Testimonial - Special Event Service Rental Inc. - Jan 10, 2011
Posted by: Kevin Campbell in Testimonials
Our management team recently concluded that we needed assistance with the financial aspects of our business. We decided that an outsourced part-time CFO was the right fit for us and we engaged Kevin Campbell with B2B CFO®. Kevin came in and hit the ground running despite the unavailability of myself and most of the management team due to business commitments. Undeterred by this situation, Kevin immediately gained an understanding of our business as well as the immediate areas to be addressed and developed a course of action. He cleaned up our in-house accounting system, mentored the accounting staff, created useful and timely management reports, implemented new processes to improve efficiency, and instituted a planning process that allowed us to more accurately project our cash flow. He also helped us source a new banking relationship that better suited our needs in terms of cash management as well as working capital and equipment financing. Overall, Kevin’s involvement has allowed me and my management team to focus more on the operation and development of our business which allowed us to have a record year in sales and profits despite the challenging economy. Kevin’s oversight of the finances has given us financial peace of mind and clarity, allowing us to make plans to move into a larger facility to accommodate our continued growth. I see Kevin as an integral part of our future as a trusted, long-term business advisor.
Steve McGhee, President
Special Event Service & Rental, Inc.
Is Private Company Gaap In The Near Future - Dec 13, 2010
Posted by: Kevin Campbell in Articles
Not exactly. On December 10, 2010, the blue ribbon panel created to provide recommendations on the future of U.S. accounting standards for private companies released a more detailed outline of what their recommendations will be when they present a report to the Financial Accounting Foundation (FAF) in January, 2011. The recommendations will include the creation of a new standard-setting board for private companies made up of five to seven members with private company financial reporting experience with the mission "to establish exceptions and modifications to U.S. GAAP for private companies, while ensuring that such exceptions and modifications provide decision-useful information to lenders and other users of private company financial reports. That mission is accomplished through a comprehensive and independent process that encourages broad participation, objectively considers all stakeholder views, and is subject to oversight by the FAF's Board of Trustees ". This proposal stops short of recommending that the new board issue completely new standards for private companies.
I believe it would be safe to say that most private company CFOs would agree that they need relief from the increasingly complex and costly U.S accounting standards that tend to focus more and more on the needs of financial analysts following public companies as opposed to the primary users of private company financial statements: banks and creditors. Standards that give private companies fits include FIN 48 (uncertainity in income taxes) and FIN 46R (consolidation of variable interest entities). Other areas include disclosure overload and fair value measurements of assets and liabilities. All this leads to private companies often issuing GAAP exceptions with audit opinions which results in confusion and dissatisfaction on the part of the financial statement users (again, primarily banks and creditors) for whom the financial statements are prepared. Some would argue that a completely separate private company version of GAAP would be more appropriate such as the recently released 230-page International Financial Reporting Standards (IFRS) for small and medium entities (SMEs). With the pending convergence of U.S. and international GAAP, this set of rules could possibly become the standard for private companies in the U.S., thus rendering this whole conversation moot.
In the meantime, the blue ribbon panel suggests that the FASB start to work on a broad set of criteria that differentiates private companies from public companies. Panel members believe that this framework would be the basis for making appropriate modifications and exceptions for private companies. The panel's recommendations will be deliberated by the FAF and their decision will be exposed to the public for comment. Coupled with the time it will take to establish a new board, don't expect any possible implementation before late 2011 or early 2012.
The Small Business Credit Environment - Feb 24, 2010
Posted by: Kevin Campbell in Articles
The NFIB Research Foundation released a report this month titled Small Business Credit In A Deep Recession. The report presented relevant data obtained from a random sample of 751 interviews of small business owners (small business was defined as businesses with 1 - 250 employees) pertaining to small business credit access.The interviews were conducted from mid-November to mid-December 2009. Some of the findings of the study were as follows:
- 55% of small businesses attempted to borrow in 2009, with 40% of those having all of their credit needs met. 10% had most of their needs met and 21% had some of their needs met. 23% were unsuccessful in getting any of their credit needs met. The most common planned purpose for rejected credit was to fill cash flow needs.
- In 2009, these least difficult type of credit to obtain was a credit card (73% successful) while a new credit line was the most difficult type of credit to obtain (38% successful).
- The best predictors of success in meeting credit needs were: higher credit scores, customers of banks with less than $100 billion in assets, more properties collateralized for business purposes, and fewer second mortgages held.
According to The Wall Street Journal, the FDIC recently reported that in 2009, U.S. banks recorded their sharpest decline in total loans outstanding since 1942. Also, the number of U.S. banks at risk of failing hit a 16-year high of 702 and more than 5% of all loans were at least three months past due, the highest level recorded in the 26 years the data have been collected. The FDIC expects these problems to last through 2010.
So will the small business credit enviornment significantly improve anytime soon? Probably not. But that doesn't mean it is impossible for small businesses to obtain credit. The NFIB study indicated that small businesses were having greater success in satisfying their credit needs at smaller banks as opposed to the 18 largest institutions in the country. This may be a result of the more personal relationship the smaller banks have with their customers and personal knowledge of their businesses as opposed to the large banks' credit scoring models. If the President's proposed Small Business Lending Fund legislation is enacted, the credit opportunities at the smaller banks could improve even more.
If in the market for new credit in 2010, small business owners should first develop a quality relationship with their banker before the new credit is needed. Meet them in person, explain to them what you do, where you are going, and how you are going to get there. Show your enthusiasm regarding the prospects for your business. When it comes time to request the new credit, be prepared! Know how much credit you need, what it will be used for, and how and when it will be paid back. Credit will be available, the key is positioning the business to be successful with its request . A solid business plan coupled with a little advanced preparation can make obtaining new credit in 2010 a reality.
The Newly Proposed Small Business Lending Fund - Feb 2, 2010
Posted by: Kevin Campbell in Articles
The President has called on Congress to create a new Small Business Lending Fund that will transfer $30 billion from the Troubled Asset Relief Program (TARP) to this new program to support small business lending. The proposal would be to use the Small Business Lending Fund to offer government capital investments to community and smaller banks with an incentive structure to support new small business lending.
The program would be available only to banks with assets under $10 billion. The theory behind this is that these banks conduct the highest percentage of their lending to small business, accounting for 50 percent of all small buiness loans nationwide while making up only 20 percent of all U.S. bank assets. According to the Independent Community Bankers of America (an advocacy group for the nation's nearly 8,000 community banks), over 98% of the nation's banks have assets of $10 billion or less. The new program would be separate from the TARP program to encourage greater participation, since the banks would not face the notorious TARP restrictions such as limits on executive compensation and dividend payments, as well as requirements that TARP banks give stock warrants to the Treasury.
With the core function of the new Fund being to offer capital to qualifying banks with incentives to increase small business lending, the proposal is structured to entice banks to increase lending immediately. The government capital would come with an initial dividend rate of 5%. By increasing their small business lending over 2009 levels over the next two years (on the basis of new lending beginning January 1, 2010), banks could receive a 1 percentage point decrease in their dividend rate on the capital for every 2.5% increase in business lending, down to a minimum dividend rate of 1%. Banks would realize this reduction in dividend rate sooner if they make early, but consistent progress towards increased lending. After 5 years, the dividend rate would be increased to encourage timely repayment.
Banks would be eligible to receive up to 3 - 5% of risk-weighted assets in capital investment from the new Fund. Banks with less than $1 billion in assets would be eligible for up to 5% of their risk-weighted assets and banks with $1 - 10 billion in assets would be eligible for up to 3%.
The Administration is counting on the Fund's $30 billion to be leveraged by the participating banks when increasing lending, resulting in new lending amounting to several times over the $30 billion in capital provided to the banks.
Will the new fund get through Congress? If so, will banks participate? Is the demand there for quality small business lending amidst a weak economy? Time will tell, but one thing is for sure--to have a chance for a real impact, the Fund needs to be put into place quickly.
The aforementioned Independent Community Bankers Association (ICBA) issued a news release on February 2, 2010 supporting the Small Business Lending Fund proposal stating that " this new $30 billion small business fund would help small businesses fuel local job creation and economic stability. In fact, every dollar of capital that goes into community banks has the potential to be leveraged eight to ten times--a substantial and positive impact for both small businesses and our communities".
It should be well worth the time of Main Street America to follow the developments of this new plan.
America's Healthy Future Act of 2009 - Business Aspects - Sep 16, 2009
Posted by: Kevin Campbell in Articles
Sen. Max Baucus, chairman of the Senate Finance Committee recently released a detailed summary of its much anticipated version of healthcare reform. Dubbed America’s Healthy Future Act of 2009, the proposal is a 10-year program estimated to cost $856 billion paid for with $507 billion in cuts to government health programs and $349 billion in new taxes and fees. The bill does not include a government-run insurance option but does include a system of nonprofit member-owned cooperatives. Some of the items in the bill affecting small and mid-sized businesses include:
1. Qualified small employers (i.e. an employer with no more than 25 fulltime equivalent employees employed during the employer’s taxable year, and whose employees have annual wages averaging no more than $40,000) would receive a tax credit for purchasing health insurance for its employees. The full credit would be available only to employers with 10 or fewer FTEs with average annual wages of less than $20,000.
Phase I of the credit would be for tax years 2011 and 2012 and employers would need to contribute at least 50% of the employee’s health premium (or 50% of a small business bench mark premium, if lower). The credit would be 35% of the employer’s contribution.
After 2012, Phase II of the credit would only be available for a small employer that purchases health insurance coverage for its employees through a newly created state exchange in which all private insurers in the individual and small group markets will be required to participate. Again, the employer must contribute at least 50% of the premium; however the credit will be 50% of the employer’s contribution. The credit would last for two years.
The employer’s expense deduction for health insurance premiums paid would be reduced by the amount of the credit. Self employed individuals, including partners and sole proprietors, 2% shareholders of an S-Corp and 5% owners of a C-Corp would not be treated as employees for the purposes of this credit.
2. Employers with 200 or more employees would be required to automatically enroll employees into health insurance plans they offer. Employees may opt out, but they must demonstrate that they have coverage from another source. States (with the approval of the Secretary of HHS) would have the option of establishing an auto-enrollment requirement for individual and small group markets.
Posted by: Kevin Campbell in Articles You may think as a small business owner that the resurrection of the "Employee Free Choice Act" (which passed the U.S House of Representatives in 2007, but was defeated in the Senate) would not affect you--think again. Unions spent record amounts during the 2007 election season to elect more allies in Congress and are now looking for a return on their investment, passage of the Employee Free Choice Act. At the heart of this Act is the so-called "card-check" legislation which would make it much easier to organize and unionize your workforce. Under the card-check method, a union collects "authorization" cards from employees and independent contractors in any manner it sees fit for as long as it takes to get 50% plus one. Obviously, the possibility of harrassment, misinformation and intimidation to get these signatures is present. Under current law, employers may voluntarily recognize the card-check method, but they also have the option of choosing a secret-ballot election overseen by the National Labor Relations Board (NLRB). Under the proposed legislation, the choice would rest only with the unions. With unions winning about half of all private ballot elections while successful on 90% of all card-check campaigns, there is not much doubt which election method they would use. How would the Employee Free Choice Act affect your business? According to a recent article in National Federation of Independent Business (NFIB) publication My Business, small business owners should be aware of the following: 1. There are no size exemptions for small business - Small businesses are less likely to have labor counsel, making them possibly better targets for unions. The NLRB's statistics for the fiscal year ending September 30, 2005 reveals that 20% of the private-ballot elections they conducted that year involved organizations with fewer than 10 employees and 70% involved organizations with fewer than 50 employees. 2. There is no time limit on card collection - The union can hold cards until they get 50% plus one, regardless of how long it takes. 3. You may never know your business is being organized until it's over - The organization effort could be conducted completely underground without your knowledge. Even if you did find out, employers would be under major restrictions about what they could say during the union organization drive. 4. Right-to-work states offer no protection from card checks - The Employee Free Choice Act would preempt state law. 5. Independent contractors are fair game in card collection - Under the proposed legislation, independent contractors can count toward a majority of workers necessary to unionize a business. Business owners should stay abreast of the developments in this legislation and contact their legislators regarding their opinions. Posted by: Kevin Campbell in Articles A long-standing struggle between the IRS and business taxpayers could get a bit dicier next year with the new increased Democratic majority in Congress and the Obama administration possibly set to change the law related to proper worker classification. Last year, President-elect Obama introduced a bill in the Senate (S.2044: Independent Contractor Proper Classification Act of 2007) that would eliminate the safe harbor defense of "industry practice" as a justification for classifying workers as independent contractors. Under current law, a business may be able to treat a worker as an independent contractor if it can demonstate that it is a long standing industry practice to treat the worker's position as an independent contractor and the business did not treat any worker in the same position or a substantailly similar job position as an employee and the business filed all federal tax returns and information returns (including Forms 1099) for the year consistent with its treatment of the worker as an independent contractor. The bill would also require the Secretary of the Treasury to establish a procedure for workers to petition for a determination of their status as employees or independent contractors and prohibit employers from retaliating against workers filing a petition. Additionally, the bill would require a workplace notice informing workers of their right to seek a status determination and would require employers to notify their independent contractors of their federal tax obligations. House members Jim McDermott (D-WA) and Richard Neal (D-MA) introduced similar legislation this year stating they would try to push the measure early next year as one of the first orders of business after a stimulus package. This bill would go even further than Obama's Senate bill by levying an additional $10,000 fine per misclassified worker. Since 1988, the IRS has engaged in an aggressive payroll tax collection program for determining a worker's classification. Estimates of federal revenue loss attributed to worker misclassification have been as high as $4.7 billion a year. Businessowners should pay close attention to the developments in this issue as the tax bill for misclassified workers could be substantial. The total additional tax costs incurred (including penalties and interest) are commonly double the amounts potentially saved by claiming independent contractor status. Posted by: Kevin Campbell in Articles In light of the recent debate over fair value accounting and to what extent it contributed to the current financial crisis, below is a quick summary of the basics of the concept. Fair Value Basics Explained* As reported in The New York Times this week, the Securities and Exchange Commission this week issued an interpretation of SFAS 157 that could make it easier for banks to report smaller losses. Basically, the interpretation gives banks more leeway in using the more favorable Level 3 approach to value securities instead of Level 2 in the case of an inactive market that consists of only "forced or disorderly" transactions. The move by the SEC drew priase from the American Bankers Association, which had complained that auditors were forcing banks to value assets at unrealistically low "fire sale" prices, rather than at the higher values the banks believe the assets should be worth in an orderly market. Some congressmen had pressed to order a suspension of the fair-value rule as part of the bailout bill that the House defeated earlier this week but may be revived later in the week. That bill stopped short of that, but did require a study of the rule and authorized the SEC to suspend it. * Source: The American Institute of Certified Public Accountants Posted by: Kevin Campbell in Articles For business owners, much of the future success they will achieve or the future pain they will feel or the results of the future exit strategy from the company will be predicated by how well they are able to manage the time of all those who work within their organization. Consequently, this graph will be very important to an entrepreneur as their company grows:
I met Kevin at an NFIB meeting and it couldn't have come at a better time. My current CFO was not getting the job done and had really made a mess - but I was scared to go naked. Kevin enabled me to dismiss my CFO and get back on track and also helped me decide on a new permanent CFO.
Chris Bird
President
Big Labor And Small Business What Every Small Business Owner Should Know - Feb 20, 2009
Independent Contractor Or Employee - Nov 26, 2008
Fair Value Accounting And The Current Financial Crisis - Oct 1, 2008
The Real Organization Chart - Sep 26, 2008
Nationwide, B2B CFO® observes that too many business owners feel they are pulled down into administrative (minding) tasks, which take them away from their finding activities and the ability to grow the company and to stay ahead of the competition.
Our firm helps identify the roles of people within organizations like "Finders, Minders or Grinders". Our philosophy is documented in The Danger Zone, Lost in the Growth Transition, by Jerry L. Mills, the Founder & CEO of B2B CFO®. The brief excerpts below from the book will help explain some of our consulting philosophy.
Finders (Business Owners) Live in the Future
"Finders are the leaders of the company. They are not necessarily the people who lead all company employees on a daily basis. Finders demonstrate the type of leadership that 'pulls' people into the future - employees, current customers and future customers."
"A good Finder spends most of his or her time building relationships and 'pulling' others into the Finder's future. The success of any company is due to the relationships that the Finder is able to make with others. Building relationships takes time and is typically the best time the Finder can spend in helping a company succeed. Show me a Finder who will spend 30 to 40 hours a week in finding activities and I will show you a company that will have significant increases in sales in the future. Conversely, show me a Finder who stops spending time in finding activities and I will show you a company that is starting the inevitable cycle of getting into financial trouble."
Minders Live in the Past
"Minders are the key administrative people of the company. A Minder may be the company's controller, bookkeeper, finance manager, CFO, IT Director, IT Manager, etc."
"Finders typically do not have the accounting, IT or other background to work extensively in minding activities. By nature, Finders detest this work. They resent the fact that they have to spend their time in countless meetings, working on cash flow, hiring and firing people, meeting with accountants, attorneys, bankers, etc."
Grinders - Today is all that Matters
"Grinders are people who do the physical work of the company. In a manufacturing company, the Grinder is the person who makes the widgets. The people making the phone calls are the Grinders in a telemarketing company. The Grinders put the cars together in an automobile manufacturing plant.
One of our goals is to help Finders escape the minding trap. We delight in helping Finders discover an extra 15 or 20 hours a week of finding time. There are a lot of minding titles that explain what B2B CFO® does, such as CFO, Chief Financial Officer, part-time CFO, virtual CFO, temporary CFO, interim CFO, Controller, etc. Regardless of what you call us, we are here to help owners of emerging and mid-market companies gain financial and goal clarity which leads to an increase in profits, cash and company value.
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