Are you focused on managing business finance for your business? If you want to win that battle and we categorically think that business and cash flow financing is really a daily struggle for most entrepreneurs ... you must be aware of your challenges, sources and solutions.
As we enter the 2011 fiscal year, we are clearly emerging for a time when many companies like your sales fell, the margins were eroded and most importantly, cash flow financing seemed to dictate where your business went from a successful point of view. So how can you assess how profit and growth can be managed from a viewpoint of cash flow financing.
The Answer Your Scorecard! What do we mean by that? Simply telling you where your working capital is bound, and what is the cheapest method to unlock sources of cash flow financing. And, although it is a surprise to our customers more often than not, cheapest does not necessarily mean what is my interest rate.
Can you point to your working capital? We can. It is tied up behind, in the form of stocks, receivables and equipment you have invested, through noncurrent assets.
So, entrepreneurs can hopefully start to see now that the secret or holy grail of the cash flow is freeing money youve tied up in these assets. We point out that you also need to handle these fastmoving assets which come with immediate invoicing, collect receivables when they are due and ensure you have financing mechanisms in place, if you need them for inventory and equipment.
Many entrepreneurs do not realize that inventory and equipment can be transformed into sources of working capital. These two assets can be combined as part of a working capital, which for larger transactions is called an assetbased credit line.
The characteristic of being able to finance working capital, more often than not, manages your claims. We can categorically say that although the majority of customers have 30 days terms for the customers typical collection periods, it actually seems to be 60 and yes, even 90 days.
How can you make money on the critical asset? In a perfect world by the way, not you will have access to credit financing through your bank. However, it comes with obligations, including your need to maintain clean financial economies, show profit and meet relationships and unions. So thats the same. What is the plan B!
Plan B can also provide you with closer financing of working capital solutions. Plan B may involve the following securitization of your claims if you are a medium size or a larger company. Smaller businesses and start up and earn money by selling their claims, removing them from the balance sheet and receiving cash flow today that can be reinvested in the business. Terms of this type of financing are invoice billing, factoring, confidential billing, etc. If your company has decent gross margins, good customers and you can increase sales and profits by having extra money at hand, these solutions are for you.
The longterm cash flow solution can be more equity in your company or borrow through term loan for cash flow. Those who are feasible, possible, but consider your shortterm options firstgive up equity or raise debt is not amazing working capital strategies.
In summary, you must keep your cash flow needs and priorities in order for you to run business. We have named 5 or 6 immediate and available solutions to consider. Talk to a Trusted, Credible and Experienced Canadian Corporate Finance Adviser to break these sources of cash flow financing.