Working Capital Financing is forever a major challenge for small and medium sized business in Canada. And that is certainly not to say that larger corporations don’t have that challenge, it’s simply a case of having more assets and resources to deal with the same challenge.
As a business owner or financial manager the level of funding that you need, and the method in which you achieve that financing is really what drives the solution to your challenge. It is important, in understanding your cash flow needs and solutions, to determine if your working capital financing is required due to the capital intensive nature of your business – or if you in fact simply need to ‘ monetize’, or ‘cash flow ‘ your assets in an effort to generate more working capital and faster turnover of those funds.
Your focus on cash and business financing becomes even greater if your sales and profits are increasing. However, at the same time the ability to obtain business credit in Canada remains a challenge.
Bank financing has become more difficult to acquire, and many firms are looking at non traditional or alternative sources of financing to secure the funds they need for working capital.
Another hard reality of working capital financing is that most small and mediums sized business are searching for more cash flow on an unsecured basis. This type of financing is very difficult to achieve in the Canadian marketplace, certainly in the Chartered bank environment.
So what are the sources of financial capital that Canadian business owners and financial managers can investigate and potentially utilize? Let’s cover off some of the basic options – These include:
Personal savings (not high on a business owner’s priority list!)
Business Credit Cards
Factoring
Government Working Capital Term Loans – Financing Business Loan (These are cash term loans with fixed payments and rates)
Factoring financing
Asset Based lines of credit
When you are looking for working capital financing one of the key areas you can start with is your own key financial metrics. You don’t need to be a seasoned financial analyst to determine at what rate your receivables are turning over. The bottom line if you haven’t realized it yet (we are sure you have) is that receivables and inventory ‘ eat ‘ cash.
One key point needs to be made here, if your sales are growing at 15% and your receivables are growing at 15% that’s not a bad thing. (To calculate simply measure the ratio of these two data points) However, if your sales are growing at 15% and receivables are growing at 30% your cash flow and working capital is being consumed by the investment you have made in A/R and inventory that is not turning over. Collections and inventory turnover are a key aspect of working capital financing.
Commercial financing from a bank is the optimal solution for small and medium sized business – as have noted that is difficult to achieve. Funding a business can be complex and we urge clients to seek the advice and guidance of a respected, trusted and experienced commercial financing expert to ensure they pick the right tools to solve working capital challenges.
Working Capital Financing – Commercial Financing Solutions
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Personal Finance – Successful Financial Budgeting Tips
Personal finance has always been one of the crucial aspects of success of an individual. Execution of one’s personal finance budget often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.There is also personal financial software to help with your financial budgeting which saves a lot of money and certainly your time.
Financial budgeting is the key to unlock your monetary success as well as your means of reaching your goals and dreams. Everyone wants to pay all their bills on time. Successful debt and asset supervision is the starting place for good credit. Unless you have unlimited funds to spend however you wish, the place to start is with good personal budgeting skills.
Here are some helpful tips in creating your personal finance budget:
Create a personal household budget which includes all your monthly and yearly bills. You must also include your spending money, savings goals, and retirement funding. It doesn’t matter how much money you make, it’s how you spend it. A personal and household budget will help you make payments on time, provided you follow the plan. Aim for your housing expenses to be about 33% of your income. If that is not possible, cut some expenses or look to at ways you can make more money. Follow a debt management program. Your debt may overtake your income and then you are forced to make late payments on bills or no payments at all because you don’t have the money. This becomes expense and can topple you over. A total debt payment (which ideally should be zero!) shouldn’t exceed 30%. If it does, look to consolidate and chop ups some store cards with high interest. You can’t just spend money and hope you have enough for your bills. You must spend within a budget. Use personal financial software to save you time and accounting fees. The software will ask the same questions that a personal finance advisor asks, without charging you a high hourly rate, during a financial planning interview. Everything is already put in to the software so you don’t have to start from scratch or think too much.
A strong and stable financial situation has always been the short route towards a sound and independent financial situation. Maintaining control over your personal finance enables you to maintain control over more aspects in your live than just money and it all starts with having a good budget and sticking to it.
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The Future of Finance Jobs
In the not so long-gone past, many career advisers were advising young people seeking to start out a career to go into finance. The financial markets were doing well then, finance jobs were in plenty and MBA schools were bursting with young students seeking to build a career in finance. And the finance jobs were, of course, not limited to the financial markets. With a strong economy, finance graduates who couldn’t get jobs in the financial markets and investment banks could quite easily be absorbed into commerce and industry accounting jobs. Other would get middle office finance jobs in the public service, and going was good.
Then the bubble burst.
The economy went into recession mode, the financial markets shrunk and finance graduates who had taken up jobs with investment banks found themselves facing the axe, as the investment banks are the worst affected by turmoil in the financial markets. And as if on cue, companies, in a bid to cut costs, were also cutting on their head counts, thus also shaking the fortunes of the finance graduates who found commerce and industry accounting jobs in the private sector. In the midst of all this, it seems that the only secure finance graduates are those who took up middle office finance jobs in the public sector, but even this is not fear-proof for we do not know for sure what the full effects of the economic turmoil will be on civil service staffing.
So in the face of all this, what is the future of finance jobs?
It might seem counter-intuitive to say, but the future of finance jobs is still bright, in spite of the current turmoil in the financial markets. As it were, economists tell us that the current economic turmoil is largely short-term to medium term, which is to say that it won’t be with us forever. Which means that the people who chose to pursue a career in finance need not regret their choice, as better times are coming. But even before the better times arrive, the people with finance backgrounds who are currently getting laid off might not find themselves in the cold for too long.
As governments unveil the various economic stimulus plans, there will be need for people to manage the money as it goes into various sectors – which translates to some finance jobs. Of course the finance jobs created in this way will be for the best brains in finance.
And then there is the fact that all companies, like human beings, have a native survival instinct, which they are likely to find handy in these hard economic times. One survival strategies for companies in crises is to hire the experts who are likely to navigate them through the particular crises. And since the current crisis is financial, the companies are likely to find themselves hiring financial experts to help them address the economic crisis. Of course, the companies are not likely to be overtly looking for finance experts to help them address the financial crises. What we are likely to see is an increase in commerce and industry accounting jobs, but the accountants so hired are bound to be almost exclusively tasked with cost and revenue management tasks, geared towards helping their employers sail through the turbulent times successfully.
And finally the good times will surely come back again. If the history of the financial markets is anything to go by, we know that all bursts are always followed by booms.