Lets start with what account receivable financing is all about? It is a program of converting your business invoices, private or government, into cash easily and without any personal guarantees or long term contracts. Sometimes small business owners have to struggle hard to obtain capital to meet the cash requirements in the organization. In comparison, loans and credit are limited to an extent, so the question of what they should do to overcome this crisis arises. The remedy for this financial crisis would be an accounts receivable financing program.
Accounts receivable financing helps to maintain cash flow in your organization and at the same time give you an opportunity to maintain a steady and good relation with your clients. Accounts receivable financing offers numerous benefits to its client, which helps them in the smooth running of their business. Let us examine the advantages of accounts receivable financing and procedures followed prior to availing of this program.
Sufficient capital for the daily operations and the expenses in your company are easily got. You can outsource your accounts receivable management to another company and concentrate on the growth of your organization. As far as working capital is concerned accounts receivable allow you to set free the working capital, which is tied up in inventory. As such no business plans or statements are required to receive cash it immediately gives you the money to relieve you from the financial crunch.
Compared to the payment of the invoice from the client that takes 30 to 60 days and sometimes even more than that, accounts receivables funding process takes 24 to 48 hours, once the invoice is submitted. The funding amounts vary on the terms of the business loan. In the first installment 80% will be paid of the invoice value and in the second installment the remaining 20% is given to you after a deduction of 1% - 5% as factoring fee from the amount paid by your client company.
Before entering into an agreement with an accounts receivable financing company, keep a few points in mind. There are certain pitfalls in this method of financing, and one of them is that the invoice is either not funded or funded on the face value which means only the first installment is paid. The problem here is not related with the invoice but the company to which the invoice was issued. So you should do a thorough research about the companies you are working with and inspect the contract as well as the terms and conditions and try to negotiate discounts.
You should also consider whether the financial strategy matches with your business plan and if you have not yet prepared any plan please prepare it first before drawing additional money. You should also review your current economic conditions and think before any kind of business expansion.
Definitely accounts receivable financing is better option to overcome the monetary crunch in your company, but you should always consider how it could facilitate you and your companys growth.
According to the Wall Street Journal ("The Next Audit Scare," by Tom Herman, June 13, 2007) the Internal Revenue Service plans to revive its controversial practice of randomly selecting thousands of taxpayers for audits even when there is no reason to suspect any wrongdoing. The first audits will begin in October, 2007, and will target 13,000 people of various incomes for Tax Year 2006.
The reason for this program may be because the IRS is under pressure from Congress, which is struggling with budget deficits, to take action on the gap between what the government is collecting each year and what the government feels it should be collecting.
The amount of this "difference" is estimated to be $290 billion. Random tax audits have troubled many people in the past. In the 1990's, when the IRS imposed a similar program, many of these targeted individuals felt the audits were invasive. Individuals were made to produce vast amounts of paperwork to support even trivial items on their returns.
What will the "new and improved" Audit Program look like this time around? Some people chosen for this auditing may not even realize it's happening to them. The audit will all be done completely by computer without their knowledge. The IRS will be able to check the information by making comparisons of what the person reports on their return against what was reported by employers and financial institutions. Many people will need to endure face-to-face meetings with IRS Agents in order to examine their numbers in greater detail.
And what was the track record of the IRS like, when we think back to those bad old days of the IRS Audit? Not completely flawless, it turns out. According to CNN.com (All Politics, April 28, 1998, "Senate Panel Hears Stories of Alleged IRS Abuses") a Senate committee commenced hearings on the abuse of power by the IRS. There was testimony from taxpayers about IRS Agents "stepping over the line" even raids on peoples' homes, IRS Agents behaving "out of control" and acting "undisciplined." These Agents were described as "intrusive" and "intimidating." During these hearings, Cody Mayo, an Assistant DA in Caddo Parish, Louisiana, described how one individual actually experienced an emotional breakdown during an audit, and how another case tragically resulted in the victim's suicide.
There was testimony that the IRS retaliated against whistleblowers. Yvonne DesJardins, of IRS Employee and Labor Relations, appeared as a surprise witness. She described how people who just wanted to do the right thing were "ostracized," and their "careers destroyed." Meanwhile, IRS officials who engaged in any misconduct were protected -- or even rewarded.
What will you do if you sadly discover that you need to persevere through one of these face-to-face audits? You might feel that you need help.
Do Taxpayers Have Any Rights? Thankfully, Taxpayers do in fact have rights. In fact, many of us might not know that there is a "Taxpayer Bills of Rights." (IRC Section 7521) Some highlights of the "original" Taxpayer Bill of Rights include the following:
1. Taxpayers have a right to an explanation of the audit process, their appeal rights, and the collection process;
2. Taxpayers have a right to be represented by a representative authorized to practice before the IRS;
3. Taxpayers have a right to suspend an interview to consult with a representative, provided the interview was not arranged through the use of an administrative summons; and,
4. Taxpayers have a right, with advanced notice to the IRS, to make an audio recording of any IRS interview.
Of course, the revised Taxpayer Bill of Rights (TBOR) is much longer and much more complex. You can view this entire thirty-page long document by going to the IRS website www.IRS.gov.
Both Ben Needles & Matthew Donahue are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Ben Needles has sinced written about articles on various topics from Business Credit Cards, Anger Control and Business Credit Cards. About the Author (text)I recommend using an experienced Accounts Receivable Financing company such as the Phoenix Capital Group. They have a high level of professionalism and have won numerous awards such as Entrepreneur Magazine's Top. Ben Needles's top article generates over 550000 views. to your Favourites.
Matthew Donahue has sinced written about articles on various topics from Finances, Legal Matters. Eno, Boulay, Martin & Donahue, LLP is a Lowell, Massachusetts law firm specializing in both business law and business solutions for clients in Massachusetts and New Hampshire. The firm deals with issues relating to government regulation including state an. Matthew Donahue's top article generates over 720 views. to your Favourites.