So we all agree, right? Keeping fluent is better than sinking ... and talking with customers seeking cash flow for companies seems to be mostly what we do today. Cash flow financing for your business, whether you like it or not, is at the top of the worries for Canadian entrepreneurs today.
We discuss the problem, how to measure the problem, and most importantly, some good solutions both traditionally and alternatively. And by the way, the option gets fast traditional, but more about it later!
When we talk to customers about business finance and business flow, we always get the distinct impression that they think their business is unique and that may be so, but the truth about the issue is that the money funded challenges facing you is faced by everybody else in and out of your industry.
As a business owner, you can be forgiven to think about your companys cash flow challenges. Challenges are unique, probably because of the mix. What do we mean by the mixture? Quite simply, each company and industry have different levels of stocks, receivables, debts, all of which are outstanding in the workforce challenge.
In fact, if you like it or not, about 80%, yes 80% of all your assets are in receivables, inventory and, in some cases, prepaid.
Your ability to sell these assets is what makes your business successful, or not.
Each industry has different gross margins, and if you have large gross margins, you can handle a little less sales required in inventory and receivables. If you are in a low gross margin, sales are absolutely critical. And you measure that revenue with three key ratios, inventory, day sales or aggregate sales and finally outstanding payment dates.
Turnover drives working capital and many entrepreneurs, but knows more often, but usually does not focus on improving sales.
So, lets get back to staying alive, which is what its about! There are a number of cash flow financing solutions that allow you to manage cash flow financing for your business. If it were a perfect world, you would have all the liquidity you need from your bank, but bank financing is always a challenge for business, and in many cases, inventory is not included in the funding mix available.
There are at least 5 major cash flows for business solutions available to help you succeed in Canadian corporate finance. These include the sale of your receivables, which can be made confidential and thereby immediately generate cash flow for your company. For companies with 250k + in assets and receivables, you are able to be candidates for a fully marginal A R and inventory capital facility, available through a nonbanking solution. Major companies with significant investments in working capital receivables and inventories are entitled to assetbased lending, which, in our opinion, is the ultimate Canadian operating capital solution.
Most entrepreneurs do not know that they can access cash flow financing through purchase order purchase and contracts. They allow you to consider orders considerably higher than you could ever have handled before. And finally, companies with relatively good financial standing can access unsecured cash flow working capital loans through nonlenders.
So what is it about. We think we have been quite clear and hope you agree. It is about understanding your cash flow financing challenges, measuring them through the turnover of working capital accounts, and finally accessing any of the five, yes 5! solutions we have provided.
Talk to a trusted, trustworthy and experienced Canadian Corporate Finance Advisor about what makes sense for your business.