subject: The Fix On Business Cash Flow ! Financing And Managing Your Working Capital Problem Via Pigs And Co [print this page] Business cash flow in CanadaBusiness cash flow in Canada. What in the world would that have to do with pigs, cows, and... Heaven forbid... killing pigs?
Basically, it comes down to this, and all of a sudden our animal analogies will make a lot more sense. And what do we mean by that... just that your current assets in your business, ie receivables, inventory, prepaids, etc are cash pigs. They require and use cash, and if you don't manage them properly bad things happen.
But the good news - when you do manage them properly your company embraces that other barn yard friend, the ' cash cow '!
The Canadian business owner and manager can easily be forgiven sometimes when it comes to concepts such as growing business assets. That's a good thing, right. Well, sometimes but definitely not always because the constant build up of current assets (again, your A/R, inventory) can be disastrous for your company if not addressed by two actions you can take - managing them, and financing them.
While we're all for working with clients on financing working capital and providing solutions that match their needs its the business owner/manager that can also make a huge dent in their cash flow plan by simply reducing and managing receivables and inventory .
Naturally its human nature for the business owner/manager to feel that if they overly pressure their client base for payment that they might be in a position to lose their customer. Don't forget though that large corporations invest huge amounts of capital in people and systems when it comes to enforcing their payment terms. By the way, that's one of the ways that they became a large company - and we shouldn't be surprised that the metrics of Days sales outstanding and inventory turns are often keenly related to the compensation of very senior management, up to and including the president. So those big guys just might be on to something!
The same general concept applies to inventory also, and if your business has an inventory component on the balance sheet (services businesses of course don't) it might already be taking months for inventory to work your way through your system and finally become: ' CASH FLOW '!
While we have focused on the left side of the balance sheet the corresponding current liability on the other side is of course payables, and if you properly manage payables that's also a great cash flow generator . Again don't our large companies do that great also? Their modus operendi ... pay everyone slowly... because... hey... they're big and they can!
There is a great analogy around managing and financing current assets, and it revolves around running your company like a plan, with yourself as the owner of financial manager always watching the controls. And when you don't... there's a crash around the corner, and the cash flow pigs have in effect won the battle.
Working capital solutions to enhance business cash flow are abundant. it's all about which one is for your firm. They include:
Receivable financing
Inventory financing
Asset based lending
Business bank lines
Supply chain /PO Financing
Tax credit monetization
Speak to a trusted, credible and experienced Canadian business financing advising on barnyard management - turning your company into a cash flow and wrestling down those cash flow pigs!
