If Cash Is King, Working Capital Is God
September 28, 2012 Management of a company’s working capital is crucial for day-to-day functioning and long-term survival Working capital management is the most important management activity in emerging and mid-sized companies because of the significant financial impact that it has on the company’s well-being. While most CEOs and business owners have heard and accept that “Cash is King,” working capital is often the least understood and most poorly managed area of their companies. When working capital is not adequately managed, the deterioration of cash flow critically affects a company’s ability to fund operations, reinvest in the business and, ultimately, to survive. With adequate working capital management, cash flow supports a company that thrives in the marketplace. ‘Working Capital’ Defined Working capital for business is often referred to as simply the excess of short-term assets over short-term liabilities. Short-term assets include cash and other assets expected to be turned into cash within one year: marketable securities, accounts receivable, short-term notes receivable, inventory and prepaid expenses. Short-term liabilities include those expected to be paid with cash within one year: accounts payable, short-term debt such as credit lines, the short-term portion of long-term debt and accrued expenses. To view the full article, click here. Article appeared in the October 2012...
How to Analyze Your Business Expenses
Q: What are the best strategies for analyzing expenses in my business? A: While analyzing expense trends is vitally important, I have to first ask if you, the business owner, are the most qualified person to do this task. What’s important here are the answers, not the time spent analyzing expenses. If you have a CFO, he or she should already be doing this analysis for you. And a really good controller will be proactive about doing this kind of work. Bear in mind, however, that it’s beyond the skills and experience of most bookkeepers. That said, I understand the entrepreneurial drive to try to find the answers. So if you’re going to go it alone, or you just want to understand what your CFO or controller should be doing, here’s a step-by-step plan. Analyze the income statement. For every line item in the operating expenses, calculate the dollar amounts and percentages of revenue. Your accounting reporting software (such as QuickBooks) should be able to spit out reports like this very easily. Compare the numbers to last month, the last three months, the average of the last three months (called “rolling average”), average year-to-date and the same month last year. Next, examine the “why” behind the numbers. I had a client whose parking-ticket fines for his delivery trucks jumped significantly compared to the last quarter and last year, and it was killing revenue. Turns out the city had tightened its enforcement. We shifted the delivery schedules and hired a ticket-fighting service that more than paid for itself. Compare “actuals” to budgets. One of the most important financial management exercises is the creation...
Morgan Stanley Smith Barney Announces Alliance with B2B CFO
Professional alliance offers more holistic approach for business owners HOUSTON, Sep 06, 2012 (BUSINESS WIRE) — Morgan Stanley Smith Barney has announced a new national alliance with B2B CFO, the largest CFO services firm in the United States. This agreement provides an innovative blueprint for a coordinated effort to meet both the corporate and personal wealth management needs of privately held businesses and their owners. The relationship, formalized through Morgan Stanley Smith Barney’s Professional Alliance Group, allows B2B CFO to refer clients to Morgan Stanley Smith Barney and is the exclusive alliance of its kind for B2B CFO, which offers chief financial officer services to companies across the country. The firm has 216 Partners in 45 states, and advises more than 800 clients across North America. Additionally, B2B CFO has been recognized as one of the Inc. 500/5000 fastest growing companies for the last three years. Through this relationship, clients referred by B2B CFO may access not only the wealth management expertise of Morgan Stanley Smith Barney financial advisors, but also a more integrated and coordinated approach to their finances and investments. The comprehensive approach of Morgan Stanley Smith Barney financial advisors covers a wide array of financial considerations of a business owner and is closely aligned with the business-specific financial guidance provided to clients by B2B CFO. “This is an important professional alliance for Morgan Stanley Smith Barney,” said Michael Brunner, Senior Vice President and Financial Advisor in Morgan Stanley Smith Barney’s downtown Houston office. “This concept has the potential to provide a paradigm shift in the way privately held business owners manage their finances. Instead of the...
Morgan Stanley Aims for Small Business Clients
Morgan Stanley Smith Barney aims to increase the number of its small-business wealth management clients through an exclusive referral agreement it announced today. MSSB announced the alliance with Phoenix-based B2B CFO, the largest CFO services firm in the United States which advises more than 800 clients. B2B CFO serves owners of privately held companies with revenues up to $75 million that want to increase cash, profitability, sales and company value. The relationship, formalized through MSSB’s Professional Alliance Group, allows B2B CFO to refer clients to Morgan Stanley Smith Barney. “This is an important professional alliance for Morgan Stanley Smith Barney,” said Michael Brunner, senior vice president and financial advisor in MSSB’s downtown Houston office. “This concept has the potential to provide a paradigm shift in the way privately held business owners manage their finances. Instead of the traditional ‘siloed’ approach that involves multiple advisors, business owners now have the ability to apply a comprehensive strategy to help reach their financial goals for both their family and...B2B CFO® are media experts on, and can speak to the media on:
- - Company Financials
- - Small Business Finance
- - Lending
- - Profit/Loss Statements
- - Exit Strategy
