Business cash flow finance. We’re going to shock you, but your firm is probably NOT a cash cow. That term is reserved for the probably 1% of all Canadian larger corporations that no longer require a lot of new investment in their firm – so that’s why if they are running their business well ( collecting receivables and turning over inventory ) they become cash flow generators – they are always generating positive financing inflows. And yes, we’re jealous.

So if you’re not our friendly CASH COW then what in fact are you? That reality is in fact pretty clear, your firm is not a large mature corporation, you’re growing, perhaps you’re even a start up, and you need… cash!
A great mentor of ours is often quoted as saying ‘ you’re not a real business person until you’ve sweated a payroll ‘. That’s the extreme part of running a business on a day to day basis.

So how in fact does the Canadian business owner or manager determine his or her cash flow financing needs, and when those needs are determined what a solutions are available? You’re looking for reliable indicators and even more reliable solutions! In fact it’s this method of looking at and solving your business challenges that will be one of the most reliable indicators of your long term business survival and success.

Having access to solutions and resources around working capital simply allows you to meet your current financial commitment sand grow your business. We don’t think there is one perfect solution for all firms when measuring and managing this aspect of your business. But if you use tools to gain solid insights into your current situation the solutions will become a lot more obvious!

At the crux of the business finance challenge is your ability to operate on a daily basis. So while your balance sheet and profit and loss statement tell you the amounts of your assets and your ‘ paper profit ‘ respectively its a cash flow analysis that really opens the kimono on your business!

Why does your banker, other lenders and lessors, etc focus on cash flow. Simply because over time it’s a strong measure of your survival. Many people will tell you to calculate your ‘ CURRENT RATIO’ to determine your working capital and solvency. That’s actually a very poor measurement in our opinion only because it doesnt measure asset turnover and the actual changes in the working capital accounts of A/R and inventory. On many an occasion we’ve profile the story of the American dept store W.T. Grant – as it filed for bankruptcy it has a lot of assets and a lot of ‘ paper ‘ profit . The only thing it didn’t have was cash and asset turnover; resulting in the bankruptcy.

So what tools do you in fact use to assess your true working capital and cash situation? The most reliable is probably operating cash flow, which simply takes your profit or loss and then asses the changes in your receivables and inventories. Quick example? Let’s say your sales grew by 15% but your receivables and inventory in our example grew by 40%. You’re using cash, and you’re far from CASH COW status. On the other hand if you sales , for example are flat, but your a/r and inventory levels are down over the previous compared period you’re well … along the way to becoming a Cash …. Well we think you get the story!

Solutions in Canada to address business cash flow financing include:

A/R FINANCING
INVENTORY FINANCE
COMMERCIAL BANK LINES OF CREDIT
NON BANK ASSET BASES LINES OF CREDIT
SUPPLY CHAIN /PO FINANCE
TAX CREDIT MONETIZATION
SALE LEASEBACK STRATEGIES

Any one of combination of these, used properly, monetizes assets, and doesn’t increase debt. Structured properly they put THE FIX in your business financing challenges.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor today.