Your CPA Knows The Power of Cash on Hand
As a real estate developer, I usually reached out to my CPA under two circumstances.
I needed to know a tax consequence or –
I needed Capital – that would be a contribution to capital and a logical source would be a financial partner.
I want to address #2 – The Financial Partner – ESSENTIALLY - That’s what we Are – We Are Your Client’s Financial Partner – However –
We don’t take any equity – We just want a Preference – and your client receives the full benefit of their business value.
Every accounting professional knows the true value of cash on hand. And they see the struggles your clients endure when their customer payment terms are extended.
It has been my experience, over the years commercial remittance has slowed significantly – we all know that today - 30 day payment rarely exists - and as such, this delay has placed a greater burden on small businesses – mainly because Payroll and numerous G&A obligations will not wait.
I am attaching a cash flow forecast derived from a typical business client. It projects 6 months of Capital demands on ownership and it compares those demands with the relief that we provide. The forecast is a stark reminder – every small business must be prepared to finance or fund their receivables regardless of how bullish their current ratio is. The forecast demonstrates a successful operation must have at least 3 full months of cash reserves or a factoring line.
Often, I have stated in my videos, I’m biased. As an operator I utilized factoring to rapidly grow two companies without sacrificing equity. Both businesses generated multimillion dollar sales in short order due to factoring. Without it, I had no way to make payroll, pay vendors in a timely fashion or have capital to take on new customers.
If you have B2B clients struggling with their lack of cash on hand. Please, give us a call – we are here to help.
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