The Step Is To Determine Whether Cash Flows Are Relevant. 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

Just imagine if your company has access to all the working capital it needs. Seems impossible? Not really…if you have a good understanding of your options and your company’s ability to qualify or exercise those options.

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

It’s probably easier than you think to make sure you’re getting your cash flow challenge right – where it gets a little “thorny” is finding a solution to the problem or locating an expert who can provide the business financing help you need.

Two key elements of your first working capital assessment are your gross margins and turnover. That’s the big problem we have with textbook/academic solutions for working capital – they refer you to a textbook calculation – give you a formula that essentially subtracts current liabilities from current assets, and voila! the conclusion is that you have working capital. However, our clients have never paid a vendor or completed a ratio company payroll!

To properly assess your working capital needs, focus on understanding your turnover – how much inventory you have, how many days you have in inventory, and more importantly, or more importantly, whether your receivables are being returned. Did you realize that for many companies, about 80% of the total business assets you have are related to A/R, inventory and on the other hand, on the balance sheet, let’s not forget liabilities.

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

Canadian business financing solutions for small business loans actually revolve around several viable solutions. Usually, in our experience, Canadian chartered banks cannot meet your business working capital needs – at least because they rarely fund inventory and require significant credit in your overall finances, profitability, external collateral, personal creditworthiness, etc.

So where do you go from there? Other solutions are very viable and can take you to a potential 100% return on cash flow – these include working capital financing as a pooled line of credit on a/ri inventory through an independent finance company. For businesses that are larger, we believe the ultimate tool is an asset-based line of credit that provides a high leverage margin on all of your business assets. Other more esoteric solutions, but still very viable if somewhat misunderstood, are securitization and financing of new contracts and orders via purchase order. (Your suppliers get paid directly for the orders you place – what could be better than that?)

Finally, factoring and discounting invoices are coming at lightning speed. We mention them at the end, but they are probably the most popular method, which is becoming more popular every day. Our favorite is confidential invoice financing, which allows you to control your financing.

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

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