Saturday, December 12, 2009

Ron Finch - When the BANK SAYS NO, there is an alternative solution

My Mechanic said “I couldn’t fix your brakes, so......” “I made your horn louder.”
This was not the alternative solution that I was looking for. At one point or another, every business is confronted with cash flow problems, and although there is an economic downturn at this time, it doesn’t just happen during difficult times!

Businesses need cash for many reasons. A company may be experiencing sudden growth, there may be a need to expand production, there may be a need to fund a major transaction, or there may be an opportunity for big discounts on supplies or raw materials if acted upon quickly. All can create an immediate, sometimes urgent need for funding.

Current research shows that a good proportion of small and medium sized businesses fail because of difficulties in meeting short term financial obligations - not because business is bad. So it seems contradictory for a growing and profitable business to get into serious financial trouble, even go broke. But on closer examination, it’s not surprising. Even if one or two of your larger accounts fails to pay their invoices on time – even if they take an additional 30, 60 or even 90 days to pay - you’ve got a cash flow problem!

Traditionally, business people have relied on corporate lines of credit that are derived from conventional lending sources. When a cash crunch hits, the process of acquiring financing can become a lengthy, arduous and sometimes impossible experience. But today, there is a viable alternative to surviving those cash-strapped cycles.

When the BANK SAYS NO, there is an alternative solution that doesn’t involve giving up your equity or increasing your dept load. This alternative form of financing is known as Factoring and is sometimes referred to as Accounts Receivable financing. That Outstanding Invoice to your customer is cash that you are owed. The problem is that your customer wants to keep it a little longer, sometimes as much as 120 days. But until the invoice is paid, you are handcuffed.

At Liquid Capital Solutions Okanagan, we recognize that invoice as an asset. Quite simply, when a company has credit-worthy accounts receivable, it’s possible, through Factoring, to get immediate cash based on those receivables. So when the bank has to say No, Liquid Capital can usually say YES and provide the much-needed financing that a business requires. More and more, Factoring has become a realistic and workable solution, allowing businesses to prevail when cash flow uncertainties can threaten survival.

Ron Finch

Factoring Kelowna BC
Liquid Capital Solutions
250 469 9606
250 826 8446 (cell)

Friday, December 11, 2009

Are you Feeling the 'CRUNCH' ?

Take advantage of your Receivables by turning them into immediate CASH FLOW.

There are many reasons that businesses often experience that cash flow crunch. Particularly in economic downturns, customers are not so quick to pay your outstanding invoices on time, leaving a short fall. A downturn also typically equates to less sales, thus less cash available to look after standard expenses such as payroll. Unexpected expenses arise such as equipment maintenance or refitting. Seasonal expenses such as taxes, can add a stress on finances.

I recently did a presentation to Okanagan members of the commercial team of the Royal Bank of Canada about Accounts Receivable financing. In my research for that presentation, I happened upon an excellent booklet published by the RBC in May of 2004, named “The Definitive Guide to Maximizing Cash Flow”. It is a well laid out “Sourcebook for Successful Small Businesses and Entrepreneurs”.

In one article, “Covering Shortfalls” it has a great analogy: “If you think of managing cash flow as one of the pistons in a business engine, its ‘downstroke’ occurs when there is a gap between available cash and outgoing payments that must be met. You must fill the gap with short-term financing until the business reaches the ‘upstroke’ in its cycle, when sales activities turn into cash.”

It goes on to explain that there are measures to assure cash flow such as a “Revolving Line of Credit” or a “Trade Credit” (where your suppliers give you time to pay them). Also it refers to “Asset-based Financing” as a source which includes Factoring (page 19) which uses Accounts Receivables as viable assets.

At Liquid Capital Solutions Okanagan Ltd., we provide immediate cash flow without disrupting your balance sheet.

It’s Not a Loan, It’s an Advance.

Contact us at 250 826 8446 or at