Separating The Wheat From The Chaff In Cash Flow Financing alternatives

Information on 2 kinds of business cash flow solutions. Finance companies and banks , and your own management can accelerate working capital inflows


or the lack thereof can provide some hard lessons for the Canadian business owner / financial manager. How does the owner/manager separate the ‘ wheat from the chaff ‘ when it comes to solutions offered by finance companies and banks. What other solution can be addressed, outside of seeking external financing? Let’s dig in.

You won’t find too many business people disagreeing with the fact that cash flow and access to working capital is important. It’s easy to see the cash going out, it’s more challenging to manage the cash coming in.

When it comes to financing solutions to address our subject manner they are more numerous than you might think. Canadian commercial finance companies offer a plethora of solutions outside of bank finance. They include:

Receivable financing

Inventory Financing

PO/Supply chain financing

SR&ED Tax credit bridge loans

Asset based lines of credit

Mezzanine financing

Royalty financing
Generally non bank solutions cost more, but it can also be quite easily said they are more attainable than Canadian commercial bank approval for your financing needs. Borrowers in the SME (small to medium enterprise) commercial finance sector must have a least a couple years of business success when it comes to accessing bank credit.

If your company can demonstrate it has real financial statements, profits, some equity in the business, and reasonable personal credit histories of the owners … well… from the banks perspective… You’re in. Bank credit lines are great solutions for the proverbial ‘ overdraft ‘.

So we have tabled two external paths in financing cash flow. But wait! There’s More! as our favourite K-TEL announcer used to say. In reality if you are growing at a modest rate your access to cash flow can easily come from within.

From within? Simply speaking it’s about focusing on better asset turnover in the areas of inventory and accounts receivable. Putting a simple system in place to verify and manage your day’s sales outstanding in A/R, or your inventory turnover will allow you to bring cash in more quickly.

We referenced your business growing at a ‘ modest rate’. In reality if you are in high growth mode, or have large , perhaps seasonal , bulges in your business you will most likely be forced to address external financing , no matter how well you manger current assets. That’s simply because sales growth is hungry, it eats cash as you build up A/R an inventory and wait for clients to pay.

Often the best solution for a company that can’t access bank credit but has solid growth possibilities is in fact asset based lending. This solution, typically via commercial finance companies, margins inventory and A/R on an ongoing basis, giving you all the business cash flow you need.

If you business is asset intensive it’s important also to consider asset financing solutions that won’t deplete working capital. That typically involves looking at a lease financing or sale leaseback solution.

If you’re looking to separate wheat from chaff in business cash flow alternatives seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your firms growth needs.

Author: Stan Prokop – founder of 7 Park Avenue Financial

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of 90 Million $$ of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:


Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171