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You find volumes of information on various collections strategies, but many of these strategies are beyond the scope of what many small businesses need. We've found that a few simple steps can make big difference in your collections. The most important element is a strong customer relationship. It's much more difficult for a debtor to default on a...
A critical part of any receivables management program is establishing optimal credit policies and clearly communicating them to your customers. Setting policies that are too tight and restrictive can lower sales, and policies that are too loose may attract slow paying customers. For small businesses, slow paying customers can cause serious cash...
There are some important ratios that trucking companies can use to quickly calculate their profitability. All of these ratios measure costs, revenue and profit in terms of miles. There are also software packages that can make calculating these metrics easier. However, knowing these ratios ahead of time allows you to make quick decisions if needed...
This day in age any trucker that isn't using some kind of software to track their financial activity is doing themselves a great disservice. There are many inexpensive packages out there that can provide valuable reports and only require you to enter basic data such as sales and expenses. In addition, a brand new laptop that can run this software...
Factoring (also known as accounts receivable financing) is a form of asset based lending that is used by a wide variety of companies in many different industries. Factoring is used by companies ranging in size from a single employee to Fortune 500 companies. In short, factoring allows companies to sell their accounts receivable to a factor (...
When should you utilize factoring? Some companies wait too long and they miss out on returns and needlessly risk business failure. Other company's factor too often and could save money by factoring less.
In this section we will discuss some calculations that can be used to determine when you should factor.
The decision to factor is driven by...
Now that we have a basic understanding of the various financial statements we can begin to analyze those statements. Financial statement analysis is often done using ratios. Below we will present several ratios helpful in managing working capital. It's key to remember that managing working capital requires a balance between having to little cash...
In the previous example we examined a basic cash flow statement. We saw how to properly track inflows and outflows of cash to spot potential problems. This analysis is helpful, but does not give a complete picture of working capital. Cash on hand is only a portion of working capital. To gain a complete picture of what working capital is, we will...
A cornerstone of understanding financial management involves understanding a few financial statements. There are 3 main financial statements that businesses use to track the health of their business. These statements are the income statement, balance sheet and cash flow statement.
The Balance Sheet
You can think of a balance sheet as a snap shot...
In short, working capital is the money a business has available to sustain its operations. It's the capital available to purchase inventory, pay employees, keep the lights on, and finance other short term expenditures. This makes managing working capital a critical business skill. If there is no working capital, there is no business.
Thousands of...
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