Analyze The Cash Flow Problems A Business Might Experience Guess What Your Business Needs? Working Capital and Small Business Finance Loan/Loans Options

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Guess What Your Business Needs? Working Capital and Small Business Finance Loan/Loans Options

Picture your firm having access to all the working capital you need. Sounds impossible? Not really… if you have a solid understanding of your options and your firm’s ability to qualify or execute on those options.

Whether you’re Canada’s largest corporation or a small new startup (and everything in between), your business needs working capital. Small business financing loans and working capital financing in Canada are limited to a handful of possibilities – but being aware of what they are and qualifying for them can be the solution to your continued focus on cash flow through some type of working capital loan.

Making sure you’re addressing the cash flow challenge correctly is probably easier than you think – where it gets a bit ‘thorny’ is in finding a solution to the problem or an expert who can provide the business financing you need.

Two important factors in your first step working capital assessment are your gross margin and your turnover. That’s the big problem with textbook/academic solutions for working capital – they point you to textbook calculations – give you a formula that requires you to subtract current liabilities from current assets and voila! You have working capital. However, our client has never paid a supplier or completed company payroll with a ratio!

To properly evaluate your working capital focus on understanding your turnover – how much inventory you carry, the number of days left in inventory and just as importantly, or even more importantly, your turnover. Have you noticed that for many companies 80% or more of the total business assets you have are tied up in A/R, inventory and not to forget accounts payable in other forms of the balance sheet.

So you can find financial success based on your newfound knowledge and analysis of your cash flow and asset turnover. We think you can.

Canadian business financing solutions for small business finance loans really revolve around some viable solutions. Generally, in our experience, Canadian chartered banks cannot meet the working capital needs of your business – if they rarely finance inventory and require significant quality in your overall financials, profitability, external collateral, personal creditworthiness, etc.

So, where to go from there? Other solutions are very viable and can get you to a potential 100% cash flow turnaround – including working capital financing through an independent finance company as a consolidated line of credit on A/R and inventory. For larger companies we believe the ultimate tool is an asset based line of credit that provides high leverage margining on all of your business assets. Other more esoteric solutions, but still very viable if somewhat misunderstood, are securitization and purchase order financing for new contracts and orders. (Your suppliers are paid directly for the orders you have in hand – what could be better?)

Finally, getting on the road at light speed means factoring and invoice discounting. We mention them at the end but they are probably the most popular methods, gaining traction every day. Our favorite is confidential currency financing, which allows you to control your financing.

So there you have it. You have identified new ways to determine need; We have mentioned 4 or 5 measures that will take the guesswork out of working capital. These loan and financing options are available with a little research and, if you choose, speak with a Canadian business financing advisor who can provide you with timely and valuable assistance with your cash flow needs.

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