Surviving A Working Capital Financing and Funding Challenge

Did we really even have to mention it, but a major CFO survey, just released, stated that ‘Cash flow is Top Concern Priority for 2011’. When has working capital financing and working capital funding in general ever been more important?

Let’s take a look at the Canadian situation and how you can solve some of those working capital challenges that were re iterated as concerns in the survey, which was done, by the way by TD. And by the way, putting ‘ surveys’ aside, we’ll offer some ‘ real world’ solutions to some of the issues highlighted in the bank survey!

Intensity? The survey actually used that word when Canadian business owners and financial managers described their necessary day to day attention to working capital management. As a business owner you have to look at your overall structure and ensure you can manage cash flow on a day to day basis.

The survey intimated that although you could cut costs to manage and conserve cash flow most Canadian business owners don’t feel that’s the optimal strategy, only 7{a61c4e1b991c7f3a090c87cb66410712d4121fe18ab0f6421d85cbe80290558f} actually.

Access to working capital financing and working capital funding was a major concern by respondents. We are reminded of headlines that say things like ’90{a61c4e1b991c7f3a090c87cb66410712d4121fe18ab0f6421d85cbe80290558f} of all jobs aren’t advertised”. Well, do you know what, when we sit down with clients we strongly feel that they often don’t understand that 90{a61c4e1b991c7f3a090c87cb66410712d4121fe18ab0f6421d85cbe80290558f}of financing options aren’t generally known to Canadian business. Did you know there are hundreds of non – bank finance entities, all very unique in nature, that finance receivables, inventory, purchase orders (yes, purchase orders! tax credits (you can finance a tax credit? – YES you can!).

The survey indicated that technology is by far the top area of planned capital investment, and you should be aware there are a number of solid capital and operating lease solutions that provide you with total flexibility in acquiring, and more importantly, using technology.

Alternately the Canadian lease financing industry is back on its feet and numerous solutions for equipment acquisition via leases, loans, bridge loans, etc are available.

Want those real world alternative financing solutions we talked about – consider non bank asset based lines of credit or receivables discounting. Your cash flow is at risk if you aren’t properly managing your A/R and financing it in a manner that suits your firm’s business model and cash conversion cycle.

You could of course stop your life and spend a lot of time investigating these solutions but we strong recommend to clients that they simply seek a trusted, credible, and experienced business financing advisor to sour the working capital financing and working capital funding they need for short term liquidity and long term survival.

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