The relationship between business owners and their bankers is critical to maintain to ensure both short-term and long-term business health, and yet it's not talked about very often. How do you collaborate with your bankers during times of uncertainty? How do you make this critical relationship work to your benefit over the long term?
CAMPS, on Jun 1, 2021
To grow in the new market environment, manufacturing companies require funding. To help you better understand the options, CAMPS hosted a panel to cover multiple funding options:
CFO Selections is a proud member of CAMPS and our own Kevin Briscoe recently participated in a panel discussion at a CAMPS event: "Funding your Manufacturing Business."
If your manufacturing company is growing, listen to the insights and options shared by the panel of financial specialists.
With government assistance waning, business owners are evaluating other ways to improve cash flow.
Since slow-paying clients are one of the biggest killers of cash flow, some companies choose to sell their invoices to recoup some of that missing revenue more quickly. This strategy, known as invoice factoring, is a way for companies to get an infusion of cash from the products they have already sold or services they have already performed from a third-party that is willing to advance them the funds before customers pay.
Alternatively, companies that do not want to sell their invoices, and may not want, or can’t, pursue a line of credit with a traditional business bank, can borrow money against their invoices from a specialty lender. This strategy, known as invoice financing, not only improves cash flow but can also serve as a means of borrowing for businesses that cannot readily obtain other lines of credit.
Each strategy has differences to consider. Find out more about invoice factoring and invoice financing to determine which approach is right for your business.
CFO Selections Team, on Aug 17, 2020
Financial projections are a critical component of a sound business plan. These projections (or “financial forecasts”) are used externally to obtain funding as well as internally to create a strategic growth roadmap with key milestones.
At the core of these projections are logical assumptions for revenue, COGS (cost of goods sold), SG&A (sales, general, and administrative) expenses, capital investments, and cash flow that serve as building blocks for the final figures that result. Because your financial projections rely on these pillars, it is crucial to find a balance with these inputs. Being too conservative or too aggressive with your assumptions will skew the resulting projections, damaging their overall credibility. The goal is to inspire confidence externally as well as internally while maintaining high ethical standards, which requires a balanced approach toward creating assumptions for financial projections.
Use existing financial information, even if it is limited by the newness of your business, to justify these assumptions and inform your financial forecasting process. Your resulting financial projections should include a P&L statement, cash flow statement, balance sheet, capitalization table, and strategic investment plan.
Lenders and investors will always ask for financial statements as part of the application process. When applying for funding, you will be required to provide both historical financial data and projected financial figures. Banks and investors will then analyze where the company has been and where it appears to be going to determine if its trajectory fits within acceptable risk parameters.
Bill Palmer, on Apr 23, 2019
For many owners of growing companies, the choice of a bank is a crucial decision. A solid relationship with a bank can make or break a company. Banks provide relatively cheap capital to fund expansion as well as the everyday transactional and payment services that enable everyday operations.
A poor relationship with your bank can hinder growth plans and even put you out of business. Still, many business owners simply stumble into doing business with a bank because of convenience or with the mistaken assumption that all banks are all the same. A wise business owner puts effort into developing and maintaining a relationship with their bank, just like they do with key customers and suppliers, to ensure their long term success.
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