Improving Cash Flow

Faster cash collections

1.) Allow your customers to use credit cards

2.) Help your customer refinance

3.) Factor your receivables

4.) Open a bank lockbox

Lines of credit & loans

1.) Negotiate lines of credit and term loans with banks or other lenders
2.) Prepare business plan and financial projections

Faster A/R collection

1.) Invoice same day as shipment or providing of service
2.) Establish shorter and less “discounted” invoice terms
3.) Insert a return envelope with outgoing invoice

Internal cash controls

1.) Checking account reconciliations and separation of duties between personnel
2.) Number of required check signers and $ limits for check signers
3.) Wire transfer authorizations, restrictions, and $ limits
4.) ACH authorizations, restrictions, and $ limits

Improving Income Statement

“Speed up” sale to delivery

1.) A lot of businesses have unnecessary steps or delays in their production. For example, Toyota takes 28 hours to build a car, but Ford takes 56 hours to build a comparable car.
2.) If production time can be reduced, overhead $ will be saved.

Compare In-house to Outsourcing tasks

1.) Get bids and compare for services such as Payroll etc.
2.) Consider leasing employees – cost could be less, plus better benefits might also be obtained for the same or less money.

Would “On-Time” inventory work in your business?

1.) Investigate “On-Time” inventory for the business. Does this business have suppliers reliable enough to provide “On-Time” deliveries of critical parts?
2.) Fifteen years ago when flying into Detroit, MI, and looking down on the Ford plant, the production plant was the size of a basketball next to a “blanket” of parts adjacently warehoused to feed production. Today, the “blanket” is gone because of going to “On-Time” inventory, and great overhead expenses have been eliminated.

Focus on shrinking overhead

1.) Many businesses lump a number of expenses into one expense account.
2.) Break these expenses out into separate general ledger accounts. The detail will create visibility of such expenses and spur management to act and cut these expenses where possible.
3.) Review overhead of the business looking for duplication of services and unnecessary services.

Strengthen Balance Sheet

Equipment lease versus purchase – which is best?

1.) Examine business’ balance sheet and income statement and determine whether to finance equipment purchase with debt or off-balance sheet operating lease.
2.) Leasing might well improve the balance sheet and leave room for other balance sheet debt.

Perform accounting Review by C.P.A. “Bankers love it.”

1.) Many banks have a policy requiring that the borrower have an accounting Review performed by a C.P.A. for all loans above a certain range, and an audit for loans above that range.
2.) I will perform an accounting Review or Compilation quarterly or annually, as requested.
3.) The information obtained in the Review or Compilation would also facilitate the preparation of the business’ income tax returns.

Compare business to industry standards

1.) Management can compare its business to industry standards.
2.) Compute the business’ financial and debt ratios and contrast them to a comparable healthy business’ ratios in the Almanac of Business and Industrial Financial Ratios.

Financially Troubled Companies

Prepare cash flow projections

1.) Prepare a spreadsheet to weekly project cash flow for a period of 4 to 8 weeks into the future. The spreadsheet would be set up to specifically identify projected cash receipts from critical, large customers, and to separately identify all projected cash payments to critical suppliers, lenders, payroll, taxes, etc.
2.) After each week is complete, actual numbers would be inserted into the spreadsheet, thereby enabling more accurate future cash flow projections.
3.) Additionally, a master cash spreadsheet would be prepared to daily reconcile cash with each critical bank.

Analyze “Fix” versus “Sell”

1.) Review a business’ desired plans, debt load, other liabilities, assets, and cash flow. Assess gross margin. Determine if a business in trouble can reasonably expect to make changes, and then be able to pay off its debt (which might need to be restructured to a longer term with lower monthly payments).
2.) If the assessment results show the business’ condition and market are such that a refinancing is not reasonably achievable, recommend that the business be sold.

Additional Services

Reviewed financial statements

1.) Review and analyze a company’s financial statements on a monthly or quarterly basis and provide written analysis.
1.) Get “behind the numbers” to provide meaningful analysis on the direction the business is headed.

Business and Individual Tax Preparation

1.) Prepare business and individual tax returns in accordance with the appropriate income tax laws.
2.) I will use my judgment in resolving questions where the law is unclear, or where there are conflicts between tax authorities’ interpretations of the law and other supportable positions.
3.) Unless otherwise instructed by you, I will resolve questions in your favor.

Five-year Review of Sales to Cost of Sales

1.) Prepare a 5-year review of Sales to Cost of Sales to determine gross margin by product line.
2.) This would allow the business to try to expand high margin product lines and reduce or eliminate low margin lines, thereby significantly increasing profitability.