Business working capital often creates somewhat of a state of ‘ paralysis’ for many business owners. They are almost ‘ caught in the crosshairs’ when it comes to understanding their commercial financing options and demystifying the complexity around the need for those solutions. Is there a simpler way? Let’s dig in.
Top experts tell us that when it comes to the SME Commercial sector of business in Canada owners and managers often don’t realize the impact of a lack of working capital and cash flow until it’s a bit too late sometimes.
In some cases, quite remarkably, they are not even aware of all of the traditional and alternative options they have available to them. They also are often not aware of both government and commercial financing programs that could potentially provide them with the funding options they need.
It is of course not surprising that almost half of business owners or their financial managers tend to only think only of their existing ‘ bank ‘ as the sole source of their financing solutions. Financial advice and solutions arising out of that advice also often comes from their accountants , searching the internet for ‘ Canadian business Financing ‘, and finally engaging a hopefully trusted, credible and experienced Canadian business Financing Advisor with a track record of success in business working capital solutions .
We recently read a study that indicated that over 60% of business owners stated that at certain times of the year they always need extra funding. That of course could come from seasonality in their business, ‘ bulge’ situations that arise out of large contracts or orders, etc.
That type of short term cash crisis always demands funds and it’s often a case of simply surviving, let alone focusing on long term growth of the business.
Fortunately, or unfortunately? many business owners/managers often rely on their suppliers and vendors as a source of cash – they of course do that by maximizing their supplier credit facilities and then delaying payments as long as they can.
Technically speaking increasing payables in fact does enhance cash flow from operations, but it is often at the risk of the key relationships you need from major suppliers and vendors.
It (almost) goes without saying that your ability to play business working capital financing is really what needs to be done. In the case of cash flow fixed term debt is rarely the solution, so the business owner should consider the following solutions:
Purchase Order/ Supply Chain financing
Chartered bank business credit lines
Non bank asset based credit facilities (‘ABL’)
Tax credit monetization
Any one or a combination of the above solutions enhances cash flow especially when you are in fact growing your business.
Understanding the impact of commercial financing solutions is key to business working capital. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in unraveling the paralysis that often comes from understanding your working capital options.
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:
7 Park Avenue Financial
Off. 905 829 2653
Cell 905 302 4171
7 Park Avenue Financial
Canadian Business Financing