A Practical Cash Flow Loan ? What Type Of Working Capital Company Can Help Your Canadian Business

Updated: June 01, 2011

Naturally just the creation of additional sales revenue creates profit for your firm, but it's clear to every business owner that is simply not enough, given the investment you then have made in current asset accounts such as receivables and inventory.

One Canadian solution available is the conversion of short term debt into long term debt via a working capital term loan. This creates a long term working capital component to your financial structure. Small and medium sizes firms can source this type of solution via a government related bank - larger firms can utilize mezzanine or subordinated debt type financing to accomplish the same goal... only from a larger perspective.

Not often thought of as a cash flow loan, but in reality it is the creation of a sale leaseback for assets your already own. You in effect sell the assets to a lessor or working capital company and create a similar cash flow loan along the lines of the term loan we had reference above. All these solutions achieve the same goal.

Probably the most popular method today of generating cash flow is the sale of receivables via a factoring or securitization type facility. The good news for Canadian business is that this type of financing is available for a 10k solution as well as a 10 Million dollar solution.

We seem to be continually explaining this type of solution to clients, and it's frankly quite simple to understand. It's your selling of your receivables as you generate them for cash flow... today. What makes it complicated, and we're not to proud of it we can assure you, is how the working capital company sometimes complicates things around how this whole process works, what it costs, and how it affects your company on a day to day basis.


When you exactly face the decision to go out and look for more working capital. Really it fundamentally comes down to three areas, starting a business, growing your business rapidly, and then simply financing those day to day activities because for some reason cash flow is failing you.

You have clear options in the Canadian business financing environment .Its a questions of knowing those alternatives and determining what is achievable based on your unique needs. Very typical fundamentals you should have under your belt are up to date financials, a strong sense of your cash flow needs (via a cash flow budget) and some ' education' on what facilities are available for a firm of your size and credit quality.

The premier working capital and cash flow loan solutions in Canada are as follows - receivable financing, a working capital facility that combines A/R and inventory, or a true asset based lending arrangement which replaces a bank facility but gives you higher borrowing margins. We of course also touched on the cash flow term loan earlier.

Three more esoteric ( but totally viable ) financing solutions for your business are purchase order financing, inventory loans, and financing your tax credits if you have access to them.

Featured Research
  • Can Gamification Improve Contact Center Performance

    We have all heard the phrase "all work and no play". Well, would you believe us if we were to tell you that by implementing gamification you can INCREASE contact center engagement, morale, and overall performance? Spoiler alert: 89% of contact center employees believe that a point system within their contact center would boost their engagement! more

  • [Infographic] 8 Common Pain Points UC Eliminates

    Every company has moments of frustration, it is when these moments become extended periods of inefficiency, or pain points, where we start to see loss in productivity and employee morale. What truly sets a successful business apart from those of its competitors, is how they take these pain points and use them as opportunities to improve upon procedures and systems to eliminate pain points and move beyond what was the status quo. more

  • Go VoIP and Go Green

    You may be looking to switch to VoIP because of the cost benefits that it will bring your company, but did you know that it is also FAR BETTER than traditional phone systems for the environment as well? With environmental impact being at the forefront of both consumer and business minds, it is essential that business decisions are made now based on economic AND ecological impact. more

  • 10 Steps for Creating an Accurate Call Center Forecast

    While other customer service channels are gaining traction, phone support is still one of the most HEAVILY used customer service communication methods. Now what does this mean for YOUR business? We answer that question and more in our latest paper which discusses the importance of knowing call volumes, peak call times, and industry trends so YOU can accurately staff your call center to handle all your clients demands. more

  • eGuide: Comparing UC Vendors

    Changing your company’s business communications solution is an investment in time and money that will touch everyone in your organization. A successful unified communications (UC) deployment should streamline everyone’s work flow, simplify IT operations and deliver a lowered total cost of operations. Your company deserves nothing less. more