How The Other Half Deals With Business Cash Flow Financing

OVERVIEW – Information on business cash flow problems in Canadian business. How can working captial challenges be solved internally and externally

Have business cash flow problems? Ever feel like putting out on ‘ APB’

On working capital for your company, are you in an earnest search to solve the disappearance of your cash flows? We’ve got some internal (as well as external) solutions. Let’s dig in.

Top experts tell us that the key to successful working capital is to understand the techniques you have available to manage business capital flows.

We’ve long been a fan of the ‘ DUPONT MODEL ‘. Without getting to technical its a formula developed by a DuPont engineer many years ago that assesses how your profit margins , asset turnover, and debt load work together to show you how you are doing on sales and cash . It can be set up on a simple spreadsheet and can nicely be tracked to show you how you are ‘ INTERNALLY ‘ managing assets and business cash flow. Check it out.

But why do you actually have to have a strong handle on cash flows. One simple reason is that it underpins your business and gives you credibility with all your lenders, as well as owners of course.

A lot of clients we meet are still in early or, alternately ongoing development of their products and services. Developing that costs money and if your firm is taking advantage of the SR&ED program in Canada (trust us, your competitors are!) then you also have the ability to finance your SRED claim for immediate cash flow. It is a great tool to fund your company, most particularly if you’re in early stages of revenue.

Your gross margins are also an important part of your cash flow. Think about it. The ability to cover your costs, realize greater profits, and then turn over assets such as inventory and receivables basically creates a cash flow source for your firm.

Those sales at a higher price allow you to monetize current assets via bank credit lines and non bank asset based business lines of credit. Keep in mind that you, the business owner or financial manager can dramatically affect cash flow in 3 ways:

Turn assets over more quickly
Lower your costs
Raise prices

We’ll let you take care of costs and pricing, and our focus will be on asset monetization and proper borrowing.

If your firm can satisfactory manage your inventory and A/R they will always yield more cash flow.

When you borrow to finance cash flow and working captial you do that through either working capital term loans or asset monetization… What though are the factors that dictate who you can borrow from and how.

Those factors include:

The size of your company – i.e. assets and revenues
Your current overall cash flow situation
Financial credibility re; current borrowing arrangements, quality of financials

The rates and costs of different types of working capital financing ( receivable finance, inventory financing, SR&ED finance, asset based non bank lines of credit, Canadian chartered bank financing ) vary based on those factors noted above.

If you’re anxious, or require further investigation into the how ‘ THE OTHER HALF ‘ deals with the disappearance of cash flow seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success in business cash flow problems .. and solutions!

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