5 Guaranteed Business Working Capital & Cash Management Solutions for Liquidity - Canada

Updated: June 22, 2011

Strategy # 1 - Not optimal, but again it's all about choices. So our tip/strategy is to consider sale of fixed assets you own but might not be getting full use of in your day to day operations. Naturally you would not consider selling assets you need on a day to day basis, but are there some unproductive assets around? There just might well be.

You naturally want to ensure that these assets are fully owned by your firm and not encumbered by any liens or bank security agreements. In some cases a reasonable strategy might be to replace e the asset with a less costly one, or used perhaps?

Strategy #2 - The sale -back. This strategy, as we have noted before is just the opposite of acquiring and financing new assets. You already own the asset and it should be free and clear of any security arrangements. By working with a Canadian lease financing company you would enter into an arrangement whereby you sell the equipment back to the lessor and lease it back.

These transactions are generally done at what is known as fair market value, so you expect to not be able to get all the money you paid for the asset of course. In some cases an actual appraisal might be required, which typically would be in the 1-2k range depending on the size of the asset.

Generally speaking, the sale leaseback or a bridge loan on an already owned asset is a strategy worth considering when it makes sense.

Strategy 3- Inventory. That's always a tough one for Canadian business owners and financial mangers to wrestle with. Financing inventory is a challenge and although there are some specific financiers able to monetize your inventory generally this is in connection with a total financing of your business. Financing and monetizing inventory works best, in Canada, in our opinion, when its part of an asset based lending arrangement or working capital facility.

It only makes common sense also that you could consider selling off any obsolete or slow moving inventory, again, if that makes sense and is possible.

Strategy # 4- Other assets. There are sometimes other hidden assets, in that business owners might no typically consider such items as patents, or tax credits as financeable items. But they are and can be monetized for their true value.

Well, we're here, last but not least, Strategy # 5. And to be honest it's our most recommended one for small and medium business in Canada. It's simply the monetization of your receivables via a receivable finance facility.

Why is this favorite strategy? Simply because for a starter you are not taking on any additional debt, you are just ' cash flowing ' assets that are already there. And these sort of facilities allow you to grow your business lock step with your sales. So working capital and cash management grow as you grow your revenues.

Our recommended facility is C I D - Confidential invoice discounting, allowing you to bill and collect your own receivables, unlike you competitors who are using this strategy and having to involve their client base re notification, etc.

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