Business cash flow and working capital. U.S. financier Harold Geneen once said that you can make almost any mistake in business and be forgiven or remedy that, but ‘ when you run out of cash they take you out of the game ‘. W e agree!

So therefore the financing and management and solutions involved in receivables and inventory finance are key to the success of the Canadian business owner and financial manager.

While profit is the measurement of the income statement many challenges and problems arise when you are not managing cash and working capital. It’s a constant juggling act, don’t you think? There is a great analogy about how you juggle the bowling pins of business to generate profits but it’s the spinning knives that determine cash balances and the pitfalls that come from that. It seems we’re full of sayings and analogies today…

Busines cash flow is of course the life blood of your company’s operations. The difference between cash and cash flow is essentially the difference between your balance sheet and income statement. It’s really a presentation of dollar amounts at any point in time, plus the changes in those dollar amounts.

It the changes in your working capital accounts that really determine your cash flow.

While sales generate cash, but you use that cash to purchase goods and services, pay your staff, rent, utilities, loan payments, etc.

It’s a constant balance act as every busines owner knows and the alternatives can be very costly. You can of course increase your own equity in the firm, but that’s costly and means giving up some measure of control. Asset sales are also, generally, not desirable.

So we have made it clear that you can increase cash by one of several methods:

1. TAKE ON DEBT

2. INCREASE OWNER EQUITY BY OWNERSHIP DILUTION

3 .SELL MORE AND COLLECT MORE – Convert non cash assets such as A/R and inventories to cash

4. REDUCE COSTS

Suffice to say that number 3 is our favorite!

When your sales are growing and you turnover your receivables in a proper manner you can avoid a cash crisis. If you don’t have a proper inventory finance of receivable financing facility in place vendor relationships can get severely strained.

There are solid financial solutions for firms struggling with profitability or for those Canadian business owners and financial managers unable to raise equity. Bank financing might be available, but many times it is not. Even growth, as we have said in the past, can be a double edged sword. Great companies disappear when their cash reserves or financing procedures become insufficient to finance their growth.

In Canada solutions to business cash flow, receivable and inventory finance are abundant. They include asset based lending, equipment finance, sale leaseback strategies, receivable and inventory finance facilities, and even the monetization of tax credits.

Speak to a trusted, credible and experienced Canadian business financing advisor on how you can manage, and solve busines cash flow challenges.