Is there life after business working capital
financing and cash flow runs out? It's unthinkable but the reality is that
business failure looms in the horizon when companies in Canada (and everywhere
else by the way)
So how do you cope with cash flow challenges and what does
the Canadian business owner and financial manager need to do to address this
financing challenge.
As a starter, whether business people like it or not
(certainly owners and financial managers) you have to have a grasp on your
overall liquidity situation. This essentially becomes a matter of relationships,
understanding how the relation of your current assets ( receivables, inventory,
cash on hand ) are relevant to your cash flow success.
Not every analysis
of some of these relationships is going to be relative to your firm all the
time. The reality is that different industries have different financial profiles
and it becomes a case of understanding where your company fits into the industry
profile. And by the way, we never met a client yet who didn't think their firm
was a bit different!
When you look at cash flow solutions you're looking
at really two areas of focus, one is the overall solvency of your firm, and
secondly the amount of risk you're prepared to take in making investments,
taking on debt, and growing their company}.
That's of course the inner view. The outer view is from lenders and suppliers, who are looking inside your
company} relative to your debt paying capability and your overall financial
health, now and somewhat into the future. They have a vested interest in doing
that based on what products of services they are supplying. And lenders don't
even get us started on that...! The bottom line is they are looking to get
repaid!
So business working capital financing then becomes a measure of
looking at your balance sheet, i. e. your company resources... and addressing
the various types of assets you have and how to monetize them to meet your
operational goals. Any look into your balance sheet is a 'static one’... it's
where you are at one place in time. It basically reflects how you're performing
today. That income and cash flow statement basically show you how you got
there.
So it's therefore important to understand some of those structural
relationships when addressing cash flow financing.
In Canada your choices
for working capital financing are one, or a combination of the following -
receivable financing, sale leaseback financing, inventory financing, cash flow
term loans, and bank and asset based lines of credit.
Which one of the
above makes sense for your firm and how do you satisfy those working capital
objectives? Speak to a trusted, credible and experienced Canadian business
financing advisor today on how to best meet your business finance needs for
growth and operational survival.
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Getting Business Working Capital Financing Right. Ideas, Tips And Solutions For Cash Flow Finance