Big Ideas by The Receivables Exchange

The A – Z of Receivables Management

Wed, 13 Mar 2013 15:55:11

Your receivables should be a number one priority for your business. In order to properly manage receivables and get paid on time, you’ve got to become a pro at the entire A/R process. The Receivables Exchange and Funding Gates have teamed together to help small businesses take control of their receivables management. In fact, here’s everything you need to know about your receivables, from A to Z.

A – Aging Report - The accounts receivable aging report shows the amount of money owed to a company, along with the amount of time those accounts have been past due. They tend to be broken up as “current”, “0-30 days past due”, “31-60 days past due”, “61-90 days past due”, “91-120 days past due” and “over 120 days past due”. This report is important to generate so you always know what’s going on with your receivables.

B – Bankruptcy - When a client who owes you money files for bankruptcy, your first reaction might be to try to collect the money – don’t do it. You could actually violate the bankruptcy code and get sued yourself. The matter is in the hands of the court system and you will have to wait patiently for the bankruptcy proceedings to take their course. In the meantime, proceed under the assumption that you will not recover the funds and consult with your CPA about claiming the loss as a deduction on your taxes.

C – CRM - CRM is naturally associated with sales, but what most forget is that receivables management is part of the sales cycle. If you “made a sale”, it doesn’t mean anything until that check is in the mail. Therefore you should treat your accounts receivables management (ARM) as you do CRM. Make it a habit to take notes on contact with customers about payment, keeping everyone on the team in the know on where a payment stands, and allowing yourself to properly structure your collections process.

D – Days Sales Outstanding (DSO) - DSO is a small business’ best barometer for determining financial health. It is the calculation of the average number of days that it takes a company to get paid after a sale has been made (the lower the number, the healthier your cashflow). According to Sageworks, the average DSO for private companies has increased from 37.9 in January 2012 to 45.3 in January 2013.

E – Electronic Payments - If you’re not accepting electronic payments, you’re asking for customers to pay you late. In fact, a study by CashEdge shows that 72% of small business would prefer online payments. Not only does offering electronic payments incentivize your customers to pay earlier, aligning with the method in which they prefer to pay, but it also cuts out the time you have to wait for the check in the mail, immediately speeding up the cash flow cycle.

F – Financing - For those of you who are dealing with the headache of extended payment terms and slow paying customers, financing your invoices could be the cure. Improve your cash flow by turning your unpaid receivables into cash. Invoice financing companies offer an up to 90% advance on the value of your receivables and most of them specialize in financing small businesses.

G – Guarantee - Extending credit to customers is always a little risky. You never know for certain if someone is going to pay. However, there is a way to give yourself a little reassurance: receivables insurance. Accounts receivables insurance is just as it sounds: commercial insurers protect you against defaults on open accounts. You would be protected in the event that your client suddenly declares bankruptcy, goes out of business, or if, say, there’s a natural disaster that prevents payment. However, this insurance is only recommended for some, and if you’re in a high-risk industry, your premiums could be hefty.

H – Help - Sometimes, despite your best efforts, you just can’t get a customer to pay on time. If delinquent accounts are hurting your company’s bottom line, don’t be afraid to ask for help. Use a CRM for accounts receivable management tool, consult with a collections company, call your CPA, or speak with an attorney to find out what your options are.

I – Invoices - When it comes to invoices, the wording you choose to include can literally affect the time frame in which you receive the check. For example, by including a “please” or “thank you”, you can increase your chances of getting paid by over 5%. If you avoid jargon (see below) such as “net terms” and be more specific with a phrase like “14 days to pay” you’ll get paid faster, and even faster than you would by asking for immediate payment.

J – Jargon - Accounts receivable jargon is very specific and can be a foreign language to non-accounting professionals. So, when you refer to a payment advice, remittance, or net terms to an account debtor (I mean customer), they might not know what you’re talking about. Ensure your message is understood by using more commonly employed words (for example: use “payment” instead of “remittance”).

K – Keeping in Touch - Sometimes forgetting a payment is all too easy. We’ve all done it before: received a bill in the mail, got distracted, pushed it to the side, and slowly things pile up over it. That’s why it’s crucial to remind customers. Whether by giving them a call or sending them a friendly email or reminder letter in the mail, you’re helping your customers pay on time. In fact, reminder letters increase collectability rates by over 4%.

L – Late Payment Excuses - You’ve probably heard every late payment excuse in the book. Some of the toughest excuses to respond to might come from your favorite customers who are appealing to your soft side – don’t let them. It’s important to remember that you’re running a business and when someone owes you money, you have to set the precedence of politely but firmly informing them that payment is expected on time.

M – “Managing” receivables - Managing receivables is a term you probably hear a lot, but just what does it mean? The fact is, overseeing your company’s collections isn’t simple. You have to take the time to create an infrastructure that allows you to monitor, track and organize your invoices once they are sent. Luckily, there is a new app out there to make this process simple. Funding Gates, an online credit department for small business, aims to make “managing” receivables the easiest part of running your business, while serving as a CRM for your ARM.

N – Negotiate - If a customer tells you that they can’t pay on time, one strategy you can employ is to negotiate a payment plan. Though you won’t get a full payment on time, you’ll still get paid in the form of smaller amounts over a longer period of time. This helps you manage cash flow and potentially salvage a relationship with your customer.

O – Organization - Part of receivables management is making sure nothing ever falls through the cracks. It’s your job to ensure that you never discover an invoice that is 11 months overdue. Start today by implementing a structure for your collections management. How do you organize invoices once they are sent? Where do you take notes on contact with the customer about the invoice? Find a system that works for you and implement it immediately.

P – Policy - Setting up a smart credit policy is essential. You should begin by researching what the standard credit policies of your industry are. Make sure your credit policy is among the terms of sale stipulated in the purchase order or contract.

Q – Qualification - Unless trade credit is the absolute industry standard for your business, you shouldn’t be extending credit to all your customers. And even if it is the industry standard, you don’t have to do business with everyone. Having a credit application for potential customers to fill out is instrumental in the receivables process. You must do some detective work on each customer and learn about their past payment behavior to see whether or not they are a trustworthy customer. If you do more work upfront vetting the customers, you will do less work on collecting late payments in the months to come. Begin by creating a credit application that will give you all the information you need to truly qualify a customer.

R – Rewards - Though you might extend trade credit (see letter T) to your customers, the sooner you get paid, the better your cash flow will be. Incentivize your customers to pay early by offering rewards. One of the most common rewards is to offer a discount on the invoice if a customer pays within a specified period of time.

S – Software - Making sure your AR process is top notch from beginning to end means also taking into account where you’re invoicing customers from. There is a lot of great small business accounting software out there, and you should really choose the software based on what’s best for your type of small business. It’s definitely worth finding a software that lets you send both printed and online invoices, as well as allowing you to accept online payments.

T – Trade Credit - Extending trade credit is when you allow a customer extra time to pay an invoice. The most common terms are 15, 30, or 60 days. If you financially able to, extending trade credit is a great way to increase your customer’s buying power and build loyalty. If you need the cash before your customer’s payment due date, you can either finance the invoice or incentivize them to pay early with a discount.

U – Urgency - The fact is, the longer you wait to get paid, the harder it is to collect. In fact, invoices that are over 90 days past due are nearly impossible to collect. That’s why, as soon as an invoice becomes past due, you should take immediate action. Call the customer, follow up by email and a letter, and stay persistent until you receive the check, finance the invoice, or turn it over to collections.

V – Verification - Responsible business practice dictates that before you extend credit to a customer, you should first verify that they have a good credit and payment history. The easiest way to do that is to set up an account with a Business Credit Bureau. There are dozens of companies that will provide a customer’s credit history for a fee but the most well-known is Dun & Bradstreet.

W – Working Capital - In short, working capital is calculated by subtracting your current liabilities from your current assets. In other terms, how much cash do you currently have to operate? Monitoring this figure is extremely important in receivables management, as you need to know how lenient you can be with your payment terms. If you have a lot of working capital, you can extend longer terms. If your working capital is tight, you should only be operating on shorter payment terms.

X – The X-factor - When it comes to extending credit to customers, always remember that you are in control. It’s up to you to decide if and when a customer is no longer eligible for trade credit. The x-factor that you use to make a decision that is best for your business can be based on anything from payment history to a deteriorating relationship to a general gut feeling.

Y – You - When you’re managing receivables always remember this: you never have to do anything you don’t want to. You don’t have to extend credit to customer if you don’t feel right about it. This is YOUR business. YOU did the work and YOU deserve to get paid. You should never feel bad about calling a customer about a payment. It’s what you’re rightfully owed. Even if you finance an invoice or send it to a collections agency, don’t sweat it. YOU are running the show here and YOU have to do what it takes to be paid. End of story.

Z – Z-Score - A Z-Score is a calculation based upon five financial ratios that can be used to measure a company’s credit risk. A company’s receivables are included among the assets used to calculate the score. It is also used by invoice financing companies in determining the financial health of account debtors.

This article was jointly written by Mariah Courtney, Online Services Associate at The Receivables Exchange and Meredith Wood, Director of Community Relations at Funding Gates.

Find out more info on The Receivables Exchange and how to turn invoices into cash by using accounts receivable financing to generate working capital.

Find out more info on Funding Gates, the world’s first CRM for receivables management, and how to sign-up for an online credit department for your small business.

Small Business Essentials: This Week’s Must Reads

Tue, 12 Mar 2013 14:19:59

We find the week's best small business articles so you don't have to. Here are the top stories posted this week:

1. The Future of Financing for Women | How should we think about the future of business and the economy? If you ask women business owners (WBOs), we should be optimistic. In a survey conducted by the National Association of Women Business Owners (NAWBO) and Web.com, a whopping 81% of WBOs were optimistic about their business’s overall performance in 2013. 38% of the women said that they are planning to hire more employees than they did last year. Compare that with results from the NFIB Small Business Optimism Index which indicated that in January, overall optimism was at 89.9% – the fourth lowest reading in the survey’s 40 year history. | Read more here (from Lendio.com)

2. No Business is Too Big to Fail or Too Small to Succeed | We live in an era of what I refer to as Digital Darwinism, a time when technology and society are evolving faster than the ability of many organizations to adapt. Over the years, I’ve studied how disruptive technology affects consumer behavior and decision-making. I’ve also researched how businesses react (or don’t) to these changes. What I’ve learned is that barring a few exceptional instances of complete ignorance, organizations are open to adaptation if there’s indeed a case made for it and a path outlined to safely and cost-effectively navigate change. | Read more here (from BrianSolis.com)

3. Leverage the Value of your Liquid Assets | The small business community is adjusting the way they think about assets – and how to turn those assets into working capital. Enter the alternative lender. Financing is evolving at breakneck speed as creative solutions are introduced to fill the capital void left by the banks. Unfortunately, most alternative financing options are either prohibitively expensive or only viable as a short term solution (or both). So, what’s a long term solution that works for nearly every industry? Receivables financing. | Read more here (from TheFundWell.com)

4. Why Banks Still Aren't Lending to You | It's official: Banks are lending to businesses again in a big way--unless you're a small business. According to FDIC data released today, U.S. commercial & industrial loans totaled $1.5 trillion as of December 31, 2012, a 12 percent increase from the year before, surpassing the high-water mark set in the second quarter of 2008. Meanwhile, small business lending continues to plod along: Loans with initial balances under $1 million increased just 0.4 percent, to $284 billion, 17 percent below the pre-recession peak. | Read more here (from Inc.com)

5. The A – Z of Receivables Management | Your receivables should be a number one priority for your business. In order to properly manage receivables and get paid on time, you’ve got to become a pro at the entire A/R process. The Receivables Exchange and Funding Gates have teamed together to help small businesses take control of their receivables management. In fact, here’s everything you need to know about your receivables, from A to Z. | Read more here (from FundingGates.com)

Got Financing? What Next?

Mon, 11 Mar 2013 16:32:59

There’s no question, access to capital is a critical component of growth for many companies. In fact, when we ask our customers, “funding growth and working capital,” are the two biggest reasons they visit Lendio in the first place.

Jeff Haden of Inc.com and Ashish Rangnekar, co-founder of Bench Prep, offer some great advice to small business owners on what to do next.

Don’t hire anyone for the first month: “Growth is not just hiring more people,” says Rangnekar. Although it’s tempting to jump right in and start expanding the team, resist the urge. You might be surprised at how similar it feels to being a kid and getting your first allowance. You’ve got a buck or two burning a hole in your pocket and you want to spend it. Take a breather and make sure you’re not making a knee-jerk reaction to the influx of cash.
When you do hire, hire differently: The people you hire at first are likely going to be different from the people you will need to hire now. “Once you have money in the bank,” says Rangnekar, “you should hire specialists who can put their heads down and focus on one aspect of the business.” The mark of a really smart CEO is his or her ability to hire people that might be smarter in some aspects of the business than him or herself.
Don’t hire talented people and assume you’ll figure out their job later: Before you hire a specialist, make sure you’re prepared to take advantage of what they offer. Rangnekar suggests, “For example, you can’t hire an online marketing expert and expect him or her to perform well if you haven’t built the infrastructure for his or her role and his or her talents.” If you’re not ready, it’s doubtful you’ll ever see the value of what they have to offer.
Help the team maintain a true sense of goal and vision: Speaking once with the former CEO of AtTask, Scott Johnson, he once said the biggest challenge he faced as the CEO of a growing company was keeping the culture that existed when they were in the start-up phase as they grew. Rangnekar adds, “That’s exciting—and that can create confusion as to what is next.” It’s important to make sure nobody gets distracted by the influx of cash and loses sight of the vision of the company.
Don’t forget your investors: If you’re part of the very small percentage of business owners who are able to acquire venture capital, congratulations. It is important to keep the lines of communications open with your investors. However the same is true with a lender. I’m aware of one small business that has maintained such a good relationship with their lender that they have acquired financing several time over the last couple of years as they’ve needed it. It doesn’t hurt to maintain good lender relationships even if it isn’t with the local banker.
Hire an accountant: “Don’t mess around with one-off spreadsheets or financial models you’ve created on your own,” says Rangnekar. “It’s time to hire an accountant.” As you grow and the need to manage financials, cash flow, etc., it’s time to hire and account that can take an active role by providing analysis and counsel. The more you grow the more important a good accountant becomes.
Create open dashboards: “Pick four of five key indicators of business performance and start sharing them with investors and employes,” says Rangnekar. Most people want to contribute to something bigger than they are. To encourage this type of behavior, doesn’t it make sense to make goals and objectives visible to the team? I don’t think it matters if you’re a growing software company or a small photography studio, when everyone knows what the objectives are, you’re more likely to hit them. That’s also true of challenges.

Finding the financing to fuel growth is only the first step. What you do with it is what really determines whether or not you are successful.

This article originally appeared on the Lendio blog.

Google+ Cover Photo Tool

Wed, 06 Mar 2013 21:46:51

You may have noticed that Google+ has just updated their maximum cover photo size - or maybe you didn't? Anyway, profiles will now feature a 2120px X 1192px cover photo across the top of the page. These dimensions are the maximum image size permitted and we recommend that you use the full size so that the image looks crisp for users with big monitors. Not surprisingly, this is a 16:9 aspect ratio which is now common for most TVs, tablets, smart phones and computer monitors. Check out what Google did with their page.

The profile image is now contained in a circle which displays at 160px X 160px, but you can upload a 250px X 250px image and crop as needed.

Since we went through all the trouble to create a Photoshop template for this new size, we thought we'd share the love and save everybody a little time. Feel free to download our Photoshop CS6 template and distribute it to your friends.

Unfortunately, we cannot offer support on using the template, but pay attention to the layer names. The only layer you need to save is named "USE THIS - your cover image - max - 2120x1192", and it already has a slice named "my-cover-image".

Good luck!

Small Business Essentials: This Week’s Must Reads

Tue, 05 Mar 2013 19:27:44

We find the week's best small business articles so you don't have to. Here are the top stories posted this week:

1. Sales vs. Collections: The Battle Between Growing Revenue and Cash Flow | When you hear the word “collections” it conjures up images of nasty warning letters, harassing phone calls, Repo Man and maybe a scene out of Goodfellas. Those types of collection methods, legal or not, might be part of the collections process at companies that sell products. However, there is an entirely different dynamic when it comes to collecting payments for businesses that sell services ( i.e. SaaS services, streaming movies, mobile services, etc.) | Read more here (from FundingGates.com)

2. Bank Lending (to small biz) Just Got Interesting for the First Time in 250 Years | Not too many days ago Oklahoma City-based MidFirst Bank acquired Presidential Financial (one of the country’s largest non-traditional, asset-based lenders), making it possible for them to offer more options to small business borrowers looking for cash to fund working capital or fuel growth. Although I’m not convinced there’s anything inherently earth-shattering about the merger in and of itself, I do think the perspective of the executives from MidFirst, one of the largest privately owned banks in the country, and their counterparts at Presidential Financial represents an incredible and much-needed paradigm shift within the banking industry. | Read more here (from Forbes.com)

3. 7 Habits of Great Small Business Owners | When looking at the players in any industry, there are usually a handful of businesses that stand out ahead of the pack. Assuming that all similar companies are doing more or less the same kind of work, and all attending to the basic demands of their business, what exactly goes into making some more successful than others? More often than not, it comes down to the kind of leadership they have steering their efforts. Being a strong small business owner is an elusive enterprise that there is no one secret recipe to achieve. But if there was a sure-fire way to be a dynamite small business leader, it would undoubtedly include the following 7 components. | Read more here (from TheSBA.com)

4. How to Break Through 5 Common Barriers to Small Business Growth | Trying to grow your business, but thwarted at every turn by problems within your own organization or by external factors such as broken supply chains? For many businesses, the biggest obstacle to growth isn’t poor sales, financing or tough competition; it’s often the business itself! So, if you find yourself operationally ill prepared to grow, what can you do about it? Here are some strategies that can help you break through some of the common barriers to growth that many small businesses experience. | Read more here (from sba.gov)

5. Signs a Small Business Needs a CFO | When should a small business owner hire a CFO? While there is no right answer, there are certain indicators. I spoke with Marc P. Palker, CMA, about this topic. Marc is Director of CFO Consulting Partners, LLC – a firm that provides interim and part-time CFO services to small and midsized public and private companies – and a member of the IMA (Institute of Management Accountants) Board of Directors. | Read more here (from Forbes.com)

Does Your Customer Data Support the Value of Your Receivables?

Mon, 04 Mar 2013 13:48:52

Trade Accounts Receivable (AR) represents the credit a company extends to its business partners. AR is essentially an approach to financing customers’ business operations, using the supplier company as the lender rather than a bank or other source. Particularly when markets are slow-moving and cash availability is low, trade credit tends to be what keeps businesses in business. AR is a business asset (which explains why it shows up on the balance sheet), because it is something the business has that is of value. When the business needs to get a little of its own financing, should an approach using AR as the basis be a consideration? Is it even possible?

Accounts receivable financing means that the business trade accounts receivable are the main consideration of the lender in providing financing, where the AR is either collateral for the loan or is a factor making the business eligible for the loan. There are many types of AR-based financing, and there are still more issues to think about before trying to use AR as a financing tool.

When it comes to other assets in the business, the information about them is probably pretty well-known. Physical assets in particular don’t leave a lot of question as to their value – at least in terms of what was paid for them and then depreciated over time. Other assets, like Accounts Receivable, are a bit more difficult to value. Realistically, the value of the AR may not actually BE the book value of the AR, because not all of that money may be able to be collected. Considering that companies fail or go bankrupt or experience other events which cause them to default on obligations, there is risk connected to the AR and, subsequently, a question of whether or not it makes sense to “leverage” that AR for immediate cash.

There is research out of the Columbia School of Business (among other sources) which discusses a condition called “information asymmetry”and how it may impact the business decision to use AR financing. The research discusses the fact that Accounts Receivable, unlike other business assets, contains information about other companies and the value is ultimately dependent upon that information and how well recognized it is by others. There are two factors to look at: how much more information you have on your customers than on other assets (the asymmetry) and how much risk is associated with that information. Whew. Let’s break it down this way:

Consider that you have extended business credit to a number of customers, and you have a ton of information on those customers indicating that they are good credit risks (which is why you extended them credit in the first place). Consider also that some of your customers are public company or government, and some are private company. The information related to the public and government entities is less risky than the information you have on the private company, because it’s easier to substantiate through publicly available information than is the private company information. Your prospective lender may need to use this information to support collateralizing the value of the AR, and it may or may not work in your favor in terms of supporting the value of the asset.

The whole point of this is that it is critical to gather and maintain information on customers and their financial stability so that the company could potentially use its trade receivables to acquire financing to support operations or retire other debt when required.

This article originally appeared on the Funding Gates blog. Learn more about Funding Gates' innovative accounts receivable CRM software on their website.

Small Business Essentials: This Week’s Must Reads

Fri, 22 Feb 2013 16:59:49

We find the week's best small business articles so you don't have to. Here are the top stories posted this week:

1. Industries That Can Use Invoice Financing to Their Advantage | While nearly any business that issues invoices can benefit from invoice financing, there are a few industries that have the most to gain by leveraging this source of alternative financing. Invoice financing and factoring is ideal for companies who use a large amount of capital to fulfill product or service orders or whose business is seasonal. What good is getting a new customer if you don’t have the cash to pay your employees, buy raw materials, or manufacture your products? Companies that are turned away from banks due to a lack of assets and/or collateral are also welcomed by invoice financing companies. | Read more here (from FundingGates.com)

2. How to Set Your Business Up to Bid on Federal Government Contracts | To supercharge your revenue, consider doing business with the largest U.S. buyer of everything from oatmeal cookies to new tires, the federal government. Navigating the many layers of bureaucracy can be challenging. Here are essential steps to getting set up to search for and win work from Uncle Sam, courtesy a new e-guide from Microsoft. | Read more here (from Entrepreneur.com)

3. Employment Law: 3 Compliance Mistakes You Don’t Know You’re Making | One of the biggest mistakes you can make as an employer is underestimating the importance of compliance with employment laws. The cost of being audited and found in non-compliance may be more than your business can bear. | Read more here (from Insperity.com)

4. Free Money: 4 Small-Business Grants You May Not Have Heard Of | If ever there was a fictional story representing the small-business grant process, it would have to be Alice in Wonderland. Looking for grant information online is like diving down the rabbit hole. You never know what you’ll find, and when you do find something that seems promising, often it’s not what it appears. These four specific grant sites can help narrow your search, and maybe even help you secure funds for your idea or product. | Read more here (from OpenForum.com)

What It Really Means For Your Business to Write Off Bad Debt

Fri, 22 Feb 2013 15:02:00

Bad debt. Yuck. Nobody wants to have it and those that do want to get rid of it fast. When it comes to small businesses, what they really want to know is “Can I write off bad debt?” If you’re a business that extends credit to customers then, yes, you’ll definitely be in a position to write off debt. However, it’s important to understand just what it means to write off debt, the effect it has on your business, and how you can prevent ever needing to do so.

Remember this: when you extend credit to customers, you *technically* earn your money as soon as the goods or services are delivered. As you know, your receivables are added to your books until you get paid or stop pursuing payment.

Now remember, your receivables are listed as current assets. Why? Because you are under the assumption that they will become cash by the end of the year. However, when you operate on trade credit, you are considered an unsecured creditor. In short, if the debtor declares bankruptcy, you are not protected. This does not apply if your business comes under a lien statute in your state. If you can’t file a lien, be prepared to write off some of your receivables.

So, what should you do when writing off your unpaid receivables? Whatever you do, don’t be optimistic. Try to give a solid estimate of the receivables that you don’t think you’ll get a check for. You don’t need to list which debtors won’t pay or the precise amount that won’t be paid. You do need to estimate how much you don’t think you can collect. You are required to use the direct write-off method when dealing with your receivables. The most important thing to remember is that you can only write off the receivables when you actually give up on collecting them. You may be asking, “When is the right time to give up?”

Well, when an account is over 90 days past due, it has become near impossible to collect. That’s one indicator. Also, if you have repeatedly tried to contact a customer about payment and haven’t had a single reply, then there is probably no hope. However, remember that writing off bad debt is not a good thing for your bottom line. You are saying “I give up” AND you are also losing cash your company has earned. In fact, the effect on your business is quite large. Compensating for write-offs is not an easy task. Just take a look at this figure:

If you had $15,000 in write-offs last year and a profit margin of 5%, you would need $300,000 in additional sales to compensate for your write-offs.

Yikes! It’s nuts to think just how much you lose when writing off bad debt. The goal is to position yourself so you never need to “give up” on your debt. You must make your receivables management a top priority, ensuring no invoices fall through the crack. Stay persistent about getting those unpaid invoices paid. It’s a commitment, but one well worth it. If you get to the point where you think you just might have to write off debt, try another option before doing so, like sending the invoices to collections. Although a last resort, it makes more sense financially. And despite any horror stories you might have heard, there are some top-notch collection agencies out there. The key is to simply ask the right questions to ensure you end up doing business with the right agency.

Curious how many additional sales you would need to make to compensate for your write-offs? Use this free write-offs monitor to calculate!

Small Business Essentials: This Week’s Must Reads

Thu, 21 Feb 2013 15:33:19

We find the week's best small business articles so you don't have to. Here are the top stories posted this week:

1. The Top 9 Small Business Trends in 2013 for Frugal Entrepreneurs | For frugal entrepreneurs and small business owners, 2013 has both its opportunities and its difficulties, it’s clarity and its stubbornly persistent uncertainty- none of which can really be ignored. Even though you may want to focus on the positive for a change, this mixed bag of trends really needs to be taken as a whole. You’ll have a much better chance of being successful in your business this year if you don’t give in to the urge to just look away and instead embrace the challenges- even if it’s with a grimace. That said, below is a rundown of the biggest issues affecting money-conscious small business owners heading in to 2013: | Read more here (from FrugalEntrepreneur.com)

2. Got Funding? 7 Things to Do Now | Sometimes growth is impossible without a significant chunk of funding to fuel that growth. But say you do manage to beat the odds and attract capital--then what? Check out the following advice from Ashish Rangnekar, the co-founder of BenchPrep, creators of test-prep and subject-based interactive courses for computers, mobile phones, and tablets. BenchPrep raised more than $2 million in 2010 and an additional $6 million last year. Here are Rangnekar's tips, in his own words, for what to do right away--and just as important, what not to do: | Read more here (from Inc.com)

3. Data Security Breaches Happen. Are You Prepared? | Your organization may be sitting on a gold mine—or a land mine. The personal data you collect in the course of doing business is a treasure trove for identity thieves, and that makes you a rich target for criminal attacks. Your mission is to do whatever you can to stop them. | Read more here (from NYReport.com)

4. 5 TED talks all brand storytellers must watch | TED talks are a gold mine of knowledge. Because the TED website's topics include not only technology, education, and design (TED) but also business, science, activism, health, storytelling, and everything in between, one can get lost on the site for days. A number of these short talks (most are around 20 minutes) revolve around storytelling. Though they don't necessarily address brand storytelling, they do offer insights that a brand could apply to its efforts to engage audiences through its brand story. I've gathered five talks I found particularly useful, and I've included a brand takeaway for each. | Read more here (from Ragan.com)

Live Coverage of More Financing Strategies for Women-Owned Firms

Fri, 15 Feb 2013 20:19:17

Women and Capital and WIPP are hosting a follow up discussion with Dr. Susan Coleman on the particular challenges and opportunities facing growth-oriented women-owned firms. We will be posting live coverage of the webinar "Bigger and Better! Financial Strategies for Growth-Oriented Firms" on Tuesday, February 19 at Noon EST.

Trade Credit: Everything You Need to Know

Fri, 15 Feb 2013 14:54:05

If you’re a company who extends trade credit, or is at least considering doing so, you know it’s no simple business operation. You are essentially allowing your business to act as a bank. Surprisingly, the facts show that this doesn’t make small businesses shy away from it. Choosing to extend credit is a big decision, however, a smart one. Here’s everything you need to know about trade credit, and why you should be extending it if you aren’t!

60% of companies who use credit, use trade credit.

“Small businesses using trade credit are larger, more liquid, of worse credit quality, and are less likely to be in the services industry”.

The Top 4 Reasons to Be Extending Trade Credit

1. Sales – Trade credit is a powerful sales tool. If a customer has more time to pay, they are naturally able to purchase MORE from you. Trade credit enables your customers to have a bigger buying power, allowing you to make larger sales.

2. Customers – If customers know you trust them to pay, it will automatically make them more loyal. Giving someone the opportunity to be more flexible with their cash flow is immeasurable, not to mention a great way to say thanks to customers for their business.

3. Brand – If your company extends credit, it says two thing: “I am financially stable and I believe in my product.” If you are willing to sell someone something and then wait on the cash, it shows that you run a financially fit business and that you know your customers will love your products. It’s a great way to gain trust and build your business’ reputation.

4. Competition – Not all businesses are extending credit. Therefore, those that are gain an immediate advantage. If a customer has the option of doing business with someone who extends payment terms vs. those who request payment upfront, they will always choose the option of flexibility (given the products and services are comparable).

Knowing if Trade Credit is Right For You

Trade credit isn’t right for everyone. Your business has to be in a healthy financial position to consider it (unless it’s industry standard). Ask yourself the following questions:

What is the credit exposure my business can afford?
What is the infrastructure of my company like? Do I have the administrative abilities to support trade credit efforts? (It is something you can handle yourself if you’re a one man show, but it’s all relative to the amount of business you’re conducting.)
On average, how many transactions do I have and what is their value? (If your company is dependent on many small transactions, extending credit might be more challenging from an administrative point of view. However, it is less risky because your risk is more diversified over a larger customer base.)

If your business can afford a certain amount of credit exposure and you have the infrastructure in place to effectively extend trade credit, then you certainly should be doing so. If you can’t afford much exposure or you just don’t have the resources to manage the process, then you should consider other options, such as cash up-front for everyone or only extending credit to the most trustworthy customers.

This article originally appeared on the Funding Gates blog. Learn more about Funding Gates' innovative accounts receivable CRM software on their website.

SBA Loan Program on the Spending Chopping Block

Tue, 12 Feb 2013 21:33:59

Last week the White House announced that government spending cuts due to take effect March 1 would greatly impact the average American and the U.S. economy. On Monday, it brought forward that the Small Business Administration's guaranteed loan programs are on the government’s $85 billion chopping block. Specifically, cuts to the SBA lending program would amount to $540 million this year, which could translate to potentially 1,100 small businesses being denied a SBA backed loan.

According to several new sources: The SBA currently is authorized to back $16 billion in loans this year through its flagship 7(a) loan program, a popular source of long-term financing for small businesses. Another $6 billion is authorized for 504 loans, which are used for fixed assets, primarily real estate. Both programs are on pace to come close to hitting those targets this year, meaning a $540 million reduction in the SBA's lending capacity could have real consequences.

Given that traditional bank lending to small businesses still has not returned to pre-financial crisis levels—and perhaps never will—many small businesses are relying heavily on SBA-backed loans. For many businesses, both start-up and established, there are, thankfully, a number of alternative financing options available. Invoice financing, purchase order financing, merchant cash advances, factoring, crowd funding, and peer-to-peer lending are a few of the small business financing options out there.

Some of these alternative financing approaches, like The Receivables Exchange do not require contracts, all-asset liens, or personal guarantees and are much more flexible and less risky than both traditional bank and SBA loans. While cuts to the SBA lending program may put some small businesses at a disadvantage, thanks to alternative lenders, there are still plenty of options for companies to get access to the capital they need.

Small Business Essentials: This Week’s Must Reads

Tue, 12 Feb 2013 20:26:28

We find the week's best small business articles so you don't have to. Here are the top stories from this week:

1. Technology is Leaving Community Banks Behind | For as long as anyone could remember, the community bank was where you went to get a small business loan. You knew the name and phone number of your loan officer and there was a branch right down the street, just in case. Now, small business financing is evolving at breakneck speed. The traditional community banking relationship is becoming less important as innovative online lending solutions become more prevalent. There are two primary reasons for this. First is the banking industry’s reaction to the recession and the second is technology. | Read more here

2. Big Ideas in the Big Apple | New York's transformation into an entrepreneurial hotbed, some say, is a natural fit for the city that never sleeps. “New York is all about fast pace and moving quickly,” says Neil Blumenthal, a born-and-raised New Yorker who co-founded the ultra-trendy eyewear company Warby Parker in 2010. “That’s what building a startup is – how fast can you move.” | Read more here

3. Do You Know What Your Business Is Worth? You Should | With the day-to-day demands of running their businesses, most owners put off getting a valuation until a sale is imminent. But some are starting to treat the act of valuing their business as an integral part of running it. “Everyone likes to think they’re building something that they can sell someday, but unless you focus on it, you don’t know if you really are,” said Chris Myers, the 27-year-old chief executive of BodeTree, a start-up that created the software used by the Sports and Collector Car Center. | Read more here

4. 12 Digital Trends That Will Rock Small Business | The digital world is changing rapidly with profound implications for how small businesses are found online, in search, on mobile devices and in social media. Here’s my list of today’s 12 key digital trends with the greatest potential impact. | Read more here

Alternative Lenders are Here to Stay

Mon, 11 Feb 2013 13:31:26

I read an article by Scott Shane published last week in Small Business Trends on the subject “Are Banks Losing Interest in Small Business?” I almost skipped reading the article; assuming that it was yet another summary of lending statistics from the past month released by Thomson Reuters/Paynet or Biz2Credit. While I appreciate the information that those groups (and others like them) give us, the statistics are increasingly contradictory. Approval rates at big banks for small business loans seem to be improving while community banks and credit unions are staying about the same or even declining.

Mr. Shane presents an argument based on data that I think is far more telling than conclusions based on monthly approval rates. He compiled data released by the FDIC over the past 17 years on the share of small loans (less than $1 million) that banks have made to businesses. The data tells us that small loans have been “a decreasing fraction of all bank loans for the past decade and a half.”

So, what is the significance of this information? It tells us that the decline in lending by banks to small business has been a trend for far longer than the past five years. It also tells us that banks are becoming increasingly more interested in lending large amounts of money rather than small loans that are primarily made to small business owners.

As Mr. Shane points out in his article, the potential reasons for this trend are numerous. One explanation that stood out is that decreased lending is the result of the increasing consolidation of the banking industry over the past 15 years. As big banks continue to absorb the smaller banks that have historically lent to small businesses, there are far fewer banks remaining that make small loans a priority. The consolidation trend is likely to continue with the passing of new Federal regulations that are expected put additional financial strain on small banks.

Though Mr. Shane did not explicitly say this in his article, I think the implications of this data are obvious. First, we’re probably not going to see a full small business lending recovery by the banking industry – at least not the kind the media is waiting for. Second, it appears the big banks that are gobbling up smaller banks aren’t interested in making small business lending a priority. Third, we’re going to have to permanently shift the way we think about small business lending.

The good news? There is already a solution to the problem. Alternative financing companies are eager to lend to small businesses. The industry is growing rapidly thanks to advancing technology, creative business models, and small business owners looking for flexible financing solutions. Invoice financing, purchase order financing, merchant cash advances, factoring, crowdfunding, and peer-to-peer lending are just a few of the types of small business financing that are out there. As more companies begin to offer alternative funding solutions, the price of capital is being driven down; to the benefit of the small business owner. It’s time we stopped thinking of these companies as the second best option for funding. Alternative lenders are here to stay – and that’s not a bad thing for small business owners.

The 6 Most Ineffective Ways to Manage Your Receivables

Tue, 05 Feb 2013 18:18:17

Everybody wants to get paid and everybody wants to get paid on time. Getting paid is a business of itself, and it takes diligent management of your receivables to make it happen. However, not everyone realizes how much attention receivables really do require. They want the money, but not necessarily the work it takes to set-up a seamless system to make getting paid possible. If you’re doing one of the following below, you are not managing your receivables in the most effective way. But, change these habits today, and you’ll find getting paid is a lot less painful than one could have ever imagined.

Not Having Your Priorities Straight - If your receivables are not at the top of your priority list, you are already in big trouble. Yes, it’s true, you’re a business owner or an insanely busy employee and you just don’t have time to make everything a priority. But the money your business is owed should always be at the top of that list, whether it means hiring someone to take on the responsibility part-time, or making it a habit to set aside a few hours a week (say every Thursday from 1:00 PM to 3:00 PM) to devote to these invoices. By making receivables sit atop of your priorities, you will instantly increase your chances of getting paid.
Disorganized Communication - Are you printing out your aging reports and making notes of your communication on those papers? What happens when those papers are thrown away? What happens if another employee tries to contact the customer and has no record of your call to reference? You need to be using a CRM system for your receivables management, one that allows everyone (even if it is just yourself) to know what’s going on with a customer and what actions have been taken. Not sure where to start? Try out this CRM for receivables management for free.
Only Accepting Checks - In this day and age, if the only way you are accepting payment for your receivables is by a check through the mail, you are automatically decreasing your chances of getting paid. You are making it more difficult for the customer to pay and easier for them to forget. By accepting online credit card or ACH payments, you are allowing the customer to take instant action on a payment, as well as giving you an easy option to set-up an installment plan (a great way to get a cash-tight customer to start paying).
Following Up…Eventually - In receivables, the longer you wait, the harder it is to get paid. In fact, for invoices 90 + days past due, it’s nearly impossible to collect. The day an invoice becomes past due, you should start taking action. The best time frame is within the first 30 days of the invoice becoming past due. Whatever you do, stop delaying. Unpaid invoices require immediate attention.
Never Picking Up the Phone - It’s great if you are sending your customer reminder after reminder about their unpaid invoice, but if you are not seeing a response, you have to change your tactics. As busy as you are, you can relate to just how busy your customers can be. Sometimes, when they receive mail, it gets pushed to the side and easily forgotten. However, a phone call can help put things in motion. When you call your customers in regards to a late payment, they will see just how serious you are about getting paid. You’ll help put the payment back at the top of their priority list. Many business owners avoid these calls because they can be tense. But, if you prepare properly beforehand, even referencing a collection call script, then you’ll be able to gracefully handle the receivables call.
Letting Things Slide - If you never “punish” a customer for paying late, then why should they avoid doing so? To help motivate on-time payments, develop consequences for late payments. Late fees are an excellent example, as no customer wants to have to owe more than they already do. Just be sure to check your state’s usury laws so you are not charging too much. Also, alert the customer when you first invoice them, so they are well aware of the consequences of not paying that particular invoice. Running a strict credit-process is key in managing your receivables.

This article originally appeared on the Funding Gates blog. Learn more about Funding Gates' innovative accounts receivable CRM software on their website.

Emerging Financing Strategies for Women

Fri, 01 Feb 2013 18:05:27

Last Wednesday, I sat in on a webinar called “A Rising Tide – Financing Strategies for Women Owned Firms” led by Dr. Susan Coleman, Professor of Finance at University of Hartford. The event was hosted by two organizations that are working hard to even the financial playing field for women business owners: Women Impacting Public Policy (WIPP) and Women Accessing Capital. As a woman in the small business financing industry, I was drawn to this topic. While I knew of a couple government sponsored programs, I didn’t know much about private financing options specifically targeted for women business owners. I did a little research before the session and when I learned that only 11% of companies that received venture backing in 2009 had a female CEO or founder, I was eager to find out why.

Dr. Coleman spent most of the webinar discussing the female entrepreneurs she interviewed when writing the book. Many of them had incredible and inspirational stories (not to mention some really inventive business models). When Dr. Coleman delved into the struggles they faced financing their new endeavors, the statistics looked bleak. According to the Kauffman Institute, women entrepreneurs typically start their businesses with a larger percentage of debt (than men) and virtually no outside equity. Women are also more likely to mismanage the three most important working capital accounts than their male counterparts: cash, accounts receivable, and inventory. Without working capital, a business is guaranteed to fail.

When I left the session, I felt like I had more questions than answers. Dr. Coleman discussed a few financing options for women including bank loans, industry specific grants, and programs through the SBA, but I felt there had to be more. I was right. Financing for women is a hot topic and a fast growing industry. There are hundreds of organizations out there that ONLY invest in women business owners. Here are just a few (sorted by type):

Angel Investors and Venture Capital Funds

I’m categorizing Angels and VCs together for the purpose of this article. Though they are very different in a few key ways, both groups are investing money in exchange for an equity stake in the business. Angels are typically wealthy individuals (or groups of individuals) who make investment decisions faster, take greater risks, and invest less than their VC cousins. VCs are usually well run corporate machines with a board of their own, millions of dollars to invest, and far more specific financial and growth goals that must be met. There are currently more Angels than Venture Capital funds investing in women owned businesses. Here are a few examples of Angel networks and VCs that specialize in women-owned businesses:

Astia is a non-profit Angel fund and network. Astia's mission is to provide access to the networks and expertise that women high-growth entrepreneurs need to succeed, and ultimately to impact today's global economy.
Women Innovate Mobile (WIM) is a three-month mentorship driven accelerator program. Selected companies receive $18,000 in funding, free office space, product development and design support, mobile-marketing promotions, and access to an incredible network of mentors, funders and advisors. In exchange for their investment and services, they receive a 6% equity stake in each company.
Golden Seeds is “an investment firm that pursues above market returns through the empowerment of women entrepreneurs and the people who invest in them.”
Forerunner Ventures is an investment firm specializing in digital commerce. While they fund both men and women owned firms, the VC itself is founded and operated by women.

For additional information, I encourage you to read this article on the Pipeline Fellowship, an organization dedicated to bringing more women philanthropists into the world of Angel investing. And this article on some VC-backed women’s success stories.

Crowdfunding

Crowdfunding is currently a hot topic in the small business financing world. Right now, websites like Kickstarter are helping startups raise money through donations from the general public. If the JOBS act passes through Congress in 2013 (and it’s predicted it will), crowdfunding will look a lot more like Angel investing with individuals giving money in exchange for equity. Platforms like CircleUp are staying ahead of the trend by partnering seasoned Angel investors with entrepreneurs on an easy to navigate platform. Crowdfunding is typically a more transactional relationship without the mentoring and education that most Angel networks provide. CircleUp founder and COO Rory Eakin says that “since launching in April 2012, over 60% of the businesses funded on CircleUp have had a woman CEO – nearly five times the VC industry average. All of our investments have women Angels involved, also at higher rates than they have participated historically.” SoMoLend is doing something similar but focusing on connecting entrepreneurs with investors in their own neighborhoods.

Accelerator Networks

Accelerator networks are groups of seasoned entrepreneurs, industry professionals, and investors who work together to train and prepare the next generation of entrepreneurs for success. Through both training and financial networking opportunities, these groups increase an entrepreneur’s chance of success exponentially – even if they aren’t financially investing directly. A few Accelerator networks that work only with women business owners are:

This is just the tip of the iceberg! The number of financing opportunities for women entrepreneurs is growing every day. Not a startup? Not a problem. There are many alternative financing options out there for small businesses looking to grow. Invoice financing, invoice factoring, and asset-based lending are just a few non-bank options. Take some to research financing options and I guarantee you’ll be amazed at the opportunities you find. I know I was.

The Best Platforms for Small Businesses to Accept Online Payments

Mon, 28 Jan 2013 15:12:07

In today’s competitive marketplace, small businesses have to do what it takes it to survive. Online payments are becoming the way in which customers want to pay, which means businesses have to make this available. In fact, not only does this meet customers’ requests but it also helps small businesses get paid faster. When customers of Intuit’s payment platform offered an electronic channel for their invoiced customers to pay, they typically received payment within in 10 days of sending the invoice. Other methods, on average, take 27 days. At times, small businesses can shy away from online payments as the fees associated with these payments can stack up. But all small businesses need is a little bit of research to know the great options out there that enable them to economically accept online payments. Here’s a list of our favorites:

PayPal - Perhaps one of the most well-known names in online payments, you can count on PayPal given their years in the industry and their reputation for minimal fraudulent activity. With a different pricing structure, from $0 - $30 a month, PayPal enables you to accept payments in almost any way you’d like. All solutions allow you to accept credit cards online, charging only 2.9% +$0.30 per transaction. Fees can also decrease depending on the volume of sales your business is doing each month. No matter the plan, you can send invoices online and your customers can click to pay right there. And if you’re a business owner on the go, PayPal also comes with a card reader that allows you to swipe cards in person if the need arises. Learn more about how PayPal can help your business.

WePay - WePay is another great option in the space, with a fee structure that is easy to understand and a solution that is simple to incorporate into any website. WePay charges 2.9% + $0.30 per credit card payment but charges only 1% + $0.30 for bank payments. For their WePay Pages and virtual terminal, the fee is a flat 2%. WePay is a solution the can seamlessly integrate wherever you need to take payment, even if you need to create a place to do so. You literally can just copy and paste the code that gets WePay up and running! WePay is an excellent option for those businesses who process fewer payments and want a simple fee structure.

Intuit PaymentNetwork - Are you a Quickbooks user? If so, you should definitely check out the Intuit PaymentNetwork. Quickbooks integrates with the PaymentNetwork, allowing users to add a payment link in invoices. You can also send payment requests by email, put the option to pay on your website, or simply provide a custom payment link anywhere else you may need. Intuit charges only $0.50 per bank payment and 3.25% for all credit card payments.There are no other fees. If you believe the majority of your payments will be bank payments, Intuit PaymentNetwork is probably the right choice for you.

PaySimple - Another excellent option for online payments, PaySimple charges $34.95 a month, but only 2.39% per credit card transaction and $0.55 per bank payment. PaySimple also gives you the option of click-to-pay invoices. What sets them apart, though, is how they enable you to always have access to your customer data, giving you better insight as to what is happening with your money. PaySimple is an excellent solution for those business owners that want more knowledge into their customers’ payment habits.

These are just a few places to begin. If you are currently accepting payments from customers, what do you use? And if you are not, what are your hesitations (if any) with online payments?

A Live Discussion on Financing Strategies for Women Owned Firms

Wed, 23 Jan 2013 13:44:03

We will be streaming live coverage and reactions from the January 23 webinar "Women Accessing Capital 129: A Rising Tide: Financing Strategies for Women-Owned Firms" hosted by Women Accessing Capital and Women Impacting Public Policy (WIPP). The 3pm ET discussion will be led by Dr. Susan Coleman, Professor of Finance at University of Hartford. She will explore the state of women's entrepreneurship in the U.S. today as well as the strategies that women entrepreneurs use to finance their firms.

5 Small Business Apps for Stellar Financial Management

Tue, 22 Jan 2013 16:10:33

Looking to get your finances in shape for the New Year? We support this resolution and are ready to provide you with a “handy” list of tools that can increase your financial power all in the palm of your…hand. Make sure to download 1 of these 5 small business apps soon.

Expensify - Hate expense reports? Expensify feels your pain and is ready to offer you some relief. With Expensify, you simply take a photo of the receipt and Expensify converts it into a friendly report. Forgot your receipt? No worries, you can enter the transaction information in just a few steps. Expensify is free for individuals, and with companies that have multiple employees using the app, the first 2 users are free with additional, active users costing $5 – $10 a month, depending on your accounting package. Of all the small business apps, Expensify is the one you can count on to never let you stress about your expense reports again.
Square - Square is the perfect companion for any small business owner who needs to accept payments on the go. All you need is the (free) card reader, or you can manually enter the payment within the app. The app is free, easy to download and the funds are directly deposited into your bank account within 1-2 business days. One option for payment is a monthly pricing package, which is $275 for the month and 0% per swipe for your first $250,000 in transactions. If you think you will be exceeding this transaction limit, it might be best to pay Square per swipe, which is 2.75% per transaction. No matter which plan you are on, if you enter the credit card information manually, it will cost you 3.5% plus 15 cents per transaction. Check out more about Square’s pricing details (and how to sign up!) here.
inDinero - Ever heard of Mint? Well, inDinero claims to be the “Mint” of the small business apps and has good reason for saying so. Essentially, inDinero pulls in your bank and credit card statements and then immediately puts your expenses in the proper categories. They will prepare profit and loss statements and track your spending habits so you are able to effectively budget your money. You can keep an eye on your cash balance trends, among other things, as inDinero displays all your information on an easy to digest dashboard. It’s free up to 50 monthly transactions, costs $29.95/month for 500 monthly transactions, and $99.95/month for unlimited transactions. And, no worries, the mobile app is free! inDinero lets you always know what’s going on with your finances.
Freshbooks - The Freshbooks iPhone app syncs with your online Freshbooks account so you can track your business on the go. You can create invoices and get paid right from your phone. You can also track your time (no more missing billable hours) and your expenses (through photo snapshots of receipts). You can even generate project estimates from your phone. It’s one of the free small business apps, but you will need to be a Freshbooks user to utilize the app. Freshbooks has plans ranging from $0 to $40, depending on your clients and if you need additional staff to access your account.
Quickoffice - Quickoffice is a must have if you are keeping up with your finances in Excel. Although this is one of the few small business apps with a price ($14.99 to be exact), there is no other fee you will have to pay. You can edit Excel spreadsheets straight from your phone and get access to any spreadsheet that you might keep in the cloud (such as in Dropbox or Google Docs, to name a few). Learn more about Quickoffice here!

What’s your favorite of the small business apps for financial management?

This article originally appeared on the Funding Gates blog. Learn more about Funding Gates' innovative accounts receivable CRM software on their website.

Scale Your Small Business: 5 Customer Service Tips That Will Help Your Business Grow

Thu, 17 Jan 2013 15:30:24

You’re at the point where you can officially label your small business as a “success” but you can’t seem to take it to the next level. Just because your marketing strategy is top notch doesn’t mean the customers will continue to pour in. Gaining, and keeping customers through quality customer support is key when it comes to growth.

So what are the secrets to keep customers smiling? Here are 5 customer service tips to help gain new customers, keep the old ones… and maybe (if you’re lucky) hear a “thank you” in the process:

Timeliness is next to godliness. When a customer takes the time to pick up the phone and call your company, they’re usually not just checking in. They have a problem that needs to be addressed or a question that needs to be answered, STAT. Whether it’s an email that just dinged your inbox, or a customer who’s been put on hold while you investigate the problem, time is money! Long wait times on hold or delays in responding to emails or returned calls screams unprofessional. Don’t use your status as a small business to excuse yourself from these potential customer service shortcomings. If you’re short on staff, time, or money, come up with a responsibility sharing strategy that splits customer communication duties amongst your staff so that punctual responses can be maintained. Every second counts.
Leave room for the airing of grievances. No one likes an unhappy customer. When a customer contacts you with a complaint, hear them out! By allowing the customer to express their frustrations to you, they will feel valued and respected. After the customer makes their point known, take control of the conversation in a polite and empathic way. Be confident in the decisions you’re making regarding what you can, or cannot do, to right the perceived wrong. If there’s nothing you can do to rectify the situation at hand, offer them sympathy and something else instead. Maybe a discount on their next purchase or a credit on their account? Offering your customer a deal on a future product or service is an incentive for them to continue doing business with you. Turn that frown upside down!
Don’t be tone deaf. The last thing that’s going to cure a case of the customer blues is an apathetic, distracted, or (dare we say) rude, person picking up the receiver on the other end. The first few seconds of a phone conversation can often set the tone for the remainder of the call. Therefore, you have to rely on tone and language to get your point across in an effective but polite manner. Always answer the phone in a way that makes your customer feel relieved to be talking with you personally, as opposed to anyone else in the office. Greet your customer in a friendly and professional manner, pay attention to his/her name and company s/he is calling from, introduce yourself, and listen attentively. You have the power to dictate the tone, speed, and outcome of the call simply with the power of your voice and demeanor. Nice guys don’t finish last here.
Exceed every expectation. Everyone loves a good surprise. So if there’s a blizzard on its way or it’s the night before a big holiday, don’t look at it as an opportunity lost, but an opportunity gained! Surprise your customer by being open and available when everyone else isn’t. They will remember that you came through for them in a time when no one else could; and many will be more inclined to remain loyal to your business in the future for doing so. Going above and beyond what a customer expects from you will leave them happy when they hang up the phone and will also result in them boasting about the positive experience to a co-worker, family member or friend. Word of mouth is a great way to gain new customers. High achievers for the win!
Every customer is an opportunity – gained or lost. Even if your product is amazing, you update twitter three times a day, and the NYT just gave you a shout out in the Sunday edition, you still need customers to grow. Every time you interact with a customer, whether it is via phone, email, in person, or through interaction with your services, you have a chance to improve or downgrade your customer’s opinion of you. Both good and bad stories can easily spread via social media, online reviews and even good old fashioned word of mouth. So be on your best behavior.

Keep these customer service tips a priority in your company and watch your customer base (and revenue) grow!

The 8 Best Resources for AR Management

Mon, 07 Jan 2013 18:20:11

Want to get paid faster? Want to manage your receivables like an absolute pro? Thanks to the revolution that is the internet, there are more tools and resources available for free (and right at your fingertips) than ever that can help take your AR management to the next level. As informative as the internet is, it can also be overwhelming. However, have no fear, as you can simply reference our cheat sheet for the best resources out there for AR management.

Predict Behavior - If you can “foresee” when a customer is headed for financial trouble, it will help you stay far away from doing business with them. Cortera shares how to use B2B purchase behavior data to help make these predictions. Visit the Cortera blog to start preparing today.
Invoice Like a Pro - Sometimes customers don’t pay an invoice for a pretty simple reason: they never received it. Help combat the most typical customer excuse by making it part of your process to send invoices online. The Small Business Bonfire has compiled the ultimate list of tools that allow you to send online invoices (and while you’re visiting them, make sure to check out there must-dos to get paid on time).
Set the Right Terms - It’s not always how you send the invoice, but what you say in it. Xero (the accounting software) has compiled a must-read invoicing guide, including a super informative infographic that reveals that invoices are, on average, paid 2 weeks late. So, for example, if you want to get paid in 30 days or less, set your payment terms for 13 days or less.
Get Into Technology - AR management and technology should go hand in hand. After all, it’s not just about getting paid, but about effectively managing your cash flow. American Express OPEN Forum has created the ultimate list of tech tools that can help you get paid faster, whether through time tracking, billing or accepting online payments.
Prepare For Excuses - Nothing is more dreaded in AR management that hearing a customer’s excuse for not paying on time. This infographic from Treasure Valley Factors helps you prepare yourself for each of the most common excuses. Check out this action plan for common late payer responses if you need more insight.
Get On the Phone - When a customer is just not paying, it’s time to get on the phone and give them a call. However, most people tend to me a bit hostile and angry in these calls, when in reality, this is not the most effective way to get paid. Credit and collections expert Michelle Dunn reveals the secret to having a truly successful collection call: treat it like a customer service call. Brilliant advice, Michelle! Access these collection call scripts if you need an example.
Know Your Options - When you have an unpaid invoice, sitting around and waiting for it to be paid is not your only option. Receivables factoring is a great option to get cash for those past due invoices immediately. Check out how The Receivables Exchange can help if you have a customer who is slow to pay.
Study Hard - AR Management is a never-ending process, one you should always be learning more about and trying to perfect. A great place to start this journey is with one comprehensive list of accounts receivable tricks. Begin here, with 101 Ways to Optimize Your Accounts Receivable Management.

What are some of your favorite AR Management resources?

This article originally appeared on the Funding Gates blog. Learn more about Funding Gates' innovative accounts receivable CRM software on their website.

Factoring Gives Invoice Financing a Bad Name

Thu, 03 Jan 2013 15:41:05

When I tell someone that I work for an invoice financing company, one of two things usually happens. About 30% of the time, I’ll receive a blank look because the person has never heard of invoice financing. I like these people because I can explain what we do at The Receivables Exchange and become their first impression of the industry. I can tell immediately if someone has heard of invoice financing when a slight look of distaste appears on their face followed by the question “you mean a factoring company?” I always respond with my usual “well, we’re similar to a factoring company but different in a few key ways.”

Somehow over its’ 800+ year history, factoring companies picked up a few bad habits. And as the years passed, those companies succeeded in bestowing an unsavory reputation on the entire invoice financing industry. In response, some invoice financing companies (including The Receivables Exchange) have sought to differentiate themselves from the bad habits of their factoring cousins.

Here are a few infamous factoring practices that have helped give the entire industry a bad name:

In order to factor receivables, you have to give up all control. Some factoring companies have incredibly restrictive contracts that take advantage of small business owners’ need for fast cash. Many of them enforce a minimum and maximum on the dollar amount of invoices that can be factored each month; impose inflexible pricing and terms; and require that all eligible receivables be factored, regardless of need. Yes, small business owners get funding they need but at what cost?
Personal assets are not off limits. Many factoring companies require personal guarantees, all-asset liens, and restrictive covenants. Why do they do this? If your customer fails to pay an invoice, you are usually responsible for paying back the money you borrowed. Already spent it on payroll? That’s too bad. Factoring companies will go after personal assets if you can’t pay.
Your customers are notified of the factoring relationship and then pestered if they don’t pay fast enough. All factors (but not all invoice financing companies) notify your customers when you finance your receivables. And by using a factoring company, you are outsourcing your collections efforts. You have no control over how often or how aggressively your customer is contacted if they are slow to pay.
Fees, fees, fees, and more (hidden) fees. It is widely acknowledged that factoring can be expensive. It’s the price some people are willing to pay for almost instant cash – especially in this economy where the banks simply aren’t lending. Sometimes, small business owners are paying even more than they think for factoring services due to hidden fees (for software, collateral, and management, just to name a few) and rising discount fees tied to aging receivables.
Once you sign on the dotted line, you can’t go anywhere else for financing. The aforementioned all-asset lien prohibits many factoring customers from entering into any other financing relationships until the long-term contract is expired.

You have just read the worst of the worst; the things that many factoring companies don’t want small business owners to know. But there is good news too. Not all alternative financing and invoice factoring companies are bad. Not all of them impose inflexible terms, require personal guarantees, charge an unreasonable amount, or notify your customers of the financing relationship. In fact, most invoice financing companies truly want to help small business owners succeed and grow by helping them improve cash flow and build credit. It’s these companies that strive to remove the stigma associated with factoring. So, while there are a few bad apples out there, it IS possible for small business owners to find a financing company that understands their unique needs and can offer flexible financing solutions.

One non-factor financing solution? The Receivables Exchange. At The Receivables Exchange, we gain absolutely nothing if a small business defaults, we don’t notify your customers of the financing relationship, and we only impose liens on the invoices you choose to trade on our exchange. Visit our website to learn more.

Protect Your Small Business with Property Insurance

Thu, 27 Dec 2012 14:43:30

No matter how successful your small business may be, it is likely not ready for a natural disaster. In 2012 there were 33 recorded catastrophes which resulted in $14.5 million in insured losses. Unpredictable weather and dangerous conditions can hurt or even destroy any business, so it is important to protect your investment with the right business insurance: property insurance.

When starting a small business, it’s important to figure out a location and type of property that will allow you to run things smoothly. You should also consider what type of property insurance you will need to protect that business and the space you operate in. If starting a business and running it from your home, you will need another kind of additional insurance; this is separate from your homeowner’s insurance policy. So, consider what you need before a disaster strikes.

Commercial Property

If your business is run out of a commercial property, you will need commercial property insurance. If you are renting the space from a third party, they will usually be the ones who hold the insurance policy as long as you follow your lease without question.

However, if you own the commercial building then commercial property insurance will protect your space from fire, theft, vandalism, weather damage, and other events that are outside your control. It will also cover damage to other company property and material assets. Some companies will offer all-risk polices which offer slightly wider coverage for businesses.

Remember that if you company is at a higher risk of a specific type of damage, for example electrical, it’s important to find a policy that caters directly to your needs. Peril-specific policies are for certain types of locations that are susceptible to specific types of damaging weather such as wildfires, earthquakes, or flooding.

Home-Based Businesses

Home-based businesses are becoming the norm for startups, but are not always covered by regular homeowner’s insurance. For example, when homes were destroyed by the 2006 hurricane Katrina, many homeowners’ insurance policies did not cover “water damage,” though in most cases the damage was much more serious than simple flooding.

An In-home business policy can be purchased, which also includes general liability insurance and states your private residence as your business property. If your house is damaged and you are not able to work, the insurance will also cover your loss of income expenses and ongoing expenses such as pay roll, just as businesses run out of commercial properties.
A Business Owners Package policy, or commonly referred to in the industry as BOP is a package deal for medium to small sized businesses. This is an excellent option in that it is relatively simple and straightforward, and allows home-based businesses to operate from more than one location.

It is important to review a number of policies before deciding on the one that is right for your small business. Prices and amount of coverage will vary depending on what kind of protection you may need, and knowing your options is a step in the right direction.

The Cliffs of Uncertainty

Fri, 14 Dec 2012 17:14:05

Uncertainty seems to be the word of the moment. Whether it is about recession and recovery, the elections, federal policies on taxes and healthcare (etc.), uncertainty seems to have caused many businesses, particularly SMBs, to remain in a holding pattern when it comes to investing in their businesses. The future of SMB business expansion and growth continues to be on the edge.

The latest topic of uncertainty is the Ben Bernanake-popularized term “fiscal cliff,” a series of tax increases and government spending reductions that are set to take effect in 2013. Many believe this “cliff” will lead to another recession. According to the 2013 Capital Markets Report from Pepperdine University, more than half of the business owners surveyed were “very concerned” or “extremely concerned” about the “fiscal cliff.”

At The Receivables Exchange, we’ve heard numerous complaints from small business owners that the likelihood of the country's budget worsening is unraveling confidence, hurting orders and delaying payments, to name just a few. Expecting their tax rates to rise, many business owners are looking at cutting payroll and other expenses – rather than creating jobs, which has traditionally powered economic recovery. In fact, 57 percent of business owners surveyed by Pepperdine say the top reason preventing them from hiring is economic uncertainty/confidence.

Small business owners surveyed by Vistage International Inc. and The Wall Street Journal shared similar sentiments. Of the 740 business owners polled 43% anticipate conditions over the next 12 months to worsen. In fact, 16% of owners reported they were already planning to reduce staff in the new year.

Entrepreneurs and SMBs have always been a driving force behind our economic health. While these businesses will continue to keep themselves going, uncertainty often prevents them from making aggressive investments to expand their business and grow their revenue – actions that often necessitate hiring.

John Paglia, director of Pepperdine’s Graziadio School of Business and Management, predicted that if the fiscal cliff situation is resolved quickly it would incent small businesses to hire, pursue financing to grow their businesses, and in general, ease those worries of uncertainty that are holding many private business owners back.

Wanting to understand what will motivate you as a small business owner to hire in 2013 and get the economy moving, The Receivables Exchange recently released its own survey the “SMB Optimism Index”. We invite all SMB business owners who want to share their thoughts about where their business is heading in 2013 to take the survey. And stay tuned over the coming months we’ll be sharing the results.

Monetizing Data: The Holy Grail of 21st Century Businesses

Wed, 12 Dec 2012 15:14:06

In today’s world of Big Data, SaaS, virtual products and services, data is king. Companies from the earliest stage tech start-up to the most established brick and mortar want to find ways to monetize their data. For many small and medium sized businesses monetizing data could be the key to significantly growing their business organically and without a large investment. However, few companies ever achieve this goal.

What makes it so hard for companies to monetize their data? It’s challenging to define what monetizing data really means for a given company and if you can’t define the goal then you certainly can’t create a plan to achieve it.

Figuring out how to monetize your data first requires an understanding of what you hope to accomplish. There are three main ways to monetize data. Listed below are examples of companies that have successfully monetized their data using those three methods.

Creating Additional Revenue Streams is the easiest way to think about monetizing data. However, creating new information, products, or services from your data may be the most difficult way to monetize your data. In order to do this successfully, the company needs data that changes over time and has a defined market that values the data enough to pay money for it. American Express, the premier credit card provider, has been very successful at leveraging their consumer and business buying habits and purchases data. They launched a separate business, American Express Business Insights “a global information, analytics, and consulting organization that combines real behavioral information — based on actual aggregated purchasing data — with sophisticated analytics to reveal unique insights about your customers, competitive set, and marketplace.” With their Business Insights venture, American Express has achieved significant success by leveraging their proprietary data and augmenting it with consulting services and sophisticated analytical tools; creating an entirely new business, independent from their core business of credit card services thus attracting clients that may have no prior relation with the core business.
Differentiating Existing Products/Services is the way most companies that successfully monetize their data are able to do it. This is where the company packages information services at a premium to provide different levels of services. It can be as simple as bundling information into basic products to create premium products or to encourage customers to move a subscription model that includes information services from a transactional service that doesn’t. A company can get more sophisticated and differentiate its products by providing specialized services to target key markets, potentially at a premium, to wider range of customers. LinkedIn has been successful monetizing its data by differentiating its core free product from premium subscriptions. The subscriptions offer more access to information, intelligent searches and increased functionality focused on the needs of the target market they are addressing; Recruiters, Job Seekers, Sales, and Businesses. LinkedIn has further differentiated their service within each subscription type by packaging the access and special features into tiers with higher rates for the further enhanced specialized services.
Promoting the Company is the least obvious way to monetize data, but can lead to significant rewards. A company can monetize their data through promotion when it identifies it has unique information that would be valued by a large community. This information may not be valued enough to generate significant revenue and/or may have greater impact if it is publicized rather than sold. ADP has become the “gold standard” for outsourced payroll due in part to how they leveraged their data. Since 2006, ADP has announced their employment and salary numbers, the National Employment Report or commonly called the “Jobs Report”. Wall Street waits and responds to these numbers with as much or maybe even more regard than the official Department of Labor employment numbers. ADP leveraged their dominant market position and became the outsource payroll company people think of first or at all. Companies that provide similar services to ADP are always measured against and competing with ADP, even when ADP is not actively involved in the sale, because ADP monetized their data to own the industry.

Companies usually do not have a good idea of what data they can leverage to be monetized. Usually the company believes they have “all this great data” and “there must be some way to make money from it.”

So what does it take for a company to be able to monetize their data?

First, a company needs to have the data. They need to be able to capture, organize and store data. Which means the companies whose operations support systems are people, spreadsheets, and “spit and wire” don’t know what data they have. The same goes for companies that invested in sophisticated systems but the employees avoid using because they don’t simplify the process. In order to “have the data” a company needs to have systems and infrastructure in place with rules and processes to label, categorize and manage the data. These systems also need to make it available to be extracted, aggregated and reported in a variety of ways.

Second, a company needs a few people who collectively understand the end-to-end business process, the product, the customer needs, complaints and the market in general, to share ideas and dig into the details about the data. Sometimes the idea comes first and you find the data, while other times understanding the data leads to the use. Often this requires “thinking out of the box” to figure out how to use the data as a new complimentary service or to promote the company.

Finding ways to monetize data doesn’t happen by accident. It’s a methodical process that requires dedicated effort and executive commitment; otherwise it becomes a second priority. In today’s world, we can’t get through all our top priorities, never mind drill to the next level down. It is a challenge, but when a company succeeds in monetizing its data, it’s a game changer.

5 More Fraud Prevention Tasks for the Small Business Owner

Mon, 03 Dec 2012 22:25:35

It has been about a week since we began our discussion on Fraud Prevention. Did you take time to review the first 5 tasks? Begin implementing them? If not, let’s take a moment to talk about why you should. According to the 2012 Global Fraud Study by the Association of Certified Fraud Examiners, a typical organization loses 5% of its revenues to fraud each year and these fraudulent acts continue, on average, 18 months before being detected. If you think you are immune because you are too small or have reliable long term employees think again. This same study showed that the smallest organizations suffered the largest median losses and that the longer a perpetrator has worked for an organization, the higher the losses tend to be.

On that wonderfully inspiring note we continue this week with our final 5 Fraud Prevention Tasks.

6. Log In’s and Passwords

Each employee that touches your accounting software, including you the business owner, should have a unique log in and password. All accounting software systems have some sort of Audit Trail which will allow you to review, to some degree, the work that an individual has performed. Try not to use generic labels for people but instead make them specific to that individual. If you use temps or have people that perform similar tasks, take the time to create a log in for each of them.

Additionally have them select their password rather than issuing one to them. This will protect you, or the person setting up these employees if fraud is detected.

QuickBooks Example: User restrictions are quite different between QuickBooks Pro/Premier and Enterprise. In the Enterprise product you can provide select access to over 100 areas in the program.

Company>Users>Set Up Users and to change your own password Company>Change Your Password

7. Set Closing Dates

A closing date is used to ensure data is not incorrectly added to a month or year that has passed. Not all accounting systems require this but it is possible in each of them. I would suggest this be done on a monthly basis after you have entered all the invoice and bills for the prior month and reviewed your financial reports for accuracy and consistency.

QuickBooks Example: QuickBooks is one of those systems where you are not required to set a closing date. The most common argument against using it is the inability to make changes even when it is warranted and proper. QuickBooks however does allow you to set a closing date password for two reasons. First to bypass this restriction and allow entries when it is proper to do so. And second, to track those changes when they do occur.

Edit>Preferences>Accounting>Set Closing Date/Password

8. Audit Trail

As I mentioned above, each accounting software I am familiar with has some type of Audit Trail functionality. Traditionally this report tracks additions and changes made to transactions as well as who made those changes. Typically, this report is quite difficult to review and lengthy if you have a lot of activity each day. If you are not able to review it daily I would recommend you do spot checks when you can and narrow down your review to a day’s transactions.

In addition to the Audit Trail, there are a few other Audit Trail type reports that I review on a regular basis. The first is the Closing Date Exception report which tracks changes made if the closing date is bypassed using the password I discussed above. I also like the Void/Deleted Transactions Summary and Detail. These reports allow you to review what has happened to a given transaction from the time it was originally created to the moment you run that report.

QuickBooks Example: In the example below note how the first transaction (a bill) was entered, than several lines were changed and finally it was deleted, all by the same person.

Reports>Accountant & Taxes>Audit Trail

9. Inventory Counts

If you track inventory this process is vital for loss prevention. In addition, if your physical inventory matches your inventory data, reporting related to Costs and Profit will be more meaningful.

QuickBooks Example: In addition to the standard inventory reports, I also run a Profit and Loss report customized to include a % of Income column. I use this to ensure my Cost of Goods is in line with what I thought I should be making based on my markups.

10. Create a Budget

Creating a budget can be easier than you might imagine, especially if you have been in business for a year or more and have properly tracked income and expenses. Compare this information to actuals in a similar way as you did with the Profit and Loss period comparison. These comparisons should highlight any unusual and unexpected spikes in spending.

QuickBooks Example: With QuickBooks you can easily create Budgets from scratch or from prior year data. You can create one for the overall business, by class or by customer. In addition there are in product reports to assist in comparisons.

Company>Planning and Budgeting>Set up Budgets and for reporting Reports>Budgets and Forecasts>Budget vs. Actual

Bonus Tip: Sign Checks

By signing checks or processing electronic payments the report reviews listed above will take significantly less time and be more meaningful. Your ability to pinpoint potential issues and errors quickly will increase with every passing month. If signing physical checks is not practical you can easily maintain control over this task by utilizing online banking systems.

QuickBooks Example: You can directly link QuickBooks’ payment processes up to most major banks. With this set up a bookkeeper can enter bills and prep payments while you simply review and electronically submit these payments to the bank. The bank in turn cuts your checks and sends them to your vendors.

To find out if you bank provides this direct connection go to Banking>Online Banking>Participating Financial Institutions.

Final Thoughts

I hope these posts have inspired you to take a few hours out of your month to review and examine your books and records. As I mentioned in my last post you may be surprised to find that utilizing these tips can not only help prevent fraud but also provides insight into your businesses' health and profitability.

5 Fraud Prevention Tasks for the Small Business Owner

Tue, 27 Nov 2012 15:40:06

Did you know that spending a couple of hours a month on your accounting could save you tens of thousands of dollars? According to a 2010 report by the Association of Certified Fraud Examiners (ACFE), 40 percent of small business owners are embezzlement victims and one-third of all bankruptcies are the direct result of internal fraud.

Protecting yourself from fraud is easier than you may think, even if you don’t know a thing about accounting. In this two part blog (5 Tips this week and 5 next) we will review simple tasks that can be performed utilizing whichever accounting software you have in your business. The examples and screen shots shown here, however, are from QuickBooks Enterprise 2013.

Open the Mail and Review Credit Card and Bank Statements

This tip is number one for a reason and may be the most important thing you do for your business finances. In the best case scenario you should open and review all accounting related mail, including vendor bills and customer payments. If this seems too daunting a task or you find you are not in the office enough to make this work, be sure to at least open credit card and bank statements.

Once you begin reviewing charges and checks on a regular basis the easier it will become to spot irregularities.

Missing Check Report

Check reports can be a valuable tool for several reasons. Obviously if someone is taking checks and not entering them in the accounting software this will highlight that activity. For me however it is also a way to see, at a quick glance, what checks are being written over a given period of time. For this to be most effective you will need to be sure you are tracking voided checks and keeping copies.

QuickBooks Example: In this QuickBooks report, detecting inconsistencies is made easy. Not only does it highlight where checks are missing but also tracks duplicates. When I run this report I also typically customize the report to include both the Entered/Last Modified and the Last modified by columns. Notice the Duplicate Document Number and Missing Numbers messages.

Reports>Banking>Missing Checks

Invoice Number Report

This may seem an unusual report to run but the thought process is the same as missing checks. There are well known cases where invoices are created and customers are directed to send payments to an alternate address or lock box.

QuickBooks Example: There is no in-product report for this but you can create it from the Missing Check report. Simply customize it by removing the Account filter and adding the Transaction Type – Invoice.

Reports>Banking>Missing Checks

Expenses by Vendor Report

I love this report. It’s the easiest way to get a snapshot of your spending over a given period of time. Review for unexpected vendors or erratic spending.

QuickBooks Example: The Expenses by Vendor Summary is probably the biggest bang for your buck in terms of fraud detection. It’s quick and easy to understand. When I review this report I typically like to customize it to include the previous year or period. This process highlights any new vendors or fluctuations in spending from prior periods.

Reports>Company and Financial>Expenses by Vendor Summary

Profit and Loss

To many business owners the Profit and Loss report holds no meaning for them. Since they often don’t understand what the different accounts mean they will ignore this report all together. Regardless of whether you are that business owner, use this in the same way as the Expenses by Vendor Report. Look for fluctuations that don’t seem to match what you perceive as happening in your business. Was last month a busier month than the one before? If so you should see your income amounts increasing. Is your mortgage amount the same each month? If not, why.

QuickBooks Example: In a similar way as the Expenses by Vendor report, I typically customize this for the previous year/period or display columns by month. I also try to ensure I am doing this review for a period where I know the data entry has been completed.

Reports>Company and Financial>Profit and Loss Standard

See how easy that was to get you started. Not only are you taking the first steps in preventing Fraud, but many of these reports and practices can also be used operationally to analyze trends and spending. Be sure to look for part 2 of this blog next week when we discuss, among other topics, inventory and audit trails.

Shop Small Gets Social

Mon, 19 Nov 2012 14:26:42

Small Business Saturday is almost upon us – on November 24 to be exact. Just in case you haven’t heard of it, let me explain. In 2009, American Express started pondering the rampant consumerism that revolves around the holiday season. We already had Black Friday and Cyber Monday – both of which primarily benefit large chain stores like WalMart, Target, and Macy’s who have the resources to offer huge sales and the advertising budget to promote them heavily. With this in mind, American Express decided to designate the Saturday after Thanksgiving as a day to encourage consumers to shop at small and independent businesses. Thus, Small Business Saturday was born and from all reports, it has been a great success.

In my opinion, American Express did something particularly smart when they designed the marketing strategy behind Small Business Saturday. Rather than using expensive marketing tactics, they decided to leverage a medium that small businesses could use as well: social media. At the time of writing, the Small Business Saturday Facebook page had 3,093,436 likes (and counting). The Twitter hashtags #SmallBusinessSaturday #SmallBizSat and #ShopSmall are trending among both businesses and consumers around the world. Even President Obama got into the spirit last year when he Tweeted after visiting a local bookstore near the White House.

According to a survey by the National Federation of Independent Businesses (NFIB), 87 percent of participating businesses are planning to promote via social media. Both American Express and NFIB are offering free advertising for participating small businesses by allowing them to create customized digital ads that will be run on both companies’ social sites. That same NFIB survey discovered that 81 percent of the entrepreneurs surveyed say Small Business Saturday would be more effective if there was more community participation and community hosted events. Some communities seem to agree and have created localized Small Business Saturday pages on Facebook and Twitter. Here is an example of one from Central Illinois. On their page they are offering free themed banners and welcome mats for participating businesses.

In addition to the efforts to promote Small Business Saturday via social media, corporate sponsors are also offering special incentives for both businesses and consumers. Fed-Ex is offering two free 11X17 posters for participating small businesses. Shoppers who use their American Express card at participating small businesses will get a $25 discount.

Small businesses are a hot topic in America – and for good reason. During the election, both candidates appealed heavily to small business owners – a sector that contributed 65% of net new jobs to the economy between 1992 and 2009, according to the US Small Business Association. Though some may think American Express is capitalizing on our society’s desire to support the small businesses that we feel are so important to our economy, I don’t feel that it’s in bad spirit. In fact, I think it’s great that there is a continuing effort to keep small businesses on the minds of both consumers and politicians alike.

Are you a small business owner participating in Small Business Saturday? If so, are you using social media to market your business? Do you feel that Small Business Saturday benefits your business? Let me know what you think by commenting here or by send me a message on Twitter.

Learn How New Technologies Are Changing the Role of Finance - In Real Time

Tue, 06 Nov 2012 14:16:54

We are streaming live coverage and reactions from the Proformative Webinar on the topic "How New Technologies Are Changing the Role of Finance" on November 6, 2012 at Noon EST. Leading the discussion are Bruce Bendix, director at Baker Tilly Virchow Krause, LLP and John Kogan, CEO of Proformative. Key topics will include insight into new technologies such as cloud, mobile, social, big data and how analytics are creating new challenges and opportunities in areas under the responsibility of the CFO.

Recovery Tips for Small Businesses Affected by Sandy

Mon, 05 Nov 2012 17:41:22

Frankenstorm Sandy has certainly lived up to the name that was bestowed upon her long before she came ashore in Southern New Jersey. She has relentlessly inflicted damage and destruction in her path from the Caribbean to the Northeast Coast of The United States – the most significant and visible being in the New York Tri-State area. And among those affected, small businesses will potentially fare the worst. Many small business owners were unprepared for the severity of this storm and the damage in her wake. Recent estimates from risk analysis firm Eqecat puts the total economic losses at $50 billion. In addition to the economic toll, the disruption to people’s lives due to property damage, transportation disruptions, prolonged business closures, electrical outages, injuries, and loss of life are immeasurable.

Unfortunately, the worst is yet to come for many small business owners. As you begin to assess the damage inflicted on your small business, it’s important to create a short-term and long-term recovery plan. Here are a few tips to help you access the money you’ll need to get back on your feet:

Contact your insurer. If you have not already done so, it’s incredibly important that you contact your insurance company before cleaning up any damage to your property. Don’t throw away any damaged property until your insurance company has sent someone out to assess the damage. Most insurers have emergency staff on hand to expedite this process. For more insurance tips, check out this article.

Contact FEMA if your business is in a federally declared disaster area. All of New York, New Jersey and Connecticut fall in this category. If your business sustained damage as a direct result of Hurricane Sandy, you will likely qualify for federal assistance. Visit the Hurricane Sandy page on their website to learn more about applying for assistance and to determine if you qualify for assistance. Keep in mind that FEMA is a long-term solution. Funds from FEMA could take weeks or months to get to you.

Apply for a disaster loan through the SBA. According to the SBA website, “If your business or private, nonprofit organization has suffered physical damage or… has sustained economic injury after a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration. If your business—regardless of size—is located in the declared disaster area, you may apply for a long-term, low-interest loan to repair or replace damaged property.” Unlike most of the SBA’s loan programs, disaster loans are funded through the Federal Government. Typically, most applications take at least two weeks to process but the expected flood of applications due to Hurricane Sandy could result in slower processing times.

Consider alternative means to access capital. While FEMA and the SBA are great long-term and mid-term capital solutions, many small businesses affected by Sandy will need cash sooner than later (like, yesterday). As a short-term solution, consider applying for financing with an alternative financing company. At The Receivables Exchange, an invoice financing online marketplace, once approved, sellers will receive cash within 24 hours of their first trade. For fast access to capital, alternative financing companies might be the solution you’re looking for.

In addition to the resources listed above, many banks are waiving fees on all of their small business bank accounts. Talk to your financial advisor to learn even more about the recovery options available to you.