Why 2+2 Doesn’t = 4 in Money

Why 2+2 Doesn’t = 4 in Money

First let me preface by saying it’s not your fault. School doesn’t teach you money. It teaches you math (2+2=4), but in money 2+2=2.5. Why? Truth is there are a myriad of reasons, but to keep it simple, here are three:   1. Time value: The value of money diminishes over time. What a dollar could buy as little as a year ago, that same dollar cannot i.e. candy bars last year on average were $1.29, today they are $1.39 and up.   2. Cost of money: When you borrow money it usually has a positive rate associated with it i.e. 5,10, 20%. This is your cost of funds. We educate that the cost is not as important as the return. If it cost 20% but my return is 60% it may be worth it. Obviously, this is a case by case basis.   3. Cash flow: When you are extending credit to your clients or customers you are minimizing your access to utilize that money as you see fit. Therefore; you must consider and monitor your outstanding receivables vigilantly, as the longer it is outstanding the less buying power it has.   How does this apply to you?   Time value: by understanding this you can price accordingly to reduce diminishing return. When you have financial controls in place you will know your average outstanding receivables timeline, therefore you can plan accordingly. Create a budget and better manage sales cycles, inventory, production cost, etc.   Cost of money: always understand return v. borrow ratio. If your cost of funds is high make progress to adjust. Interest rates are in...
Tackle Holiday Challenges with a Strong Year-End Business Strategy

Tackle Holiday Challenges with a Strong Year-End Business Strategy

Tackle Holiday Challenges with a Strong Year-End Business Strategy With the holidays approaching, many small business owners are nervous about ending the year on a high note, new research finds. A study from Office Depot revealed that making sure assignments are completed and having enough financial resources to have a profitable and successful end of the year are small business owners’ biggest worries as they head into the holiday...

Funding Broker Vs. Direct Lender

There will come a time when you will seek capital to help grow your business! It is important to understand that you have options, choices and you decide what, how, when, who, where you receive the capital from. Options mean what types of capital available to you. Choices refers to programs, what type of capital you want, how refers to amount of capital you need, when refers to when you would like to receive the capital, who refers to which company you want to do business with and where refers to lenders location, ability to service, etc. In understanding this we have assembled an overview chart of broker vs. direct lender to educate you so the best decision can be reached. Here is why you should consider each: Options: Brokers will have multiple lenders for multiple loan products. Multiple lenders means better bargaining position regarding rates, terms and fees. Direct Lenders will only have access to their loan programs.  As brokers Altima is consistently able to achieve better terms, rates, etc. for our clients by negotiating one lender against another. Timeliness: A brokers ability to quickly place an applicant with the correct lending source based on lenders criteria means quicker funding. Direct Lenders have to lump everyone into their specific guidelines and if you don’t fit, they cannot provide you with the necessary funds, meaning wasted time. Every lender has a different risk tolerance and appetite. I.e. Construction Vs. Retail, 800 Fico Vs. 520, etc. It’s important to know this for effective and time efficient outcomes. We research lenders loan programs to ensure borrower meets their guidelines for faster...