It Figures

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3 min read

This story appears in the November 1998 issue of . Subscribe »

" is king, especially for a young ," notes Tim Lovoy, a partner in Big Five firm & Touche LLP. While you don't have to be a numbers cruncher to run a business, Lovoy recommends you "maintain a laser-beam focus on collecting receivables" and regularly track key figures.

Numbers to look at daily include cash on hand, bank balance, summary of sales and cash receipts, corrections made in recording collections on accounts, and all cash and check .

Lovoy would add to the list, but since most start-ups lack the time and the staff to deal with collections every day, he suggests doing it weekly. "Have an aging [report] that tells you which receivables are 30, 60 and 90 or more days past due," he says. "Once receivables extend beyond terms, immediately follow up with collection efforts. If a customer is net 30, allow five days, then make a phone call. The squeaky wheel gets the grease."

Other items to check weekly include (take advantage of discounts for prompt payment), and related taxes (if you have employees), and reports to government agencies.

On a monthly basis, make sure all journal entries are classified according to the appropriate account numbers and posted to the general ledger. It's also wise to prepare a monthly profit and loss statement and a . "Make sure they reconcile with the general ledger," Lovoy adds.

Look ahead each month. "[Estimate] revenues for the next month, six months, 12 months," he adds. "That helps you determine what you should do now to either add capacity--so you can satisfy demand--or reduce expenses so you don't lose ."

Also monthly, be certain all appropriate tax payments are made, and review so you can remove dead stock and order new stock.

Give Yourself Credit

Ideal for start-ups, Visa's new Check Card is designed for small businesses with annual revenues of less than $10 million and with fewer than 100 employees.

"Emerging businesses are often unable to establish a line of credit or obtain a business credit card, but they have bank accounts," says Bruno Perreault, senior vice president of commercial products for Visa USA. "[You] can get a Visa Business Check Card to start and, over time, add a business credit card and business line of credit."

Visa is also making it easier for small-business owners to get an unsecured line of credit of up to $50,000. Interest rates and transaction fees vary by bank, but they're usually more attractive than those charged on consumer accounts.

In Other Words???

If you've ever considered investing in a mutual fund but were mystified by the prospectus, you'll appreciate the simpler fund profiles now available. Seeking to make investment documents clearer, the Securities and Exchange Commission (SEC) now allows mutual funds to be sold without a conventional prospectus. Instead, investors may request a shorter summary outlining the fund's risks, performance and investment style.

If you still want to see a full prospectus, good news: Effective last month, the SEC began requiring mutual funds and public companies to use plain-English principles in the cover page, summary and risk factors sections of prospectuses. This means:

  • active voice
  • short sentences
  • concrete, everyday words
  • bullet lists for complex material
  • no legal jargon or technical terms
  • no multiple negatives

Companies have until December 1999 to finish changing their prospectuses.

Paul DeCeglie ( is a former staff reporter for Journal of Commerce and American Banker.

Contact Sources

Tim Lovoy, c/o & Touche LLP, (562) 499-8305,

Visa USA, (800) VISA-911,


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