Recently I had a discussion with one of my clients on the difference between cash flow lending and asset based lending (ABL). It started with a Line of credit (LOC) offer made by a bank to my client. The Bank said that they will lend money on the AR and Inv. of the company (up…
DetailsStrategic Planning at small and medium sized businesses Most small to medium businesses (SMEs) struggle with the concept of Strategic Planning. Several obstacles loom: The time that needs to be diverted from regular routine work. Is it worth it? How do we go about doing this and who do we involve? Most SMEs are run…
DetailsA business is always better off when it knows its’ numbers! It is even better off, when it sees this frequently and thereby keep a pulse on the business. It is akin to driving a car and you are constantly scanning the dashboard – speed, gas level, lights etc. and you can get the feedback.…
DetailsWhat is working capital (WC) and what is the working capital cycle? WC refers to the investment a firm has made in AR, INV. minus the AP. The WC cycle refers to the continuous changes in these items (which occur in a cycle) – for example, AP is incurred because of Inventory (raw material and/or…
DetailsHave you ever wondered what really happens, when a company makes a loss? Who pays for it? How do loss making companies keep operating? To start, in simple terms – a loss occurs when expenses exceed Sales. You can calculate this on a monthly basis, as is done traditionally when you do the financials. A…
DetailsMost businesses know what their Gross Margins are; either across the whole business or across main product categories. This is Sales minus direct costs, before overheads are deducted. However, it is interesting to know the Gross margins earned from each customer. You may be surprised by the results and may even want to re-align your…
DetailsWhen Businesses have borrowed money from a Bank or any other Financial Institute based on their Assets – usually AR and Inventory, they will be subject to a “collateral audit” as a condition of the loan. This is done by a CPA and is usually limited in scope, as their examination is primarily the businesses…
DetailsMost companies, especially small and medium sizes have focused on cost cutting to improve or maintain their profits. These costs are usually split between variable and fixed costs – the first varies directly with revenues and the second stays the same , no matter what the revenue is, increasing only in steps as the business…
DetailsBusiness turnarounds usually mean you are managing under stress and to a deadline imposed by a key stakeholder – usually a Bank. Deliver these results by this date or else! On the positive side, turnarounds also mean there is hope and an overall understanding that it can be done. Restructuring is an integral part of…
DetailsBusiness turnarounds usually mean you are managing under stress and to a deadline imposed by a key stakeholder – usually a Bank. Deliver these results by this date or else! On the positive side, turnarounds also mean there is hope and an overall understanding that it can be done. Restructuring is an integral part of…
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