Sources of financing of rolling companies

by Augustus Callen

Funding for rolling companies is never a question of why – it’s just a question of when! Working capital and cash flows are of course the heart of every business. The challenges of getting this funding become a matter of time.

Perhaps you need money for your regular economic cycle in progress – it’s the simple – you buy stocks, your production products, selling you, your bill and collect. In a perfect world, your suppliers give you an unlimited time to pay and unlimited credit limits. And of course, your customers pay you exactly 30 days. Guess what? It’s not a perfect world!

If you are a traditionally funded business, you have access to bank capital for renewable credit lines according to your professional needs. But for a growing number of Canadian companies that access to traditional banking capital is not available. These scenarios require special expertise to identify the sources of financing companies that work for you. The solutions are really numerous – its request becomes a question of which solution works for your business, what are the costs involved and the solution corresponds to the solution in your business model.

The financing of the companies we are talking about can take many different forms – it could include a credit line, an inventory financing or a financing of the purchase order, a sales lease on unbelievable assets, Loans in work capital or customer funding, otherwise known. as afraft.

One of the most important things you can do for business financing is to make sure that the type of funding you are told corresponds to your needs. What we mean by that is that you need to match short-term needs with short-term funding. Factoring could be a good example. If your receivables are not funded and you need money to meet inventory and supplier commitments that the type of funding is immediate and meets your needs. Why do you go to a five-year loan to fixed payments for a short-term capital need or a requirement?

The best way to think about short-term funding is to focus on the current part of your balance sheet assets – these elements include typical stocks and account accounts. These assets can quickly be monetized in a working capital facility that comes in a variety of methods. The reality is that your inventory and customer accounts increase the locking step of your sales and your ability to finance them continuously will give you access to unlimited unlimited labor capital.

There are strong technical rules around the way you can generate positive prices for operating facilities. By calculating and analyzing certain basic financial ratios (we call them relations) in your financial statements, you can get a strong feeling of what is available in the financing of rolling companies and prices could be involved. These ratios are your current ratio, your inventory turns, your receivables rotates or from the outstanding days of sale, A and your total debt to the value. Depending on where these final ratio calculations are completed, will allow your working capital to finance to put your business at low risk risk at average risk or high risk of pricing?

In Canada, working capital rates range from 8 to 9% per year to 1 to 2% per month, depending on the financed assets and the manner in which they are funded.

So, whatever our end result in the financing of rolling companies? There are simply available alternatives and you, as a business owner of Financial Manager, you can evaluate these alternatives in terms of short-term needs or long-term needs. Prices and solutions vary, and your ability to transmit the positive aspects of your business to the work lender will eventually lead to a pricing and a final solution. Talk to a credible, experienced and confident business financing advisor to determine the best solutions for your business.

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