Cash flow is the lifeblood of business, with working capital acting as the pump that monitors and controls momentum. Rapidly expanding undercapitalized companies often find themselves constantly running out of cash to meet their daily obligations. Working capital may be tied up in fixed asset investments, extended term customer receivables or inventory. There are several financial options available to the business owner that should be explored when this occurs, including:
Sale / leaseback of fixed assets
Conventional thought often leads to the conclusion that the above are expensive alternatives, to be avoided. And yet all represent areas of explosive growth in the financial services industry.
Why? Because in certain circumstances these financial alternatives represent the right tool for the job. One might be surprised to learn that most, if not all of the companies that make up the Wall Street Fortune 500 have in the past, and many continue to employ some of these financial tools to fund business growth.
Each of these financial strategies offers unique advantages to the business owner. Knowing when these financial alternatives might be appropriate, evaluating the cost to the business of employing these financial alternatives and the likely impact they will have on the cash flow budget, income statement and balance sheet should be fully evaluated. There are many companies in the financial services sector who offer a wide variety of products. Evaluating both the financial services' company and its products to obtain the best possible fit with your business is critical. Establishing new business relationships can be a time consuming process. It is important to consider both the immediate and future needs of the business. Taking the time to select the best possible financial partner initially is prudent.
Nexus is a private, owner managed financial services company dedicated to providing advisory services, financial management services and capital arrangement services for small to mid-size companies, primarily based in Western Canada.
There are many financial strategies business can employ today. Don’t let a shortage of capital prevent you from expanding your business without first exploring all of the options available to you.
If you want to know more about leasing or factoring and whether these products may be the right financial tools for you, please contact our office.