Procuring working capital is usually required for one of a variety of reasons.  Most likely due to a strained and prolonged  business cycle and add into that the usual operating cycle which is the gap between money out and money in and shazam the cash flow is on the brink of empty.  What can you do is what we will answer to today?

In the case of a product based supplier industry (service industry’s similar would be extended service contracts payable upon performance etc.) you will have a variety of short term assets or contracts that can be monetized – Receivables, Inventory and Purchase Order contracts.   The options on monetizing these ‘assets’ are in varying percentages, discounts or advance rates.  An important measure of determining any of these monetizing options are margins – considerable value otherwise, the profitability is absorbed into the financing and the viability of the business becomes mute.  Where you can show healthy margins and support future sales growth then working capital financing options are ideal at these times.  Fast growing companies can have this same challenge with the operating cycle being lengthy (i.e. out of country purchases – paid in advance or on the dock yet the time on the water is weeks away straining the cash flow).

Do you need to be a net importer to require this working capital financing? No.  Do you need to be a net exporter to require working capital financing?  NO.  Who else may fit into working capital financing?  Well, often companies who engage in buying raw materials who will convert them to a finished product then have to install them in the client’s place of business for instance may require this working capital financing support.  Any mature or maturing business understands this ‘gap’ in cash flow and typically factors this into their pricing model.  However, if a few clients’ make up a substantial portion of a company’s Sales and living in this operating cycle and a perfect storm happens – one client delays payment(s) for whatever reason and another client goes bankrupt on you, you are at risk and your exposure to cash flow can become dire.  Wow!  ‘What just happened?’ kind of doesn’t matter at this moment rather, what can be done to salvage and minimize the impact on your business is what’s most critical today.

You don’t have to be in financial ruins, just need working capital financing to steady your cash flow and an experienced advisor will assist you with your needs.  This is what we do at 7 Park Avenue Financial.

For that matter, review our history and get comfortable with whom you trust in your working capital needs – .