PMF Bancorp wishes health happiness for all during this Thanksgiving season, but its important to also remember to keep your business’ financial health in mind too.
By following these 7 business tips, your business will be on course for healthy & profitable 2016:
- Use your Balance Sheet as a financial Road Map (and if you are a small business then this is the perfect time to start your balance sheet);
- Start on the Left Side of your Balance Sheet where your Assets are described to make sure your Cash account’s position is strong enough to support several months of downturn at minimum (a 6 month cash reserve should be your goal);
- Review Inventory and try to always balance to minimize it as its your enemy as well as your best friend;
- Receivables should always be under 90 days and your goal should be to get all your customers between 30 and 45 day terms max;
- Moving to the Right Side of your Balance Sheet with your Liabilities (and Equity), make sure the accounts payable are not more than your receivables. Aim for accounts payable being 1/3 of your receivables which will indicate in most cases that your equity is working for you as well;
- Loans are something to have, but not in excess…as Jack Welch described that a company without loans is a company in a position not to maximize their utilization of assets and sales capabilities;
- Always try to retain a little Equity in your company each year so that banks and lenders will see a positive retention trend which will make them more likely to lend when the time is right.
The right time for a business line is when you don’t need it, so if you are doing fine now, then it is the right time for a lender to want to lend to your company. Take advantage of this and open a business line with PMF Bancorp. PMF Bancorp makes the process simple for businesses as our +30 years of experience lending has only been in the area of working capital lines to our business clients for their growth. Our smartest clients get their loans when they least need them, knowing that in the future, they might have a working capital need.
