This simple calculation gives you a powerful tracking tool that helps you adjust your cash in-flow on an as-needed basis:
Step 1: Calculate your average collection period by dividing your total sales for the previous year by 365. This gives you your average daily sales volume.
(Total Sales / 365 Days = Average Daily Sales Volume)
Step 2: Then divide your average daily sales volume into your current accounts receivable balance to get the number of days it takes to collect a bill.
(Average Accounts Receivable Collection Period = Average Daily Sales Volume / Current Accounts Receivable Balance)
Now that you know your average accounts receivable collection period, you then need to interpret that number as it relates to your commercial business.Is your collection period in line with the company's credit policy? does your credit terms provide your customers with 30 days to pay their bills as related to your products and services.
Are you tracking overdue accounts and taking consistent action to collect past due accounts? Do you have an effective tool in place to track when an account comes due, and knowing who has paid their bills and who has not? When a customer's invoice goes past its due date, is there a procedure in place to place that account for collection By answering these basic questions, implementing a procedures that Burt and Associates can provide to help you get your money on time every time.
Tuesday, February 16, 2010
To Collect or Not Collect?
To collect or not to collect. Is Burt and associates the answer?
Many times people contact our firm with a commercial debt that is owed to their company. This could be an invoice over due or a contract dispute.
The key to a good working relationship is communication and sometimes that relationship sours due to a lack of speaking clearly.
Once you have tried everything in your companies powers to relieve a burden or debt it is sometimes best to wash your hands of that deal and move into offensive mode.
Burt & associates has been accused of deceptive trade practices or received complaints from our clients debtors. Why? Because we are the quarterback that is given the call with 8 seconds on the clock on a 4th and 3 on the six yard line during the superbowl.
We are often the last step before legal action is taken.
Many times people contact our firm with a commercial debt that is owed to their company. This could be an invoice over due or a contract dispute.
The key to a good working relationship is communication and sometimes that relationship sours due to a lack of speaking clearly.
Once you have tried everything in your companies powers to relieve a burden or debt it is sometimes best to wash your hands of that deal and move into offensive mode.
Burt & associates has been accused of deceptive trade practices or received complaints from our clients debtors. Why? Because we are the quarterback that is given the call with 8 seconds on the clock on a 4th and 3 on the six yard line during the superbowl.
We are often the last step before legal action is taken.
Small Business Face Death Tax Dilemma
About 5,500 estates -- about one quarter of 1% of all estates -- paid death duties in 2009, says Policy Center in Washington. But 44,000 estates could be hit by the tax next year if Congress doesn't change the law before then , And some small businesses have such limited cash flow that they couldn't withstand the hit.
One small business-owner watching the debate is David Castillo who owns a wine store. Castillo says he has been forced to purchase expensive life insurance to ensure that his four children, three of whom he employs, can inherit the business without having to sell it to pay the estate taxes. "There are only four years left on the policy, and then it becomes absurdly unaffordable," says Castillo, who hopes the estate-tax law changes before then.
Uncertainty over the tax gives business owners a chance to take advantage of other estate-planning tools, says Richard Emmons consultant Richard@mymarketingvp.net to business"s on Estate Planning.
One strategy is for owners to give some assets to their children. The gift tax has a $1 million exclusion this year, so a married couple could give their children $2 million tax-free this year. For amounts of more than $1 million per person, the gift-tax rate is 35%, making it a better deal than the estate tax. Another strategy recommended: establishing trusts that let businessmen pass some assets to their heirs tax-free. In one such plan, a business owner would deposit assets in a trust, which pays the owner back over a fixed period. During that time, appreciation of those assets -- which can be substantial -- passes to children tax-free.
Still, such estate-planning tools are beyond the reach of most small business owners. "We don't have that kind of money, we don't have those kinds of assets," Castillo says. "Our net profits aren't millions of dollars. For most small businessmen, the only way to raise liquid assets is to liquidate the business."
Bill Page , who owns a Lumber company in Arkansas, says that while his business is large enough to create trusts to shelter the estate, the tax is still so high that his business will probably have to be sold to pay the "death duties." "It's futile to build a business over 100 years," Page says.
One small business-owner watching the debate is David Castillo who owns a wine store. Castillo says he has been forced to purchase expensive life insurance to ensure that his four children, three of whom he employs, can inherit the business without having to sell it to pay the estate taxes. "There are only four years left on the policy, and then it becomes absurdly unaffordable," says Castillo, who hopes the estate-tax law changes before then.
Uncertainty over the tax gives business owners a chance to take advantage of other estate-planning tools, says Richard Emmons consultant Richard@mymarketingvp.net to business"s on Estate Planning.
One strategy is for owners to give some assets to their children. The gift tax has a $1 million exclusion this year, so a married couple could give their children $2 million tax-free this year. For amounts of more than $1 million per person, the gift-tax rate is 35%, making it a better deal than the estate tax. Another strategy recommended: establishing trusts that let businessmen pass some assets to their heirs tax-free. In one such plan, a business owner would deposit assets in a trust, which pays the owner back over a fixed period. During that time, appreciation of those assets -- which can be substantial -- passes to children tax-free.
Still, such estate-planning tools are beyond the reach of most small business owners. "We don't have that kind of money, we don't have those kinds of assets," Castillo says. "Our net profits aren't millions of dollars. For most small businessmen, the only way to raise liquid assets is to liquidate the business."
Bill Page , who owns a Lumber company in Arkansas, says that while his business is large enough to create trusts to shelter the estate, the tax is still so high that his business will probably have to be sold to pay the "death duties." "It's futile to build a business over 100 years," Page says.
Monday, February 8, 2010
Strategic Planning For Your Business
For the most part, salespeople are not concerned with or committed to corporate initiatives in which they had no input. Their real commitment is to generating sales and earning commission- end of story. If a salesperson falls short of his “new business” quota, for instance, but is above quota with existing customers, in his mind, he is still “hitting his numbers.”Therefore, if you are a sales manager for a business your responsible for translating corporate initiatives into specific department goals, it is imperative that you invest time developing a detailed plan of accomplishment to accompany the quotas you assign. Most importantly, make it a point to involve your sales team in the planning stage. After all, they will be responsible for making the plan work.
You can’t have all the answers and knowledge regarding markets, customers, and products. Involving the people in your business in the planning process can provide you with additional perspective and insight. And, more significantly, their participation in the development of the plan gives them ownership in it which increases their buy-in and commitment to it
You can’t have all the answers and knowledge regarding markets, customers, and products. Involving the people in your business in the planning process can provide you with additional perspective and insight. And, more significantly, their participation in the development of the plan gives them ownership in it which increases their buy-in and commitment to it
Latest Unemployment Figures
The unemployment rate dropped from 10% in December 2009 to 9.7% in January 2010 according to the Bureau of Labor Statistics. The news isn’t as good as it sounds, however. In January 2010, 20,000 jobs were lost when economists had anticipated a gain in jobs.
Employment fell in warehousing, transportation, and construction. However, there was an uptick in employment in retail and temporary help services. The good news is that usually when an increase is seen in temporary help services is seen, it is a leading indicator for a good job picture in the future. There was also an increase in jobs in the health care sector.
The interesting thing is that even with a drop in unemployment, the economy still lost jobs.
Some economists, according to a recent articles think that only 1.5 million jobs will be regained during 2010 and that it may take 3-4 years for the job market to return to anything approaching normal. This recession is truly earning its nickname of the Great Recession. Don”t take a risk on your customers call me today to help your bottom line 469-368-6410
Employment fell in warehousing, transportation, and construction. However, there was an uptick in employment in retail and temporary help services. The good news is that usually when an increase is seen in temporary help services is seen, it is a leading indicator for a good job picture in the future. There was also an increase in jobs in the health care sector.
The interesting thing is that even with a drop in unemployment, the economy still lost jobs.
Some economists, according to a recent articles think that only 1.5 million jobs will be regained during 2010 and that it may take 3-4 years for the job market to return to anything approaching normal. This recession is truly earning its nickname of the Great Recession. Don”t take a risk on your customers call me today to help your bottom line 469-368-6410
4 Secrets of Successful Joint Ventures
Companies that build successful joint ventures follow the same systematic process. Although the costs of forming alliances is inexpensive, the cost of not planning out the partnership is far greater in lost profits and failed relations.
1. Set Clear Goals: Know from the beginning what you want to accomplish. Is it reduced product costs, expanded sales, or market credibility? Your partners’ goals may be different but complementary to yours.
2. Find a Partner: The best partnership is based on a mutual win-win relationship. Take the time to locate a business with an honest interest in joint ventures and a similar corporate culture. If your small business is focused on long-term customer relations and your strategic partner cares about gaining market share quickly, then your two cultures may clash.
3. Plan the Venture: Map out your negotiation tactics and understand the legal aspects of the deal. Keep win-win agreement in mind.
4. Manage the Relationship: Once a winning joint venture is formed the real work takes place. A good alliance is like a marriage. It is built on communication, trust and understanding.
Joint ventures and strategic alliances can be a positive outcome for all parties involved. Take the time to understand the process and your small business will be well positioned into the future.
1. Set Clear Goals: Know from the beginning what you want to accomplish. Is it reduced product costs, expanded sales, or market credibility? Your partners’ goals may be different but complementary to yours.
2. Find a Partner: The best partnership is based on a mutual win-win relationship. Take the time to locate a business with an honest interest in joint ventures and a similar corporate culture. If your small business is focused on long-term customer relations and your strategic partner cares about gaining market share quickly, then your two cultures may clash.
3. Plan the Venture: Map out your negotiation tactics and understand the legal aspects of the deal. Keep win-win agreement in mind.
4. Manage the Relationship: Once a winning joint venture is formed the real work takes place. A good alliance is like a marriage. It is built on communication, trust and understanding.
Joint ventures and strategic alliances can be a positive outcome for all parties involved. Take the time to understand the process and your small business will be well positioned into the future.
8 Small Business Trends
Running a small business requires a focus on the present daily operations. With time restraints looking ahead becomes difficult. However, in order to succeed you need to know what’s ahead to better plan and avert danger. The 21st century presents plenty of changes that will impact your small business in the future. Here are 8 small business trends for the 21st century:
The Small Business Revolution: The face of entrepreneurship is changing from the white middle-aged college educated male to a new class consisting of immigrants, women, baby boomers, and the younger digital generation. These groups are better prepared for success.
The boomers have a vast repertoire of skills and experiences while the youth possess a risk-taking attitude with very few financial commitments. According to the Kauffman Foundation, Americans aged 55 to 64 start a business at the highest rate of any age group—28% higher than the adult average. A growing number of employees will value the path to entrepreneurship continuing the small business revolution. Look for greater political clout and financing for small business.
An Empire of One: Forget the hiring headaches, managing problems, and added paperwork of running a business with employees. According to the Census Bureau, small business without payroll makes up more than 70 percent of America’s 27 million companies, with annual sales of $887 billion.
An empire of one can operate in a low-cost of location such as the home office and be more nimble than larger companies. One-person businesses can take advantage of outsourcing many functions while focusing on core strengths. The empire of one model will be appealing to more and more corporate employees leaving behind big companies with limited pensions and job security. Small businesses built around the empire of one model will be able to weather the perfect talent storm on the horizon.
The Perfect Talent Storm: A fast aging population, a rapid declining pool of younger workers combined with global competition creates the perfect storm for a serious labor shortage. Unlike past labor shortages, this is a global phenomenon impacting workers in many areas and businesses of all types. It will continue for much of the future regardless of economic cycles.
According to the U.S. Bureau of Labor Statistics, the U.S. is heading for a shortage of 3 to 6 million workers by 2012. Immigration provides little comfort with other countries facing similar talent crunches; retaining citizens will be a top priority. This storm means small businesses will have to compete aggressively for talent and learn how to fully engage the hearts and minds of employees.
The Innovation Age: The most important asset that will be fully realized in the future is the 3-pound creative universe in our heads. Our true competitive advantage is our ability to create and execute new business ideas. Although we have mastered the fundamentals of business such as sales or marketing, we have yet to grasp the concept of innovation. Smarter companies will leap ahead with the understanding that innovation is a process dependent system as opposed to a flash of genius.
The Small Business Revolution: The face of entrepreneurship is changing from the white middle-aged college educated male to a new class consisting of immigrants, women, baby boomers, and the younger digital generation. These groups are better prepared for success.
The boomers have a vast repertoire of skills and experiences while the youth possess a risk-taking attitude with very few financial commitments. According to the Kauffman Foundation, Americans aged 55 to 64 start a business at the highest rate of any age group—28% higher than the adult average. A growing number of employees will value the path to entrepreneurship continuing the small business revolution. Look for greater political clout and financing for small business.
An Empire of One: Forget the hiring headaches, managing problems, and added paperwork of running a business with employees. According to the Census Bureau, small business without payroll makes up more than 70 percent of America’s 27 million companies, with annual sales of $887 billion.
An empire of one can operate in a low-cost of location such as the home office and be more nimble than larger companies. One-person businesses can take advantage of outsourcing many functions while focusing on core strengths. The empire of one model will be appealing to more and more corporate employees leaving behind big companies with limited pensions and job security. Small businesses built around the empire of one model will be able to weather the perfect talent storm on the horizon.
The Perfect Talent Storm: A fast aging population, a rapid declining pool of younger workers combined with global competition creates the perfect storm for a serious labor shortage. Unlike past labor shortages, this is a global phenomenon impacting workers in many areas and businesses of all types. It will continue for much of the future regardless of economic cycles.
According to the U.S. Bureau of Labor Statistics, the U.S. is heading for a shortage of 3 to 6 million workers by 2012. Immigration provides little comfort with other countries facing similar talent crunches; retaining citizens will be a top priority. This storm means small businesses will have to compete aggressively for talent and learn how to fully engage the hearts and minds of employees.
The Innovation Age: The most important asset that will be fully realized in the future is the 3-pound creative universe in our heads. Our true competitive advantage is our ability to create and execute new business ideas. Although we have mastered the fundamentals of business such as sales or marketing, we have yet to grasp the concept of innovation. Smarter companies will leap ahead with the understanding that innovation is a process dependent system as opposed to a flash of genius.
Friday, February 5, 2010
Cash IS King
Don't Take "No" for an Answer - Cash is King
“You can survive decreased profits if you have cash flow, but… if cash flow takes a dive, you’re in trouble While most business know the above to be true, most have been told by their financial “partners” that they do not meet the criteria for additional capital, even though their financials are strong and their ability to repay is not in question. The past 18 months demonstrated that even financially healthy companies were hamstrung when it came to accessing capital. Every company should have multiple sources of liquidity – in good times and bad. It is your fiduciary responsibility to be “cash prepared.” Look for ways to optimize your balance sheet and alleviate your cash flow management concerns. Seek out reliable partners that will help you to finance your growth on your terms and, ultimately, work with you to reduce your cost of capital. For example, Burt & Associates allows you to decrease your DSO and improve your financial performance by allowing you to set terms that work for you. Like we said, Cash is King!
“You can survive decreased profits if you have cash flow, but… if cash flow takes a dive, you’re in trouble While most business know the above to be true, most have been told by their financial “partners” that they do not meet the criteria for additional capital, even though their financials are strong and their ability to repay is not in question. The past 18 months demonstrated that even financially healthy companies were hamstrung when it came to accessing capital. Every company should have multiple sources of liquidity – in good times and bad. It is your fiduciary responsibility to be “cash prepared.” Look for ways to optimize your balance sheet and alleviate your cash flow management concerns. Seek out reliable partners that will help you to finance your growth on your terms and, ultimately, work with you to reduce your cost of capital. For example, Burt & Associates allows you to decrease your DSO and improve your financial performance by allowing you to set terms that work for you. Like we said, Cash is King!
Tuesday, February 2, 2010
Commercial Business Loans
When you start a business, you generally have two ways to raise capital: loans and equity contributions. There are some obvious disadvantages to loans. They require you, for example, to pay back the lender whether or not the business is successful, which is not the case with equity contributions. But the advantage of a typical loan is that if your business prospers, the lender is only entitled to an interest return on its loan — not a percentage of the profits or a share in the company that an investor would expect.
Whether you obtain loans from a bank, individuals or other lenders, a number of variables can affect how good or how bad they are for your business. Virtually all of these variables are negotiable: There is no such thing as a “standard loan.” Be sure to negotiate these key issues if you plan to get a loan for your business:
Due date. You need to set a date when the loan is to be repaid. This can be formulated as a lump-sum payment at the end of the term of the loan or as a periodic payment of principal with a final payment. For example, you can agree to borrow $50,000, with entire principal due in two years, or you could agree to repay the principal in 20 equal monthly installments of $2,500. In any event, make sure that the payment schedule is reasonable given your anticipated cash flow. Realize that interest will be charged to you either way.
Interest payments. When a lender establishes an interest rate, it must comply with any applicable state usury laws. (These laws govern how much interest can be charged on a loan.) Often, however, usury laws will not apply to banks. The law may also allow a lender to charge a higher interest rate for business loans than for personal loans (such as consumer credit). The interest payment dates should be clearly defined — the most common method requires monthly interest payments due the first day of each month. You might also try to adjust the timing of your interest payments to match the cash flow patterns of your business.
Loan fees. The lender may charge up-front loan or processing fees. Check these fees carefully, and try to get an estimate as soon as possible to help you evaluate the loan package.
Prepayment. Ideally, you want to be free to pay off the loan at any time before its due date. Make sure that your loan agreement or promissory note gives you this flexibility and try to avoid a prepayment penalty for paying off the loan early.
Defaults. The lender may define a variety of events that will constitute a default on the loan, including failure to make any payment on time, bankruptcy, insolvency and breaches of any obligations in the loan documents. Try to negotiate advance written notice of any alleged default, with a reasonable amount of time to cure the default.
Grace period. Try to get a grace period for any payments. For example, the monthly payments may come due on the first day of each month, but they won’t be deemed late until the fifth day of the month.
Late charge. If the loan includes a fee for late payment, try to make sure that it is a reasonable charge.
Collateral. The lender may insist on a pledge or mortgage of some asset to secure the loan. Under a mortgage (for real property) or a security agreement (for personal property), if you default on the loan, the lender is able to foreclose upon the asset and sell it to repay the money owed to the lender. If you are required to provide security, try to limit the amount you have to give to secure the loan. And make sure that when the loan is repaid, the lender is obligated to release its mortgage or security interest and is required to make any government filings acknowledging this release.
Co-signers and guarantors. A lender may ask for a co-signer or guarantor as a way to further ensure that the loan will be repaid. A co-signer or guarantor runs the risk that their personal assets will be liable to repay the loan. If you ask someone to co-sign the loan with you, you may want to draw up a co-signer agreement to let the person know how you will repay them if you default on the loan.
Attorneys’ fees. The lender will likely insist on a clause that says in the event of any failure to pay on the loan, the borrower will reimburse the lender’s fees and costs in enforcing or collecting on the loan. Try to insert a qualifier that the reimbursement will cover only “reasonable” attorneys’ fees.
Whether you obtain loans from a bank, individuals or other lenders, a number of variables can affect how good or how bad they are for your business. Virtually all of these variables are negotiable: There is no such thing as a “standard loan.” Be sure to negotiate these key issues if you plan to get a loan for your business:
Due date. You need to set a date when the loan is to be repaid. This can be formulated as a lump-sum payment at the end of the term of the loan or as a periodic payment of principal with a final payment. For example, you can agree to borrow $50,000, with entire principal due in two years, or you could agree to repay the principal in 20 equal monthly installments of $2,500. In any event, make sure that the payment schedule is reasonable given your anticipated cash flow. Realize that interest will be charged to you either way.
Interest payments. When a lender establishes an interest rate, it must comply with any applicable state usury laws. (These laws govern how much interest can be charged on a loan.) Often, however, usury laws will not apply to banks. The law may also allow a lender to charge a higher interest rate for business loans than for personal loans (such as consumer credit). The interest payment dates should be clearly defined — the most common method requires monthly interest payments due the first day of each month. You might also try to adjust the timing of your interest payments to match the cash flow patterns of your business.
Loan fees. The lender may charge up-front loan or processing fees. Check these fees carefully, and try to get an estimate as soon as possible to help you evaluate the loan package.
Prepayment. Ideally, you want to be free to pay off the loan at any time before its due date. Make sure that your loan agreement or promissory note gives you this flexibility and try to avoid a prepayment penalty for paying off the loan early.
Defaults. The lender may define a variety of events that will constitute a default on the loan, including failure to make any payment on time, bankruptcy, insolvency and breaches of any obligations in the loan documents. Try to negotiate advance written notice of any alleged default, with a reasonable amount of time to cure the default.
Grace period. Try to get a grace period for any payments. For example, the monthly payments may come due on the first day of each month, but they won’t be deemed late until the fifth day of the month.
Late charge. If the loan includes a fee for late payment, try to make sure that it is a reasonable charge.
Collateral. The lender may insist on a pledge or mortgage of some asset to secure the loan. Under a mortgage (for real property) or a security agreement (for personal property), if you default on the loan, the lender is able to foreclose upon the asset and sell it to repay the money owed to the lender. If you are required to provide security, try to limit the amount you have to give to secure the loan. And make sure that when the loan is repaid, the lender is obligated to release its mortgage or security interest and is required to make any government filings acknowledging this release.
Co-signers and guarantors. A lender may ask for a co-signer or guarantor as a way to further ensure that the loan will be repaid. A co-signer or guarantor runs the risk that their personal assets will be liable to repay the loan. If you ask someone to co-sign the loan with you, you may want to draw up a co-signer agreement to let the person know how you will repay them if you default on the loan.
Attorneys’ fees. The lender will likely insist on a clause that says in the event of any failure to pay on the loan, the borrower will reimburse the lender’s fees and costs in enforcing or collecting on the loan. Try to insert a qualifier that the reimbursement will cover only “reasonable” attorneys’ fees.
Business Spending by Will Rogers 1919
Why don’t somebody print the truth about present economic condition?
We spent years of wild buying on credit everything under the sun, whether
We needed it or not & now we are having to pay for it & howling
Like a pet coon This would be great world to dance in if we didn’t
Have to pay the fiddler
We spent years of wild buying on credit everything under the sun, whether
We needed it or not & now we are having to pay for it & howling
Like a pet coon This would be great world to dance in if we didn’t
Have to pay the fiddler
Raising Capital Though Bad Debt
An important decision for a business wanting to raise capital is that of choosing among the various ways to structure financing. Bankers and investment bankers may offer a number of possibilities besides straightforward bank debt, which is basically a loan that can be a fixed term loan or a revolving line of credit. Other possibilities bankers may offer include convertible debt, which is debt that may be converted into equity at some predetermined price per share. Mezzanine debt, which is senior to equity but subordinate to convertible debt, typically has a term of three to five years and often requires warrants or stock options in addition to substantial interest rates on the notes. Equity financing includes preferred equity and common equity. Preferred equity is stock that has certain preferential rights higher than common equity, which in turn is the sale of ownership of the company that issues the equity. for more information check Burt & Associates
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