A trusted adviser can help you track data and review ways to boost profit. Mark Van Benschoten, a principal at Rea & Associates Inc., lists some things to consider in discussions with your accountant.

Q. What accounting missteps might lead to decreased profitability? 

A. Not having timely and accurate monthly financial statements can hurt a business. Within a few days of month’s end, you should have a current income statement, cash flow statement and balance sheet. A trusted adviser, like a CPA, banker or CFO, can help you understand how each of these reports reflects how your business is performing.

Q. What accounting tools could prove most valuable to business owners? 

A. It does not matter how large or small your business is, a budget will help you keep your eye on the things that are most important. Compare your actual results each month to your budget, giving you an indication of how your business is performing in key areas like sales, margins, overhead and cash flow.

Q. What do businesses commonly overlook that can pose problems?

A. Many businesses don’t have a good handle on the true cost of a product. This leads to underpricing and potentially critical losses. In addition, many business owners will cave into lower price points for larger clients without evaluating the impact of shrinking margins. You also need to review your current pricing. You cannot set prices for an extended period of time without considering price increases in raw materials.

Q. How does risk affect company value?

A. There is an inverse relationship between your business value and the amount of risk associated with your business. Why does risk lower value? It is because risk causes uncertainty about the future cash flows. Once you understand how specific risk factors impact your value, you will be motivated to set a plan of action to reduce your business risks.

Mark Van Benschoten, CPA, is a principal at Rea & Associates Inc. Reach him at (614) 889-8725 or mark.vanbenschoten@reacpa.com.

Published in Columbus
Tuesday, 08 May 2012 13:09

Why SBA Financing?

Learn how SBA Financing can help your business grow & succeed

Thursday, May 31, 2012

10:00 a.m. to 11:00 a.m. EST (US & Canada)

Cost: FREE

Registration is required: Click Here to Register

If link does not work, type the following address into your URL:

http://www.pncwebinars.com/SBA


Brief description of the topic:

In trying to grow their businesses, owners often find themselves seeking credit to finance those expansions.

Join Kreischer Miller, Fox Rothschild LLP and PNC Bank for this free webinar that will be hosted by PNC Bank and Smart Business to learn how U.S. Small Business Administration (SBA) loan programs may help.

The SBA offers a variety of loan programs that provide basic to complex financing solutions that business owners might not be able to attain conventionally. Hear from our well-versed panel — a CPA, an attorney and a senior SBA business development officer  — who will go through case studies that show the unique ways SBA loans can be structured to help businesses successfully grow and expand.

In this session you will learn:

  • How the SBA transformed since the Small Business Jobs Act was passed in 2010
  • Benefits of SBA financing vs. conventional financing
  • Overview of the SBA 7(a), 504 and Express Loan Programs
  • Case studies showing creative ways SBA loans can be structured

Panelists include:

Steven E. Staugaitis, a CPA and leader of Kreischer Miller’s Entrepreneurial Services specialty services group. Steve focuses on serving privately held companies with their accounting, tax and business advisory needs.

Thomas J. Kent, Jr., is a partner and Attorney for Fox Rothschild and co-chairs the firm’s Franchising, Licensing & Distribution Practice. He focuses on franchise law as well as mergers and acquisitions.

Lisa Kennedy, Vice President, Senior Business Development Officer at PNC Bank is one of the top SBA lenders in the nation. With over 22 years of SBA financing experience, she has helped fund over $150 million in SBA loans.

The Webinar and/or materials were prepared for general  information purposes only and are not intended as legal, tax, accounting or  financial advice,  or recommendations to buy or sell securities or currencies or to engage in any specific transactions, and do not purport to be comprehensive.  Under no circumstances should any information contained in the seminar, and/or materials be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy.  Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation.  Any views expressed in the seminar and/or materials are subject to change without notice due to market conditions and other factors.

PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”). Banking and lending products and services and bank deposit products and investment and wealth management and fiduciary services are provided by PNC Bank, National Association, Member FDIC.

©2012 The PNC Financial Services Group, Inc.  All rights reserved.

Published in Akron/Canton

Should your legal firm be considering ways to improve its payment practices ? and ultimately its cash flow ? alternative fee arrangements and online payable tools are good bets.

But a word of advice from Gavin Geraci, senior vice president, specialty segment executive, PNC Business Banking: couple that examination with an evaluation of the firm’s financial policies.

“Any time you’re going to adopt a new billing arrangement or structure, use that as an opportunity to evaluate billing and collection policies,” Geraci says. “It’s likely going to result in a change in revenue, a change in how clients see their charges and it’s going to have an impact.”

Review how it will potentially impact the budget with which you started off the year. The payables cycle particularly deserves review if the firm does work on a contingency basis.

“Take advantage of the data that is available to the firm to really do some analysis and test the impact of any changes you might make on the firm’s cash flow, because  if you do it to any magnitude, it will likely have some impact,” Geraci says.

Moving to a flat fee instead of a traditional hourly billing and using credit cards to pay legal fees are two growing trends being used to improve payment practices.

“Using a credit card as a payment vehicle tends to be a pretty effective means for some firms to accelerate those receivables,” Geraci says. “It’s something more businesses are amenable to, and it’s a little outside the traditional invoicing that you will normally see.”

Other methods to accelerate payments include online tools, such as online bill pay, offered by financial institutions.  These tools can also offer access to escrow accounts, master and subaccounts so that legal firms can effectively manage those.

Technology aside, some good, old-fashioned business smarts can help improve the picture.

“You have to actively manage your past due accounts,” Geraci says. “A lot of times those conversations are going to lead to greater collection than if no efforts were made. That follow up could be the difference between full payment and a writeoff.”

Gavin Geraci is the senior vice president of business banking and specialty segment executive at PNC Business Banking. He has more than 19 years of experience in the financial services industry.

How to reach: PNC Bank, www.pnc.com/attorneys or (877) 535-6316.

Published in Akron/Canton

Amid the economic gloom and doom of the past two years, a potential bright spot may have been overlooked. In spite of the impression that U.S. exports are not competitive, are shrinking or are hamstrung by protectionism, the U.S. remains a major player with enormous untapped potential.

Victor Notaro, the senior vice president of PNC Global Treasury Management, believes that the U.S. is doing very well as an exporter, but could be doing better.

“While we certainly import more than we export, we remain the third largest exporter of goods in the world,” says Notaro. “And when you add in services, the picture gets even better. In spite of this historic success, however, too many companies are reluctant to explore the international market, even though 95 percent of the world’s consumers are beyond our borders.”

Smart Business spoke with Notaro about what’s holding companies back and how winning companies have learned to grow internationally.

What proportion of U.S. companies export?

According to the U.S. Department of Commerce, only 1 percent of U.S. companies export. On the other hand, the U.S. has about 30 million companies, so even 1 percent of that total is a large number. That small percentage has been able to keep the U.S. in the top tier of all exporters worldwide. When you include high-value services such as professional and technical services, insurance and financial services, the U.S., at $1.5 trillion, tops every other country. And, contrary to popular impression, exports are growing. U.S. goods and services exports in the first two months of 2010 are up 14.8 percent, according to the U.S. Department of Commerce.

Why does such a small percentage of companies export?

First, U.S. companies have enjoyed such a rich home market that they have not needed to export in order to grow. Second is the risk you take on whenever you venture into the unknown. Companies may not be comfortable navigating within other cultures and they are concerned about managing risk, getting timely information, even getting paid.

Is protectionism a problem?

Certainly, we hear that undervalued currencies in China and other countries make U.S. exports more expensive. And foreign governments often provide low-interest loans and subsidies that put the U.S. at a disadvantage.

But there is so much room for growth and hunger for the innovative products and services that the U.S. creates that companies should not let these issues discourage them.

What is the profile of a typical exporter?

Companies of any size can enter the world market successfully. However, we see more of an export concentration by larger companies. So of total exports, 60 percent is accounted for by the top 500 U.S. companies.

Although large companies dominate, smaller companies — those with fewer than 500 workers — are getting into the game in increasing numbers. Our domestic market is very competitive, robust and innovative. If a company is doing well here, it has what it takes to outpace foreign competitors.

If a company is interested in exporting, how does it get started?

First, gather information on the markets you are considering. This doesn’t require a large investment. Trade shows, informal discussions with vendors and even competitors can help you understand how your products might compete abroad.

Second, get as many people as possible involved in the effort. It is particularly important that senior management and key people understand the foreign market.

Third, take advantage of agencies such as the U.S. Commercial Service, a bureau of the Commerce Department that has offices all over the world. Many states have a presence or commercial support in other countries, as well. Industry associations offer different levels of support, but many provide useful information such as changes in the regulatory environment in key countries.

Enlist the support of a financial firm that has a global advisory service that can provide intelligence and advice based on first hand experience. And if you are importing or sourcing abroad, leverage the relationships you have already developed. Many companies are moving from sourcing to selling successfully. Most important, talk to everyone you can — customers, suppliers, even competitors. By asking about their experience, you can pick up a lot of sector-specific information.

What kind of support should companies expect from their bank?

At the very least, you want a bank that understands the full range of financing and settlement options that are available — letters of credit, ExIm Bank facilities, cash management, treasury management for multiple currencies and cross-border transactions. Other important capabilities are foreign exchange and risk mitigation solutions.

On top of that, your bank should be able to provide guidance on local business customs and advice on the creditworthiness of potential trading partners.

Then, look for help in meeting general business challenges in emerging markets. Advisers who have first-person experience in a target country can provide invaluable support as you explore your options.

This article was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell securities or to engage in any specific transactions, and does not purport to be comprehensive. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other adviser regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

©2010 The PNC Financial Services Group Inc. All rights reserved.

Victor Notaro is the senior vice president of PNC Global Treasury Management. Reach him at victor.notaro@pnc.com.

Published in Philadelphia

With economic uncertainty becoming a way of life, most businesses struggle to find new sources of revenue growth. As a result, they are looking harder than ever for ways to improve profitability through more efficient use of working capital.

Accounts receivable remains the lifeblood of most companies and, therefore, it is one of the first places they should look to refine their processes, says William J. Booth, executive vice president, Treasury Management, PNC. The opportunity for improvement in working capital management is significant.

Smart Business spoke with Booth about the latest techniques and technologies for improving working capital performance.

What’s the first step companies should take to make working capital more efficient?

Companies should look first at the way that cash comes in the door. For most, that ‘cash’ looks a lot different than it did a few years ago. Electronic payments are becoming the norm. Even credit card payments can be a meaningful component of your mix thanks to commercial p-card applications. New technologies, including ACH, EDI and wire transfers, allow companies to better integrate these payment streams, allowing the business to benefit from controls visibility and technology not only with traditional paper receipts through a traditional lockbox but also electronic payments through a virtual lockbox.

What about payments outside the lockbox?

Companies occasionally receive payments at a facility other than a lockbox. Using remote deposit technology, you can integrate these payments and the remittance detail into the lockbox process. The information is then incorporated into the overall consolidated stream of data coming back to your system.

Are there ways to make foreign-denominated payments less of a nuisance?

Ask if your bank is capable of processing foreign-denominated payments through its lockbox. Some banks can provide a spot rate foreign exchange for certain currencies, then seamlessly integrate the payment, saving up to two weeks of collection time.

How important is it that information be current and correct?

Past due accounts and unauthorized deductions can significantly reduce cash flow, so up-to-the-minute receivables information is a critical piece of the process. With current information at your fingertips, you can significantly improve daily sales outstanding, deduction management and collections.

Even if you use a lockbox solution to collect payments, there are more advanced features to take receivables collection to the next level.

What are some advanced technologies?

Intelligent character recognition software, virtual batching and accounts receivable matching are some of the most useful advanced tools for improving A/R performance.

How does intelligent character recognition work?

Data that was manually keyed in is now automated. Information contained in columns and rows from statement and invoice documents is captured and uploaded immediately, reducing processing time and improving the quality of receivables information.

What is virtual batching?

Virtual batching is a way to customize data grouping so that you can access the information that’s important to your business. Receivables can be grouped by department, transaction size, or client — or even matched and unmatched payments. Exceptions, such as out-of-balance situations and incomplete checks, can be isolated and dealt with right away, allowing you to get through your exception processing more quickly. Virtual batching can also be used to segregate different categories of customers, allowing data to be pushed to the right group of accounts receivable people, which improves workflow.

How can companies use A/R matching?

Accounts receivable matching allows your bank to compare, validate and match payment data to an external source such as an open invoice file. If items don’t match, additional data elements can be added. Say a client submits an invoice with a partial invoice number. Accounts receivable matching takes what was provided and attempts to match the information until a valid number is found. The result is that you’re able to post information more quickly and reach customers faster when legitimate exceptions are found.

What is the role of online correction tools?

Sometimes, the lack of any invoice or posting information cannot be effectively resolved through accounts receivable matching. An online correction feature allows your bank to identify the exception item and post it in a website for your immediate review. You can then research and manually input the missing information so the item will post automatically when your receivables file is received from the bank. These solutions can be structured to work together or tiered to process receivables in the best way for your organization.

When considering a provider for your receivables management, make sure that your bank can provide comprehensive capabilities. You can then identify the solutions that will address all aspects of your receivables needs and maximize your cash flow.

This article was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell securities or to engage in any specific transactions, and does not purport to be comprehensive. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other adviser regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

©2010 The PNC Financial Services Group, Inc. All rights reserved.

William Booth is executive vice president, Treasury Management, for PNC. Reach him at william.booth@pnc.com.

Published in Philadelphia