Category Archives: 1 Basic Accounting

Managing cash flows

When we discuss payment terms and managing cash flows we are faced to deal with the needs of our customers. I have had experience with companies who say that their customers ask for 6 month payment terms. 6 months! Imagine trying to accommodate your own business within the same cash supply timeframe and producing, paying bills within the 6 month period. When I dag further I realized that those companies were themselves in a tight spot since they’re customers were enforcing longer payment terms and so on. It sounded like a vicious circle. Furthermore, there are countries that require certain taxes to be paid upfront for the whole year and the amounts are based on expected sales volumes and what not. Where does the money come from? It’s a cycle and at some point your company is going to part of it.  Continue reading →

Confirming certain measurable amounts or time spent on work

Once the measurable amounts are determined and have been agreed with the team, it’s one thing to know them and understand them, but another to ensure that they are met and correctly measured. Routines confirming the measurable amounts, time spent on certain activities is as essential as merely identifying and agreeing on something.   Continue reading →

Factored receivables with nonrecourse

We have now discussed factoring agreements with recourse however what if the risks prevailing are indeed transferred? If you’ve signed on an agreement where you’re in fact selling the receivables and you’re no longer and will not be in future responsible or taking risks in relation to the collection of the invoices, you’ve in fact sold them receivables for good and you can account for the actual collection of the receivables once you’re being paid by the financing company (i.e. bank).  Continue reading →