Tag: finance

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Bankable: Giving Small Businesses Credit

Bankable: Giving Small Businesses Credit

Whether the economic environment is “friendly” or not, small businesses will turn to their banks to secure lines of credit and get funding to smooth out bumps in cash flow and availability.  Getting credit is always a challenge, even in the best of times.  When the economy stalls and times are tough, getting the necessary cash to support the business gets even tougher.

A recent post on blogs.wsj.com (Wallstreet Journal) discusses the results of a survey (Federal Reserve Bank of New York’s Small Business Borrowers Poll), where it was revealed that “small-business owners in New York, New Jersey and Connecticut are still struggling to acquire credit for day-to-day expenses and expansion”.  What a surprise.  Times are tough, and the banks need to manage their risk and increase the predictability of repayment for loans and lines of credit.  If accountants are looking for reasons to adopt and implement analytics and forecasting for their clients, there you go.

Accounting professionals can help their clients get the credit they need, by helping demonstrate how “bankable” the business is.  Here are three ways to improve the odds when trying to get financing for the business (and where the accounting professional can be a pivotal player), according to an article on Bloomberg Businessweek: Three Ways to Make Your Small Business “Bankable”

1. Tighten up your books. The value of good financial reporting cannot be understated. By being able to demonstrate profitability and a strong balance sheet, you reduce the ambiguity that is often present in a small business’s financial statements. Banks look to manage their risk and increase their predictability with the loans and lines of credit they give. Owners who can do that for them will stand a better chance of getting approved.

2. Showcase your strategic thinking. Give financial institutions an idea of how your strategy will help your bottom line. Broad brush strokes won’t cut it here. Provide specifics as well as the quantitative and qualitative reasoning behind it.

3. Get some help. Although most small businesses don’t require a full time chief financial officer, many should consider hiring a reputable, outsourced accounting firm. The right one will give you a better understanding of your company finances.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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The Cloud is Not the End of ERP

With the emergence and general acceptance of “cloud” technologies and services, many in the information technology industry have begun to wonder if the traditional approach to enterprise software – the ERP solution – is nearing its useful life.  Is this the end of ERP?  Well, the hype sometimes becomes the reality, and businesses are moving in droves to software-as-a-service to find the cost and efficiency benefits promoted in the sales materials, and they’re finding them.  Look at Sage’s acquisition of Intacct as an expression of increased focus on cloud-based solutions. This activity around the cloud and cloud-based software-as-a-service represents a major change in how people access and consume information technology and business services, a change that’s being driven by the huge momentum of the overall growth of “cloud”.  The market is moving to a customer-centric subscription model, where the legacy approach was more in tune with the “purchase it once and use it forever” mentality, and customer relationships were largely centered on upgrade cycles.

“As an economy and a culture, we are rapidly moving away from owning tangible goods and, instead, gravitating towards becoming members of services that provide us with experiences  – such as listening to a song, using a car, watching a movie or collaborating with our colleagues.

Of course, this cultural transformation has profound implications for business models. Why? Success is no longer gauged by counting how many units of your product you have sold. Rather, success is measuring how many customers are using your service on a recurring basis and how successful you are monetizing those recurring relationships.”

Forbes.com guest post written by Tien Tzuo http://www.forbes.com/sites/ciocentral/2012/02/09/the-end-of-erp/

While it sounds like the cloud is the right approach for everyone, looking at the variety of real business situations in the market suggests that, as always, one size does not fit all, and more “traditional” ERP solutions may well continue to be the right foundation for many enterprise operations.  Particularly when considering that many businesses already significant investments in platforms and infrastructure, software and data integrations, and operational process support, cloud software solutions may not provide the necessary functionality to support existing business.  Further, integrations that may be available and supported with legacy systems are often not available with cloud-based counterparts, while different integrations based on cloud standards may be present.

For smaller businesses and those in emerging markets, subscription-based IT models may make more sense, especially as popular traditional software makers have introduced their cloud-based counterparts which will likely incorporate the features or functionality of their legacy systems, while taking advantage of the capabilities introduced through cloud integration and interoperability standards.  Strong consideration should still be given to “traditional” ERP solutions, however, as there may be a level of stability, usability, or process support desirable by the business.

Utilizing these traditional ERP systems does not mean eliminating the potential for the business to benefit from cloud solutions.  Rather, cloud platforms and hosting solutions, as well as cloud-based integrations and extensions, are enabling mobility and collaboration around legacy systems, delivering cost and efficiency benefits just as significantly as those who have adopted a full-on “cloud” approach.

“It also makes sense to explore “edge” investments. […] there are significant innovation opportunities outside of core operations. Look to take advantage of the ERP platform’s capabilities in these spaces. Or implement low-cost, smaller-footprint solutions – even if on an exploratory basis. If they are fully adopted later, you can integrate them into the ERP backbone and expose standardized data and processes to the edge.”

from Deloitte’s Tech Trends 2011 report titled “the end of the “Death of ERP” 

So, what does this mean for your business?  It means you need to consider all the possibilities.

First, evaluate cloud-based options, and balance features with cost, time-to-value, and operational requirements.

Then, selectively innovate.  Figure out which areas of the business give you a competitive differentiation and innovate in those areas.

The traditional thinking, which is in line with the traditional ERP approach, is that all of the business functionality has to be incorporated into a single platform solution.  This is certainly no longer the case, and businesses are finding that they now have an ability to take advantage of the benefits of their existing systems while extending and innovating through the use of cloud services.