Borrow Or Monetize When It Comes Canadian Business Financing ? Business Finance

OVERVIEW – Information on business finance options and solutions for Canadian SME Commercial Financing . Financing businesses involves the proper match of asset monetization and new or re organized debt

Business finance options
and solutions often come down to the issue of either borrowing to take on new debt or monetizing assets. Financing will take on one of these two forms to achieve the financing solution that your company needs. But is it better to borrow, or monetize? Let’s dig in.

Being able to identify the right type of financing your company needs will always keep you on top of staying competitive and successful, and, in the extreme, avoiding business failure.

At the end of the day it comes down to knowing which solutions make sense for your firm and your industry (some do not). The comfort that comes from knowing you have access to cash flow and capital can only be described as a good feeling!

Companies seeking SME COMMERCIAL FINANCE options generally have fewer choices that larger corporations or firms having public company listed status.

So how does the business owner/financial manager avoid a cash flow shortfall? It boils down to a simply piece of thinking – knowing your asset based and how it’s monetized – understanding the timing of inflows and outflows. Easier said than done, right?

One of the great ironies in business lies on page 3 of your business financial statement. It’s the cash flow statement, and when properly understood allows the owner/manger to identify why the firm is having problems even when sales are growing quickly and your accountant advises that ( paper ) profits are being generated.

Asset monetizing solutions such as:

Canadian chartered bank credit facilities
Receivable Financing
Inventory Financing
PO/Contract financing
Non bank asset based lines of credit
SR&ED Tax credit financing

are ‘ asset monetization’ strategies that will increase operation cash flow. All of these come at different costs and work differently, but at the end of the day they all solve the same problem.

To take on debt to fix the cash flow problem might entail considering a working capital term loan. Careful consideration should be given to that strategy because it has fixed payments and adds debt to the balance sheet, in effect changing what the Bay St boys call your ‘ capital structure’.

The key point we are making essentially is that your business finance options boil down to understanding:

Working Capital
Cash Flow

Your working capital accounts, i.e. A/R and inventory can be used to generate business cash. The more assets you have the more access to capital you will almost always have. Cash flow on the other hand is simply the timing of profits generated over a period of time. That allows you to consider adding debt options such as:

Lease financing
Term loans
Bridge Loans
Sale Leasebacks

Unfortunately in business no one arrives to give you a heads up warning about future financing needs. All along the way the owner /manager can address some issues internally – tighten credit terms, manage payables, focus on better asset turnover of a/r and a/p, etc.

When you want to be ‘ cleared to go ‘ in monetizing your assets, or taking on new debt either traditionally or with alternative finance solutions seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your business finance options .

Author: Stan Prokop
7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :



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