The constant battle for working capital for the Canadian business owner – it’s a continuous journey. And sometimes it’s a scary one, maybe not as scare as some of those popular Zombie movies… but pretty close sometimes!

Are there some finance cash flow tools and knowledge we can share? You guessed it… there are. So we’re of course talking about the funds that are in fact, hopefully … ‘ working ‘ in your short term operations. It’s critical to understand a couple of key concepts before we can take you to that toolkit of solid cash flow solutions. So the concept of ‘ net working capital which is really the difference between your short term assets and liabilities is critical. And at the end of the day the final success you have in financing your business comes down to two key areas –

How you manage those assets
How you finance those assets

Simple as that.

When you think of it, you’re basically on a constant journey with this whole issue. We read an analogy the other day where you might be considered either a warrior or a wizard when it comes to certain aspects of business success. We suppose that we are saying that you have to be a bit of both.

The ‘ warrior ‘ aspect of today’s issue is your constant effort to turnover assets, but at the end of the day you have to be a bit of a wizard, especially if you are growing, because that investment in receivables and inventory is in effect your permanent investment. So both your lenders and yourself have a vested interest in how you are doing on that issue – especially if bankers, other lenders, lessors, etc have loans outstanding.

When you think about it the real challenge of finance cash flow tools is really the issue of using the financial solution that comes with an appropriate rate and risk level.

So what are some of the working capital solutions that your firm can employ? They might be one or several of the following:

Bank credit facilities

Receivable financing

Asset based lending

Supply chain/Purchase Order Finance

Sale leaseback of fixed assets (we’re a bit outside out current asset scenario here but sale leasebacks do work)

Tax Credit monetization

Securitization of receivables/contracts

While we would all probably agree that it would be great to have a precise formula around which solution worked best that’s not the real world of course! It simply becomes a case of ensuring that the increases in sales you are enjoying are financed properly. And you want to be able to do that proactively… we can’t count the number of clients who we meet who are in emergency cash flow crunches. Why? Because they didn’t plan or use some basis analytical tools to measure the performance of their receivables, inventory, and payables.

Seek out and speak to a trusted, credible and experienced Canadian business financing manager who can assist you with your finance needs. It doesnt have to be scarier than a Zombie movie!