Due Diligence Matters
Feb 01,2018
A company’s financial statements are important in assessing a potential borrower’s situation. But thorough due diligence requires looking closely and deeply at all aspects of the company’s operations, from applicable economic and industry conditions to sources of collateral and business operations — and beyond. Only then can you, as lender, accurately evaluate the borrower’s financial status and minimize your risks of delayed payments and default.Assess risk and review financialsBefore you review a borrower’s financial statements, research industry risks. This risk assessment identifies what’s most relevant and where your greatest exposure lies, what trends you expect in this year’s financials, and which bank products the customer might need. Risk assessments save time because you’re targeting due diligence on what matters most.Now tackle the financial statements. First evaluate the reliability of the financial information. If an in-house bookkeeper or accountant prepared it, consider his or her skill level and whether the statements...
Minimize Inventory, Services to Make Your Financials Shine
Nov 01,2017
Your business financials — where they stand currently and where they might be going next year — are incredibly important. Obviously, sales and expenses play enormous roles in the strength of your position. But a fundamental and often-overlooked way of making your cash flow statement shine is to minimize inventory or services so you have just enough to fulfill demand.Sprucing upCarrying too much inventory can devastate a budget as the value of the surplus items drops throughout the year. In turn, your financial statements simply won’t look as good as they could. Taking stock and perhaps cutting back on excess inventory:Reduces interest and storage costs,Improves your ability to prevent fraud and theft, andIncreases your capacity to track what’s in stock.One item to perhaps budget for here: upgraded inventory tracking and ordering software. Newer applications can help you better forecast demand, minimize overstocking, and even share data with suppliers to improve...
PTO Banks: A Smart HR Solution For Many Companies
Feb 01,2017
“I’m taking a sick day!” This familiar refrain usually is uttered with just cause, but not always. What if there were no sick days? No, we’re not suggesting employees be forced to work when they’re under the weather. Rather, many businesses are adopting a different paradigm when it comes to paid time off (PTO). Under the “PTO bank” concept, employers merge most (or all) of the traditional components of excused absences (vacation time, sick time, personal days and so on) into one simple employee-managed account, typically offering not quite as many PTO days as under a traditional PTO system. One benefit of this approach is that employers are no longer put in a position to have to judge whether leave is used appropriately. PTO banks may not work for every business, but more and more companies are finding them beneficial. 6 primary motivations There are a number of reasons that...
3 Ways to Get Started on Next Year’s Budget
Nov 18,2016
As the year winds down, business owners have a lot to think about. One item that you should keep top of mind is next year’s budget. A well-conceived budget can go a long way toward keeping expenses in line and cash flow strong. The question is: Where to begin? Well, to answer this question, we don’t have just one suggestion — we have three: 1. Investigate your income statement. A good place to start on next year’s budget is with the numbers you put on paper for last year, as well as your year-to-date results. In your income statement, you’ll see information on sales, margins, operating expenses, and profits or losses. One specific factor to consider is volume. If sales have slipped noticeably in the preceding year, your profits may be markedly down and regaining that volume should likely play a starring role in your 2017 budget. 2. Check your...
Making Your Case for a Business Loan
Mar 30,2016
From afar, the commercial lending process may appear comical. On one side of the desk you have the lenders, who want to manage their risk by loaning money to only successful business owners. On the other side of the desk, you have the business owners — many of whom believe they can’t truly become successful until they get the money!To avoid this disconnect, you have to approach business financing as a partnership rather than a provider-customer relationship. If you were going into business with someone, you’d want to clearly understand his or her vision for your venture. It’s the same with lenders.What’s the plan?For example, say you’re asking for money because your company is so far behind on vendor payments that it needs the working capital to catch up. In this scenario, you’ll need to make a case for how catching up on payments will allow you to get the...

Go back to Blog Home