From the Indianapolis Business Journal First in a Six Part Series published August 24, 1981 by: Randal E Suttles, CPA Starting Your Own Business …One of the common complaints that I receive from businessmen who are successful is “if I’m making so much money, why don’t I have any cash?” September 14, 2008 note from…

Small Business Finance I & II Indiana University Division of Extended Studies 1982 Course by Randal E Suttles, CPA An extract from Lesson One: To summarize the key points of cash management: Short-term solvency (liquidity) can only be maintained through a good cash flow tracking system. You can borrow for the short term if a…

As everyone knows, the economy is, and has been, horrible. I thought I would describe how one of my clients has begun to respond. My client is in the commercial and residential heating and cooling business. In our region, I am informed that 8 similar businesses have failed in the last 12 months. By the…

A senior lending officer at a large commercial bank said to me some years ago that when he reviewed loan application packages, he wanted the answer to three questions: What is my primary source of repayment? What is my collateral or other security? What is my third source of repayment? By primary source of repayment…

What is ONE JND? Is that some kind of military code? A GPS coordinate? A password? A typo? None of the above. ONE stands for ONE, as in the number 1. JND stands for “JUST NOTICEABLY DIFFERENT”. As in the saying: “I need at least one thing that is just noticeably different.” One of the…

I just finished a discussion with the controller for a golf course, and a potential client. Their circumstance is not atypical. Cash is tight, vendor payments are delinquent, fixed costs (particularly employee salaries) are high, accounting systems are not producing accurate nor timely information, and the business is seasonal. Spring and summer are the critical…

This is a true story. Several years ago the audit firm finished the exam of a mid size food wholesaler and issued a clean audit opinion. There was one comment in the internal control letter to the owners: the same employee receives cash payments, prepares and posts billings and accounts receivable, and sends out past…

Character, Collateral, Capacity, Conditions, Cash Flow I recently had a discussion with a commercial loan officer about the 5 Cs of Credit. Some of them are obvious, all are important. Character refers to the integrity of the borrower. For mid size companies ($2 million to $20 million in revenue) it means the operational and credit…

How do you fix accounts that don’t balance? Where do you begin with a checking account that hasn’t been reconciled accurately in years, literally? What do you do with a system spitting out rejected checks from customer authorized direct payments and the staff can’t keep up? How do you deal with an inventory costing system…

Lenders have a number of ratios and formulas they use to evaluate credit applications, to set ongoing debt covenants, and to review renewals. I find two of them are most critical. They are intertwined, and if you can meet them, the rest of the covenants and ratios tend to take care of themselves. First ratio:…