The Black Hole Of Canadian Financing – Is Financing Cash Flow And Working Capital Your Corporate Finance Challenge?

Is financing cash flow and working capital really the ' black hole ' of corporate finance and business financing in Canada? It sure seems that way. That ' black hole ‘... it’s a term used to denote a place of ' confinement ‘from which ' nothing can escape '. That clearly seems to be the feeling many clients we talk to have when they are faced with the challenges of business financing.

When those sorts of challenges exist in a business it becomes difficult to both survive, let along grow the business. Canadian business owners and financial managers realize that it's about time they understood some of those options.

A good start before exploring those solutions is to ensure you have your business financials in order and up to date, that’s critical. We're never surprised anymore at the number of businesses we see and meet that can't product proper and up to date balance sheets and income statements. This issue then becomes one of credibility, in essence current lenders, and future lenders can be forgiven for wondering ' what’s really wrong here?’ And all along the way you're missing opportunities to grow sales and increase profits.

We don’t want to overestimate the need for getting your business financials under control but that simple task allows you to hole employees and managers accountable, you can grow, while all the time removing the stress of not knowing where your firm is at from a viewpoint of financial strength.

Every business owner / manager would love to relieve the stress of daily cash flow financing firefighting - you're rather growing the business!

Let's move on to some of those working capital solutions, the corporate finance tools that allow you get back on track.

Part of that challenge revolves around assessing your where you are in the business continuum. You're either a start up, in the SME sector, or a mid sized Canadian business. (We’re pretty sure the largest corporations in Canada don't read out stuff!)

In the start up phase your cash flow often comes from personal assets, and suppliers can also supply much needed credit at this point in your business cycle. Many start up firms utilize receivable financing in Canada - it’s a pre-step to qualifying for a traditional bank line of credit and provides working capital as you generate sales. It appears to be more costly, but in reality the cost of this finance is grossly misunderstood by many.

If you are in the SME sector financing cash flow comes from working capital term loans, equipment finance, and finally the ability to qualify for a bank line of credit. The government business loan is a great way to acquire capital assets and minimize cash outflow.

Mid sized firms in Canada have access to various forms of commercial capital - those funds come from business credit unions, banks, insurance companies and unregulated non bank commercial lending conce
s such as asset based lenders.

More esoteric, but very realizable methods of financing cash flow are supply chain financing and the monetization of tax credits, as well as securitization of current and future sales receivables.

We hope we've made our point - get those financials up to date and explore Canadian corporate cash flow alte
atives, whether you are a start up or intent on taking your company to the next level.

Speak to a trusted, credible and experienced Canadian business financing advisor on financing cash flow alte
atives for your firm.