Working capital Cash Flow – A measure of a company’s financial health. Equals cash receipts minus cash payments over a given period of time. That’s one of the better definitions we’ve seen lately. And could that emphasis on ‘ financial health ‘ be any truer? – We don’t think so.
Canadian business owners and financial managers want to… wait a minute, need to! understand cash flow concepts . And by the way cash flow solutions wouldn’t be bad also, and we’ll shortly be identifying some of those!
We all agree that cash flow financing forces the business owner to address some really key issues, i.e. dealing with banks, borrowing from other independent finance firms, etc. When we sit down with clients that bring in their balance sheet and income statement its clear to us that there is a true mis understanding often… in the business owners eyes about what that incomes statement is telling us. It’s those changes in the balance sheet they should be focusing on instead, in particular our working capital accounts, receivables and inventory.
Are there real world Canadian made solutions for managing cash flow financing , and what type of ‘ loan ‘ is best suited to address your cash flow needs, or crisis!
When you think of it , it all comes down to managing your billings, aka receivables, granting terms to clients, and of course managing payables which many business owners omit in their ‘ cash flow analysis ‘.
We can also add that a great concept we use is often overlooked , and that’s the quality of earnings , Simply speaking, your net profits don’t always ( in fact rarely ) equal your cash flows. The closer you can bring those two together, at a reasonable financing cost, will be the solution to working capital cash flow financing. A quick example would be giving customers extended terms and booking larger sales and profits… for awhile!
So, great job so far on all the technical jargon, right? Not what you were looking for?! Let’s jump into the real world, our favorite place. We’re identifying 5 working capital cash flow financing ‘ loan’ techniques. And guess what, 4 of them aren’t ‘ loans ‘ per se.
If you want to fix, better, or change your cash flow financing consider one of the following – C I D receivable financing, a cash working capital term loan – injection permanent working capital into your firm, a full fledged ABL facility , a junior working capital facility, and , our most esoteric but real solution, inventory and purchase order financing .
Any of these 5 solutions will better your cash flow existence. Want information on what they are, how they work, what they cost and where to get them… seek out and speak to a trusted, credible and experienced Canadian business financing advisor.