Tag Archives: Cash Management

A Simple Tax Proposal to Improve Financial Stability — The Harvard Law School Forum on Corporate Governance

Small business of-interest.  The perspective isn’t what is so unusual in this article — in my opinion, it is the definitions insights and solutions put forth.   What do you think?  Cash management

Excerpt:  It is hard to imagine a financial crisis that is not ultimately caused by creditors who had taken on too much debt. Debt is the root cause of most corporate financial failures and, if a snowball effect sets in, the root cause of financial system failure. Of course, debt also has advantages. Without debt, many privately and socially valuable projects could never be undertaken. Still, it is our current tax system that has pushed our economy to be too levered. Now is the time to address the problem—before it will again be too late.

From a creditor’s perspective, the two key advantages of debt are the tax deductibility of interest payments and the ability of lenders to foreclose on non-performing borrowers (which makes it in their interest to extend credit to begin with). Although both factors contribute greatly to the incentives of the borrower to take on debt, there is one important difference between them: the tax deductibility of debt is not socially valuable.

To explain this issue, let’s abstract away from the beneficial real effects of debt and consider only the tax component

Read full article via A Simple Tax Proposal to Improve Financial Stability — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

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Cash Advance Loan Gives Financial Opportunity for Your Small Business

Guest Post by Brian Thomas

Do you want some financial help to expand your business? Are you in need of some capital to sustain your business on a temporary basis? Then instead of applying for a traditional business loan you can take advantage of business cash advance. This loan has a lot more flexible and easier terms than a traditional loan. The loan does not have any impact on your personal credit and also does not pose any risk to your business or personal assets. The loan gives you the financial opportunity required to take your business to a greater height.

You can take advantage of cash advance loan for your trade, which is completely unsecured for an amount up to $250,000. This loan is a great alternative for your small business. Even if you do not have a good credit history, you can take advantage of this loan and make potential plans for your business.

The cash advance loan can be taken for any kind of business, including –

  • Repair of any equipment
  • Purchase of any equipment
  • Remodeling
  • Purchasing inventory or seasonal merchandise
  • Expansion of current business
  • Paying off taxes or debt
  • Emergency funding

Benefits of cash advance for small business The major benefits of this cash advance for small business are as follows:

  • The loan approval process is very fast, is approved within 24 hours
  • The loan does not require any up front fees
  • There is no hassle regarding any paperwork
  • The formalities for loan application is not stringent
  • The loan does not require any security or collateral
  • The business does not have to be for a long tenure
  • Small term business owners can also take advantage of this loan

Requirements for business cash advance The requirements for business cash advance are as follows:

  • The business needs to be registered in the US
  • The business owner needs to submit proof of monthly revenue (gross)
  • The business needs to be an established one
  • Loan is not granted to start ups

Advantages of business cash advance against small business loan

1. Unlike a traditional loan for small business a cash advance loan does not require any fixed payment schedule. The lending organizations generally adjust as per the flow of the business. If the loan repayment period is slow, the repayment amount is kept smaller.

2. In a traditional business loan, you need to keep a security or collateral against the loan. The security can be a fixed asset like house or business property. In case, the loaner is unable to repay the loan amount, the collateral is taken possession by the lending institute. However, in case of cash advance, the loaner does not have to keep any collateral against the loan. It does not require any personal guarantee or a co-guarantor as well.

3. In traditional loans, you need to provide the tax returns for a minimum of last 3 years. However, in cash advance you do not require to provide any such tax returns.

Author: Brian Thomas has been advising people on getting various types of professional services that include how to gain knowledge on GSA marketing and GSA advantage

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Equity, Debt or Assets? A New Lens for Looking at Raising Capital – Knowledge@Australian School of Business

Cash management good read.  Alternatives to weigh that may have long term ramifications.

Excerpt:  “Financing Through Asset Sales” probes the choice to issue equity or sell non-core assets such as a division or a plant. As a means of raising cash, under what conditions are asset sales or equity issues likely to add more value? Edmans, a Wharton finance professor and a faculty research fellow at the National Bureau of Economic Research, and Mann, a Wharton PhD candidate, have an answer.

They propose three forces behind decisions to sell equity or sell non-core assets, which they call the camouflage, correlation and certainty effects.

Read full article via Equity, Debt or Assets? A New Lens for Looking at Raising Capital – Knowledge@Australian School of Business.

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The Exploding Business of Bartering – HBR

Small business takeaways — ideas?   Have you used bartering?   Maybe you should explore!   Cash management and more!

Excerpt:  What do Honda, Haymarket Exhibitions, and your plumber have in common? Bartering. Business bartering is big, and it’s happening at every level. The International Reciprocal Trade Association reports that in 2011 over 400,000 companies worldwide used bartering to earn an estimated $12 billion on unwanted or underused assets.

Our Global Trends research, along with discussions with senior executives around the world, show that in response to tighter credit and budgets companies are exploring new ways to create and capture value. In this context, they see bartering as a way to steer around the restrictions imposed by cash and credit, to extract value from perishable or underperforming assets, and to expand channels to market and find new customers.

Read full article via The Exploding Business of Bartering – Tracey Keys and Thomas Malnight – Harvard Business Review.

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Dot-Com Bubble’s Equity Swaps Are Back

Need cash or funding to cover the needs of startup — here is an alternative that is back for another go around.  Explore well before jumping in — but it could be for you.

Excerpt:  Raaj Nemani and a pal were making plans to start their own business, an online retailer of limited-edition sneakers. But they couldn’t afford the $100,000 for high-end website design.

Then, they learned of an alternative.

Raaj Nemani and Aaron Firestein of Chicago paid for website development primarily using equity in their firm, BucketFeet Inc.

By joining forces with a Chicago website-design and professional-services firm, the pair of first-time entrepreneurs were able to get the work they needed by paying primarily with equity, instead of cash.

The swapping of equity for services is exploding, as a range of professional services providers—including website designers, attorneys, ad agencies and business consultants—seek to profit directly from the growing demand for their services on the part of U.S. start-ups.

Read full article via Dot-Com Bubble’s Equity Swaps Are Back – WSJ.com.

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A Novel Idea for Putting Sidelined Cash to Work – HBR

Good idea — big company cash hoard to aid the startups cash need with a win – win  —  both sides receive good value.    Cash management and funding.

Excerpt:  Even as the large companies are hoarding cash, many small and mid-sized enterprises are still facing significant challenges and hurdles gaining access to the credit markets. Loans to these companies would help chip away at our alarming unemployment rates—and even more troubling underemployment rates—as well as knock down some of the hurdles that these firms face in executing on their business and growth plans.

The challenge for these emerging growth companies is twofold. First, credit standards and lending rates make it generally difficult to access otherwise very attractive capital available at low interest rates. Second, for small and rapid-growth technology companies, the problem is compounded by the fact that, while rich in intangible assets, they typically lack the kind of collateral (equipment, inventory, real estate, etc.) banks require to secure commercial loans.

What if the idle cash sitting in the treasury accounts of our largest companies could be used as collateral to secure these loans?

Read full article via A Novel Idea for Putting Sidelined Cash to Work – Andrew J. Sherman – Harvard Business Review.

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Financing Tricks from Inc. 500 Companies

Entrepreneurs and small business owners use takeaways from peers.  Cash management.

Excerpt: The Inc. 500 list came out last week, and we were proud to again make the list. We also were pleased to see that Avondale was in the vast majority of Inc. 500 companies that financed their growth through personal savings and cash flow. You might be somewhat surprised, in this era of venture capital, angel investing, and crowd funding, that many of the fastest-growing companies didn’t raise a single cent from outside sources.

Every year, Inc. surveys the CEOs of the Inc. 500. Here’s what they said about funding their growth:

Read full article via Financing Tricks from Inc. 500 Companies | Inc. 5000.

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Forecasting Revenues Key to Successful Launch

Recommended read as reminder to all entrepreneurs and wanna be entrepreneurs — actually add all small business owners to the list as well.

Excerpt:  The late, legendary Silicon Valley attorney Craig Johnson used to say, “The leading cause of failure of start-ups is death, and death happens when you run out of money.”

And the leading cause of running out of money in a start-up is poor financial forecasting.

At the core of unrealistic forecasts is the undying optimism of most entrepreneurs. Their “what could possibly go wrong?” attitude leads to many forecasting disasters. My father used to say that when he looked at investing in an entrepreneurial venture he would always double the start-up costs and triple the time it takes to get to breakeven.

Read full aritcle via Forecasting Revenues Key to Successful Launch.  From Dr. Jeff Cornwall

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Filed under Budgeting, Forecasting & Planning, Cash Management, Entrepreneurs & Startups, Small Business

Cash Needs in Starting and Growing Your Business

Guest Post by Samuel Baker

Since the recession and the recovery of the paralyzed economy, most businesses, large and small, were hit hard. Not only did the business firms incur huge amounts of debt, there were a lot that even needed to close down and wind up their business. Taking out loans, is a very common phenomenon for a business organization and there is hardly any business that is operating without loans. But since the loans carry interest rates that you have to repay along with the principal balance, it is a prerequisite that you repay the loan on time to avoid accumulating interest rates. How will a business return its loans when it doesn’t earn enough revenue? Well, this is a chronic problem of most businesses and if you want to ensure that you start and grow a business by managing and avoiding debt and also become a successful entrepreneur, here are some tricks that you may follow.

  • Know your business well: Before you start off with the business idea, you need to roll up your sleeves and accumulate enough knowledge about the various aspects of your business. You should study the market segments, know about the products and also understand the concept of the product and its contribution in the present industry so that you can devise a worthy business plan.
  • Determine the cash flow of your business: Everyone is aware of the fact that the cash flow is the lifeblood of any business and thus, the first step you should take is to determine the sources from which you can boost the cash flow of your business. Don’t keep too much receivable with the customers as this can harm the growth of your business organization. The receivable that you’re supposed to get from your customers may just be enough to fund a new project and hence you should gather the funds immediately. Tighten the lending policy and boost the growth of your business without having to take out loans.
  • Devise a marketing strategy: When it comes to promoting your business, marketing plays a pivotal role. Without effective marketing strategy, you can never be able to promote your business organization in the way that can help you boost your returns. Formulating a marketing alliance through which you can put in your joint effort to spread awareness of the services and products offered by you, can also be a worthy marketing strategy.
  • Try the nondebt solutions: When you want to grow your business, you often face a stage when you have to take on debt. What should you do during such instances? Well, there are certain non-debt financial solutions like accounts receivable factoring purchase order funding or equipment leasing. Through a factoring company, they can offer you cash in lieu of your company assets and you can use it to expand your business.

Therefore, when you’re wondering about the ways in which you can expand or start your business by avoiding debt, the above mentioned points should be taken into consideration. Avoid incurring debt by defaulting on the business loans and also save money at the same time to be able to repay your loan amount on time.

For more information on debt consolidation please visit : http://www.debtconsolidationcare.com/

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Start-up Seed Funding Cash Management

Within the article story of one startup are great takeaways for entrepreneurs and all startups.  
Excerpt:  The key to handling the seed money, Palmer says, is not a secret: you try to keep expenses down. For instance, Pingup is located in the Innovation District — a heretofore largely undeveloped and unprepossessing slice of South Boston’s waterfront — because rent is cheap. “We try to be as efficient as we can with every single dollar,” says Palmer, who includes herself in that efficiency. She works at Pingup part-time.

Read full article start-up seed funding cash management.  From CFO.com

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Cash-Flow Analysis Critical to Business Success

A good cash management article for all entrepreneurs and small business owners.   Cash flow is critical and the article offers good advice for all newbies.

Excerpt: Many business owners and managers have learned the hard way that denial and hope are not effective strategies. You must manage your cash, especially when in start-up mode or during tough economic times. The earlier you can recognize an upcoming cash flow issue, the more options you have to prevent or mitigate it. If you have cash flow issues, you have to be focused on managing the inflows and outflows closely on a daily basis. Too many organizations wait until the crisis is upon them and they have already hit the iceberg.

Read full article via Cash-Flow Analysis Critical to Business Success.  From NuWire Investor

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Pension Funds as Owners and Investors — The Harvard Law School Forum on Corporate Governance

Small business need-to-know and news-to-watch.  Cash management

Excerpt: …. acknowledging the important role of public pension funds.

As significant investors, public pension funds are a needed voice in the ongoing public dialogue involving the issues facing investors today, including corporate governance and audit quality. As fiduciaries, public pension plans can be a powerful voice on behalf of their beneficiaries, working men and women whose voices are often drowned out. You and your beneficiaries have a direct stake in the results. You should speak out on behalf of investors, and you should hold the SEC accountable to act on behalf of investors

Read full article via Pension Funds as Owners and Investors — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

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Multinationals and the High Cash Holdings Puzzle — The Harvard Law School Forum on Corporate Governance

Small business of in-interest takeaways in the study of reported cash holdings and size – kind of company ratio.

Excerpt: We find that U.S. multinationals held comparable amounts of cash than purely domestic firms in the late 1990s, but now hold significantly more cash than similar purely domestic firms. Since the increase in cash holdings of U.S. firms is concentrated among multinational firms, we investigate why the cash holdings of U.S. multinationals increased so much and whether the increase is explained by the tax treatment of repatriations. Foley, Hartzell, Titman, and Twite (2007) show that the tax treatment of remittances makes it advantageous for multinationals to keep their earnings abroad and they find that firms for which repatriation is more costly hold more cash. Our findings suggest that the tax costs of repatriation are not the whole story for the increase in cash holdings of U.S. multinationals in the 2000s

Read full article via Multinationals and the High Cash Holdings Puzzle — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

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Should You Fund Your Startup With Convertible Debt? : AMEX

Advice and definition  — in case you do not already know how this works.  Cash management and funding

Read full article Should You Fund Your Startup With Convertible Debt? : Money :: American Express OPEN Forum.

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Small Firms’ Big Customers Are Slow to Pay

News …….many of my small business clients are experiencing the ever increasing delay to be paid, particularly from their large, enterprise size clients/customer.   While this may qualify as good cash management in the minds from the enterprise side of the table,  there is a chain reaction to less and less growth and economic recovery.

Excerpt……Small businesses are waiting longer for commercial customers to pay their bills as many big companies continue to hoard cash to bolster their own working capital.

The trend, which began in the recession and has worsened in recent years

Read full article……..via Small Firms’ Big Customers Are Slow to Pay – WSJ.com.

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