Sky Ranch Lodge - Aug 9, 2011
Posted by: Mark R. Johnson in Testimonials
We're a 100 room property in Northern Arizona. We recently overhauled the business, making many needed updates. As is often the case, before we could tackle our biggest needs we needed get our financials in order and set up a system that we could manage from afar. Mark played a key role in making this happen. We'd hire him again tomorrow and highly recommend his services. — SRLWhen Cash Flow Is Tight - Aug 29, 2010
Posted by: Mark R. Johnson in Articles
In our current economy, the lack of cash flow has become all too common with small business owners. In normal times when cash is plentiful and liquidity is good there is less concern with the weekly cash requirements for paying vendors, payroll and creditors. However as the downturn in the economy impacts more and more businesses the need to manage cash flow and find creative solutions to keep business operating as expected.
Here are some tips I have learned in the recent past from my clients and other small business owners to maximize cash flow in difficult times.
1. Do not pay your suppliers until the due dates and if necessary go past the due date with the vendor’s concurrence.
2. Accelerate all accounts receivable collections through timely customer follow up on past due receivables. Consider a discount for cash payments made prior to the due date.
3. Renegotiate lease terms on rent and equipment when you are in the last two to three years of the contract. Lessors would rather keep you in a contract longer at a lower rate than lose you as a client.
4. Utilize outside consultants who work on a contingency basis to lower costs for expenses such as telecom, property and casualty insurance, etc. These arrangements allow for lower expenses and the savings is usually split with the consultant.
5. Reduce inventory levels and manage workflow production with a minimum of on hand product for manufacturing.
6. Research deposits paid more than a year ago to utility companies to determine if the deposit is no longer required.
7. Defer principal and interest on outstanding loans with banks and other creditors.
Additional assistance and guidance in the area of cash flow management can ....
Posted by: Mark R. Johnson in Articles
184% Growth Earns B2B CFO Spot in the 2010 List of Fastest Growing Companies in America Phoenix, Ariz. August 24, 2010 — B2B CFO, nation’s largest provider of CFO services to small businesses, has been named to the prestigious Inc. 5000 list of fastest growing companies in America. Now in its 29th year, Inc. Magazine’s annual ranking judges US-based and privately held companies by their revenue growth. This year’s list was ranked on the percentage in revenue increase from 2006-2009. B2B CFO’s growth earned 84th place in its industry. "There are approximately 27 million small businesses in the U.S. today,” said Jerry L. Mills, founder and chief executive officer of B2B CFO, “It is a huge honor to be among the fastest growing and the most successful businesses in the country. Our firm has experienced tremendous growth over the past few years and we are on track to continue expanding. I am especially grateful to all of the firm’s dedicated Partners who continue to advocate our services around the nation.” In a personalized letter congratulating B2B CFO on this accomplishment, Jane Berenston, editor-in-chief of Inc. Magazine’s wrote “Congratulations: your company, B2B CFO, has made the 2010 list of the fastest growing private companies in America. This achievement puts you in rarefied company, especially if you consider that over 27 million businesses are registered in the USA. The elite group you’ve now joined has, ov....
Posted by: Mark R. Johnson in Articles I am often asked this question by business owners who use Quickbooks and are not sure which is better the cash or accrual method for reporting their business results. The general rule is that cash basis accounting is simpler to understand and consistent with most taxpayers income tax filings. As businesses grow and their operations become more complex with customer accounts receivable and vendor payables the accrual method is preferable because this method more accurately reflects the businesses revenues and expenses as incurred rather than when paid or received in cash. I recommend that my clients use the accrual method for the simple fact that it more completely shows the amounts owed to vendors and the expected revenues earned in the business. If you are using Quickbooks, it is simple enough to maintain the ledger in the accrual basis with the accounts receivable and payable recorded and, if needed, you can report on the cash basis by selecting the cash option when displaying a report. In most situations, the cash reporting method is of value only to the tax accountant and the IRS so this approach of using the accrual method in Quickbooks will satisfy all of the business needs but still allows the flexibility required to satisfy the tax return at year end. The challenge to the accrual method is that at the end of an accounting period all economic transactions are to be recorded regardless of whether any cash has been involved. Thus, an accountant may need to make journal entries for obligations entered into by contract or agreement where the cash has not yet been paid. For assistance with accrual accounting, contact your CFO, CPA or accounting professional. Posted by: Mark R. Johnson in Articles
The balance sheet is an often overlooked and misunderstood financial statement. It is not as sexy and often considered less important because the income statement which shows the profit and loss is where the action is in the financial statement world. Some important focus areas I point out to my client when we review the balance sheet each month include: Cash – Does the balance make sense and have we reconciled these accounts to the most recent bank statements? Are the timing differences recent and explainable or are they old and unidentified? Do we remit stale checks to the state in accordance with escheat laws? Accounts Receivable – Do we have an aging report that lists each open invoice and the days unpaid by customer? Is there a consistent and effective process to ensure the older receivables are followed up and collected? Do we write of uncollected receivables after six months? Have we identified and reserved for customers that might not pay us? Inventory – Do we know that the quantity on hand is properly stated based on physical count or inspection? Have we determined that the costs assigned to each item inventory are reasonable and consistent with the current costs and valued at or below current market values? Have we identified and reserved for inventory that is obsolete or damaged? Other current assets - This is usually prepaid assets such as prepaid insurance or deposits held for some short period of time (less than a year). Are the balances amortized to their current value? Fixed Assets – Do we have all our manufacturing equipment, trucks and office equipment identified and recorded on each asset at cost? Are we properly depreciating this equipment? Accounts payable - Do we have an aging report that lists each open vendor and the days unpaid? Have we scheduled payments for the next two weeks against the oldest payables based on estimated incoming cash? Notes payable – Are all of the notes payable to the bank or other creditors recorded on the financial statements and do the balances shown reflect the current principle due on the debt? Credit cards pay....
Posted by: Mark R. Johnson in Articles I am working with several clients who are cash challenged at this time of year. We are carefully reviewing the P&L on a regular basis to identify any opportunity to reduce costs and conserve cash. Cash management is so critical to the operation of any business. The proper use of cash will provide a business owner with some real advantages in the marketplace. It gives the businesses that manage cash well the opportunity to: • Survive unexpected loss • Adapt to unexpected change • Take advantage of unexpected opportunity In managing cash flow I ask my clients to prepare 90 day cash forecast to determine the needs for borrowing and capital expenditure. This forecast is based on a projection of the current income statement by month for the next three months. Additions to the net income are for noncash expenses such as depreciation. Common reductions in cash should be recognized for cash outlays used to purchase fixed assets, repay debt, pay dividends and reductions in vendors payable. Some questions your controller or CFO should be able to help you answer include: • Facilities. Buy or lease? • Working capital. How large & how do I manage it? • How much debt should my business have? Posted by: Mark R. Johnson in Articles I am working with a new client in the health care industry who needs to have some key statistics each week to measure performance to know where changes in the business need to be made. We have defined these statistics which are put into a weekly report as our key performance indicators or KPI’s. We refer to our weekly report as our dashboard. It is essential for any business regardless of size to have daily or weekly operating statistics or KPI’s to properly manage your organization. These KPI’s are unique to each organization based on their culture and industry. These KPI’s should provide direction and serve as a bench mark or target for the organization to track performance within specific timeframes (weekly, monthly or quarterly). KPI’s that are well thought out should follow the SMART criteria as described below: · Specific purpose · Measurable · Achievable · Relevant · Time Phased In establishing your KPI’s, try to avoid measurements that are expensive or difficult to determine. Keep in mind that as the business climate changes so should your KPI’s to reflect technological advances and shifting priorities. Some measurements are not as useful because there are no benchmark standards so the usefulness of the statistic is limited. Read more... Posted by: Mark R. Johnson in Articles For small businesses and business owners their first reaction is to try to do all things themselves or with a trusted group of employees (some of whom may be family members). There is a natural reaction to the question of outsourcing which draws the following responses from business owners: Let’s answer each of these questions and I want you to see that in many situations outsourcing can be an excellent solution. Outsourcing can be economical in many circumstances. If the service allows you the opportunity to decide when and how much time you will pay for then the cost of outsourcing can be managed to only those times when the service is needed. As an example a business can save significant costs by paying for managed IT services (an outsourced help desk) rather than hiring a full-time employee as a network administrator. Outsourcing services can often allow the business to focus on their core competencies rather than deal with the complex payroll rules to pay employees on a biweekly basis. The key here is to outsource those functions that are not core competencies allowing the business owner the time to focus where they have expertise. While outsourcing does require the owner to relinquish a level of control this issue can be largely mitigated by effectively managing outcomes as you would with any vendor. The competitive process and investing time to research the best services for your business will go a long way in minimizing the loss of control. Choose services on recommendations you trust and leave options in the agreement for you to replace the service if the performance is subpar. Limit your contact period to one year or less when taking on a new service. Have a clause that allows cancellation of the contract with a 30 day notice. ....
Posted by: Mark R. Johnson in Articles I have two clients that are both very focused on determining their budget for the Fall of 2010. One of these clients already established a budget back in February 2010 the other client has never done a budget before. Why the difference? Both are small family owned businesses that have survived for at least 10 years. Here are some general observations on budgets: 1. Have a plan at the beginning of the year that everyone in the company understands and believes is achievable. 2. If your current situation at midyear has changed your assumptions dramatically then make a revised fall budget so you can reset expectations. Unrealistic budgets are ignored and therefore of little real value. 3. Each month compare your actual results to the budget and be prepared to discuss the variances. Why are the differences occurring and are they due to timing or fundamental shifts in the operation of the business? 4. Review your assumptions at least quarterly and decide if you need to reset your expectations. Budgets provide a meaningful goal to achieve a result as a company and can be fun to compare actual results to plan. 5. Information from accounting and finance needs to be timely and accurate to be of value to compare to budgets. Have the budget loaded into your existing accounting package so all the budget line items match up with the reported actual results. 6. It is important to create key performance indicators (KPI’s) for your business to measure results daily and weekly. These KPI measurements may use budget assumptions and data but often require operational information as well (example: average sale per customer requires both sales revenue and an accurate customer count). Finally a good finance professional such as the controller or CFO helps provide guidance in preparing and analyzing results to the original budget. Posted by: Mark R. Johnson in Articles This has been a very busy week meeting with bankers discussing the current bank lending situation here in Phoenix. The bankers I talked to both large and small here in Phoenix made the following recommendations when asked what they look for in the ideal loan customer. 1. Have a plan of what you want in terms of loan size and structure and be prepared to defend your request. This shows the lending officer that you understand the need for the loan and how the cash flow impacts your operations. 2. Have a current set of financial statements complete with balance sheet and the income statement (P&L) and supporting subsidiary schedules for accounts receivable and accounts payable. You get bonus points for having a cash flow statement and/or a budget prepared. 3. Be prepared to discuss your fluctuations in earnings, accounts receivable and general operations and any other outstanding debt. Also be sure to be prepared to discuss gross margin percentages, breakeven volume and EBITDA (earnings before taxes, interest and depreciation and amortization). Bonus points are awarded for anyone who can articulate why their earnings changed and how they plan to improve to previous levels prior to the current economic downturn. 4. Understand you’re the business risks related to your specific industry and how the current economy and markets will impact future performance. Be prepared to discuss how your product or service is superior to your competition and why you will succeed in the marketplace. Also, understand any regulations or technologies unique to your industry. Banks are only lending to those companies and organizations that have a positive cash flow, a history of earnings, good collateral (accounts receivable or inventory) and a favorable future earnings trend. Banks have money to lend but fewer businesses to lend to in the current economic and regulatory environment. Finally a good finance professional such as the controller or CFO helps provide confidence to the bank and loan committee that the company is well controlled financial and is committed to a long future with the proper financial controls. Posted by: Mark R. Johnson in Articles I spent the day learning from two experienced insurance agents learning about the commercial insurance industry. The underlying issue is the lack of knowledge and exposure many businesses have in areas of risk particularly with employee theft. This is a clause embedded in most commercial policies which limits the total loss from any occurrence to $10,000. This often is woefully inadequate at the time of loss however because many thefts and embezzlements go undetected well into a loss in excess of $100,000. However, if this clause is written the insurance company will only cover $10,000.
B2B CFO Named In Prestigious Inc. 5000 List 1237 - Aug 26, 2010
B2B CFO NAMED IN PRESTIGIOUS INC. 5000 LIST
Which Is Better Cash Or Accrual Accounting - Aug 10, 2010
Why The Balance Sheet Is Important To The Business Owner - Aug 7, 2010
Cash Is The Lifeblood Of Your Business - Jul 21, 2010
Who Needs Key Performance Indicators Kpis - Jul 8, 2010
Why Companies Should Consider Outsourcing Key Services - Jun 26, 2010
Budgets Matter - Jun 23, 2010
Bank Lending To Small Business - Jun 17, 2010
Risk Management - Jun 10, 2010
Another complicated area that is misunderstood is insurance for business interuption. It is important that the policyholder understand how this insurance will be determined and what the coverage will actually pay. A good insurance broker should be able to answer these questions with specific details and calculations.
An independent third party such as a certified fraud accountant can provide objective advice that may well be worth their cost to assure proper insurance coverage over specific risks.
Sitemap | About Us | CFO Services | Find A B2B CFO | TV | PR | FAQ | B2B CFO Directory | Office Locations | B2B CFO Careers | Why B2B CFO? | Part Time CFO | CFO Wise vs B2B CFO | CFOwise | Kenneth Kaufman | B2B CFO® Blog | Privacy Policy | Refund Policy
B2B CFO Partners, LLC dba B2B CFO®
(480) 397-0590
3850 E. Baseline Rd. #105Mesa, AZ 85206
Zoom in using the +/- tools on the left. Click on each photo for more details.