Every business owner needs to know the difference between insolvency and bankruptcy. Often these two terms are misunderstood and improperly used in conversation. You need to know their correct meaning because both are used in civil law and both have different issues to address during the process. In addition, understanding these two terms builds a better comprehensive understanding of financing your business.
Cash is King
Cash is king is a popular phrase used in business to describe the three primary sources of cash and the best business practices for utilizing these resources.
Accrual accounting is the preferred method of accounting for all business operations. Any publicly traded company must comply with the principles of accrual accounting. Small business operations can choose between cash and accrual accounting for their records. Although cash accounting is the easiest to work with as a small business operation, accrual accounting will provide a more accurate picture of the financial status and affairs of any business operation.
In business, liquidity is defined as the period of time it takes to turn assets into cash. It takes 20 minutes to turn the balance in the checking account into cash. You head on down to the bank and present a check. You get cash. But most businesses run on just more than the cash in the bank account.
All vendors look for avenues to expand their market share or maintain their market share. Many times it is to their benefit to provide start-up capital to potential point of sale opportunities. If they can assure themselves of a long term buyer of their product or service, then they will give serious consideration to a new business opportunity.
There is one responsibility of all business entrepreneurs that is loathed more than any other. It’s asking for money. First off, you have to find financial resources and then you have to ask for money. This article is dedicated to finding money and how to ‘ask’ for the money from a family member. It is easier than you think.