May 12
16

Ways to increasing cash using Accounts Payable & Accounts Receivable

I like to stick to the Alex Spanos favorite phrase Cash is King! Regardless of the state of the economy, cash will always rule. Without cash one cannot survive.

The simple principle one has to execute daily is: Receive payments from your clients quicker than and in greater amounts than what you have to pay your vendors; that is without placing your company in a compromising position with your vendors.

Accounts Receivables: Don’t be afraid to ask for cash up front on large orders. If that’s not possible requested a deposit, milestone payments or payment on completion of the job. Each company’s circumstance and service offering will dictate certain parameters; however think outside the box.

For companies that require offering credit to remain competitive, instill disciplined procedures that compliment your great customer service; access credit policies, client credit ratings, credit limits, run credit checks annually; benchmark your clients activities: average invoice amount, frequency of purchase, average payment terms; offer early discount settlements – take 2.5% off if paid within seven days of invoice; charge interest on all overdue invoices, accept credit cards for payments if settled within credit terms, add a convenience fee for credit cards used outside the credit terms. For the larger accounts, offer annual rebates based on volume and punctual invoice settlement. Request personal guarantees from all clients. Perhaps one of the single biggest areas that can be improved on is dispute resolution: identify disputes quickly, resolve them in a timely manner, and collect the funds to extinguish the debt.

Accounts Payable: The converse applies to your creditors, your valued suppliers. Don’t be afraid to ask for credit, and more credit, with extended terms. Push the envelope with extending the terms without shooting yourself in the foot. It’s a fine balance. In the event you are a substantial client with a particular vendor, ask for rebates based on volume. Anything you receive is free money. Believe it or not, your Accounts Payable are more valuable to you than your bank manager; more so in a tough economy. They typically don’t request financial statements, they do not charge you interest on a daily balance, and the majority don’t require personal guarantees. So in simple terms – it’s FREE money.

For companies that have cash earning minimal return in the bank, ask your vendors for a cash discount, or an early settlement discount. If you get 2.5% discount and you are earning 0.75% APY, you have more than tripled your return with little to no effort.

Pay your purchase invoices by credit card. This method is to be used by the disciplined entrepreneurs, as you may get up to 30 days extended credit; however, if you do not settle the balance in full, additional charges may apply. Depending on your credit card company, you can also earn you rewards points. Did I mention FREE? You could use your accumulated rewards to incentivize your employees or take the family on a free vacation.

I am here to help you if you need assistance. I utilize a well executed strategy called The GamePlan ^TMwhich is a proven system we utilize at B2B CFO^® to help you achieve your financial goals. Reach out, I’m here, Give me a call or email me today!

Stan Alhadeff MBA

Email: StanAlhadeff@B2BCFO.com

Telephone: (678) 596 0744

Tags: Cash
Posted in Budgetting Cash by stan. No Comments

Mar 12
19

Benchmarking – is it necessary?

What is benchmarking: Benchmarking is the process of comparing one’s business processes and performance metrics to the industry bests and/or best practices from other industries¹.

Benchmarking means a lot of different things to a various audiences, as each audience has their own specific objectives. The common objective in all instances is comparing one’s business processes and performance metrics to the industry averages.

To name a few types of benchmarking: Benchmarking from an investor perspective; Best-in-class; Energy; Financial; Functional; Operational; Performance; Process; Product and Strategic

What do we measure: As Chris Gardner a manager of APQC’s Center of Excellence, states, “The key to developing effective benchmarking is to begin by choosing measures that are aligned with the company’s strategic objectives.

It is imperative that you compare your company’s results to industry standards. Any gaps identified, undergo evaluation, for deviation analysis, with the sole intention of process improvement. When comparing your companies performance to others, the first fundamental principle, is ensuring that your accounting records are in accordance with Generally Accepted Accounting Principles. Without adherence to such, any benchmarking analysis is futile, as one cannot compare apples to apples.

How do we benchmark performance: Industry specific metrics afford companies the ability to truly understand their operational performance, and compare such with independent third parties in their industry. Comparative benchmarking data in is available from regional data, to national and even global markets.

The comparative results regardless of where you fall, reflect the humble truth that every company can improve – NO COMPANY IS PERFECT, especially as we all are competing in a global economy. The results emphasize the importance of continuous measurement, reassessment, and implementation improvements, repeatedly. Especially into today’s hi-tech world, process improvement will afford management the ability to improve, and if executed proficiently, creates product / service differentiation which can increase both profitability and market share.

Implementation of predetermined Key Performance Indicators or commonly known as KPIs are the fundamental metrics deemed necessary to understanding operational viability. Measuring performance allows an organization to objectively determine what is working and what is not. In addition thereto, by identifying successes, managers can reward and learn from best practices, and similarly reflects activities that needs to be addressed.

Try identifying your companies KPIs, it certainly will help you understand your business, your successes and identify areas that may require improvement…it is the foundation for sound business decisions.

Stan Alhadeff MBA

Email: StanAlhadeff@B2BCFO.com

Telephone: (678) 596 0744

Reference:

Wikipedia.org

Posted in Benchmarking Budgetting Success to Profitability by stan. 1 Comment

Jan 12
16

Can my company be profitable and sustain profitability?

Perhaps the question rephrased best portrays the true objective; Could my company be dynamically leveraged to ensure profitability in any socio-economic climate?

What does this all mean, all I want to be is profitable… Well it is so complicated! Wrong! It is relatively easy, with the correct tools and mechanisms in place, anyone can navigate the waters; regardless of how hard the current is pulling or pushing…In today’s world, we have to continually make decisions, some sticking with a Kamikaze version of Pareto 80:20 rule as long as we make 80% correct decisions we should be fine. I beg to differ, I would rather make 20% correct, based on well informed decisions, as sooner or later your luck will run out…and the one bad decision could cost you significantly. After all, 20% of your decisions will bring you 80% of your business.

One may ask, how do we achieve this? So many things change! The world today is not what it was yesterday! That it is!, however the world moves, and we all make a concisions decision be it implicit or explicit on how we are staying on top of this dynamic. In business, it is simple, we need to know our costs, and where we want to be, once we establish these elements, we can then can then sell, make an actual profit based on our true cost, (no guesstimates) and head towards where we wish to be.

How do I calculate my costs? Simplicity speaking, its reality straightforward – the bigger the company, or the more involved the operational elements are, it can become complex, however – it is a combination of your fixed costs and variable cost. Here we have touched on three different elements: Fixed, Variable Costs and the word combination allude to the fact that you need to utilize a portion of one or maybe both cost types.

Fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rent paid per month. This is in contrast to variable costs, which are volume-related (paid per quantity produced). Here we introduce the concept of Cost Accounting; managers utilize this, to guide them, as they make decisions for their own company. Cost Accounting is an internal mechanism, which differs from financial accounting, as the latter has guidelines to follow, commonly known as generally accepted accounting principles (GAAP). With the former – cost accounting, every company is unique and cost accounting will vary from company to company, hence it’s used solely for internal reporting.

Now that we got an understanding of the cost element, let us discuss the concept of where we want to be. In accounting terms, we refer to this as a budget. President Ronald Reagan said “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.” Good effective budgeting, will allow you alleviate such instances.

Budgeting allows us to focus on:

Strategy: allowing us to focus not only short term, but also long term objectives, what we want and need to achieve;

Profitability: it is very easy to lose sight of where a company is making most of its money, how do I achieve fiscally what I set out to do;

Assumptions (dynamic world) review – why are we doing what we do, can we do it better; and

Performance evaluation – how am I doing against all the objectives I set out, what do I need to change to achieve these goals;

Try it, (both budgeting and cost accounting) its helps you understand your business; it is the foundation for sound business decisions.

Stan Alhadeff MBA

Email: StanAlhadeff@B2BCFO.com

Telephone: (678) 596 0744

Tags: Budgets, Profitability; Fixed Costs, Variable Costs
Posted in Budgetting Cost Accounting Success to Profitability by stan. 1 Comment

Nov 11
11

B2B CFO recent news

B2B CFO’s Record Growth Surpasses 200 Partners and Shapes New Leadership Team

B2B CFO Appoints Joseph C. Worth to Vice President of Operations and Expands In-House Digital Media Team

PHOENIX–(BUSINESS WIRE)–B2B CFO’s record growth is pushing the firm to become the world’s largest CFO services firm with more than 200 Partners across 39 states and more than 800 clients across North America. B2B CFO surpassed the 200 Partner mark in September of 2011. Corresponding with the pace of the growth, the company today announced the appointment of Joseph C. Worth to Vice President of Operations.

“I look forward to further elevating the success of our firm by focusing on the individual development of each one of our Partners and supporting their accomplishments and growth.”

Jerry L. Mills, Founder and Chief Executive Officer of B2B CFO, said: “We have entered a very exciting time for B2B CFO. As we further drive our growth, we must focus on streamlining our operations and ensuring the consistency of our brand. Great people have always been the key to our success and I am so pleased to have Joe Worth join our executive ranks. His leadership skills, deep roots in service, sales and the financial industry will be an invaluable asset in our future growth.”

“There are tremendous opportunities ahead for B2B CFO,” Mr. Worth said. “I look forward to further elevating the success of our firm by focusing on the individual development of each one of our Partners and supporting their accomplishments and growth.”

Mr. Worth, who lives in Wall, NJ, first joined B2B CFO as Partner in 2007. In 2008, Jerry Mills turned to Mr. Worth to help create a custom sales training program for B2B CFO’s Partners. Since then, Mr. Worth has been leading the sales training for B2B CFO. Mr. Worth was instrumental in launching a new coaching program in 2011 that will further enhance the resources available to the firm’s partners.

Making him extremely effective in this endeavor is his unique and diverse background. Mr. Worth has 30 years of financial and general management and transaction experience in many industries. He earned his undergraduate degree from Harvard College on a Navy ROTC scholarship and his MBA from Harvard Business School. After serving in the Navy and Navy Reserve, he retired as a Captain with 23 years of total service, including a combat tour in Vietnam. When not working, Mr. Worth is an accomplished sailor and navigator. He has sailed halfway around the world including passages of the Indian Ocean, Red Sea, Suez Canal and Atlantic Ocean.

Streamlining the training and coaching processes for B2B CFO Partners will be Mr. Worth’s first order of business. He will also be tasked with forming strategic partnerships and business alliances for the company. Mr. Worth’s new role complements the work that B2B CFO is already doing to implement emerging technologies across its operations. In 2010, B2B CFO created an in-house digital media team under the direction of Danny Stansfield to take the firm’s interactive marketing and digital presence to the next level. In his position as Director of Emerging Media, Danny Stansfield expanded the team in 2011 by adding Andrew Freeman and Dale Mills. To support the growth, B2B CFO also added two administrative positions.

“2011 has been a huge year for us,” added Mr. Mills. “Not only did we surpass the goal of 200 Partners, which puts us in the forefront of our industry, we also created six full-time in-house positions within the company, expanded our leadership team and we were recognized with top national honors for our continued growth and contributions to the economy.”

B2B CFO’s success echoes loudly in the national accolades received this year. The company made the prestigious Inc. 5000 list for two consecutive years as well as the ACE Corporate Growth Awards, which recognizes the top 25 most successful and fastest growing private companies in Arizona. B2B CFO was also named as the Free Enterprise Honoree by the US Chamber of Commerce and Jerry L. Mills was recognized as one of the top 100 Small Business Influencers in North America.

“I’ve often said that we are an overnight success that’s been 25 years in the making,” said Mr. Mills. “But my vision for the company has always been ambitious and we will continue to see further growth each year ahead.”

Mr. Mills founded the company in Phoenix, Ariz. in 1987. He established the company with a determined philosophy to put integrity, ethics, and the needs of small businesses above all.

The philosophy proved to be successful and by the 1990s, the firm expanded presence into the Southwest. In early 2005 the company had gained national prominence following expansions in its service portfolio and geographic coverage. In 2008, B2B CFO first moved into an aggressive growth period doubling the number of partners and increasing revenue by 70 percent. The company has maintained that fast growth momentum and is on set trajectory to continue that growth in the years ahead.

As of October 2011, B2B CFO has grown to 208 partners in 39 states with nearly 6000 years of cumulative experience. Each Partner is a seasoned financial executive who serves as a part-time CFO to growing businesses on an as-needed basis. A majority of the Partners have a background that includes senior executive positions at the Big Four, and all of the Partners have held high-level executive finance positions in various industries in corporate America. Together, B2B CFO Partners work with more than 800 businesses in the nation with combined annual sales of more than $4 billion.

ABOUT B2B CFO

Headquartered in Phoenix, Ariz., the firm was founded in 1987 by Jerry L. Mills, who pioneered the “CFO for hire” concept. Today, B2B CFO is the nation’s largest CFO firm serving entrepreneurial, growth and mid-market companies. The firm’s partners have an average of 25 years of experience and each individual partner is a senior-level executive with a broad range of expertise. Please visit online at www.B2BCFO.com to find out more about the company and CFO Careers.