Sales are great, but wouldn’t they be better if you were actually able to reap the rewards? Many CEOs that were not trained with an accounting/finance background struggle to understand profitability. They think that if sales are great, then the business is great. But when sales increase, inventory and overhead increases. Productivity also decreases –
Why use a 13-Week Cash Flow Report as a management tool? Cash is king! This applies to any and all companies. No matter the size or industry, cash and cash flow are critical to any operation. Yes, some companies have access to lines of credit and other forms of financing, but that is debt that
One of our clients called us up because his DSO went from 34 days to over 72 days within a couple months. He couldn’t figure out what was causing his daily sales outstanding (DSO) to increase so dramatically in such a short time. When we came in the office to investigate, we found that there
See Also: CEI vs. DSO Key Performance Indicators (KPI’s) How Does a CFO Bring Value to a Company? 5 Stages of Business Grief Collection Effectiveness Index (CEI) The Collection Effectiveness Index, also known as CEI, is a calculation of a company’s ability to retrieve their accounts receivable from customers. CEI measures the amount collected during a time period to the
It’s almost that time again… quarterly debt covenant reporting. Is your company going to have some explaining to do? If so, you’re not alone. Banks generally set 3-4 key covenants on their loans. These covenants serve as “tripwires” that alert the bank to potential trouble ahead. Most companies don’t bust all of them, but many find themselves
Seasonality can be brutal. If your business is like ours, summertime is pretty slow. The phones don’t ring, employees and clients are on vacation, nobody is available for appointments and not much happens in general. Even if summertime is busy in your industry, chances are that there are other times during the year that business
See Also: Another Way To Look At Factoring Accounting for Factored Receivables Journal Entries for Factored Receivables Can Factoring Be Better Than a Bank Loan? History of Factoring How Factoring Can Make or Save Money Factoring is Not for My Company The What, When, and Where About Factoring What Is Factoring Receivables? Factoring receivables is the
See Also: Retainage Management and Collection Retainage Management Collection Example For example, a client may hire a contractor for a $100,000 project. The contract stipulates 10% retainage. Over the course of the project, the client pays the contractor $90,000 for the work. But 10% of the total cost, $10,000, is withheld until the completion of
Retainage Definition What is retainage? What is a retainage fee? In the contracting business, vendors define this term as a portion of the payment that is withheld until the completion of a project. The client doesn’t pay the contractor remaining payment until all work on the project is complete. It is defined the risk clients
See Also: How Important is Personal Credit in Negotiating a Commercial Loan How to Improve Your Credit Score Letter of Credit Line of Credit (Bank Line) How to collect accounts receivable Net 30 Definition What is 2% 10 net 30? Or 1% 10 net 30? The credit terms 2% 10 net 30 means the customer
See Also: Trade Credit 5 Cs of Credit Collateralized Debt Obligations Cash Flow Statement Balance Sheet Credit Sales Definition In accounting, credit sales refer to sales that involve extending credit to the customer. The customer takes the product now and agrees to pay for it later. Credit sales are a type of trade credit. They
See Also: Debit Memorandum (memo) Credit Sales Account Reconciliation Chart of Accounts (COA) Transaction Exposure General Ledger Reconciliation and Analysis Debt Compliance 101: Keeping Your Banker Happy Credit Memorandum Definition The credit memorandum definition or memo is a form or document, sometimes called a credit memo invoice, that informs a buyer that the seller will be
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