April 2019

Seeking to grow your business? Make your working capital work for you!

2 minute read

There are numerous financing solutions for businesses, regardless of their size. With such a wide array of possibilities, it can be difficult to make the right choice. Using working capital and taking advantage of flexible payment solutions can be help stimulate business growth.

Exploring financing options to sustain business growth

In 2017, American Express conducted a survey (American Express Global SME pulse survey) among more than 3,200 SME owners in Canada and around the world. The results showed that companies’ preferred financing option to supply their business over the next year was their current working capital.

Further evidence showed that only 16% of SME owners are “very satisfied” with current financing options. In addition, close to 40% of SMEs currently use their overdraft to finance their business. Finally, just 40% of respondents affirm that lenders can meet their financing and investment needs.

In light of the results of this survey, it is clear that business owners are in dire need of financing solutions tailored to them.

Using working capital: a strategic option to consider

A major financing solution for businesses is to use their working capital, which allows them to free up money from their current balance sheets. It is crucial for businesses to see in their working capital—and their cash flow—a source of growth capital and a strategic lever that can both optimize their payment agreements and improve their supplier relationships.

In addition to providing increased flexibility, using working capital helps optimize processes while maintaining trust with suppliers and other business partners. That way, subcontractors are happy to be paid on time and the business has enough cash that can be used when necessary.

According to Paul Roman, Vice President and General Manager of Global Commercial Services at American Express Canada: “Businesses of all sizes are able to increase their financial flexibility by using the enormous potential of working capital. Using the right financial tools can help businesses free up money that will be invested in the growth of the business.”

This financing strategy offers an array of benefits, such as allowing seasonal businesses to replenish their inventory and afford additional employees during peak periods. Businesses that use working capital strategically will be able to fund more business initiatives and are less likely to have to choose between two competing priorities.

”There is a high awareness in most companies to optimize working capital but many continue to struggle to realize their objectives,” says Simon Rockcliffe, Associate Partner - EY Working Capital Advisory Services. “The best companies have a deep understanding and visibility into their cash conversion drivers and have strategies and incentives in place to drive operational improvements that can release cash tied up from receivables, inventory and payables.”

Rockcliffe adds, “The creation of convenient payment platforms is accelerating cash flow at a much lower cost than before, particularly for small- to medium-sized enterprises, and should be a key component for all companies when evaluating the portfolio of improvement opportunities in releasing much needed cash flow.”

Over the years, American Express has developed expertise and a variety of tools to help Canadian entrepreneurs free up more cash to maintain a certain degree of financial flexibility and enjoy better purchasing power. Find out more about our payment solutions that offer, among other things, 55 interest-free days. Now that you’ve uncovered the “secret weapon,” let us help you unleash its power.

To find out more, visit:


This article was originally published by American Express Canada on Les Affaires on October 24, 2018. Service de contenu Les Affaires. Find it here (in French)