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Manage Finance

The Myth Of Inventory Finance Companies

Your company carries it. You need to finance it. We’re of course talking about inventory. Discussions with clients reveal a lot of misconceptions around inventory financing in Canada. Let’s try and resolve some of those myths around the financing of your inventory, who the players are, who they are not ( that’s the most common myth ) and we’ll also try and provide some straight forward direction on next steps in your inventory financing challenge.

The overall quality of your inventory management will play a large part in your ability to finance your products, which are a part of the current assets component of your balance sheet. You cannot overlook the importance that an inventory lender will place on your ability to report and count your products. The reality is that most firms are either carrying a ‘ continuous’ or ‘ ‘periodic’ system of inventory control.

So here is solid tip # 1 – be aware that inventory lenders prefer a continuous type of inventory accounting, for all the obvious reasons. Essentially you are counting and monitoring inventory (with the use of software of course!) at all times. That’s a good thing when it comes to a lenders valuation on an ongoing basis and their ability to lend.

You’re company is growing. Unfortunately so is your inventory! And that places a huge drain on your cash flow. The working capital cycle dictates that cash turns into inventory which turns into receivables and then we start all over… that lag can be anywhere from 60 – 120 days, sometimes longer. Never underestimate the problem that higher sales will bring to your inventory financing needs.

Clients typically are looking for inventory financing because the level of investment that you have in product and receivables drains your cash flow. As sales volumes increase your cash flow decreases based on your overall collection period of A/R and of course those inventory turns.

Your sales staff of course never wants to be in a position to tell a customer you don’t have the product they have worked so hard to sell.

Does your company have an inventory financing strategy? The majority of firms we talk to in Canada, certainly in the small and medium business sector do not have access to the inventory financing they need. Do true inventory financing companies exist in Canada? We feel that the answer is generally ‘ no ‘, they do not. However if your firm would consider an asset based lending scenario that in effect takes the place of inventory finance companies in Canada.

Under an asset based lending strategy your inventory is margined for what its worth, by experts who categorically know what its worth. You will enhance your ability to finance your product if you have the controls, reporting, and inventory accounting system in places that makes the inventory and asset based lender ‘ comfortable ‘.

Speak to a trusted, credible, and experienced business financing advisor with regards to inventory financing companies and asset based lenders who will give your product the financing it deserves!

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Finance Services

The Gold Price Points?

PRICE of gold continues to rise after surging 2 percent in trading Thursday. The rise in gold prices could not be separated from the steps the U.S. Federal Reserve, the Federal Reserve, which issued a new stimulus to encourage job creation in the U.S..

Reuters news agency reported Friday, September 14, 2012, the price of spot gold traded at U.S. $ 1,766.75 U.S., after surging 2 percent on Thursday to U.S. $ 1,772.26, the highest since February 29. Meanwhile, the index of commodity Thomson Reuters-Jefferies CRB index rose 0.55 percent on Thursday, touching its highest level since March.

In Singapore, spot gold prices on Friday morning, up 0.1 percent to U.S. $ 1,768.44 per ounce. Throughout this week gold has risen 1.9 percent. This represents an increase of gold for four consecutive weeks.

Why is gold so attractive for investors to continue to strengthen in the past four weeks?
Jeff Sica, chief investment officer of Sica Wealth Management currently manages client assets of more than U.S. $ 1 billion, to see that gold as a major investment in the face of a weakening dollar.

“The appeal of gold as a refuge from the fear and the secondary currency has never been unparalleled,” Sica said in an e-mail to Reuters. He estimates that commodity prices will continue to rise.

Sica doubt that the market euphoria will not last long, as investors will soon shift their focus to the economic fundamentals are weak.

Although traded slightly higher, in fact during the weakening dollar. The dollar index, measured against a basket of currencies in the world, hovering near its lowest level in four months, at 79.18.

The dollar traded up 0.1 percent at 77.57 yen, recovering from a seven-month low at 77.13 yen. The euro held steady at U.S. $ 1.2987, just below the highest level in four months at U.S. $ 1.3002.

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Sources Business

Overcome Crisis, ECB Interest Rate on Hold at 0.75% Level

The European Central Bank (European Central Bank / ECB) yesterday announced to keep interest rates at 0.75 percent, its lowest level. The move was accompanied by a commitment to the Blue Continent monetary authorities to keep buying bonds to support the economy.

The decision of the central bank’s governing council had been predicted earlier by market players who are waiting for further action amid fears of bailout funds to Spain.

Once the details of ECB bond-buying program launched last month to ease market tensions, the ECB Governor Mario Draghi is projected to announce more measures against the debt crisis but urged European governments to act.

“After introducing the Outright program Monetary Transaction (OMT) last month, I predict there will be no new announcements from the ECB this week,” Goldman Sachs analysts said in a note quoted by AFP.

He added, before Goldman Sachs estimates the ECB will keep the policy rate and there will be no immediate change in policy proposals. Natixis economist Cedric Thellier revealed that further rate cuts will only be considered if the economic situation deteriorates.

“For the time being, the ECB governing council maintain the current level of interest rates,” he added.

According Thellier, further rate cuts are likely to be held in December, along with the recent announcement of the ECB regarding growth and inflation forecasts.

Looking ahead, there is a tendency to revise predictions of gross domestic product (GDP) for 2013 and 2014. At the same time experts predict that the central bank will announce a long-term operation of a new financing (long term refinancing operation / LTRO) before the end of the year.

Just to note, the central bank has launched a two-year LTRO by pumping large amounts of liquidity into the banking system to prevent a credit crunch. In the last month Draghi pledged to provide assistance to euro zone countries such as Spain by buying bonds to lower borrowing costs. This makes the tension in the market as investors thought that was the turning point of the crisis.

However, after a period of quiet, new volatility in emerging markets amid doubts whether Spain will apply for bailouts (bailouts) to the ECB. John Higgins at Capital Economics economist Ben May and expressed, since the ECB launched the policy of OMT, 10-year yields on government bonds have fallen sharply.

“However, three key questions about the effectiveness of the program remain unanswered and more importantly, we doubted the program, even if immediately implemented,” added Higgins and May.

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Small Business

Small Business Loans – Good Way to Start Business

Tο substantially grow аnу business аn individual hаѕ tο ѕtаrt frοm scratch. Aѕ thеrе іѕ a saying” Rome wаѕ nοt built οn a day”. Thе bіg names іn thе market, аll οf thеm hаd a humble beginning. Now уου tοο саn finance уουr dream business venture bу seeking small business loans. Sensing thе mood οf market whісh needs tο bе tapped, various lenders аrе providing business loans аt easy terms аnd conditions.

Small business loans аrе designed tο provide finances tο hеlр individuals set up thеіr business. Depending οn thе requirement, loan applicant саn avail small business loans bу placing wіth οr without аnу collateral. If уου саn pledge property such аѕ home, real estate οr аnу οthеr valuable document аѕ collateral, уου саn opt fοr secured small business loan. Bу placing collateral уου асqυіrе a bіggеr loan amount wіth cheap interest rates. Thе derived amount іѕ based οn thе equity value οf thе collateral.

 

On thе οthеr hand, unsecured option οf small business loans іѕ beneficial fοr borrowers lіkе tenants аnd non homeowners аѕ іt dοеѕ nοt require аnу collateral. Homeowners whο dο nοt want tο рlасе аnу collateral саn аlѕο υѕе thе loan. Aѕ thеrе іѕ nο collateral involved, interest rate fοr small business unsecured loans аrе comparatively higher.

Anу expenses concerning уουr enterprise саn bе met wіth small business loans. Thе loan amount derived саn bе used tο рυrсhаѕе nесеѕѕаrу raw materials, machinery аnd tools, hiring nесеѕѕаrу labour, placing ads, paying payments etc. Existing business owners саn аlѕο υѕе small business loans tο meet thеіr small specific needs.

It іѕ better tο evaluate аll thе nесеѕѕаrу expenses before opting fοr small business loans. Bу determining thе approximate amount required tο ѕtаrt уουr business, іt refrains уου frοm taking excessive amount аnd going overboard. Further look fοr lenders offering small business loans аt lower interest rates, whісh wіll hеlр уου іn repaying thе loan amount.

Tο hеlр individuals gain foot hold іn thе market, small business loans provides аn ехсеllеnt opportunity. Wіth thе market moving іn rіght direction, borrower саn сеrtаіnlу mаkе thе maximum out οf thіѕ loan.