9. April 2010 by admin.

I don’t often highlight political issues on this blog, but as we approach tax day, I’m guessing most would agree with this opinion.

In “Washington Whispers” by US News and World Report

Top Ten Things Wrong with the Income Tax System
by: Ken Hoagland

• It’s too complicated. Even a degree in rocket science won’t save you from 67,500 pages of all but indecipherable tax code regulations. It confuses the IRS, the Secretary of Treasury and even the former Chairman of the House Ways and Means Committee. It’s an annual nightmare that has spawned a tax industry based on complexity created by our own government.

• It’s too expensive. The complexity of the code costs a lot of money—more than $310 billion last year on the paperwork alone. Small businesses often pay more in paperwork expenses than the taxes they pay. Can any law be just, much less efficient, that costs so much to obey?

• It’s unfair. Income is commonly double and triple taxed, married people pay a higher rates than singles living together and Congress’ mistake in failing to index the Alternative Minimum Tax for inflation now threatens to define as “wealthy” those with as little as $80,000 a year income. How just can a tax be that rewards those who hide income either here or offshore or have tax lobbyists to broker special deals?

• It damages the economy. Income taxes are levied on work, savings and investments. In essence, the government grows by taking money from what makes the economy grow. Such a system retards capital formation, job growth and a higher savings rate and, as such, stymies economic growth or recovery.

• It’s been corrupted. More than a billion dollars a year is spent lobbying the tax code. Congress has sold off two to three tax breaks a day every day they’ve been in session for the last 20 years. It makes Congressmen powerful and lobbyists rich and creates a tax system with more loopholes than Swiss cheese. It’s very lucrative for those in Washington and very bad for those without a lobbyist.

• It undermines American companies. Foreign governments often forgo domestic taxes on products for sale overseas. American companies don’t get that break and carry the second highest corporate tax rate in the world, employee FICA taxes and significant tax compliance costs as the cost of doing business here. It puts the “Made in America” label at a significant producer price disadvantage and drives jobs overseas.

• It hides the cost of government. Taxes are withheld from paychecks, hiding from plain sight the cost of federal spending and its relationship to our own earnings. For many Americans, federal spending mistakenly seems like “free money”. The resulting tenuous connection between personal wealth and government profligacy allows politicians to promise more and more from the Treasury to win elections and satisfy their own political ambitions. That’s destructive.

• It’s intrusive. Once upon a time it was no one’s business how much money we made or how we spent it. Today it is the right and duty of the federal government to track every penny we earn, save or spend. It has created a system where every business decision is weighed against tax consequences and where pastors are told what they can and can’t say from the pulpit to keep their non-profit status.

• It hurts consumers and workers. Business taxes don’t come out of CEO’s personal accounts but are paid for by consumers when taxes are “embedded” in wholesale and retail prices. When competition with foreign producers won’t allow a higher price point to cover taxes, employee’s wages and benefits take the hit.

• It makes us into modern day serfs. We get what’s left over in our paychecks after the federal government has taken its share. That means the fruits of our labors belong first to our government. That’s backwards and not at all what the Founding Father’s had in mind.

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3. March 2010 by admin.

Great article here from CFO magazine about how companies integrate the “supplier-to-manufacturer-to-customer” cash cycle into their business strategy.

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3. March 2010 by admin.

• “It is easy to make a buck.  It’s a lot tougher to make a difference” - Tom Brokaw
• “You’ve achieved success in your field when you don’t know whether what you’re doing is work or play” - Warren Beatty
• “Advice is what we ask for when we already know the answer but wish we didn’t.”
• “Most of the things worth doing in the world had been declared impossible before they were done” - Louis D. Brandeis
• “You aren’t wealthy until you have something money can’t buy” - Garth Brooks
• “I don’t like heights.  This is why I stopped growing at fifth grade.” - Billy Crystal
• “When someone tells you nothing is impossible, ask them to dribble a football.” - Unknown
• “As I grow older, I pay less attention to what men say.  I just watch what they do.” - Andrew Carnegie

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24. February 2010 by admin.

In talking with our small business clients one aspect of their business always seems to rise to top of the ‘needs attention’ list. It is the long debated topic of collections — should I? Shouldn’t I?

The scenario is simple.

I am a small business owner and my cash flow is under strain, so I look to outside resources to resolve the issue. I use my credit cards for business expenses, I slow down my own payments, and I use any available credit facilities to the maximum. I even explore new credit options, a line of credit at my bank, factoring, invoice discounting, what ever I can find.
What I don’t do, naturally, is get on the phone with my customers and ask them to bring their accounts up to date. If I did, my cash flow problems would probably diminish overnight.  When we spoke to some mid-sized companies recently about their payment policy, a number of them openly admitted they deal with their accounts payable when the customer calls and asks for the money. They assume that if they don’t call they don’t need the cash at that time.

With this type of approach it becomes even more important for small business owners to be ever diligent about following up on — what is after all —their money. They are not asking for something as a favor but as a result of them having delivered their goods or services.

At The Interface Financial Group, when we turn current quality accounts receivable into instant cash, we often have to remind our clients that the primary
responsibility for a healthy cash flow is their responsibility — it is not something that you outsource. Interface is there, however, to help with cash flow needs that result in growth situations where other options are not available.

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27. January 2010 by admin.

How do you finance your business growth?

Many entrepreneurs running small- and medium-sized businesses have found that corporate and personal credit cards can be a viable financing tool. They provide the purchasing power for a small business as it finances the gap between selling their products or services and getting paid for them.

Corporate credit cards invariably have higher spending limits than personal credit cards. While this seems to be a good thing, corporate credit card users should note that some card issuers report their corporate credit activity together with their personal activity, thus distorting their personal credit picture. Looking at their personal credit picture might lead one to think that as an individual they are grossly over-extended — not good for the individual or their business.

Another potential credit card ‘trap’ is that it becomes too easy to use the card and run up what quickly becomes permanent debt in the company. The cards get maxed out and the company is left with a solid core of debt to be serviced on a monthly basis. If the business is growing rapidly there will usually be little opportunity to pay down that credit card debt as the ongoing growth requires more working capital to fuel that growth.

An alternative funding approach to consider is invoice discounting (also know as spot-factoring). This funding approach provides the working capital needed when, and as, it is needed. Invoice discounting does not represent a loan, as is the case of a credit card, and is very much ‘off balance sheet’ funding.

The need for additional working capital comes from the delay between issuing invoices and being paid. The invoice discounting approach speeds up the cash flow so that sales essentially become ‘cash on delivery’. This means that a business is utilizing their existing assets in a more productive manner without adding a debt burden to the company.

Growth will always demand more capital — the successful entrepreneur is the one who finds that all-important cash without going into debt or being constrained with burdensome service contracts. Invoice discounting may be the winner over credit cards.

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7. January 2010 by admin.

Factoring is not for everybody.  Like all financing, there are certain situations when factoring works extremely well, and other situations when it doesn’t.  So when is factoring the right choice for a business?  Below are eight benefits of factoring.  If you know of a company that values the following, then factoring may be right for them.

• Speed of Setup and Funding: Unlike most capital resources, the factoring relationship can be set up within days, and once set up the funding of invoice can happen between 24 to 48 hours.
• Different Credit Requirements: Most of the funding decision is based on the credit of the customer, not of the company receiving funds.
• Flexible Credit Limit: As long as the client is invoicing a credit-worthy customer, factoring relationships can grow with the client so there may not be limits to access of capital.
• Borrowing Discipline: Lack of discipline often causes companies to not pay loans regularly down the line. With factoring, there’s no lack of discipline — each time a customer pays the invoice, it retires the mini-loan.
• Preserved Equity: Factoring is considered an off-balance sheet form of financing, preserving the equity position in a positive manner.
• Ease: The process of getting set up requires minimal paperwork and no lengthy negotiations compared to banks and equity venture funding.
• Cost: The cost of factoring invoices is relative to the short-term nature of the transaction, not lasting more than 90 days — more than a bank, but less than a VC. Companies with thin profit margins are not good candidates for factoring to grow their business.
• Ability to Grow: Having access to capital improves the financial position of a growing company. While factoring is a short term solution, it ultimately leads them to conventional bank financing.

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23. December 2009 by admin.

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9. December 2009 by admin.

Did you know IFG is able to fund deals all over the US?  Below are some examples of clients we have funded from coast to coast.

• Cabinet Manufacturer - $11,938

• Logging Company - $15,389

• Energy Load Management Systems - $40,000

• Consulting Firm - $102,747

• Oil & Gas Transport - $62,088

• Framing & Drywall Contractor - $30,630

• Metal Roofing Contractor - $33,311

• Metal Fabricator - $3,882

• Advertising Agency - $7,912

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7. December 2009 by admin.

As a business owner, I could definitely relate to the following list of 5 lies about being an entrepreneur published by marketing expert Stacy Karacostas on Startupnation.com.Lie # 1 - If you want it done right, you have to do it yourself. Lie # 2 – You have to give up your life to grow a small business. Lie # 3 – Once you have a small business you can never take a vacation. Lie # 4 – Your business will always suffer like the cobbler’s shoeless children. Lie # 5 – Being self-employed is the same as owning a business. For details on each of these lies and to read the full article, click here.

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12. November 2009 by admin.

For the record, I am not a big fan of 20/20.  But I was sent this video and I found it amazing.  How many times have you heard the saying, “It takes money to make money.”  Well, watch this clip and see how one guy turned a small, red paper clip into a house.

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