We are not shocked – You will not be either – a current U.S. survey by CFO Magazine mentioned that income and dealing capital and being able to access capital funding sources was the greatest concern associated with a financial manager.
Thanks for visiting Canada! We’re confident we’re having the same problem once we speak with clients seeking options to debt financing and liquidity for his or her companies.
Another key item within the study was that business generally was dissatisfied using their banking relationships – again not surprising.
Therefore we all agree there’s a niche in capital solutions for Canadian business. Let us discuss why that gap exists, and, more to the point can there be options to dealing with more debt financing yet still growing income inside your firm.
Once we wrote previously we always tell clients the very best enter in Canada, bar none within our opinion may be the government small company loan program, that is underwritten by our good buddies in Ottawa. Great rates, terms and structures, also would you request. Well here’s the issue, this program only covers equipment, leaseholds and property – that’s known as debt financing. So no longer working capital or income occasion to emerge from that program for the firm. Let us move ahead then.
We are able to begin by defining our capital problem simply by saying it is the daily liquidity inside your business that we’re speaking about – basically the quantity of funds you’ve inside your company that may be liquid should you did not ask them to tangled up in inventory, a / r, and perhaps prepaid current assets. Not to mention the ‘double whammy’ is available in if you have your obligations on the other hand from the balance sheet, i.e. accounts payable and term loans.
Capital funding sources originate from two areas, debt and also the monetization of individuals current assets. We prefer monetizing and funds flowing such things as A/R and inventory instead of debt financing, which infers a lengthy term commitment.
So let us get to the point, what exactly are the options to income success. The good thing is there’s a good number of alternatives – they include operating credit lines which could originate from your bank or perhaps your non bank loan provider. Customers are growing interested in listening to non bank lenders since these firms can more readily approve financing for the inventory and receivables. The ‘buzz word’ for this market is asset based lending, so we advise clients to take a look, because oftentimes it is the ultimate means to fix capital success.
If you’re a smaller sized firm you can use a / r financing, also known as invoice factoring. If done correctly (and lots of occasions it’s not) it may turn your firm into literally an ATM income machine, while you generate immediate cash flow for your sales. This kind of facility comes at a price so we find there are lots of misconceptions about the price of this kind of financing, so that as importantly, how it operates.
So lets summarize – you are not getting capital from your buddies in Ottawa – should you be eligible for a bank financing employ it! A number of our clients don’t, so consider great options for capital funding sources for example asset based credit lines, receivable financing, or in some instances even securitization.
Therefore if your firm includes a thirst for liquidity (!) make contact with a reliable, credible and experienced Canadian business financing consultant who’ll use you to definitely solve your money flow challenge.