Financing

A Company Diet

You may be wondering what I mean by a company diet. Have you ever had the experience of stepping on the scales, then being in shock at your weight gain. It seems as if the pounds came from nowhere, in essence just creeping up on you. However, if you were to take some time to think about what you have been eating, look at your exercise routine, and consider if you are getting adequate sleep, you just might be surprised that your weight gain is really no surprise at all.

A Company Weight Gain

Okay, I know we don’t weigh a company, but actually something goes on in most companies similar to Read the rest of this entry »

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Cash Flow–The Bottom Line

In the 1986 move Jerry Maguire, there is a famous line, “Show me the money.” Actually, when ever I read or hear about how profitable a business is, that line comes back to me.

Cash or Profits?

While there are any number reasons a company may fail, one of the most common is falling short of cash – that is insufficient positive cash flow. In fact, on paper some companies are very profitable yet they still fail. On the other side of this same coin, some companies remain unprofitable for an extended time and still survive because they possessed adequate cash flow. Of course, let’s be realistic here – a company cannot continue forever being unprofitable. But, profit alone is not enough. Read the rest of this entry »

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The Over 90 Days Customer

Every business that sells on credit has had, has, or will have them at some point “Those customers who think your purpose is to bankroll them”. Here I am primarily talking about the customers whose accounts receivable with you are routinely over 90 days. I recognize that in some industries that over 90 days is the norm, but for most businesses, once a customer’s account gets to 90 days, there is a high likelihood that what they owe will become a bad debt. I touched on this in an earlier blog, 3 Low Cost Sources of Cash – Part 2, but here I want to delve into this in more detail. Read the rest of this entry »

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Implementing the Budget

In an earlier post, some of the reasons why companies are always going over budgeted expenditures were discussed. Also in a previous posting, some of the pitfalls of planning a budget were discussed. See Do You Budget Like the Government?  Now let’s look at an intermediate step, implementing the budget.

First Things First

Before you can ever hope to implement a budget and realize any benefits from having one, you must first Read the rest of this entry »

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How to Get the Bank off Your Back

I can remember on more than one occasion observing where a client’s bank just wasn’t buying what the client was saying anymore.  Perhaps you have had a similar struggle with your bank.  There are some things you can do to Read the rest of this entry »

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The Business Plan – Hold On to the Napkin

Hmm, a blog called “Your Business Plan – Hold On to the Napkin” would seem to contradict one of the things I do, i.e. Business Plans.  But, allow me to explain.

Sometimes You Really Do Need a Full Business Plan

There are numerous reasons you may need a full, Detailed Business Plan.  Some of the reasons include obtaining financing, your business is highly complex, you are trying to change the direction of a business, or you simply are the type who needs details.

The Trouble With a Full Business Plan

If you have had a formal business plan before or even have one now, think about how you actually utilized it.  If you are like many, you ether Read the rest of this entry »

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3 Low Cost Sources of Cash – Part 3

In Part 1 and Part 2 of this series I discussed how proper management of inventory and accounts receivable were great sources of cash to internally finance your operations.  You can find those two blogs at 3 Low Cost Sources of Cash Part 1 and 3 Low Cost Sources of Cash-Part 2 .

Again, as a reminder, in an earlier blog called The Big 4 Capital Users, I used the acronym CRIP to represent 4 activities that heavily impact cash.  Specifically they are:

C –  Capital Equipment.  (Fixed Assets and their financing)

R –  Receivables (Accounts Receivable along with Credit and Sales Policies)

I –   Inventory (Controls, purchasing policies and procedures, and levels carried)

P –  People (Human resources, employment practices, training, turnover, etc.)

In Part 1 we discussed inventory and how properly managing the levels carried presented a great opportunity for your company to self-finance.  In Part 2 we looked at accounts receivable and the way creating and utilizing appropriate policies and procedures for sales, credit, and collections could provide a ready source of cash as well as reduce internal conflict between sales personnel and support employees (primarily accounting).  In Part 3 I would like to look at an area that many often overlook as a key component of cash management and that is Read the rest of this entry »

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3 Low Cost Sources of Cash – Part 2

In Part 1 of this series called 3 Low Cost Sources of Cash – Part 1 I mentioned the stress, strain, and anxiety of not having sufficient cash and the resulting game that must be played juggling creditors and even employees to survive?  In Part 2 of this series I will discuss another commonly overlooked source of internal financing.

As previously mentioned, the economic downturn that began in 2007 and accelerated in 2008 left many companies (particularly small businesses) struggling for adequate financing as lenders tightened lending requirements.  As a reminder, in an earlier blog called The Big 4 Capital Users, I used the acronym CRIP to represent 4 activities that heavily impact cash.  Specifically they are:

C –  Capital Equipment.  (Fixed Assets and their financing)

R –  Receivables (Accounts Receivable along with Credit and Sales Policies)

I –   Inventory (Controls, purchasing policies and procedures, and levels carried)

P –  People (Human resources, employment practices, training, turnover, etc.)

In Part 1 we discussed inventory and how properly managing the levels carried presented Read the rest of this entry »

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3 Low Cost Sources of Cash – Part 1

Have you ever experienced the stress, strain, and anxiety of not having sufficient cash, thus finding yourself resorting to juggling creditors and even employees to survive?  If so, this blog is for you.

In these tight economic times, nearly every company is concerned with whether they will have access to adequate capital.  In contrast to the past, lenders are scrutinizing borrowers much more closely, and in many cases simply saying “No” to loan requests.  In an earlier blog called The Big 4 Capital Users, I used the acronym CRIP to represent 4 activities that heavily impact cash.  Specifically they are:

C –  Capital Equipment.  (Fixed Assets and their financing)

R –  Receivables (Accounts Receivable along with Credit and Sales Policies)

I –   Inventory (Controls, purchasing policies and procedures, and levels carried)

P –  People (Human resources, employment practices, training, turnover, etc.)

In this list there are three items I think are most often misunderstood, and as a result, small businesses frequently miss Read the rest of this entry »

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