These days you probably would be happy with 1 solid working capital financing solution for your cash flow business needs.
We’ll beat that and give you 5 ! How is that for alternative solutions to your working capital and cash flow needs?
Funding of working capital continues to be a large challenge for Canadian businesses of all size – you want to grow your business which requires investment in and of it, and by the way those suppliers and employees want to be paid on time also.
Lets examine some solid real world solutions to your cash flow needs – in some cases all of them could work for you, but in general even a couple of these solutions would ‘ fix ‘ the current problems you face on a day to day basis .
The most liquid asset any business always has, (next to cash) is your receivables. Working capital financing is best generated by the collection, or financing of your receivables. This can be done via either faster collections, or selling your receivables as you generate them. This financing is called receivable discounting or factoring, and is becoming increasing popular everyday.
Did you ever think of the government of Canada as one of your best working capital financing partners? Our clients are amazed when we suggest that ‘ partner’ as a solution. But the specialized government program, technically called the BIL/CSBF loan program finances any equipment and leasehold improvements you need via a greatly subsidized loan program. We say subsidized, because even if you are a start up rates are great, guarantees are limited, and loan max amount is up to 350,000.00. Our clients who take advantage of this program consider it, bar none, the best financing in Canada for small and medium business, including start ups.
You’ve spent your working capital – would you like to get it back? Clients always ask what we mean by that. Any equipment you have already paid for can often be refinanced, the technical term is sale leaseback, and we find that either that strategy or a short term bridge loan with the equipment as security is exactly what our clients need to bridge the cash flow gap.
We spoke above about receivable financing – one of the best facilities for Canadian business is a combo working capital facility that finances, or ‘ margins ‘ both your A/R and your inventory. Since many firms previously couldn’t finance their inventory either elsewhere, or via banks, the combined liquidity of borrowing against your A/R and inventory is a true power punch! Typical this type of financing is known as an asset based lending facility, and makes most sense when the facility is at lease in the 250k range, and sky is the limit after that.
Many clients are totally unaware the Purchase orders financing is available in Canada. This is a strong potential cash flow saver, and generator, since your suppliers are paid for product when you order it, once you have received the P O. The P O lender takes the inventory and receivable as security, but in effect finances your whole sale. While it is an expensive form of financing if you have good gross margins and could otherwise not facilitate the sale of your large new orders and contracts it’s a perfect solution.
In summary, make yourself aware of your Canadian business financing options. Working capital and cash flow are available if you have assets and orders. We have demonstrated that clearly to you via 5 separate solutions. Speak to a trusted, credible and experienced Canadian business financing advisor to determine what works for your firm.