flow loans are changing the game for entrepreneurs.
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Unlock your business potential: Discover how cash flow loans can fuel your success and keep your finances flowing smoothly.
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7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer BUSINESS CASH FLOW LOANS and solutions that solve the issue of cash flow and working capital ?– Save time and focus on profits and business opportunities
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7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
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Business Cash Flow Loans: Financing Solutions
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Business Health - We’re pretty sure dedicated business owners and financial managers care about their business viability, the amount of cash they have on hand or access to, and business solvency , pretty well as much as they care about their issues.
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And the results of not caring about overall financial health and liquidity in your business are of course disastrous, up to and including business failure.
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It also goes without saying (but we’ll say it!) that you’re in a position to survive and grow when you have business cash flow working capital and access to solutions that provide those funds.
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Companies often need to borrow money to fund their operations or make major purchases. Evaluating business assets, such as accounts receivable, inventory, and real estate holdings, is crucial for understanding financial health and liquidity.
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Business cash flow loans allow your company to avoid liquidity crunches. Numerous solutions are available and flexible around your business needs. Funding your cash flow cycle allows you to access working capital and cash flows needed to fund daily operations and grow your business.
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SYMPTOMS OF POTENTIAL BUSINESS INSOLVENCY
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The symptoms of poor cash flow and working capital should be evident to every business owner; they include:
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Vendor/supplier concerns
Slow receivables
Faulty financial reporting
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And on it goes!
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When you are on top of things and you can attract financial solutions.
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That’s a much better position to be in than being ‘ hat in hand ‘ in front of a? bank or a commercial finance company when your firm is probably closer to ‘ dire straits ‘ than poised for growth and cash flow/working capital success. There are pretty well times in every company’s existence when working capital goes ‘ negative ‘ .
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Hopefully, that is a temporary situation, as it often is, but if the problem persists a combination of taking a hard look at sales fluctuations, as well as putting a financing fix in place to overturn negative working capital is required.
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Managing monthly payments is crucial for avoiding insolvency, as it helps align cash flow with financial obligations and ensures the business can meet its repayment terms.
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For many owners, the reality of continued negative working capital is almost intuitive—simply because they are always chasing cash/receivables and talking to suppliers!
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One solution for the business owner is to have him or her inject further equity into the business. If that can’t be done, working capital financing must be put in place, as poor financial performance cannot continue for an extended period without ramifications.
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FINANCIAL SOLUTIONS FOR CONTINUING BUSINESS CASH FLOW SOLVENCY
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What are some of the solutions for business working capital and solvency?
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They are more numerous than you think and often can be used in combinations. They are:
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Merchant Cash Advance /? short term working? capital loans - installment loans based on sales or credit card sales
Government Of Canada Small Business Loan Program? - The Guaranteed federal business loan is offered by participating financial institutions.
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Cash flow lending relies on a company's projected future cash flows to determine loan approval and terms, allowing companies to borrow money without physical collateral.
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Invoice financing is a short-term loan option that allows business owners to borrow against their outstanding invoices. It is ideal for businesses needing quick cash from customers with lengthy payment terms.
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Merchant cash advances provide financing based on daily sales, which is suitable for businesses with high sales volume and flexible repayment terms.
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The challenge, of course, is to ensure which solutions suit your company and when.
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Here’s where you need to take the ‘ big picture ‘ outlook regarding the business working capital solutions that more perfectly suit your firm’s situation through expert financial analysis.?
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Business owners and financial managers must differentiate between short-term and long-term financing needs. The good news is that there are solutions for both.
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PREPARING YOUR FINANCIAL STATEMENTS AND INTERPRETING THEM FOR BUSINESS LOANS!
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Of course, to ensure which solutions work, you need a solid handle on meaningful information from your financials. Unbelievably, not every business owner/manager knows how to either pull together the data or interpret it.
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The importance of working capital, cash flows, and future cash flow in assessing a company's ability to repay loans and manage financial stability cannot be overemphasized. At 7 Park Avenue Financial, we are always working with clients to understand their financial position and match a solution to their business needs.
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The third part of any firm’s financial statements is the cash flow statement, and it’s a telling document that many business owners overlook. Cash flow inflows and outflows have a real impact on how you run your business and what you need to do to grow your company.
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That simple definition of working capital, namely, the absolute dollar difference in current assets and corresponding liabilities, will show you what’s left to cover those short-term expenses.
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We caution clients not to get overly comfortable with that number being positive; managing those assets and ensuring solid working capital turnovers in accounts receivable and inventory turns is more important. That type of turnover in assets is what impresses a commercial lender, by the way!
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Never underestimate the relationship between current assets and current liabilities in your numbers - your banker or lender never does! Attention to your receivable accounts always impresses lenders of any type and increases your ‘ quick ratio ‘, an even more critical measurement of cash survival.
领英推荐
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Simple relationships in your financial statements make your banker or non-bank lender somewhat of an ‘oracle ‘ when predicting business failure. We recommend that clients become their oracles!
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THE IMPORTANCE OF UNDERSTANDING KEY FINANCIAL RATIOS FOR BUSINESS HEALTH
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The business relationships of the numbers in your financial statements are long-term and short-term. The common word for these relationships is ‘ ratios’; we prefer our terminology of a ‘ relationship ‘.
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A simple example would be the ‘ current ratio ‘—the relationship between current assets and current liabilities—reflecting your working capital changes.
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When you look at some of the shorter-term ‘ relationships ‘ in your financials, you are really looking at two things. And because they are so obvious, most owners/managers can’t see the forest for the trees.
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What are those two things? They are ‘ changes’ and ‘ movement ‘. Just keeping track of simple changes in:
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Operating expenses/accounts payable
Day’s sales outstanding / accounts receivable ( balance sheet financing of current assets might be required )? /?? Inventory turns
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Be the oracle of your business future!
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And whether it’s a balance sheet or income statement relationship, we assure clients there is meaningful data in their numbers!! When you look at cash flow projections, take into account how your working capital will affect payables and business line of credit needs.
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KEY TAKEAWAYS
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CONCLUSION
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When you both manage and care about your cash flow solvency, solutions to growth and operations challenges will become much more straightforward for SME/small business owners who seek a competitive interest rate.
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Understanding even the basics will ensure you understand the relationship between balance sheet financing and cash flow and, more importantly, its positive and negative impacts.
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On a long-term basis, the overall working capital situation can even impact your company's true value. As we noted, a business might have seasonal or ‘bulge financing’ needs, so at times a/r and inventory investments are required, and those will typically allow you to secure the right type of receivable financing/factoring , line of credit, or inventory loan
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Pinpointing temporary or permanent changes in working capital needs allows your firm to remain solvent with finance solutions and avoid financial distress.
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A business loan calculator can help estimate loan repayment and assist in financial planning.
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Call? 7? Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor in corporate financing in the SME sector, who can assist you with Canadian working capital solutions.
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FAQ
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How do business cash flow loans differ from traditional bank loans?
Cash flow loans typically offer faster approval, more flexible terms, and base repayment on future revenue projections rather than strict collateral requirements.? The cash flows of the business secure cash flow financing.
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What types of businesses can benefit most from cash flow loans?
Seasonal businesses, companies with long receivable cycles, and rapidly growing startups often find cash flow loans particularly beneficial for managing working capital needs.? Proper business financing allows borrowers to not rely on? a personal loan to fund the business.
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Can cash flow loans help improve my business’s financial stability?
Yes, by providing quick access to working capital , cash flow loans can help bridge temporary gaps in cash flow, allowing businesses to maintain operations and seize growth opportunities.
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Are there any advantages to choosing a cash flow loan over equity financing?
Cash flow loans allow business owners to retain full ownership and control of their company, unlike equity financing which dilutes ownership stakes.
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How quickly can I receive funds from a business cash flow loan?
Many lenders offer rapid approval processes, with some providing funds within 24-48 hours of application, making cash flow loans an excellent option for urgent financial needs.
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What documentation is typically required to apply for a business cash flow loan?
Most lenders require recent bank statements, financial projections, and proof of business revenue history to evaluate loan applications.
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How are interest rates determined for cash flow loans?
Interest rates are often based on factors such as a company's credit score, revenue history, and overall financial health.
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Is there a minimum time in business required to qualify for a cash flow loan?
Requirements vary by lender, but many prefer businesses with at least six months to one year of operating history.? Online lenders offer short term working capital loans payable in installments and based on sales history.
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Can startups or new businesses obtain cash flow loans?
While more challenging, some lenders specialize in providing cash flow loans to newer businesses based on future revenue projections and business plans.
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Are there any industries that typically don’t qualify for cash flow loans?
High-risk industries or those with regulatory uncertainties may find it more difficult to obtain cash flow loans, but options often exist with specialized lenders.
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How do lenders assess a business’s ability to repay a cash flow loan?
Lenders offering business finance solutions analyze historical cash flow patterns, revenue projections, business credit history, and financial health to determine repayment capacity and loan terms.? In smaller firms the personal credit score of business owners is often a determinant for credit approval.
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What are the key differences between secured and unsecured cash flow loans?
Secured loans such as asset? based lending require collateral and potentially offer lower interest rates, while credit lines, a working capital loan, and unsecured loans for a specific loan amount rely solely on the business’s cash flow and creditworthiness.
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How can businesses leverage cash flow loans to support long-term growth strategies?
Using cash flow loans strategically, businesses can invest in inventory, equipment, or marketing initiatives that drive revenue growth and improve overall financial performance. Government small business loans now offer cash flow and working capital components. Thousands of small businesses use the program annually, which offers flexible amortization and monthly payments. Early payoff discounts come with no penalty and a limited personal guarantee.
' Canadian Business Financing With The Intelligent Use Of Experience '
?STAN PROKOP 7 Park Avenue Financial/Copyright/2024
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Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil