Are You Controlling Cash Flow In Your Business – Here’s The Why and How!

OVERVIEW – Information on how the working capital formula is a key part of cash management in Canada

Is Cash Management in your business in control… of you? , or are you in fact managing with a working capital formula and solutions that work. When it comes to business cash flow it’s not a time for inaction or procrastination. Let’s dig in.

The irony has never been lost on us when it comes to what ‘academics’ might say about how great your liquidity position is in, given the way accountants, textbooks, and even banker measure working capital . It all starts when you’re told you have a ‘ high’ working capital (current asset to current liability ratio).

Naturally you want to be in a position where you liabilities are low, but does having high levels of receivables and inventory create a winning scenario ?We sure don’t think it does , because all that might mean is that you’re mismanaging or perhaps simply unaware of the quality of asset turnover in A/R and inventory.

Using inventory specifically your warning signs might be as follows:

Sales are down and inventories are building up – Not good!

Inventory is outdated and somewhat unsalable – Not good!

Inventories are building up – Not good

And then there is your receivables position. Your A/R is of course your most liquid asset next to cash itself; in essence the heart of your liquidity.
Here are your potential problem sign warnings:

Customers are paying you more slowly relative to your terms of payment – Not good!

Potential bad debts loom on the horizon based on serious delinquency in your A/R

If your business has the right levels of current assets solutions to a working capital might be more abundant than you think. They include:

Selling receivables (A/R Financing)

Inventory finance

Canadian commercial bank lines of credit

Asset based (‘ABL ‘) lines of credit that are non bank in nature and monetize all your current assets – plus your equipment!

Tax credit monetization, i.e. financing your SR&ED claims

Working Capital term loans

Supply Chain / P O Finance

In utilizing any of the above solutions it’s all about timing. Here’s where you need skill and attention to details such as timing your payment inflows, managing payable and term loan commitments and of course keeping costs in line.

Unfortunately some businesses have it easier than others. Service businesses that require low investments in capital and little or no inventory are often cash flow ‘ winners’. Tech businesses with high margins and low capital investment also can be cash flow machines.

If you’re not in the above industries as an example you’re going to have to master a solid working capital formula. That’s simply because you need cash to run operations, buy assets, and finance working capital in A/R and inventories. Your ability to manage and exhibit good cash flow management will affect the type and quality and rate and structures of financings available.

If you need help in winning the cash flow battle when it comes to mgmt and financing of assets 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 a winning finance solution and working capital formula.

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




7 Park Avenue Financial
Canadian Business Financing