How Business Owners can Control Employee Company Card Security

Many businesses, both large and small, utilize company issued credit cards as a way for employees to complete small purchases or pay for other business related expenses. In order to reduce the possibility of misuse, well defined policies for card usage should be communicated to employees and their supervisors. These policies should address issues such as appropriate usage, security, limitations and approval process.

Cardholder Responsibilities
• Employees selected to receive business credit cards should be held responsible for the security of the card, as well as the privacy of company-related information. This responsibility should include keeping the card in a secure location, protecting the card personal identification number and reviewing statements for fraudulent activity. Company credit cards should never be used by anyone other than the cardholder. Lost or stolen cards should be reported to the card issuer and the company as soon as possible.

Don’t assume anything
• No one at your company should be exempt from having his or her purchases reviewed by another person, or an outside auditing firm. Corruption is just as likely to occur at higher levels, where the executives or upper management are free from scrutiny — and above reproach — as at lower levels in the company.
In all, it is important for both employer and employee to remember that having a company credit card is a privilege and a responsibility, not a right. This privilege can be revoked at any time, should there be the slightest hint of irresponsible usage.

How to Manage New Business Growth and Not Go Bust

A new business owner knows they only have so much time to grow the company and become profitable before the initial capital they invested runs out. So it seems counter-intuitive to any entrepreneur to worry about growing too fast. But companies that grow fast can implode so here are some things to look for when jumping to the next level.

1. More Business means more demand on your Cash flow. How are you going to float the credit you extend to your customers?
• Offer Discounts 2-5% for payments in 10 or 15 days.
• Try a 10% COD term if your margin can support that.
You may only need to offer discounts for a short time until your sales level off.
• Enlist your supplier to participate in your growth by extending your terms and increasing your credit with them. Remember your growth is their growth. Look to your suppliers for discounts on volume or fast pay.
• To maintain your cash flow while increasing sales secure additional capital by Factoring, Lines of Credit, Purchase order financing, new partners or additional equity invested in the company. Plan ahead.

2. Quality Controls are more important as your time is stretched. Now you need more systems to help monitor quality, service and inventory. Growth is not sustainable if you can’t keep your customers happy.

3. Watch your Expenses. Often your margins decrease at certain points in the growth cycle as you expand in space, number of employees, additional financing etc. It will take more sales to cover the fancy car expenditure when your margins are down.

4. Make sure your employees are paid on time. Don’t forget how important your key people were in getting you to this point.

5. Leadership style needs to be adjusted and systems in place so you can manage more but not micromanage everything. It’s hard to remember you’re the CEO or the Captain directing the ship not an employee.

How to Organize Your Desk

1.  Start with a blank slate:

Remove everything—everything!—from your desktop; and only bring back what you need, as you need it. You’ll quickly realize that many of those “essentials” cluttering your workspace don’t get used at all. Then you can decide what goes into storage and what gets tossed for good.

2.  Arrange items to suit your workflow:

Everyone works differently, so a system of desktop organization that works for one highly productive person may be frustrating and illogical for another. Analyze your habits. What do you need to have within easy reach? What do you only need occasionally?

3. Put frequently used items in easy-to-reach areas:

This may include a shelf or a drawer. However, make sure you do not just throw the items on a shelf or a drawer. Give everything a specific place so that you always know where it is.

4. Do an end-of-day and end-of-week cleanup:

When you’re nearing the end of each workday, take a few minutes to put everything back and think about what you’ll need first thing tomorrow. Arriving to find a clean desk makes it easy to get started on tasks without feeling overwhelmed. Similarly, at the end of the week, file or scan documents that are no longer active and save them in some type of “Work” folder, labeled perhaps by week or date.

5. Go as paperless as possible:

Cutting down on incoming paper saves time, space, and trees. Opt to receive bills and transaction records online only. Having all that data in one place makes it easy to search records without having to thumb through a filing cabinet.

6. Set up an electronic storage system:

Making the switch to digital documents cuts down on clutter, but you’ll also need to establish an archiving system that keeps your files safe and allows you to find specific information easily.  Don’t forget to back up your information just in case.

When you’re organized you don’t waste time searching for documents and you start fresh every morning where you can plan your day based on the most important jobs.


Prevent Fraud in your Company

Over the year’s cases of corporate fraud involving very large, publicly traded businesses make big news.   Every day Small businesses are targets of fraud and deception even if the amounts aren’t newsworthy.

Here are steps that can help keep businesses away from the courthouse and detect fraud before it eats into profits.

  1.  Set clear standards. One of the best ways to safeguard a business is to set clear standards from the beginning. An employee manual can be helpful in establishing the company principles and values.
  2.  Check employee references. When hiring new employees check references and perform background checks that include employment, credit, licensing and criminal history.
  3.  Secure your organization.  Put systems in place to guard blank cheques from being stolen.   Monitor the cheque numbers and have systems to double check payments.  Using numbered checks enables you to audit for missing cheques.
  4.  Never sign blank cheques. All disbursements should be reviewed on a regular basis.  Scrutinize cheques made out to suppliers you don’t recognize, made out to cash, and missing cheque numbers or appearing out of sequence.
  5. Safeguard payroll. Payroll is another area subject to abuse. Small-business owners and managers should take the extra time to review every payroll personally.
  6.  Control who reviews sensitive documents. Small-business owners should control who first receives the bank statements and other sensitive documents. This helps eliminate the possibility that someone intercepts the mail for the purpose of stealing or covering up an earlier theft.

Every year millions are lost from employee fraud and theft.   Often small businesses are targeted because they haven’t taken the time to put systems in place to prevent it.   Smaller companies also tend to put too much control in one person’s hands and over years tens of thousands or more can be siphoned off the top without a noticeable impact on the business.   Simple checks and balances will help you maintain law and order.


How to Deal with Stress in Business

For almost 25 years I’ve been financing businesses and watching the effects of being a business owner.   Then one day I became a business owner!   Although I always appreciated how stressful it can be owning and growing a business having firsthand experience is a game changer.

For years I watched the stressful looks and the desperation when a client was looking to increase their cash flow in time to make a deal happen or pay off taxes when their bank accounts were seized or payoff partners.   Sometimes it was the anxiety of paying a supplier so they wouldn’t cut them off and we had to do the due diligence in record time to save the day.   Those entrepreneurs were supporting their families and working toward a dream but there were days when the dream seemed out of reach.

I worked for John Danis in the 1990’s and we had a big Sales and Operations meeting in Palm Springs and at the time they were pushing hard to grow the company.    It was interesting that even a large company operating for 25 years financing millions in receivables had an owner who was showing the signs of visible stress.    Part of the presentation was a train that was moving down the tracks and gaining momentum.   Toward the end the presentation Mr. Danis was talking about the speed of the train and not being able to get off the train.   We all looked at each other confused and wondering if this was supposed to be our motivation about creating momentum for more sales or an indication that the stress of growing a business was taking a toll on Mr. Danis.  Perhaps he was saying he would have loved to get off the train for a while.     I was very fortunate to have had many conversations with John and I think he was an amazing business man and intuitive about people.   He brought together the best sales people in the industry and together we accomplished amazing things.    I wish I could have asked him how he dealt with the pressure and stress of growing that locomotive.

What I’ve learned is that you must find time for physical activity regularly, to burn off the stress and create endorphins to balance the demands of owning a business.    ‘Life is about the journey’ cannot be overstated because life is the journey and sometimes we never get to see that destination we have in our dreams.   What we do every day has to be part of the dream.    We have to embrace the locomotive ride and embrace the speed recognizing it’s the fear that derails us and our mind that puts the limitations on what we can achieve.

Below are a few ways to combat stress and fatigue:

  1.  Exercise a few times a week and eat more rabbit food and less rabbits.
  2. Drink lots of water
  3. Take 5-10 minutes and walk away from the phone, breath and picture why you are in business
  4. Take some down time every week to spend with the people you love or they won’t be there when you arrive at your destination.   Be fully present when you’re with your loved ones even if it’s only for a short time.
  5. Stay in the present moment because if you focus on past mistakes and future worries your mind will play havoc and you will be less productive.
  6. Do only the important things that impact your business the most.  Don’t waste time on things that give you a false sense of checking off the list.   Procrastination can come in many forms but doing the least important things first will suck your energy and destroy your business.
  7. Laugh and enjoy this ride and if you don’t want to be on the train get off and take the bus.
  8. Don’t try to solve every problem you have at once take them on one at a time otherwise the overwhelming feeling of how will I ever get it all done will prevent you from doing anything.

Who doesn’t love a good train ride!!!!!

How to Start a Small Business

This power point was presented at Mohawk College in February 2014 to help students that are new to Canada access general information on starting a business.

Starting a Business

What does a first position on my Accounts Receivables mean?

Generally a Factor will take a first position on all accounts receivables as collateral even if they are only purchasing certain accounts. This allows the Factor to purchase other accounts when there has been an offset to the receivables that can’t be covered by the reserve. This is preferable to invoking the personal guaranty and instead another invoice is purchased to offset the invoice that didn’t pay. It also gives greater flexibility to the client to choose and change the customers submitted for factoring.

When an invoice is purchased and funded it becomes the property of the Factor and is no longer available to leverage or sell. You wouldn’t sell the same car to two different people and the same applies to receivables.

When a bank is already in first position of the receivables which often will happen with an overdraft or corporate credit card, the Factor will need a postponement or subordination from the bank releasing their interest on the receivables. The other option is to pay off the outstanding balance to the bank and request a release on the assets.
In some circumstances banks will work with the Factor and split up the security to benefit the client. In this situation a portion of the receivables can be isolated for the purpose of increasing cash flow by factoring a particular account that is experiencing growth or identify an amount that will be factored. This reduces the amount of the security available to the Factor and increases the risk to finance but this can be very beneficial to the client who is growing rapidly.

Sometimes a Factor will take a General Security Agreement which secures all the assets of the company. Generally the first position on the receivables is required and sometimes inventory and then all the other assets will fall in line depending on who has previously registered. For example if there is equipment leased or financed and has a previous registration the GSA taken by the Factor will fall behind those lenders.

One of the benefits with factoring is the ability to separate out the assets of the company to take better advantage of leveraging those assets.

What Security is Pledged for a Factoring Agreement?

When entering into a Factoring Agreement a Factor will take a first position on the account receivable as a minimum requirement for most clients and a personal guaranty is standard. Occasionally a primary lender normally a Bank may work with the Factoring Company by allowing them to take a First Priority Position on a portion of the receivables to help the client access more funding. If bank financing is already in place, the bank will hold a General Security Interest in all the assets of the Corporation. This is called a GSA.
More and More Factoring Agreements are also including a GSA on all the assets of the Corporation to offset risk and allow the client to access higher advances and lower fees. It sometimes just provides a comfort level to the Factor so they will fund an account that may or may not be meeting the approval of the credit department using just the receivables as collateral.

Case Study Transportation

This transportation company started with a $75,000 credit limit for US and Canadian invoices.  This client had larger invoices and carried larger loads so they required the financing to help them pay the drivers and gas on time.    Within six months we increased the credit limit to $125,000 when they signed a new contract and increased their monthly receivables by $25,000.  We increased the credit limit within a couple of days and reduced their fee to reflect the new volume of invoices.   Our client had checked credit with Newport prior to signing the contract and we were able to help them take on the new business without skipping a beat.

Case Study Publishing

A company publishing a newspaper was suffering from inadequate systems and was not collecting receivables regularly and never checked credit on the customers.  They had a couple of bad debts that had put them behind with their supplier.     We set a small credit limit of $25,000 and credit checked the customers and set up credit limits to reduce the risk on their outstanding invoices and help eliminate future losses.   We managed the receivables and provided accounts receivable aging reports for the client to track their receivables.    Newport Funding Group purchased and funded a majority of the outstanding receivables and paid down the Supplier to keep papers printing.   Going forward we paid the Supplier directly once the papers were delivered and helped our clients repair their relationship with their printer.

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