Tips to Get Your Finances in Order

unduhan-65For many businesses, January marks the beginning of a new year of financial records, evaluations and sometimes, difficulties. For small businesses in particular, a lack of experience with banking can present a host of problems on top of other issues that startups already have to deal with.

“The biggest financial issue facing small business owners today is capitalization, specifically, difficulty getting loans,” said Ken LaRoe, CEO of First GREEN Bank. “Even though lack of capital can affect any business, it is particularly prevalent and tricky for small businesses. This also acts to limit the development of many small businesses, because without sufficient capital they cannot afford to make key investments necessary for growth and expansion.”

Whether you’re applying for a loan or simply want to be more knowledgeable about business finances, there are plenty of things you can do to boost your financial expertise. LaRoe offered these three tips for small businesses looking to bank smarter in 2014:

 

  • Keep tabs on your accounts. Business owners should get all of their accounts — personal and commercial — in order and perform a realistic assessment of expenses and financial needs. Set aside time each quarter, or even each month, to review your accounts and re-evaluate your business finances.
  • Join a community bank. Community banks are the lifeblood and backbone of a small business- based economy, LaRoe said. Many community banks look beyond just banking services and are helping clients discover financial products they might not have otherwise considered through education and counseling.
  • Take advantage of professional services. Hire a strong CPA and have monthly financial statements prepared to GAAP (generally accepted accounting principles) standards. Also meet frequently with your banker, who can provide great counsel to small business owners.

 

How To Handle Audited Like a Pro

unduhan-66With tax season at an end, many small businesses assume that the worst of their IRS filing worries is over. However, a handful of business owners still have one more battle to fight: the dreaded tax audit.

As stressful and overwhelming as an audit may seem, there’s no need to panic. It does need to be taken seriously, but sometimes, audits deal with simple data or reporting errors that the IRS suspects may have occurred, said Frank Pohl, an attorney at Gunster law firm.

“Keep in mind that not all tax audits end adversely for taxpayers,” Pohl said.

If you do receive an audit notice, here’s what to do to make the process go as smoothly as possible, and to minimize any negative impact on your business. [See Related Story: 5 Tax Deductions That Could Get You Audited]

1. Review the audit letter carefully.
Open the letter promptly, and understand what information the IRS needs from you, Pohl said. If you don’t have a designated financial adviser, hire an accountant or tax attorney to help you go through the audit letter and identify the issues the IRS has flagged. Pohl also warned not to delay action or ignore the letter.

“The IRS will not go away, and not acting promptly may only make the auditor suspicious or antagonistic,” he said.

For security purposes, if you are being audited, you will receive a mailed letter, Pohl said. Scammers will often masquerade as the IRS by sending emails or leaving phone messages in an attempt to get your personal data, but the real IRS does not communicate with taxpayers in these ways, Pohl said.

2. Get your records organized.
Before you and/or your tax professional meet with an IRS auditor, take the time to dig up and organize all of your business records from the past tax year, said Kimberly Foss, a certified financial planner (CFP); founder and president of Empyrion Wealth Management; and author of “Wealthy by Design” (Greenleaf Book Group Press, 2013). This includes receipts and invoices for income and expenses, bank statements and canceled checks, accounting books and ledgers, hard copies of tax-prep data, and leases or titles for business property, she said. If the IRS has requested specific documents to review, be sure you have those readily accessible as well.

3. Answer the auditor’s questions (and that’s it).
When you sit down with the auditor, you’ll be asked numerous questions about the information reported on your tax return. Our expert sources agreed that you should not volunteer any information you are not required to give.

“Just respond with the information [that is] requested,” Pohl told Business News Daily. “Providing unneeded or unasked-for information may lead to more questions … and additional issues.”

“Be straightforward in responding to questions, but don’t manufacture excuses,” Foss added.

Unsure of what you should and shouldn’t say? Sandy Gohlke, a CPA, chartered global management accountant and principal at Rehmann financial services company, advised giving the IRS a signed power-of-attorney agreement that will allow the IRS to deal directly with your tax professional.

“That takes you out of the loop and puts them in,” she said.

Pohl agreed, and said that even if your tax professional doesn’t have power of attorney, you should still have him or her present when you meet with an IRS auditor. He also advised business owners not to get defensive or hostile during the interview.

“The auditor. cannot and will not forgive and tax debt or mistakes, and any admissions you make can be used against you,” Pohl said. “Adopting an antagonistic attitude risks alienating the auditor, [which] will not be in your best interest.”

Avoiding future audits
Gohlke reminded business owners that audits are generally random, and you can’t prevent them entirely. However, some companies are selected because of certain “red flag” expenses — either amounts or types — that are out of the ordinary and would cause a second look, she said.

Foss noted that bank transfers and other financial records beyond your receipts should be tracked, and anything that can’t be explained on the standard IRS form should be explained on paper. She also advised double-checking all of your math before filing.

“Keep proper documentation, and only deduct ordinary and necessary business expenses that are allowed by the IRS,” Gohlke added. “Even if you are selected for an audit, you will know you have nothing to worry about.”

Tips To Boost Your Credit Score First

unduhan-64When applying for a small business loan, your credit score is a major factor in determining whether you get approved. So entrepreneurs with bad credit can benefit from taking steps to boost their business’ ratings.

According to Experian, one of the United States’ three credit-reporting agencies, a credit score is a number that lenders use to help decide how likely it is that a loan would be repaid on time. In addition to the role these numbers play in the approval process, credit scores are also used to set the interest rates on the loans that lenders do pass out.

It is important to note that a business’s credit score is different from a personal credit score. According to BusinessLoans.com, a personal credit score is a reflection of how someone repays their mortgage, auto loans, or other personal obligations, while a business credit score reflects how a business owner meets their company’s financial obligations. While the two scores are different, lenders can look at both when deciding whether to approve a loan.

“Having a positive business-credit profile is extremely important because it presents a current, objective picture of how a business manages its financial obligations,” Brian Ward, vice president for Experian’s Business Information Services, told Business News Daily. “A negative credit profile can lead to higher interest rates, difficulty in securing loans and potential problems with suppliers, but a positive business credit profile can help save your business money by enabling the business to secure the best possible rates and terms.”

Recent research shows that most business owners are in the dark when it comes to their credit scores. A study from Manta and Nav revealed that 72 percent of small business owners don’t know what their credit score is and nearly 60 percent don’t know where to find their credit score.

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Credit scores can range anywhere from 100 to 990, depending on the scoring model. Amber Colley, a business-credit expert and director with Dun & Bradstreet, said since there isn’t a definitive “good score” business owners should be aiming for.

“There is not necessarily one score that is more important than others or that you should completely disregard,” said Amber Colley, a business-credit expert and director with Dun & Bradstreet. “It depends on what scores your lender uses to make its decisions. ”

Since there isn’t a specific number that businesses have to achieve, the best strategy is for business owners to focus on managing the factors that help build positive scores, Ward said.

“This is done by monitoring the business credit report on a regular basis to help verify the information and be educated to what drives changes,” he said.

Colley and Ward said there are several ways that business with bad credit scores can improve their ratings:

1. Pay bills on time: Colley said the most important thing you can do as a business owner to boost your business credit score is to pay your bills on time.

“The amount of payment experiences recorded in your report that show your historical ability to meet your vendors’ payment terms, along with the amount of high credit you have been extended by those vendors, are important components within your business credit report,” Colley said.

2. Pay down current balances: Ward said another way to improve a credit score is by paying down balances on commercial accounts and credit cards as much as possible.

3. Keep tabs on your credit score: Colley advised business owners to pay close attention to their credit report in order to see changes to their scores and ratings as they happen.

“Monitoring your company’s credit information can allow you to react and update or confirm the information being reported about your company,” Colley said. “This, in turn, can allow you to be proactive versus reactive in managing the information within the report.”

Other tips from Experian include applying for and opening new credit card accounts only when necessary and avoiding closing unused credit-card accounts. Owing the same amount but having fewer open accounts may lower your credit score, Experian said.

But there is no set time frame for how long it will take a business or business owner to improve a credit score, Colley said.

“There is no definitive answer to this question,” she said. “What information is being updated, added, disputed or confirmed could dictate how long it may take for information (scores/ratings) to change within the report.”

The Adverse Side Of Online Payday Loans

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A great deal of folks frequently are cautious in relation to businesses that demand high interest rates when it comes to their loans. Including online payday loans, in case you’re seriously consider buying one, you should educate yourself initially. These report gives you guidance so you are very-safeguarded when getting a payday loan.

The most crucial point you possess to bear in mind when you decide to apply for a cash advance would be that the curiosity will be higher, whatever loan provider you deal with. These rates can even achieve as much as 200 pct. As a result of way they framework their lending options, creditors who offer payday loans have managed to exempt them selves from the usury laws that might typically prohibit these kinds of attention.

Usually go through all of the conditions and terms associated with a payday loan. Identify every single point of rate of interest, what every single possible payment is and just how a lot each is. You want an urgent situation bridge bank loan to help you get out of your current scenarios back to on your ft ., yet it is easier for these conditions to snowball more than many paychecks.

When looking for a cash advance, will not select the first business you find. Instead, examine as many costs that you can. While some organizations will undoubtedly charge a fee about 10 or 15 %, other individuals may charge you 20 or even 25 %. Perform your due diligence and locate the most affordable firm.

In case a cash advance firm constitutes a promise, you ought to be really distrustful. A great deal of these types of businesses are usually predatory loan providers. They create cash by giving loans to the people who is able to not spend them again. Make certain you read the fine print when you are taking these loans.

Usually closely safeguard your financial info when looking for financial loans. There are times that you may be required to give information just like a sociable safety amount. Just understand that there could be scams that could wind up marketing this sort of information and facts to thirdly functions. Make sure you are handling a reliable organization.

It’s vital that you show payday loan firms that you will be reputable. This is very important as it implies you can obtain a potential bank loan for the number of dollars you require. Utilizing the same loan company for online payday loans helps you get greater personal loans if you have a great reputation using the organization.

Decide the lender’s state of starting point. In relation to loaning caps, you can find various express regulations. It isn’t uncommon to locate illegal loan providers that operate in says they are certainly not able to. It is essential to know which express governs the laws that the pay day loan provider must conform to.

While confronting a paycheck lender, bear in mind how firmly governed they can be. Rates of interest are usually legally capped at diverse level’s condition by state. Really know what obligations they already have and what personal proper rights that you have like a consumer. Hold the contact information for regulating federal government office buildings helpful.

You should look for the Better business bureau for information about your lender before you sign with them. Before signing on the dotted line, look for the BBB for that firm score. If you discover any issues, then you should possibly look for yet another firm. If you find not one, then it’s probably safe to use them.

Since there are normally extra fees and phrases concealed there. Many individuals make your blunder of not performing that, and they turn out owing considerably more compared to they loaned to start with. Make sure that you are aware of totally, nearly anything that you will be signing.

If you have time, make certain you look around for your personal cash advance. Each and every pay day loan service provider can have some other interest rate and fee structure for their pay day loans. To acquire the most affordable payday advance close to, you must spend some time to compare lending options from various suppliers.

Be sure that the business you might be going to work with is not really likely to charge a fee any hidden costs. Seek out institutions that have a very good track record, together with about five-years from the field. This straightforward stage is a straightforward way to avoid many of the most typical financial loan cons.

The very best hint designed for employing online payday loans would be to never need to utilize them. Should you be being affected by your debts and could not make ends meet, pay day loans are not how you can get back on track. Try out setting up a budget and saving some money in order to stay away from these types of personal loans.

Viewing as how you have to be a payday advance specialist you should not really feel unclear about what is associated with online payday loans any more. Make certain you use anything that you go through these days if you make up your mind on pay day loans. You are able to steer clear of having any troubles with the things you just learned.

The Best Way To Decide When To Take Out A Cash Advance

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Payday loans can provide individuals who end up in the financial pinch a means to make finishes meet. The easiest method to employ these kinds of personal loans correctly is, to left arm on your own with understanding. By applying the tips in this bit, you will understand what to expect from pay day loans and the way to use them wisely.

If you need to get a pay day loan, remember that your upcoming income may well be gone. When investing in your money you must understand that the income is definitely not avaiable for your needs! Not recognizing this will begin a persistent routine of financial debt which could serve you for a lengthy while.

Ensure that you fully grasp exactly what a payday loan is prior to taking a single out. These loans are generally granted by firms which are not banking companies they provide tiny amounts of capital and need very little paperwork. The personal loans can be found to the majority individuals, while they usually need to be repaid in 14 days.

Generally have enough money available in your banking accounts for financial loan pay back. If you overlook to generate a payment, the money company will try to find the funds in the banking accounts you joined with. You will definitely get strike with charges from your lender and also the pay day loans will fee far more service fees. By ensuring that the money is at your account, it will be easy to keep every thing in check.

Stay away from making decisions about pay day loans coming from a place of worry. You might be in the middle of a monetary crisis. Feel long, and challenging prior to applying for a pay day loan. Keep in mind, you should spend it back, additionally fascination. Make certain it will be easy to achieve that, so you may not make a new crisis for yourself.

Before signing up to get a payday advance, carefully think about how much cash that you will require. You need to acquire only the amount of money that can be needed in the short term, and that you may be able to pay rear following the phrase from the personal loan.

Assume the cash advance company to phone you. Each and every firm must confirm the details they receive from each and every individual, and this indicates that they need to contact you. They should talk with you in person just before they accept the loan. As a result, don’t give them a number which you never ever use, or utilize when you’re at work. The longer it requires to allow them to talk to you, the longer you must wait for a cash.

In case you are developing a difficult time figuring out whether or not to utilize a pay day loan, phone a customer credit rating therapist. These professionals normally work for non-income businesses that provide free of charge credit rating and financial assistance to buyers. These people can help you find the right payday lender, or even even help you rework your finances so that you do not need the borrowed funds.

When you discover a great pay day loan company, stay with them. Help it become your primary goal to develop a history of successful personal loans, and repayments. In this way, you may come to be entitled to larger loans in the future using this organization. They may be far more ready to work alongside you, when in actual struggle.

Take a look at online community forums and reviews to determine which businesses are the best to use for payday cash loans. Like that, you will definitely get a feel where loan providers are dependable and which can be not.

Obtaining a payday advance is remarkably simple. Be sure you proceed to the financial institution with your most-latest pay stubs, and also you must be able to get some good funds very quickly. Should you not have your recent pay out stubs, you will find it is actually much harder to obtain the financial loan and can be declined.

Tend not to require another payday loan if you find an unpaid harmony on a personal loan removed from an additional firm. Although funds may be restricted, it is very important understand while you are getting yourself in more than your face.

Whenever you have monetary problems, many individuals ponder where by they are able to transform. Payday loans produce an choice, when unexpected emergency conditions require fast cash. An intensive idea of these fiscal autos is, essential for anybody thinking about securing cash in this manner. Make use of the assistance over, and you will definitely be ready to create a clever decision.

Uncover What Your Shoppers Have To Say

Small businesses with a poor standing are going to be unsuccessful though businesses with a wonderful track record are likely to increase quickly. Nevertheless, it could be difficult for a business proprietor to be able to keep close track of their own track record as well as make certain they’ll recognize just what their particular buyers are saying regarding them. Although there are various web sites where customers could leave reviews, it could be hard for the small business owner to check out all of them regularly.

It is critical for a business proprietor to make sure they will check all of the review sites routinely to allow them to watch their own reviews and also respond to virtually any bad ones to be able to try to correct them. Nevertheless, this really is unbelievably time-consuming for a business owner to try and do. To be able to ensure they are able to monitor all the websites and also their own reputation, they are going to need to be sure they will utilize a reputation management platform just like Chatmeter. The services automatically examines all of these sites for them as well as informs them when a brand new review is posted.

Along with the ideal assistance, it really is less difficult for a business owner to find out when there’s brand new reviews so they can look at the reviews and also attempt to make sure they have a fantastic reputation. To discover more with regards to precisely how this operates, check out Chatmeter now.

Learn Exactly How To Use Apps To Actually Enable You To Bring In More Revenue With Investments

Stock trading would mean someone needs to pay attention to both their particular stocks and also stocks they may be considering purchasing. Being unable to monitor the stocks may suggest they don’t really make nearly as much funds as they may or even, worse, could generate losses. A great way in order to be sure the person remains on top of the stocks they’re considering will be by considering the different apps that are available. With a chance to look into the stocks from everywhere and the capability to set notifications with a few apps, it can make tracking them easier than ever.

An important component of keeping an eye on the stocks will be being able to gain access to the details in real time from almost anyplace, Do You Agree? For this reason quite a few individuals are choosing to work with apps to keep an eye on their particular stocks. It is crucial for the person to take a look at a lot of the apps that are now available as well as take the time to be able to read much more about them to make sure they will decide on the proper app. They will desire to ensure the apps consist of real-time information as well as the capability to trade from the app in order to ensure trades are carried out as soon as possible.

A person who desires to look into the apps that are offered may need to check out this Great Post To Read to find out more about using apps to keep close track of their particular stocks. The person might then take a look at some of the best apps that are offered to be able to uncover the one that’s going to fulfill their needs. They may want to proceed to obtain several apps to have fun with them somewhat in order to get a better idea of how they work and also which of them they want to use.

Anybody that trades stocks will probably have to have a way to effortlessly monitor their stocks as well as versions they might be interested in. I Was Reading This and He Has A Good Point that you might need to have a look at. Go on and take a peek now to be able to find out much more regarding exactly how making use of apps can allow it to be easier for you to be able to generate much more cash with your investments. Whenever you happen to be all set, go on and try a few apps to be able to discover which one will be best for you.

Who Is Joe Kashurba?

So who is Joseph Kashurba exactly? If one is trying to discover the best means to create and expand a web-based business, the answer to this question is a very important one. This is because many people dipping their toes into the ocean of freelance commerce for the first time need a good “swimming teacher” and even a “lifeguard” to help them become confident, strong swimmers who know how to deal with shifting business currents as they develop.

Joe Kashruba is a problem solver. Specifically, he teaches others how to solve their own problems when it comes to web marketing and freelance business strategy. He is able to offer this knowledge to others because of his own extensive experience in the field. While still in high school, Joe Kashruba started up his own independent web design operation. He steadily grew his business over the years until he was designing $30,000 websites for clients around the world with the aid of a team of talented web design professionals he had built up himself. Now handling six-figure accounts on a regular basis, Mr. Kashruba designs and manages websites for some of the world’s largest manufacturing and construction companies as well as a wide variety of businesses in diverse fields.

Having developed his agency into a world class instrument, Joe Kashruba is in a position to educate up-and-coming web designers, freelance e-businesses and digital advertising agencies in all the myriad strategies useful to develop their own operations. He offers through his own website online education programs teaching one how to grow a web design or digital advertising business. For example, the Agency Blueprint program, a six-week course, outlines how to get the maximum yield for freelance work with less stress and to guarantee increased profitability. Another eight-week program deals exclusively with meeting the challenges of attracting new clients and projects. There is also an invitation-only program stretching over twelve months focused upon mentoring agency owners to become leaders in their own market fields.

Outside of these instruction programs, Joe Kashruba offers his vast wealth of knowledge and experience to the public. This is available through podcast interviews archived on his website. From developing a sharper focus on business imperatives to taking a diagnostic approach to problem solving to positioning as a market specialist, Mr. Kashruba outlines key techniques for avoiding mistakes and step-by-step approaches to achieve goals in each endeavor.

Get Your Own Business Started The Right Way With Very Skilled Staff

Selecting staff to be able to start a small business can be challenging. Businesses may need to ensure the workers are trained properly to do the work that’s required and also can want to ensure they can carry out the work properly. To do this, businesses might desire to explore incorporating a training program for the new personnel. Along with the correct scientific molding training program, business people can be sure the personnel they will employ can do the job as well as may help the organization expand.

Personnel could currently have knowledge of molding but might not have the degree of skills required for a small organization. It is essential to increase output and minimize waste as much as possible for brand new business owners in order to decrease just how much they’ll invest and also increase the revenue. Presenting staff members with injection molding training will help with both of these to be able to make sure the business may tackle a lot more tasks as well as complete the work that’s accomplished as fast as possible and also with as little waste as is possible. This is most likely to help the company grow considerably quicker.

One more advantage of extra training would be that the personnel are much more familiar with the machines they’ll be utilizing as well as can work together for much better results. Any time the employees are able to work together and also comprehend the machines, not only precisely how to use them, it may reduce down time from any problems with the equipment. The scientific molding seminars supply the help they will need to learn as much as is feasible about the machines and also concerning working together. This can present many added benefits for employees and also the small business, as well as it enables personnel to have a better working relationship together.

Companies who’re just starting their business can need to make certain they’ll have highly trained staff members. One of the best methods to do this would be to commit to extra training for all of the staff. To be able to understand a lot more about how extra education could help or even in order to find out about the classes that exist, be sure you consider decoupled molding training now.

Acquire More Business and Have a Higher Ranking Site By Incorporating Video

Almost all persons have a visual learning style, and study best whenever information is shown visually. They go to visual demonstrations whenever granted an option. Which means it really is plainly important to include things like films included in your enterprise web site’s subject material. Not only does the actual inclusion associated with online video media have a tendency to enhance this web page inside search engine ranks, but it is key to getting the information along and for sharing an individual’s brand. The online video media you incorporate in your web site is a lot more likely to be seen to its end compared to written content is to be read all the way through.

Since this is clearly a organization’s primary region upon which to truly take advantage, as far as his business website is in view, you should take full advantage of the possibility. This is easy to carry out, for except in cases where one is without a doubt a specialist in video production services, he should never attempt to supply his own amateur online video media designed for his particular web site, for doing it is probably going to show a lot less than the intended impression. Instead, he or she must contract with a company giving professional video production services in Los Angeles. A well done, to the point and also targeted video with your web site will probably improve your small business while it will cause your site go go higher.

Let’s Lear About Zero based Budgeting

Zero based budgeting is a method of managing cash flow in which all expenses must be justified in each new period rather than basing financial decisions on the previous year’s funding. Zero-based budgeting forces companies to scrutinize and justify all expenses in a never-ending goal to redesign cost structures and boost competitiveness. An organization watches its spending and challenges the costs it creates through expenses and employee activities, attempting to identify inefficiencies and necessities to reduce corporate spending and increase market competitiveness.

The focus on reducing overhead while still increasing performance proves helpful in aligning resource allocations to company strategic goals. Zero-based budgeting places the emphasis of cost analysis on identifying the activities that need to be performed at what levels and frequency. After that, a company must answer the question of how these activities can be better performed — whether it is through streamlining, standardization, outsourcing, offshoring, automation or simple fiscal conservation.

How zero based budgeting works

When a company adopts zero-based budgeting, a massive shift in mindsets is required. Management must be willing to make sacrifices and cut expenses traditionally viewed as necessary to help in the goal of reaching a bottom line of zero. The company first re-envisions its business and asks what activities and resources are needed to remain competitive under current and future market conditions. Once the necessary items are identified, the company then sets clear cost targets and strategic visions that share in this goal.

Company management should justify every activity needed to continue with the company’s function, while at the same time making concessions in removing unnecessary expenses and activities. In the end, resetting budgets and full-time employee levels, redesigning the organization and implementing the zero-based budget initiative prove the most time consuming parts of the process.

The benefits of zero based budgeting

The main goals behind zero-based budgeting are to save money and improve services. However, in addition to these main benefits, the strategy also impacts the restraint of management and employees when developing budgets.

With a traditional budgeting strategy, companies generally have one goal: to have money left over at the end of each month or fiscal year. This creates a mentality of entitlement where employees and management alike feel justified in spending money, provided expenses don’t exceed income. Rather than letting money pile up to protect against slow economic seasons or unexpected company-wide expenses, many organizations spend more than is necessary, both on purchasing equipment and performing activities that waste profit and reduce company efficiency.

When the mentality of entitlement is removed, expenses likewise reduce and budget discussions then become more meaningful.

The negatives of zero-based budgeting

While the strategy behind zero-based budgeting is well intended, it causes some adverse impacts on company culture and expenses. Preparing budgets becomes even more time-consuming because of the amount of justification needed for each expense. The use of zero-based budgeting may even prove too radical of a strategy for a company and may cause more harm than help.

How companies use zero based budgeting

Zero-based budgeting forces management to overcome conventional thinking and instead challenge every expense and assumption, no matter how sacred. In the event of acquisitions or mergers, this strategy proves even more appropriate as it helps align resources with mission functions and strategic imperatives. The main goal, however, is to reduce wasteful expenses without reducing company value.

For example, a software development company may be using the a third-party organization to purchase IT services to reduce staffing overhead and free up existing company resources to focus on production-related activities. However, they are paying a significant fee each month for unlimited access to the service’s support department, a feature they use no more than once a year. By removing this monthly cost and instead paying for the occasional and infrequent fee of a support call, the company makes significant strides toward reaching a bottom line of zero.

Know More About Beyond Credit Scores

When consumers apply for credit cards or loans, their credit scores are often the single most important factors in deciding whether their applications are approved. But what about when you’re applying for a business loan?

While business lenders will certainly take your personal credit into consideration, it’s far from the only factor they will consider. Ted Peters, chairman and CEO of the Bluestone Financial Institutions Fund, outlined what is known as the five “C’s of credit” that commercial lenders look at to make a credit decision.

Cash flow. Lenders look at your historical and projected cash flow, as well as your sales numbers, to determine your ability to pay them back in a timely manner.

Collateral. Depending on the strength of your cash flow, banks may look at your current assets — mortgage, working capital, inventory, etc. — to see if anything can be used as collateral to secure your loan, should you have trouble paying it back.

(Business) Credit. In addition to your personal credit and payment history, lenders will check if your business entity has established any past credit, including on-time bill payment for any B2B services. Many lenders use reports from business data company Dun & Bradstreet to access this information, Peters said.

Character. Your overall character and reputation in the community matter to the people taking responsibility for funding your business. This is part of the reason lenders will set up an in-person meeting to discuss your application and credit needs.

“Lenders meet with people [to] look them in the eye [and determine], ‘Is this someone we trust and want to do business with?'” Peters said.

Capacity. Peters noted that this is typically the least important factor in a credit decision, but lenders still want to know the capacity your business has to grow. A local ice cream franchise, for instance, has a limited capacity to boost sales, but a global e-commerce or tech business could grow exponentially in just a few short years.

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Looking ahead: Social media for credit decisions
Although it’s not yet a publicly available product, the team at Experian’s research and development branch, DataLabs, has been hard at work over the last three years looking at the correlation between social media and commercial credit risk. In the not-too-distant future, DataLabs’ solution may allow lenders to factor data from a business’ social media channels into a credit decision.

“Breakthrough experimentation in Experian DataLabs has uncovered that social media has predictive value in assessing the credit risk of a business,” said Eric Haller, executive vice president of DataLabs. “While not being productized for lenders to use today, the future may hold that business reviews, likes and check-ins can all help to paint the picture of a successful and growing business.”

Haller said that DataLabs aligned data from businesses’ accounts on Facebook, Twitter, Foursquare, Yelp and other major social platforms with those companies’ commercial credit data. The results showed that certain social trends can help predict a credit default.

“The strongest value is for businesses that have not established credit in the past,” Haller told Business News Daily. “This is significant because one-third of all inquiries for commercial [lending] are businesses [without] established credit.”

Advice for borrowers
If you’re looking to take out a traditional bank or SBA loan, Peters advised meeting with two or three different lenders before making a decision, so you can fully understand your options.

“Not all banks look at everything the same,” Peters said. “Some won’t do a restaurant loan, for example. It’s a good idea to talk to multiple banks, as [they may have] different preferences.”

He said interested borrowers should also put together a “package” for potential lenders. This package should minimally include an executive summary of your business, your business plan, financial information, how much you want to borrow and what you intend to do with the money.

“There’s no set rule [about it], but make sure it’s well-organized, clear, up-to-date and done neatly,” Peters said. “It’s going to be one of your first impressions at the bank.”

All About Accounting

Accounting is vital to a strong company, keeping track of the business’s finances and its continued profitability. Without accounting, a business owner would not know what money was coming in or going out, or how to plan for the future. The actions taken by accounting professionals — from bookkeepers to certified public accountants (CPAs) — make it possible to monitor the company’s financial status and provide reports and projections that affect the organization’s decisions.

What do accountants do?
The American Accounting Association defines accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.” This is often done by logging a business’s accounts payable, accounts receivable and other financial transactions, typically using accounting software.

While bookkeepers tend to focus on the details, recording transactions in an efficient and organized manner, they may or may not see the overall picture like accountants do, said CPA Stan Snyder.

“Accountants use the work done by bookkeepers to produce and analyze financial reports,” Snyder said. “Although accounting follows the same principles and rules as bookkeeping, an accountant can design a system that will capture all of the details necessary to satisfy the needs of the business — managerial, financial reporting, projection, analysis and tax reporting.”

One part of accounting focuses on presenting the company’s financial information in the required ways to those outside of the company. In order to present this information in a format everyone can understand, accountants follow a set of guidelines. In the United States, most accountants abide by the Generally Accepted Accounting Principles. There are different sets of accounting standards for companies that operate overseas, as well as for local and state government entities.

CPA Harold Averkamp said accounts also provide a company’s internal management team with the information it needs to keep the business financially healthy. Some of the information will originate from the recorded transactions, while some will consist of estimates and projections based on various assumptions, he said.

To come up with a company’s status and projections, accountants rely on various formulas. Accounting ratios help uncover conditions and trends that are difficult to find by inspecting individual components that make up the ratio. Accounting ratios are divided into five main categories:

  • Liquidity ratios measure the liquid assets of the company versus its liabilities.
  • Profitability ratios measure the organization’s ability to turn a profit after paying expenses.
  • Leverage ratios measure total debt versus total assets, and gauge equity.
  • Turnover ratios measure efficiency by comparing the cost of goods sold over a period of time against the amount of inventory that was on hand during that same time.
  • Market-value ratios measure the company’s economic status compared with others in the industry.

Accounting careers

Many accountants within the industry choose to become CPAs, a title they achieve by passing an exam and getting work experience. According to the Pennsylvania Institute of Certified Public Accountants, CPAs audit financial statements of public and private companies; serve as consultants in many areas, including tax, accounting and financial planning; and are well-respected strategic business advisors and decision-makers. Their roles range from accountants to controllers and from chief financial officers of Fortune 500 companies to advisors for small neighborhood businesses.

According to the University of North Carolina at Wilmington’s Career Center, there are countless other jobs that require accounting proficiency, including auditor, financial investment analyst, claims adjustor, loan administrator, tax lawyer, underwriter and stockbroker.