2013 – What Went Wrong With Your Working Capital And Cash Flow Challenges

OVERVIEW – Information on business funding and capital financing in Canada. What solutions are available for effective cash flow management and business success

Working Capital Financing
– that’s a challenge that faces every Canadian business owner and financial manager. It’s that time of the year for ‘Sales ‘! To be successful in today’s Canadian business environment (an environment that includes strong competition and difficulties in accessing financing) Canadian business has to ensure that have all their financing options up for review. Let’s dig in.

Lets take a look at some of these options, which include revolving lines of credit that are alternative in nature – these non – bank operating lines margin your firms receivables, inventory, and tax credits , equipment and real estate, in a manner that provide you with maximum financing for your business growth needs .

How does the business owner assess the need for working capital? That comes from carefully reviewing your firm’s financial statements and determine what is working and what isn’t.

Look at items such as:

Current debt to equity – calculate by taking current liabilities and dividing by your tangible equity – ratios over 80% signal danger

Debt to equity – take your total liabilities and divide by tangible equity – when the ratio exceed 100 your lenders are financing your firm more than you are

A great ratio in the context of our working capital discussion is:

Turnover of working Capital – Calculated by net sales /working capital. This calculation will give you a strong sense of how efficiently you are using working capital. When sales go up inventories and receivables tend to increase also – as a business owner you need to be buying wisely, and collecting your receivable even more wisely. It’s a great way to look at how you are buying and how you are selling. You don’t want to be put in a position where yourself, or your lenders feel that you don’t have the working capital to run your business and grow the business.

The above 3 examples are what we could call ‘ text book ‘ answers to major working capital and balance sheet issues – quite frankly business owners we meet with intuitively know what those working capital challenges are . What the really need is solutions, not technical finance explanations!

So let’s look at working capital solutions in the Canadian environment. For discussion purposes we will avoid traditional chartered bank financing, which is more difficult to achieve for the majority of small and medium enterprises. Coming off the difficult 2008 and 2008 liquidity crisis worldwide – including Canada balance sheets for many firms are challenged, and income statements are only coming back to life from a growth and profit viewpoint.

So what are some of those solutions you should be investigating? The Canadian business financing landscape is drastically changing – for additional working capital firms should be working with a trusted and experienced advisor in Canadian business financing and examine such alternate solutions as:

Asset based lines of credit outside of chartered banking – these will margin all your current assets, (including inventory) and allow you to meet your working capital challenges head on.

– Another individual ‘ flavor ‘ of an asset based line of credit is factoring or invoice discounting – This provides business owners with immediate cash for receivables, and if managed properly can be cost effective, contrary to popular belief . Note – our best solution in this area is non notification factoring which allows you to bill and collect your own receivables

Financing your SR & ED tax credits – why wait for 6-12 months or more for your government grant refund – monetize that tax credit now!

Two other more specialized (shall we say esoteric) methods of working capital financing are purchase order financing and inventory financing.

In summary working capital financing – Canada – continues to be challenging. And contrary to our theme of a year end ‘ sale ‘ it’s a full time year round job for business owners and financial managers .

Explore your options, alternative in nature potentially, and understand the optimal rates, terms, and structures that will allow you to grow business. 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 your capital and cash flow needs.

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653

Cell    = 905 302 4171
Email = greg@7parkavenuefinancial.com

7 Park Avenue Financial
Canadian Business Financing

Directions: http://bit.ly/1hogxp7


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:


Stan Prokop

7 Park Avenue Financial
Canadian Business Financing