New California Paid Sick Leave Law Requirements

Posted on by Randy

nov2013Approximately six million California residents became eligible for paid sick leave for the first time on 7/1/15 due to the “Healthy Workplace Healthy Family Act of 2014 (AB 1522).”  The legislation was authored by Lorena Gonzalez a Democrat from San Diego.

On July 13, 2015, Governor Jerry Brown signed Assembly Bill “AB 304 Sick Leave: Accrual and Limitations” amending the “Healthy Workplace Healthy Family Act of 2014” sections 245.5, 246 and 247.5 of the California Labor Code.  The amendment became effective immediately after the legislation was signed.

The new law presents some challenging requirements for all California employers regardless of their industry or number of employees with only some exemptions for specifically designated employees.  The following is a summary of some of the key changes in the new legislation.  It is not to be considered legal or accounting advice.

Eligibility Requirement

An employee who works in California for thirty or more days within a year from the beginning of the employment is entitled to paid sick days so long as the employee works for at least thirty days within the previous twelve months with the same employer.

Accrual Methods 

Employers may provide for employee sick leave on a basis “other than one hour for each thirty hours worked” provided that the accrual is on a regular basis and the employee will have accrued sick leave available by the 120th calendar day of employment.

Limited Sick Leave Use

Employers may limit an employee’s use of paid sick days to twenty-four hours or three days in “each year of employment,” “calendar year” or “12 month period.”

Notice Requirement

Pursuant to the original law, employers were required to provide employees with written notice of the amount of sick leave available or the amount of paid time off the employer provided instead of sick leave.  The amended law specifies that employers who provide unlimited sick leave may comply with the notice requirement by indicating “unlimited” on their employees’ “wage statements.”

Reinstatement of Unused Days on Rehire

The original statute did not require an employer to pay unused sick days upon termination.  However, unused sick days must be reinstated if the employee is rehired within one year.  The new law provides that an employer is not required to reinstate accrued paid time off that was paid at termination.  The amendment also stipulates that any reinstated sick leave is subject to the same use and accrual limitations of the statute.

Pay Rates for Sick Leave

According to AB 304, employers are required to calculate paid sick leave for non-exempt employees based on: (1) regular rate of pay for the week in which the employee uses sick leave (the rate used when calculating the overtime premium rate) or (2) total wages, excluding overtime premiums, divided by the total hours worked in the full pay periods of the prior ninety days of employment.  Paid sick leave for exempt employees may be calculated in the same way as the employer calculates wages for other forms of paid leave time.

Recordkeeping

Employers are required to keep records for at least three years documenting the hours worked as well as paid sick days accrued and used by their employees.  They must make these records available to the Labor Commissioner upon request.  The amendment releases the employer of inquiring and recording the purposes for which an employee used the paid leave or paid time off.

Minimizing Your Risk

Given the complexity of the original law and its amendments, it is highly recommended employers review their existing paid sick leave and paid time off policies to make sure they are in compliance with the new legislation.  The cost of not properly complying with current labor laws is detailed in the Pacific Crest Group case study “Risk Management Saves Thousands in Litigation Fees.”

In this case, all of the Client’s employment records had to be brought up to date and made compliant with applicable local, state and Federal laws.  A process that would normally take at least one year was done in six months.  The Client was trained on risk management strategies that resulted in saving thousands of dollars in additional litigation and government imposed penalties and interest charges.

Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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Five Pillars of a Successful Team

Posted on by Randy

Handbook_thumb.pngHow do businesses operate collaboratively in our global environment and still continue to thrive in the face of increasing competition?  The answer is that businesses must embrace functioning as highly result oriented ecosystems called teams.  In a letter prefacing the “The United Nations Principles for Responsible Education Management,” the Dean of the U. C. Berkeley Haas School of Business Richard Lyons wrote:

“Most experts agree that myriad societal and economic forces have us on trajectories that will, if continued as in the past, hit a wall in our children’s lifetimes, if not in our own…Globally, trends in climate change, trade imbalances, persistent poverty, limited access to clean water, and armed conflict represent even more daunting challenges. These macro paths need bending…this presents both a responsibility and an opportunity: We can prepare business leaders who will bend us toward sustainability, and who will use the power of markets to do so.”

The five pillars of a successful team are Trust, Conflict Resolution, Commitment, Accountability and Results.

Building Trust

Trust grows when team members are willing to be vulnerable with each other.  They must have confidence that their fellow members’ intentions are good and helpful.  Team members need to take the time to gain deeper insights about themselves and their teammates.  They must be transparent about what they feel are their limitations.

Resolving Conflicts

All sustainable relationships are built on resolving conflicts in order to grow.  The process of conflict resolution is the best way to find the most powerful solutions in the shortest period of time. It is imperative to encourage all team members to contribute their best ideas and to put them on the table for open discussion.

Increasing Commitment

Commitment requires clarity and the ability to move forward with the agreement of the team especially those who may have initially disagreed with the decision.  Successful teams know they must commit even when the outcome may be uncertain.

Being Accountable

Full accountability for each team member is based on establishing effective guidelines, procedures and practices.  There must be straightforward delivery of positive and logical explanations for each of the team’s actions.

Achieving Results

The ultimate goal of building trust, resolving conflicts, increasing commitment and being accountable is to achieve the desired results collectively agreed upon.  One of the biggest challenges to team success is not knowing how to operate in a successful team culture.  This is clearly illustrated in Pacific Crest Group’s “How to Increase the Effectiveness of Your Company’s Culture.”  The benefits of an effective company culture include high performance, outstanding innovation and unparalleled team work.

Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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New Revenue Recognition Standards Effective 2017

Posted on by TJ Van Voorhees

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have released new Revenue Recognition regulations that must be complied with by all public and private companies in all industries worldwide in 2017.  The changes are wide sweeping to say the least.  For many industries, the new standard will be a total game changer.revenue recognition

Five Step Reporting Process

Organizations will be required to capture information from all sales contracts related to revenue with a customer.  Revenue recognition is fluid particularly when agreement terms are updated or new performance requirements are added to the contract.  Consequently, businesses must start preparing for the new reporting requirements right now.  It can take six to twelve months for a professional trained in the new standard to get a company to the point where it is fully compliant with the new rules.  Early adoption is not only recommended, it is critical for successful compliance.

The new five-step process for revenue recognition is as follows:

1)    Identify the contract with the customer.

2)    Identify the performance obligations (promises) in the contract.

3)    Determine the transaction price.

4)    Allocate the transaction price to the performance obligations in the contract.

5)    Recognize revenue when (or as) the reporting organization satisfies a performance obligation.

There is a technical accounting assessment that must be completed in advance of implementing any part of a proposed compliance solution.  It is imperative the new standard be fully understood before any Information Technology (IT) software system changes are attempted.  Potential parallel reporting requirements and impacts should be analyzed fully before proceeding with any implementation methodology.

Collaboration Is Vital

The best way to prepare for the new standard should be iterative and dynamic as opposed to sudden and static.  Excellent teamwork and collaboration will be required throughout all departments including Strategic Planning, Accounting, Finance, Human Resources (HR) and Information Technology (IT).  Ideally, teams will be co-located as much a possible with regular and consistent communication channels in place to organize and share the required data.

Hire an Interim CFO

One of the best ways to create and install the required compliance system is to hire an interim Chief Financial Officer (CFO) who is trained in the new reporting requirements.  The CFO can set the initial course of the initiative, keep it on course and plan for future compliance.  Please see hiring an Interim CFO for a complete explanation of the advantages of this option.

Having a professional looking in from the outside gives that person the independence and objectivity they need to gain insights that are typically not available from inside the organization.  The financial expert comes in, completes the job and then supports the accounting department in continuing the ongoing work from the outside.

Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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Human Resource Risk Management Increases Productivity

Posted on by TJ Van Voorhees

Human Resource (HR) risk management plays a vital role in businesses of all sizes.  It affects mission critical decisions in every aspect of a business.  This conclusion was meticulously developed in the article titled “Human Resource Management and Productivity” by Nicholas Bloom of the Stanford University Department of Economics and John Van Reenen at the London School of Economics.

Successful Risk Management

There are basically two types of risks in Human Resource management.  First, employees are the primary source of risk in production decreases.  Examples of production loss are when employees do not come to work, leave before their job is completed or do not accept responsibility for the quality of their work.  Second, management can be instrumental in reducing human resource risk when they are effective in assisting employees in meeting or exceeding their performance goals.

Successful Human Resource risk management that results in increased productivity consists of excellent Leadership, Communication, Training, Motivation, Conflict Resolution and Evaluation skills.

Leadership

People cannot achieve their full potential without effective leadership. Successful leadership is comprised of trust, motivation, planning, delegation of authority and the development of policies and procedures to document best practices.

Communication

Communication is essential in decreasing risk and increasing productivity.  Listening, delivering clear messages and encouraging two-way communication is fundamental.

Training

Training involves a systematic approach, patience and an honest evaluation of whether the training has been effective in producing the desired results.

Motivation

Employee motivation helps the company accomplish its goals and at the same time assists people in attaining their career goals.  It is management’s responsibility to create and maintain an environment where employees feel motivated to perform at their highest level.  Understanding and satisfying workers’ needs, compensating fairly and treating people equitably is paramount in providing positive motivation.

Conflict Resolution

In work environments, conflict can be inevitable.  Management must be adept at handling conflict.  The human tendency to postpone conflict resolution only results in more severe problems later.  Strategies and systems must be developed and followed consistently that build trust between management and employees.

Evaluation    

Employees want to hear from management about their performance.  Managers must make sure their evaluations are clear, fair, consistent and timely.  The evaluation period is the best time to listen to employees needs in order to enable them to be more productive.

Increasing Productivity

Effective Human Resource (HR) risk management requires strategic planning that minimizes the probability of financial losses.  This process is demonstrated in the Pacific Crest Group (PCG) case study “Risk Management Saves Thousands in Litigation Fees.”  PCG trained its Client on how to use HR risk management strategies that resulted in saving thousands of dollars in litigation and government imposed penalties and interest charges.

Due to Pacific Crest Group’s unique relationship between its Human Resource and Accounting departments, it was able to organize the Client’s employee data so it could be integrated into a complete Human Resource Information System (HRIS).  The new system allowed for the tracking of every payroll function.  The end result was a substantial increase in productivity in all their departments.

Clear communication channels were established that built trust between the company’s management and employees right away.  PCG assisted in hiring and training all new personnel.  It acted like a partner in the decision making process by putting the Client’s needs first every step of the way.

The Pacific Crest Group provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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Focus on Profitability Not Revenue Growth

Posted on by TJ Van Voorhees

The primary mission of a business should be long-term profitability not just revenue growth.  “Profitability is a measurement of efficiency.”  It ultimately is the deciding factor in the success or failure of a business. “It is expressed as a relative, not an absolute, amount. Profitability is “the ability of a business to produce a return on an investment based on its resources in comparison with an alternative investment. Although a company can realize a profit, this does not necessarily mean the company is profitable” (see more about profitability at Investopedia.com).

Revenue versus Profit Growth

More revenue from sales does not always mean more profit.  Revenue is only part of the story. Revenue minus expenses equals profit.  A business must keep their costs as low as possible to make sure it is maximizing its profits.  How do you maximize profits?

The key is to answer some very important questions about your business relative to your industry.  Some of these questions are as follows:

What is the state of your industry relative to the overall economy?

How big is your market opportunity and how fast is it emerging?

Is your business privately owned or backed by venture capital?

Is your organization the first supplier in the marketplace?

Does your firm have patents, trademarks or a great deal of product complexity to protect your market position?

Do you have a competitive advantage in the industry that you can increase overtime?

Sustained Profitability

Many organizations depend on revenue growth to drive the scale of the business.  The real determinant of growth is creating long-term profitability through efficient operations.  This point is made very clear in the Pacific Crest Group (PCG) case study “Consulting Firm Saved Overhead Cost by $250K in the First Year of Service”.  PCG streamlined internal accounting processes, increased the efficiency of the technology infrastructure and improved employee management for this business.  Executing an efficiency strategy utilizing this combination resulted in a large operation cost savings, better cash flow management and greater profitability.

 

The Pacific Crest Group provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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A Key Determinant of Profitability is Production Not Labor Costs

Posted on by TJ Van Voorhees

A huge myth in Human Resource (HR) management is that you can increase your profitability by simply reducing labor costs.  Labor costs are a function of how much a business pays its labor force and how much that labor force produces in a given period of time.different types of employees

The problem with just reducing labor costs is that it does not take into consideration how much that labor force is producing.  Production is not solely a function of labor cost.  Production is determined by efficiency.  If lowering labor costs results in an equal or greater reduction in production, the business is actually worse off.  The better solution is to focus on increasing production efficiency not on lowering labor costs.  The end result is increased profits.

Employee Classification

In order to understand the true relationship between labor costs and efficient production, it is important to analyze how labor costs are classified.  The rules governing the payment for labor are enforced by the Wage and Hour Division of the United States Department of Labor.  Labor is defined as being performed by either Independent Contractors or Employees.  Independent Contractors are defined by many different criteria that will be discussed at a later time.  Employees are basically classified as follows:

Exempt Employees

Exempt employees are not entitled to overtime pay no matter how many hours per week they work.  Employers must pay exempt employees their full salary amount as long as they do any work during a pay period.  If they miss work, the employer can require them to make up the lost time or deduct the time from their accumulated leave time.  Exempt employees must have work responsibilities that are primarily executory in nature (meaning supervisory or managerial).  Professionals in “learned” occupations such as Doctors, Lawyers and Engineers may be exempt from overtime rules by definition because of their education and licensing requirements.

Non-Exempt Employees

Non-Exempt employees must be paid time and one-half for all time worked in excess of forty hours in a week.  When an employee’s contract includes a non-exempt salary, the employer must state the number of hours the employee is expected to work each week.  The expected hours are divided by the salary amount to determine a base pay rate in the event an employee works more than forty hours in a week.

Non-Exempt with Overtime

“Non-Exempt with Overtime” employees required to work an expected work week of less than forty hours are not entitled to overtime unless their total hours exceeds forty hours in a week.  For example, if the employee’s employment contract specifies that the employee work twenty hours per week and the employee works thirty hours during the week, the employer is not required to pay overtime for the ten hours in excess of the required twenty hours.  However, if the employee works more than forty hours in a week, the employer must pay the base rate for the entire forty hours plus time and one-half for the hours worked in excess of the forty hours for the week.

Exempt versus Non-Exempt

A common misconception is that hourly employees are non-exempt employees and salaried employees are exempt.  This is not true.  Classification of exempt versus non-exempt employees depends on job titles, duties, responsibilities and in some cases ownership of the company.  The primary determining factor is that exempt employees perform activities that have an impact on the management of the company because they are expected to exercise independent judgment as part of their job.  Non-exempt employees do not have this requirement as part of their employment.

Employee Misclassification

The cost of making a mistake in the classification of an employee can be staggering.  This point is illustrated well in the Pacific Crest Group (PCG) case study titled “Proper Differentiation between Wage and Hourly Employees is Critical.”  In this case, PCG wrote two different employee manuals because the employee’s roles, responsibilities and compensation amounts were so different.  Pacific Crest Group professionals also provided office hours on site for employees and management to answer questions about employment policies and procedures.  Providing access to trained Human Resource (HR) professionals was critical in building trust between employees and management.

The Pacific Crest Group provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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Strategic Planning Analysis Finds Two-Hundred-Thousand Dollars in Unbilled Revenue

Posted on by TJ Van Voorhees

Proper strategic planning is required to keep current operations in alignment with the company’s long-term goals. When this process is not in place, things fall through the cracks fast. Getting back on track means discovering and repairing loopholes in the system. The benefits of everyone rowing in the same direction are highlighted in the following case of a company that closed a major revenue leak. Management thereby increased its ability to forecast the future of the business based on solid strategic and financial planning.

Client Introduction

The Client is in the Compressor Industry. The company supplies and maintains large compressors to commercial buildings, hotels and other large industrial users. They have an Internal Controller that is responsible for the processing of the financial data and hired Pacific Crest Group (PCG) for the Chief Financial Officer role on an ongoing, part time basis. The company wanted to take their business to the next level in sales.

Revenue was Not Being Recognized

The Owner was frustrated because he could not get the type of financial information from their reporting systems he needed to make key business decisions. The Controller was doing his job well. However, the company’s lines of business were interwoven and there was no way to break them down into easily recognizable profit centers. The accounting system was generating reports, but they were not integrated in a way that the performance of different departments could be compared to each other in a meaningful way.

The revenue from activities reported on the Profit and Loss Statement did not align with the company’s long-term goals. There was no way to measure the return on the business owners’ investment or the fulfillment of their objectives. Things just did not seem to make sense.

As a result, management was constantly focused on what was not working rather than what was working in their company. In addition, since they had no concrete way to know where they had been, the organization had no reliable way to look into the future with clarity. The executive team was “flying blind.”

Accounting Loopholes Were Closed

PCG utilized a business reporting software package to analyze operations. The accounting data was streamlined and organized so management could clearly see which departments were profitable and which were not.

It was found that sales orders in the work flow were not being closed because there was no way to know where the sales order was in the fulfillment process. Based on the Client’s previous accounting system, a sales order must have been closed before the completed work could be billed to the customer.

As a result of PCG’s analysis of the Client’s accounting system, it was found that two-hundred thousand dollars in unbilled product that had been ordered and installed was not billed to the applicable customers. This was just the beginning. It was later discovered there were many similar loopholes in the record keeping system.

The accounting system was integrated so it was easy for management to quickly see which business lines were profitable and which were not. Forecasting and budgeting became much more efficient and reliable. A process that would normally involve hiring a pricey CFO position to implement new high level processes was done on a part-time consulting arrangement and cost the client a fraction of the revenue it saved. Pacific Crest Group continues to provide ongoing strategic consulting services and makes recommendations using industry best practices to keep the client on track.

PCG Value Added Highlights

  • The Client’s accounting system was fully integrated.
  • Strategic long-term goals and daily operations were aligned.
  • $200,000 in unbilled revenue was collected at the outset.
  • Department profitability was made comparable on an ongoing basis.
  • Unprofitable lines of business were phased out.
  • Budgeting and forecasting reliability was vastly improved.

The Pacific Crest Group provides professional services that keep your business focused on your critical objectives. We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

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Startups Must Monitor Their Cash Burn Rate to Survive

Posted on by TJ Van Voorhees

One of the most potent Key Performance Indicators (KPI) for companies in general and Startups in particular, is their “Cash Burn Rate.”  This indicator shows how much cash the organization is spending each month.  The “Cash Burn Rate” is the underlying component of the company’s “Break Even Point” calculation.  This is the point at which the business starts to become profitable.

Cash Burn Rate versus Cash Runway

Assuming the Startup has no revenue yet, the “Cash Burn Rate” is calculated by taking the amount of money the business is spending each month for operations by the total amount of cash in the bank.  For example, if you spend $100,000 on operations each month and you have $500,000 cash in the bank, your “Cash Burn Rate” is twenty percent per month ($100,000 in cash expenses divided by $500,000 in cash available).  Your “Cash Runway” is five months ($500,000 in cash divided by $100,000 in operating costs per month).  The business will either need to be “Cash Positive” by increasing revenues or raise new funds within five months or it will have to close its doors.

Monitoring Your Cash Burn Rate

The “Cash Burn Rate” of a company is watched very closely by investors because it indicates when an investor can expect to receive a return on their investment.  It takes time to build lasting relationships with customers just like it takes time to develop long-term relationships with people.  Most organizations under estimate the time it takes to build customer loyalty (see “Money Couldn’t Buy Time for Failed Net Firms”).  How can a Startup best reduce its “Cash Burn Rate” to give it more time to become profitable?

Becoming Profitable

There are only three ways to decrease your “Cash Burn Rate.”  The business must increase its incoming cash by increasing revenue or raising more funds, decrease its outgoing cash by reducing expenses or both.  One of the most powerful ways to reduce your cash expenditures is by outsourcing operations that are not core to your business. This allows the company to concentrate on becoming profitable right away.  An example of this is the Pacific Crest Group (PCG) case study titled “Outsourced Human Resources Services to Increase Operating Efficiencies.” In this case, PCG created a time tracking system to analyze employee performance.  The process resulted in a substantial increase in profitability in a very short period of time.

Pacific Crest Group provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

 

 

 

 

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Accounting Errors Can Be Devastating

Posted on by TJ Van Voorhees

The Sarbanes-Oxley Act created a new regulatory authority called the Public Company Accounting Oversight Board (PCAOB) in 2002.  It replaced the American Institute of Certified Public Accountants (AICPA) rules about auditing businesses.  The law was the most comprehensive change in financial reporting since the Great Depression over eighty-five years ago.  Please see the article titled “The Financial Impact of the Sarbanes-Oxley Act on Small vs. Large US Public Companies” by the Economics Department at the Haas School of Business at U. C. Berkeley for more information on the Sarbanes-Oxley Act.

One of the biggest lessons learned from this legislation is the cost of accounting mistakes can be unforgiving to a business.  One of the most insidious accounting errors made by most companies is under pricing their products and services.

Many businesses try to break into new markets by under-cutting their competition.  In the short run, they can gain new customers.  However, the marginal cost of each new customer acquired, is exorbitant over the long run.  It also brings into question the quality of your products and services by those customers.  Quoting prices below your required profit requirements is not a sustainable strategy.  Price is only a consideration in the absence of value.

Another critical accounting error is building budgets based on last year’s performance.  Future success cannot be forecast based on prior performance.  New strategic assumptions must be created that are in alignment with management’s current goals to be relevant.  An accurate budget will list all anticipated expenses as well as take into consideration changes in everyday business realities such as seasonal changes in sales.

The most expensive mistakes involve accounting for mergers and acquisitions.  The Pacific Crest Group case study titled “Bay Area Business with Bookkeeping Challenges” required that a new accounting system be installed with a totally revised chart of accounts for an accounting client.  All the bookkeeping transactions from 2006 to 2008 had to be re-entered into the accounting system.  This entire process was done in less than four weeks and saved the client thousands of dollars in potential reporting penalties.

The Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives.  We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

 

 

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5 Reasons to Manage Your Business Credit

Posted on by TJ Van Voorhees

Pacific Crest Group (PCG) fully supports businesses in building their credit to fuel business growth. Establishing and maintaining business credit helps companies increase profits by financing growth and controlling costs. Below are five good reasons to take control of your business credit.

#1 – SEPARATION OF PERSONAL AND BUSINESS CREDIT
When owners and/or officers of a company use their own credit (i.e. – guarantee loans or credit cards), they risk the chance of being personally liable. If the business defaults, personal assets are at risk.

#2 – BORROWING POWER AND OPTIONS
Personal guarantees only go so far. If a business owner has a normal credit profile (i.e. – a mortgage or two, car payment(s), and a few credit cards), there is a ceiling to how much can be borrowed. Increased credibility in established business credit reduces risks for lenders and/or vendors resulting in more options at better terms and anywhere from 10 to 100 times the borrowing power.

#3 – ACCOUNTS AND TERMS WITH SUPPLIERS
Being able to purchase goods and services from suppliers on account with favorable terms is essential to effective cash flow management. Your business needs good credit in its own name to qualify for accounts and the most favorable terms.

#4 – INSURANCE PREMIUMS
Insurance is necessary for the security of your business. The cost of insurance is affected by many factors, including your business credit. Without good credit, the cost of insurance is higher, and you may be forced to seek coverage from less reputable providers.

#5 – EXIT STRATEGY EXECUTION
Established credit in the name of the business increases overall value, which results in a higher sale price. It can also ease the extrication of the business owner by not having personal credit tied to loans or vender relationships.
The best time to create credibility in a business is before it is needed. Not being prepared can cost the company, and its owners, money.

The Pacific Crest Group (PCG) provides professional services that keep your business focused on your critical objectives. We create custom made financial and Human Resource (HR) systems based on creative strategies that are always delivered with exemplary customer service. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed specifically to maximize all of your business opportunities.

Erik Lacy
Founder, Credit & Business Funding Specialist
Apollo Credit & Finance Solutions

Office: (707) 327-2769
Mobile: (707) 889-4100
Fax: (707) 260-6002

Erik@ApolloCFS.com
www.ApolloCFS.com

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