Accounting News and Notes

Straight Talk: When there is not enough in your paycheck for your mortgage – what should you do?

Sell, Loan Modification, Short Sale or Foreclosure.

If you are dealing with financial distress and the inability to keep your mortgage payments up to date my advice is to quickly educate yourself on your options and decide the best course of action for your family. Don’t wait! If you do nothing, the choice is taken out of your hands. You can end up with a foreclosure from your lending institution that negativity impacts your credit and the ability to buy another house for a minimum of 2 years.

Your options are:

1) Sell the house outright for at least what you owe your current lender and you come out whole. The marked benefit is having no negative impact on your credit history. Unfortunately, if you purchased within the last 2-3 years with minimal to nothing down; or if you put minimal down and obtained an interest only loan you could find it difficult for your home to appraise and complete a sale in the current declining value environment. If that is the case, you have the following three options: Loan modification, short sale or foreclosure.

2) Apply for a loan modification from your existing lender. While this process can be tedious you can have favorable results, stay in your home and have time to get back on your feet. Unfortunately each lender has their own process and follows their own timeline so you need to play by their rules, complete all paperwork in a timely manner and give them the documentation they request so they can render a decision. Then follow up, follow up follow up!

3) Short sale: simply stated you can sell your home and request that the lender of your current mortgage accept less than the total amount due. This is done as soon as a contract/offer is submitted to you. If you have both a first and second mortgage; you must obtain approval from both lenders and this process is even more challenging. The lender does not have to accept a short sale which means – no sale! They will weigh the options of your equity position and estimated marketing time and costs to see if the short sale benefits their bottom line versus taking the house back through foreclosure proceedings and selling it themselves. Short sales usually take much longer than typical resale closings, i.e. 2-4 months but the benefit is you will not have a foreclosure on your credit standing for 7 years and you can move on without any baggage to your next housing opportunity.

4) Foreclosures: When the lender holding you loan takes action to foreclose upon your property, you are given legal notification and after due process, you can and likely will be evicted from your home. In the state of Georgia, foreclosure can occur as early as 30 days after your first delinquency. While this is not typical, it is legally possible. It is beneficial for the lender to find a way to keep the homeowners in the property, not incur legal and real estate expense of upkeep and marketing. However, after a certain time frame, usually 2-5 months, action will be taken.

ACT NOW. Your best defense is to investigate which of these opportunities to pursue before the decision is taken out of your hands. When you know you will have a shortfall in making your mortgage payment start the process immediately, not 2-3 months into a delinquency. Lenders usually do not accept partial payments; therefore making less than the required mortgage payment is still considered a delinquency. Knowledge is powerful. Make the most of your alternatives despite the difficult choices. Having a plan keeps you and your family on track for adjusting to the decisions that must be made in these troubling financial times.

Your CPA and Mortgage Planner can help negotiate through these tough times by arming you with key information. As a 30 year veteran of the mortgage industry, my goal is to assist my clients through all the cycles of their life by managing their best mortgage solutions. I am available to assist with any questions or strategies to help you and your families navigate the current market conditions.

To learn more contact Ms. Sandra Hill of Georgia Residential Licensee #12149 at Trellis Financial Services, Inc. via phone at (770) 814-0552 or by the Internet at sandyhill@trellisfinancial.com

Gwinnett CPA Firm on Being Ever Diligent…While Collecting Unpaid Invoices

The Apostle Paul Commands us to be ever diligent as Satan is always seeking for those he might devour. It is by our readiness and putting on the very armor of Christ that we are able to do God’s bidding. When we are addressing collection issues, it is easy to fall into righteous indignation as others fail to live up to their end of the bargain, after we have strived to be Christ-like in the services that we have provided. It at these times, when the devil as the opportunity to gain a foothold and to encourage us to judge others, and to sin in our anger.

Staying Aware. God commands that we are to submit to the Authority of others, even if it hurts. This means that whatever a judge or court rules that we are to submit to the laws of our government, elected officials and authority figures. However, it is prudent to remember that Jesus Christ himself humbled himself in the court of Pontius Pilate submitting to the court’s ruling and ultimately His crucifixion. Though Jesus knew the truth and could have over-thrown the court and its decision at any time, He chose to be submissive and suffered as a result, a gruesome death on a cross. However, He realized, as well we should, that the courts of the earth, though they are to be obeyed, are not the courts of the Heavens. “I care very little if I am judged by you or by any human court; indeed, I do not even judge myself.”  1 Corinthians 4:3

Offering Forgiveness. Though there will be many who will fail you, as Believers we are exhorted to go not only the extra mile to assist others, but to sincerely offer forgiveness, when doing so. We are commanded by scripture to forgive as many as seventy times seven (for you non-math people that is 490 times) in a single day. Luckily no one has yet sinned against me 490 times in a day, my responsibility as a Christian is to always offer the path of forgiveness and peace.

Staying Out of Debt. Staying out of debt, substantially limiting both the amount of debt you acquire and its repayment period are Godly tenants of the Christian-life. All of the precepts in this series we have discussed have included the a Believer’s responsibilities to handling collection issues. Whereas staying out of debt and paying it off ASAP is your best bet to a quieter and more joyful life, for it is far easier to serve God when you are debt-free and not heavily laden with undue concerns and worries. “Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.” Romans 13:8

To read more about John Dillard CPA and his CPA practice, business consulting and IRS representation visit http://www.hiscpa.com/ (All Rights Reserved)

To read about his books A Voice of One, Overcoming Life’s 9/11’s and Charleston Dawn and his speaking ministry visit http://www.john-dillard.com/

Helping Clients with Corporate & Personal Income Taxes, Incorporation Advice, Tax Planning, Virtual CFO, Financing, Business Plans, Back Taxes, Offer in Compromise, Tax Advocacy, Business Acquisitions & Sales, Business Plans, and IRS Representation.

Serving Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond

Following Christian Precepts…While Collecting Unpaid Invoices

God guides us, throughout the Bible, to be good stewards of our time, money and resources. To this end, there are many variables to be explored when making collection efforts that I have detailed below of situations and circumstances where we tried to go the extra mile in being a Christian and a Believer on both collection issues and difficult economic times. These principles will do much to guide and direct you as you handle the collections of your business.

-Being Willing to Sit Down With an Arbitrator, a fellow Believer, or their clergy. Just as Jesus deals with us directly through the prompting of the Holy Spirit so are we to be willing to deal directly with others to ensure that open and honest communication, at least on your part, is always maintained. If a debtor is unwilling to resolve the matter in any amicable sensible fashion, then offer to meet with an arbitrator or a fellow Believer or their clergy. Your goal in these conversations should not be to be right, but only just and fair. I have often been willing to walk away from/reduce billings in an effort to keep peace and to live in peace. I always suggest being willing to meet with their pastor in an effort to not have a biased mediator as well as to make others more comfortable. “If your brother sins against you, go and show him his fault, just between the two of you. If he listens to you, you have won your brother over.” Matthew 18:15

-Be Patient. Perhaps there is no greater virtue than patient. Imagine what would happen if God was not patient with us. Though our payment terms and contract specify that checks for all billed monies are due to be paid upon receipt of the invoice, we have frequently granted payment terms over months and even years. Just recently we were involved in a case, where we waited over three years to pursue more stringent collection efforts. Seeking not to judge, lest we be judged, should be of critical moral and strategic importance when pursuing all collection efforts.

-Walk Miles and Miles in Others Shoes. It is only when we really try, and not just do it half-heartedly, that we can begin to help and see others more clearly. One of the cases we were involved in was a client to whom we granted, in advance, the longest payment terms my firm had ever agreed to. I did this to help him out of a very difficult and trying economic time that they were suffering through. To this end, the client returned by favor by:

-Not honoring their initial commitment.

-Not honoring their three plus commitments to mail checks and funds.

-We failed to receive a promised money order, two promised overnight packages, and a separate package that enclosed three checks, to be applied against their balances.

Regardless of their failures, just recently I approached them and sought to see if there were other issues going on in their life or perhaps Spiritual Warfare they are in the middle of that perhaps I might help with or pray for. God does not allow me to judge my Brothers and Sisters in Christ but does require that we constantly to look to the good in others and indeed to consider others better than ourselves.

To read more about John Dillard CPA and his CPA practice, business consulting and IRS representation visit http://www.hiscpa.com/ (All Rights Reserved)

To read about his books A Voice of One, Overcoming Life’s 9/11’s and Charleston Dawn and his speaking ministry visit http://www.john-dillard.com/

Helping Clients with Corporate & Personal Income Taxes, Incorporation Advice, Tax Planning, Virtual CFO, Financing, Business Plans, Back Taxes, Offer in Compromise, Tax Advocacy, Business Acquisitions & Sales, Business Plans, and IRS Representation.

Serving Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond

Knowing the Credit Score of Your Georgia Business

Checking your business credit worthiness is not for the meek of heart and can be done without ever leaving the office, calling your bank or logging on to the Internet.  All you need to do is to print out your internal financials and utilize a few basic mathematical calculations and you are well on your way. 

Entrepreneurs often feel they need outside professional advisors and CPA’s, which frequently they do for many of the more complex tax and management issues they face.  However, there are a few key internal management statistics each and every owner should be well apprised of and able to put their hands on at a moments notice.  Ownership of these statistics will set you well ahead of your peers and give you key operating information which when used properly will grant you a competitive edge in the marketplace. 

These statistics are for those who are familiar with most of the basic tenets of a balance sheet and profit and loss.  If you are not, these principles and guidance are easily learned.  As you review these calculations/ratios, stop and apply them and see how your business compares.

A/R (Accounts Receivable) Turnover

This ratio calculates how often your account receivables turn over/are paid by your clients.  Generally, you would want your A/R to turn over approximately twelve times a year, which would mean your average monthly billings are paid within thirty days.  This is calculated by dividing annual sales by A/R equals your turnover ratio.  For example:

     Annual Sales          or         $720*   = A Turnover
Accounts Receivables                $60        Ratio of 12

*Monthly sales of $60K times twelve months

Care should be taken in reviewing/relying upon this calculation to also evaluate the aging of your receivables and to review in detail all substantive account balances over thirty days for any potential collection issues/corrective action required.

Days in Receivable (A/R)

This calculation reveals to its user as to how long receivables are unpaid/what the billing to payment cycle is.  A lower calculation result will signify that receivables are being collected sooner than later.  As with any business, “cash is king” as you cannot be fiscally responsible without cash in the bank.  Days in receivables are calculated by dividing your A/R by your last months/average monthly sales.

       Open A/R Balance              or $90K = 1.5×30 days/month =  45 days in
Last Month/Avg. Monthly Sales       $60K                                  in receivables

Days in A/R is one calculation you will want to be as low as possible and care should be taken to evaluate it in light of:

• Your industry, its norms and trends
• The credit terms you extend to your clients
• Present economic conditions locally, nationally and internationally

Inventory Turnover

If you are more aware of how efficiently/quickly your inventory is turning/selling you will be better apt to ensure that you do not either overstock or run out of your faster moving items.  This calculation can be applied to the total inventory, a particular class or segment of your business and even to individual items to discern the nuances of your inventories and sales ability.  Also, this process can be used to weed out less profitable/marketable lines/items of inventory.  Calculation of your inventory turnover is done by dividing your annual cost of goods sold/purchases by your present inventory, illustrated by the below:

    Annual Purchases          or      $480K       =  Inventory Turnover of
Present Inventory at Cost             $40K          12 times annually

Days in Inventory

A keen knowledge and awareness of how much inventory you have on hand and its marketability is one of the primary indicators of future success/profitability.  This indicator will reveal to you if your inventory levels are too high or too low.  Your industry and suppliers will dictate much of your desired levels so you will want to be sure to gain an adequate understanding of your particular nuances.  However, a general rule of thumb would be to have approximately forty-five days in inventory.  This can be determined by dividing your total inventory by your past months/average monthly sales at costs and then by multiplying it against the number of days in a month, for example:

            Inventory                  or        $80K  x 30 days in a month =
Months of Purchases at Cost               $40K     60 days in inventory

Current Ratio

The current ratio is calculated by taking the total of all of your total current assets and dividing it by the sum of your total current liabilities.  For a typical rule of thumb it is suggested that this ratio should be two or better, as this indicator will foretell your firm’s ability to meet its current obligations as they become due.  To illustrate how to calculate this ratio:

 Current Assets         or         $400K          =       2.0 Current Ratio
Current Liabilities                   $200K

In conjunction with this calculation it would be prudent to also perform the earlier stated ratios/turnovers as they will assist in determining the integrity and soundness of the accounts receivable and inventory balances included in the current assets and liabilities totals.

Acid Ratio

The acid test ratio is a key-determining factor in helping to evaluate a firm’s ability to meet its immediate cash needs.  This calculation is preformed by taking all of your quick assets (cash balances plus all items which can quickly be converted to cash) and dividing it by the firms total liabilities, illustrated by the below:

  Quick Assets                 or         $300K        =   1.5 Acid Ratio
Current Liabilities                         $200K

The acid ratio will most always be less than the current ratio and it reveals a firm’s ability to meet its immediate cash needs. We work with clients each and every day in meaningful and insightful ways to look beyond the numbers to provide significantly meaningful management information.

To read more about John Dillard CPA and his CPA practice, business consulting and IRS representation visit http://www.hiscpa.com/ (All Rights Reserved)  

To read about his books A Voice of One, Overcoming Life’s 9/11’s and Charleston Dawn and his speaking ministry visit http://www.john-dillard.com/

Atlanta CPA on Lending Sources/Business Incubators…Resources for Metro Atlanta’s Entrepreneurs

To find out what the SBA (Small Business Administration) is doing in your area of town, you can get a full listing of closed loans be month at http://www.ajc.com/business/content/business/smallbusiness/index.html This list is sorted by county, loan date, amount, bank/lender, name of borrower, address, and its NAICS/tax code for easy reference. Here you will be able to get at a glance a complete listing of SBA loans and activity in your area and throughout the state.

For business’s who do not fit a traditional banking relationship or that of an SBA lender you can see a list of Atlanta Venture Capitalist (VC) . The listing can be viewed at http://www.ajc.com/business/content/business/extra/vc.html and includes the name of each VC, the year their business was established, their address, lending focus, total capital, preferred lending range, and list of sample funds/incubated companies. Although a VC will typically request a large amount of equity ownership many business opportunities are well suited to this type of lending. Having personally experienced the Atlanta Venture Capital Marketplace firsthand, I have learned that pursuing a VC will most likely prove the most expensive of all Financing Options potentially available to a business owner. For those we are not quite ready to purse Venture Capital money, asset based lenders are often a viable financial alternative. For more information visit http://www.hiscpa.com/blog/2009/04/23/asset-based-lending-finding-alternative-sources-of-funding-your-atlanta-business/

For business’s who are not yet quite ready to go to market their business Incubators who will work alongside and with business owners to help develop their ideas and to mature their business plan. For a listing of Atlanta Incubators please visit http://www.ajc.com/business/content/business/extra/incubators.html Including in this listing you will find the Incubators full name, address, phone, officers/partners, their industry focus, samples of prior clients, their size in terms of square footage, and the average length of past incubations (i.e., the time a business is served by the Incubator).

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Atlanta CPA Advises on Atlanta Venture Capital Sources

Finding and Sourcing Financing Sources for your Metro Atlanta Business

For the newer business owner with a great idea who needs money venture capitalist (a VC) or an angel investor are often great places to start. These types of investors will often require you to give away a percentage of the company’s stock and therefore its long-term profits as opposed to a bank that will solely charge interest. Though a VC or angel investor will be therefore substantially more expensive in terms of financial outgo over the years, they are often the only valid option for an entrepreneur with a unique idea, niche, product, or service.

There are several options when combing the marketplace looking for potential investors who might have an interest in investing in your company. Web sites such as www.thefunded.com are good places to start. There you can search for potential financing options by geographic area, size of the loan needed, and type. On this site you can also obtain ratings of funds for which you might be considering, which appear to be from the prospective borrowers themselves. Seeking any substantive form of capital, whether from traditional or VC sources will necessitate one having a sound and well thought out business plan or model that will tell a story motivating a potential investor to engage. Also www.startuplounge.com and www.tagonline.org will prove useful to a potential entrepreneur in seeking financing for their venture. Working closely with your CPA and attorney and allowing for a reasonable budget to negotiate a deal, often in the tens of thousands and above, will be critical components of the process along with that business plan which will virtually sell itself.

Having personally experienced the Atlanta Venture Capital Marketplace firsthand, I have learned that pursuing a VC will most likely prove the most expensive of all Financing Options potentially available to a business owner. For those we are not quite ready to purse Venture Capital money, asset based lenders are often a viable financial alternative. For more information visit our blog at http://www.hiscpa.com/blog/2009/04/23/asset-based-lending-finding-alternative-sources-of-funding-your-atlanta-business/

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Atlanta CPA Teaches the Loan Application Process and Atlanta Loan Procurement

Author/Speaker John Dillard CPA teaches Atlanta business owners and entrepreneurs how to both apply for a loan and loan procurement

Getting Your Banker to Say Yes to Financing Needs…Getting Financing For Your Business includes getting to your banker information they will need to properly evaluate your business credit/repayment ability and whether or not to extend financing to your business. Getting these items to your banker in one well-organized and documented marketing package will do much to assist the banker/lender in both feeling comfortable with extending financing to you and your business as well as properly evaluating your business. By putting together a good “package” for the banker you have the ability to put “your best foot forward” thereby allowing your story to be told.

If you have a good business, good cash flow and good opportunities for the future, ensuring that your loan package for your banker will do much to help ensure prompt completion of your loan request. A well-organized loan package will include:

-Last two years corporate and personal income tax returns

-An interim/year-to-date financial statement

-A sound and logical business plan

-Business promotional brochures

-A narrative cover letter detailing the needs and use for loan monies

-Any other substantive corroborating financial, operational, industry, demographic and economic information

The goal of all of the information will to that it will essential tell a story and that the loan request will be viewed by the banker/lending source as a natural progression and logical decision for both the company and the bank. Keeping in mind that banks only make money when you pay back the loan in full along with interest will do much to ensure that your business plan and strategy for the use of the money are well-thought out and organized. Essentially a bank or traditional lending source is looking to extend credit only when they believe you and they both believe they will be repaid.

Recently we helped one of our clients with an introduction to a smaller but well capitalized bank in placing with them a total credit of $200,000, in spite of the recent bad economic news. I have learned over the years while practicing as an Atlanta CPA that frequently working with small banks offers much more flexibility than larger banking institutions. Accordingly this particular $200,000 line was place with what would be deemed a predominantly local/regional bank.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Business Banking 101…Getting Financing For Your Atlanta Business

Getting Your Banker to Say Yes to Financing Needs

Knowing how to best package your business and to present yourself to a banker is essential to getting your bank to say yes to your financing needs. This is the third part of the series of Getting Financing For Your Business. Integral building blocks to this series can be found on this blog and are entitled and are available on this blog:

Building Your Business Credit…Getting Financing For Your Business

Top Five Criteria Banks Use to Extend Financing/Credit Lines…Getting Financing For Your Business

These are the essential components of getting a loan and this article, Business Banking 101, is the “icing on the cake.” Putting a well-organized and thought out loan package together is the last step in our series of Getting Financing For Your Business. The loan package will be the documents that the bank will use to evaluate your loan should be presented in a well organized and typed format. These documents will be first reviewed by your primary bank contact and then forwarded up the “ladder.” Thus, having the documents well presented and in order are essential to ensuring that your data is reviewed thoroughly. A poorly presented package, regardless of your other qualifications, will do much to have it quickly ignored and discarded. A well-presented package should include most or all of the following, depending upon your particular circumstances:

-Income Tax Returns. Corporate and Personal Income Tax Returns for the last three years. Corporate Tax Returns should ideally reflect a positive net worth/retained earnings and a positive and growing net income. Though banks frequently  extend credit to companies that have a negative net worth and a recurring loss on their books, it is much less likely than when a bank sees that a company is managing well their own financial results and operations. Tax returns should be prepared by a CPA who is well informed and versed in your business and all taxation issues impacting your business. Having returns prepared by anyone else is a recipe for failure in both the loan process and the legal mitigation of your annual income taxes due.

-Interim Financial Statement. Banks want to know what is currently going on in your business. Unless the year is just over (less than sixty days), then it is prudent to have a interim financial statement prepared by your CPA showing the proper classification of assets, liabilities, revenues and expenses. A banker, like all prudent investors/lenders/owners of a business should first look to see if there is a positive retained earnings and net income. Failing to have these as integral components of your internal financials will not bode well for the approval process. Frequently there can be prudent management decisions made to help ensure that financials presented put the company in the best light possible. For example, presenting your April interim financials that show a profit will be more meaningful and beneficial than presenting your March interim financials, which reflect a loss. Also providing a narrative of any significant issues, trends, concerns and operational issues is a great way to “pre-answer” any potential questions.

-Current Net Worth Statement of Owners/Guarantors. Often banks and lending institutions will want for you to have available for their review a Statement of Net Worth. Most lending institutions will have a form that you can use for this purpose and many want the information presented on their standardized forms. This form lists all of the owners/guarantors personal assets and liabilities. Being sure to list all of the information both completely and succinctly will make this easier for review. Also, being sure not to unduly inflate any values on the forms will add credibility to the package. Two of the more widely inflated values include the valuing of home furnishings and stock of a closely held corporation.

-Credit Reports. A credit report is an independent source of information that a potential lender uses to evaluate a banking credit. Although any lender is going to pull one on their own as well, you being sure that you are aware of and have adequately addressed all potential blemishes is essential. Clearing any potential problems off of your credit report prior to submitting any loan package will do much to gain favor in the review of your package. Your goal should be to ensure that a potential lender does not “discover” any nuances or missteps in your package being sure to cover all of your business strengths as well as weaknesses adequately.

-Business Plan. Especially for longer term or permanent financing, having a well-thought out and organized business plan is essential as it will “lay out” and tell the story of your business, its operations, how you plan to use the money, how profitable you anticipate the business to be in the future and most importantly to the bank, how you plan to repay them. Working with a CPA who is well versed in business plan development is essential to providing a package to a bank.

-Aging. If your business has a large amount of accounts receivable or accounts payable, it is suggest that you include in the loan package a recapped aging by customer/vendor. This will assist a potential lender in evaluating whether your billings and collections are up to data as well as highlight any potential collection issues. Also this will allow the banker to evaluate your liquidity and your ability in keeping all your company’s bills and financial obligations current and paid.

-Detail Fixed Asset Schedule. If your business has a substantial amount of their net worth invested in fixed assets.

-Substantive Corroborating Information. Every package is different and needs to be treated accordingly. For what might be desired to emphasized in one package may not even be listed in another. Being sure to list all of the important substantive issues such as upcoming events, sales, acquisitions, product line enhancements etc. would all be important and critical to share on the front end of any loan package request.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Top Five Criteria Banks Use to Extend Financing/Credit Lines…Getting Financing For Your Atlanta Business

“Knowing the Ropes” is essential to positioning your company to be able to be in a position to be bankable and to get a line of credit or more permanent financing when it is most needed by your business. Just as you cannot obtain fire insurance the day after a fire and to have it cover a past loss. Similarly is it true, that you cannot one day decide to “get a loan” and acquire needed financing as easy as picking up the phone and ordering it, as if off a menu. Though restaurants respond well to that sort of relationship and, in fact, they cater to it, banks and lending institutions often have Lending Boards, Boards of Directors, Review Committees, Shareholders, Officers and many regulatory authorities they all answer to. As such being aware of what they are looking for is essential to any search for financing. Getting “your financial ducks in a row” is the first part of the process. Failure to satisfactorily address all of these variable components will do much to impair your firms ability to procure monies for operating and capital financing needs.

The Five C’s of Lending

Cash Flow. A lender will look at your internal books and records to ensure that there will be adequate cash flow available to pay for all of the business normal operating expenses, including all salaries, including the owner. In addition to the past operating results of the business a bank will review to make sure that substantive cash flow is available to safely ensure that all required loan payments, including principal and interest, will be made on a timely basis. One old adage to be constantly aware of is “that cash is king” for without it, many business opportunities will be lost, due to poor planning and under capitalization.

Credit. Your credit score is the banks source to independently determine and verify you past track record of paying and keeping your financial obligations current. Though there are many things one can do over time to improve your credit, the best change in your credit score will be dictated over time by you obtaining reasonable credit limits and sources and then the timely payoff of any and all existing obligations. When cash flow permits paying your bills in advance will do much to help ensure that you are a favored creditor. If you have had a bankruptcy or default in your past, often it will take many months or several years for those events to “season” and for you to improve past blights on your record with sound financial management and prompt bill payment.

Collateral. Part of the recent demise in our economy is that banks and lenders failed to stay committed to tried and true lending criteria that had worked previously for decades. Collateral is essentially the amount of the commitment that a borrower makes themselves in a financing consideration. This can take the form of existing cash, retained earnings, stock, real estate, property and any other substantive item of value that you and the bank agree. Though banks never make a loan in an effort to “get at” the collateral, having it available as a backup, in the event of a default, does much to help mitigate a banks given exposure on any particular loan.

Character. Who you are, what you do, what strengths you have, how you work, your past successes, your present working habits are all essential parts of your character that a bank will review when evaluating whether or not to extend your company a credit line, mortgage or bridge financing. Banks do people frequently because of the people who run a business rather than the business itself. This is especially true if you are a business that is relatively new and growing and therefore the business is still interlocked and identified with who the owner is, rather than what the business does.

Conditions. Just as we have all so dramatically learned over the last several months what is going on in our world around us will do much to determine what will happen in the future. By our own personal and business analysis of economic and demographic trends in the areas where we live and work will tell us much about the prospects for the future. Though analyzing them will not guarantee either success or failure, they do much to provide leading indicators of potential success. A bank/traditional lender will stay abreast of this information, which is often available through your local Chamber of Commerce. For example, in Gwinnett County where I live they even have a separate operating department that keeps tracks and analyzes key economic operating criteria.

Focusing on these Five C’s of Lending will not guarantee you a loan but they will dramatically heighten your awareness and understanding of what banks and lending sources are looking for. This will give you a leg up and an opportunity to put your best foot forward to ensuring adequate funding and souring of business lines of credit of financing.  These items when taken as a whole will give the banker specific and general information alike when determining on whether to extend credit to you and your business. I have watched many CPA clients in Atlanta fail in their financing attempts solely as a result of failing to know what to look for. Staying abreast of your business community and trends will do much to ensure financial success.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Our Newest Series Starts Today…Getting Financing For Your Atlanta Business

Techniques for Financing Your Business, Procuring Credit & Mortgages

Learning what you can do to get your business and personal affairs in order to address financing needs and issues is essential. As a forbearer to a new series called Getting Financing For Your Business will be coming soon. This series will focus on what you can do to get ready for this series and to ensure that you have much of the requisite “course material” out of the way. Having a basic familiarity with Financing Vehicles, Terms, and Options will ensure that as the Series begins you will be ready to learn and apply the concepts.

Stay tuned to this site as we unfold the Financial Series… Getting Financing For Your Business

Funding Your Business – Loans, Leases, and Lines of Credit
There are many financing methods that are available as your business grows. This guide will help you select which one is best for you.  http://www.hiscpa.com/business-funding.html

Alternative Funding Methods for a Growing Business
A guide on what to do when you banker says no leading you to discover new funding vehicles to help your business achieve its goal. http://www.hiscpa.com/alternative-funding.html

Working with a Banker and Obtaining Credit for your Business
Finding a good banker and maintaining a close rapport keeping them well apprised of your business’s trends and operations results will help him be able to say yes when you need them the most. http://www.hiscpa.com/banking-relationships.html

Examine Your Options Before Taking Out a Mortgage
A changing marketplace and a tightening economy are impacting financing decisions as well as the whole of the economy impacting this critical financial decision. http://www.hiscpa.com/mortgages.html

There is no magic pill to take that will make you business “bankable.” As you would expect banks make loans with the goal of being repaid, thus some of their primary concerns will center on your credit, cash flow, character, past operations and business plan. These items when taken as a whole will give the banker specific and general information alike when determining on whether to extend credit to you and your business.

Having served as a Public Speaker and CPA in the Atlanta Area for over twenty years, I have learned that business owners and entrepreneurs are still seeking guidance on similar issues of decades ago. This reference material will have you seeking after more.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html