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Operational Items Tips
Board meetings are not department meetings.
It is crucial to keep board meetings focused on company direction. All to often board meetings become extensions for micromanaging departmental concerns. Each company group has distinct responsibilities in an effort to achieve company goals - board of directors, owners and management. Therefore, it is an excellent idea to solicit some outside influence to sit on the board.
Buyer Beware - capital lease financing.
Rarely is capital lease financing the way to go. The interest rate is generally high, hidden fees abound and end-term buyouts hit snags. So before a decision is made, please run the computation to determine the "true" interest rate assessed and review the contract closely for fee and buyout arrangements.
Debt v. Equity infusion?
There is no right or wrong answer here. However, consistency needs to be applied over time and a clear understanding of the differences between these two types of infusions must be attained. And most importantly, appropriate documentation must be completed in order to eliminate potential questions about the type of infusion selected.
Don't lose credit card transaction revenue.
Save all the documents you generate or receive related to customer credit card receipts. Always tie the various pieces together on a regularly basis to make certain you receive the funds rightfully owed. Errors occur due to the sheer volume of credit card payment activity the card issuers encounter. Double-check their accuracy.
Keep the company retirement plan at one trust company.
While individual segregated accounts outside of the main trust company may make financial sense, for accounting purposes, it raises costs and sometimes leads to lost assets. Therefore, select a large full-service trust company to meet numerous investor needs and keep plan assets under one roof.
Know your flows.
Gain an understanding of the components of cash flows from operating activities (core business), cash flows from investing activities (asset purchases and disposals) and cash flows from financing activities (debt and equity transactions). Knowing how these three separate components of cash flow interact with each other will make acquisition and infusion decisions seem straightforward.
Line of Credit financing is a good thing.
Dipping into available bank LOC financing is a smart way to meet operational demands as they arise. Smarter then pushing A/P payments to vendors out another week. Smarter then paying management a day or two after other staff. Smarter then hounding long-time routine customers for accelerated remittance. Line of credit financing is an economic and efficient tool to keep your company humming along.
No need for multiple bank accounts.
In this day of payroll outsourcing and low interest rates, it doesn't make sense to have more than one operating bank account. You gain greater control and reduce bank errors. And know your cash balance with a single glance accompanied with no math.
Payment on individual invoices v. monthly statements.
If a vendor mails both individual invoices and monthly statements, then remit payment based on the monthly statement amount. It is easier to track, will create less confusion and likely involve fewer payment misappropriations. And make certain you attach each individual invoice and related purchase orders, if applicable, to the monthly statement and separate payment voucher.
Split out travel from entertainment costs.
You get the question every year at tax time - what are your total meal costs? So simply allocate airfare, lodging and vehicle expenses to travel and allocate meals and diversion activities to entertainment. And treat company outings as employee relations.
Tangible asset additions bring about tangible asset disposals.
An upgrade in machinery or computer systems usually arises from the obsolescence of previously used equipment. Pay careful attention to your internal fixed asset lists and make certain you still use the equipment listed. Otherwise, you're likely paying tax or taking a depreciation deduction on assets you no longer use or even possess.
Tie new equipment purchases to short-term debt.
Long-lived assets are just that, acquired to last three or more years. Therefore, it generally makes sound business sense to obtain short-term bank debt financing that mirrors the intended useful life of the asset acquired rather than pay cash or use credit cards. Computer Equipment = 3 years. Office Equipment = 5 years. Furniture = 7 years.
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