Working Capital Finance – Your Problem – Our Solutions for Solving Cash Flow Challenges

It would be great to hear our clients say they have no issues in working capital finance and challenges, and that solving cash flow problems is the least of their worries. Unfortunately we haven’t met one customer that seems to be comfortable sharing that with us.

Let’s look at the root of some of those working capital challenges; what are the problems, what caused the problems and then talk about why you are probably reading this… you want working capital solutions.

It’s of course great to have sales – and sales and profits are even better. In general when you have those you have the essence of a healthy business. But those are in effect what we could call paper transactions and it always comes back to 100 year old clich?s such as ‘ cash is king ‘ and ‘the sale isn’t made until you’re paid ‘.

Working Capital Finance - Your Problem - Our Solutions for Solving Cash Flow Challenges

That cash is required for all those mundane things, paying suppliers, paying employees, and meeting your obligations on loans and leases.

Your challenge is typical, how you do create a flow of cash in the long term, as well as addressing short term bulges to ensure you have liquidity.

Of course when you have a good handle on cash flow, everyone looks at you with a positive outlook, the most important is your supplier and lender.

Solutions to cash flow challenges often arise from the inability to plan or overcome the right type of cash flow solution. You run the risk of liquidity problems when your current assets cannot be converted in a timely manner to cash – these assets are usually in the form of receivables and inventories.

There is no day where we don’t find this type of textbook of working capital financial challenges – it’s as simple as requiring products to fulfill regular or new large orders, generating invoices, and then waiting 30, 60 or 90 days for payment. That’s the challenge of textbooks when we talk to clients asking for our help in solving cash flow problems.

So we’ve done a good enough job to tell you what your problems and challenges are – let’s discuss some real-world solutions.

The essence of working capital financial challenges is that you cannot access business credit. We encourage all customers to seek Canadian bank business loans that are hired when they are in a position to do so. Unfortunately many clients cannot meet the net value of the business, the value of personal wealth, and the liquidity ratios and agreements that your bank might need. We also strongly believe that financing inventory by banks in Canada is increasingly difficult to achieve.

Don’t borrow – cash it. That’s the best advice and plan that we established with clients to solve cash flow problems. You can get a working capital cash flow term loan, but that only creates additional debt on your balance sheet. Instead, take the assets that you already have in your book and cash them out – those assets are the … Read More

New Normal For Small Business Financing and Working Capital Management

With business financing options that have changed significantly over the past two years, it is appropriate to review what the “new normal” looks like so small business owners will be prepared to face the challenges they face with commercial lenders. Business borrowers are more likely to find commercial financing successful by quickly accepting the fact that a “new normal” way of doing things has emerged.

The dramatic reduction in the number of commercial lenders who actively make small business loans is one of the most significant changes in the business financial lending environment. Banks continue to insist that they still provide small business financing when in fact they have reduced or eliminated their commercial loan programs are an equally important part of the “new normal”.

New Normal For Small Business Financing and Working Capital Management

A recent report showed that commercial loan activity fell by the largest amount since records were kept. This trend is likely to get worse before it gets better because based on Federal Deposit Insurance Corporation accounting, almost one out of every ten banks almost fails. The current shaky financial condition of many banks is further documented by reports from the Federal Reserve and the US Treasury that more than 50 banks do not have sufficient cash flow to make payments in November 2009 for loans made by Troubled Asset Relief Program ( TARP). The payment is due every three months, and more than ten banks have missed three consecutive installments. Unlike banks that have tripled and quadrupled interest rates for individual consumers who have lost credit card payments, perhaps government regulators only hope to get their money back from delinquent banks.

Banks have been doing business too often as if they are monopolizing their small business financing services. The “new normal” for small business owners must increasingly reflect the growing realization that banks can be replaced when they stop providing adequate levels of service to their business customers.

As a direct result of the continuing shortage of banks in providing financial assistance to small businesses in sufficient quantities as mentioned above, for most business lenders, the “new normal” will involve a new bank or at least a new commercial lender (which may not be a bank at all ). Even though banks want their small business owners’ customers to believe that only banks like them can help business borrowers, this is really a myth created by bankers themselves.

For many important commercial financial services such as commercial mortgage loans, many banks have indicated that they will no longer provide such financing. For specialized business financial services such as working capital management, business consulting, and business advances, banks rarely provide cost-effective and realistic options for commercial borrowers. For business owners who have commercial loans or working capital financing that will be refinanced within the next three years, future planning will be increasingly important for the success of their small business financing. With the “new normal”, if commercial borrowers wait until their bank decides to stop the small business finance program in the future, the time will … Read More

What You Need to Know About Venture Capital

When a venture capitalist takes the decision of investing in a small company, he or she does so after carefully studying the business plan for a period of up to 3 years. Generally the offers that enter this process are those that are different and innovative with a high potential for success. Venture capital funds follow a different set of rules than those established by banks. For instance, a venture capitalist will give great importance to the documents presented, the experience and profile of the entrepreneur, the idea of the business and the product it will offer to the market, and of course its innovative qualities.

Venture capital is obtained after going through a complex process. Depending on the kind of venture capital we are talking about, the investor may choose to buy shares (ordinary or preferred), or agree to receive advances on their bank accounts.

Venture capital is not intended to remain indefinitely invested in the company. Its intervention should be ad hoc and limited in time. The output can be achieved by: reduction or amortization of capital, the repurchase of securities by original partners at an agreed price, the resale of securities to a financial or industrial group, and by the sale at a capital development.

The capital gains that the venture capitalists obtain come essentially from the sale value of the shares they bought. The risks they take are: never being able to sell the shares, or losing everything if the company disappears.

You may be wondering, who are these investors? Well, venture capital can be given by angel investors, venture capital companies, or venture capital funds that help small business that have innovative or different ideas.

We present you here a list of factors that venture capitalists will take into account when choosing a company:

For investors what the company does and how it does it is important. They will want to know whether the business produces, creates, develops or recovers.

Status of the capital investment: public, semi public or private. The criteria for entry to the capital of a company can vary depending on the nature of the company that owns the fund.

Minimum and maximum amount granted: there is no need to contact a speaker funds from 1million Euros while your need for investment is estimated at 200,000.

The areas of funding are particularly important to venture capitalists because some may look for specific areas: technology, innovation, etc. As well, as if coverage is requested for a small or large geographic area.… Read More

The Art of the Start by Guy Kawasaki – Book Review

The Art of the Start, The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything, offers readers both good news and bad news on starting up a company. The good news offered by Guy Kawasaki rests upon his background as a venture capitalist. Kawasaki is the managing director of Garage Technology Ventures, an early stage venture capital firm. According to their web site, “Garage Technology Ventures is a seed-stage and early-stage venture capital fund. We’re looking to invest in extraordinary entrepreneurs who have the ability to build great teams and great companies.” Thus the good news revolves around strategies to pitch business ideas to venture capitalists, positioning your company, writing a business plan, “making mantra”, etc. These are all important activities and based on sound advice. Kawasaki offers exercises, tidbits and suggestions on redefining thinking in entrepreneurial terms, all helpful to early stage entrepreneurs.

The bad news revolved around bootstrapping and the fact that there was only one chapter on this truly important topic. The Art of the Start seemed slanted toward the “come up with an idea, write the business plan, pitch to venture capitalists, secure early stage venture, increase sales, find additional venture, liquidation event road”. I strongly favor bootstrapping, self funding and virtual business ideas over the borrow tons of venture capital funds to succeed path, and fully understand that reader bias could have crept into this perspective.

If your entrepreneurial idea absolutely requires the significant capitalization that venture capitalists offer, The Art of the Start should definitely be at the top of your list. There is an execellent section on pitching to venture capitalists complete with the questions which are likely to be asked and suggestions on the best answers to offer would be venture investors. I found the book to be well written and thought provoking, particularly enjoying the final chapter, The Art of Being a Mensch (and the three foundations of menschhood), which Kawasaki recommends that the reader reads first. So, the good news is, though there are more aspects to this book than venture funding, you should definitely read this book if you’re thinking of venture capital funding. The bad news is that statistically, entrepreneurs are better off finding alternatives to venture capital funding and might be better off reading books focused on alternatives to venture capital funding. Regardless, I enjoyed The Art of the Start and found it an interesting read.… Read More

What To Expect When Applying For Life Insurance?

For many, Life Insurance is the most affordable, reliable and secure way to ensure their families have enough financial resources in place in the event of a loss. Applying for Life Insurance is now easier than ever with options to apply right on-line.

THE APPLICATION PROCESS: The Life Insurance application will ask for some basic information including:

– Name, address

– Height, weight, date of birth

– Habits and lifestyle (smoking habits)

– Medical history

ALWAYS TELL THE TRUTH! When getting life insurance quotes, it’s important to tell the truth. The information you provide helps the insurance company calculate the policy premiums and if an insurer discovers you have lied on your application about basic information OR lifestyle/habits, it could result in an increase to your premium, the cancellation of your policy or coverage, or the denial of your claim.

In some cases, insurance companies will accept your application answers for health-related questions. However, some will require an in-person medical exam. Typically, for lower coverage amounts of up to $250,000 or less, a simple health questionnaire is likely. For higher coverage amounts or for customized individual insurance policies a detailed health screening is more common. Where this is required, your insurance provider will arrange for a medical examiner to visit your home or office, or you will be asked to attend a clinic selected by the insurance company, where they will review your personal and immediate family medical history, take your blood pressure, check your physical attributes, take a blood & urine sample and also review your lifestyle habits that could affect your overall health, including exercise, smoking, alcohol, stress, hobbies, etc. Depending on your age, there may be additional testing like an EKG, X-Rays, or cardiovascular tests.

Once examined, an insurance underwriter will review your application and medical exam results and either deny or approve your request to purchase. If approved they will then move forward with issuing the policy or coverage. If the policy or coverage is issued, you may be assessed an additional risk-based premium, depending on your health status.

In the end, take the time to educate yourself about your life insurance options and be honest throughout the application process. A good insurance broker can help you through the process and find the policy that provides the coverage you need at a price you can afford.

If convenience is what you are looking for, you can research and apply right online Some providers will even give you an answer on your application status right then and there.

For those of you who do not like the idea of completing even a simple health questionnaire, there is always the option to purchase a minimal amount of life insurance that will help cover final expenses (less than $25,000). For many of these types of insurance, where your acceptance is guaranteed and the enrollment process does not require any type of medical screening, you will pay a little more for the guaranteed enrollment.… Read More