Can You Properly Recognize Business Financing Needs ? Funding Businesses In CanadaDon’t Make These Mistakes

OVERVIEW – Information on business financing loans and alternatives in Canada . Funding businesses requires knowledge of the type of finance solutions that meet your company’s specific challenges and needs

Funding businesses
in Canada often comes down to recognizing what type of business financing loans make sense for your firm. In fact not properly being able to ascertain what type of finance is needed, makes sense, or that your company is qualified for is what it’s really all about. Let’s dig in.

Part of the confusion around picking the right type of financing revolves around understanding the sometimes subtle ( and sometimes not so subtle !) differences between ‘ working capital ‘ , ‘ cash flow’, ‘profits’ and ‘ asset turnover ‘.

We all should be familiar with the idea that profit isn’t cash and many a great company has stumble and fallen around missing that difference. There a classic example of that in the U.S. that is used in text book studies – it revolved around the dept store W.T. Grant. It was a public company, seemed to be doing well (key word = ‘ seemed ‘) and went under to the surprise of all, including shareholders! The reason – things in paper looked great, assets were huge. The problem – assets weren’t turning and there was no real cash. After the company went under the accounting industry went on to invent the ‘ cash flow ‘ statement which is not a part of every financial statement.

The reasons that cash and profit don’t equate often come down to the asset turnover we have talked about. As your firm builds up inventory and then sells products on credit terms Funding Businesses In Canadaa huge gap develops between paper profits and cash in the bank.

Companies finance working capital, which then becomes cash via short term credit facilities. In Canada these facilities should be financed via:

Bank credit lines

Commercial A/R financing facilities

Inventory financing arrangements

PO Financing

Tax Credit Financing

Non Bank ABL Asset based credit lines

The ability to turn receivables and inventory into cash is the ultimate measure of success of a business.

The business owner/ financial manager should also be watching cash availability and assets needed to run and grow the business. Here asset financing strategies are key – they include:

Equipment Financing

Bridge Loans

Term Loans

Sale Leaseback strategies

The key point owners/managers need to recognize in acquiring capital assets is that these assets will typically be used over several years, so it doesn’t not make sense to deplete cash and credit lines today for benefits that will be received over time.

Always remember to ensure that working capital and cash flow needs cover your ability to pay down debt and purchase or finance new assets needed in the business.

If you’re focused on properly recognizing the right type of business financing loans and asset monetization strategies for your company seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in business funding that matches your needs.

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 : Funding Businesses In Canada



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