Business Finance & Invoice Factoring Articles

To cash out, or not?

noreply@blogger.com (Admin) — Tue, 10 Feb 2009 20:54:00 +0000

Sometimes, cashing out RRSPs is the only way to go to finance a small business startup, says a Toronto-based entrepreneur.

Evan Carmichael, of evancarmichael.com — which is dedicated to helping entrepreneurs grow their business — says it’s becoming increasingly difficult to get money from the bank to start a business.

“So quite a number of entrepreneurs do actually cash out some RRSPs because they have no other option,” he said.

The 29-year-old, who has a decade of experience with small business startups, said if that’s your only option, it’s not the worst thing you can do.

“The business itself can become a great little nest egg for yourself and your retirement,” he said.

Jeff Moulden is in the midst of starting up a home renovation business called HJM Home Improvements and recently cashed out about $10,000 of his RRSPs in order to build a shop in his garage.

He said losing some of the money to taxes was a consideration but it was a “necessary evil” — something he felt he had to do.

“It’s my money and rather than going further into debt, I thought I’d just capitalize on some of my retirement savings; I’m building this business for (retirement) anyway,” he said

Paul Woolford, tax partner with KPMG Enterprise, says anyone considering cashing out RRSPs needs to be aware that they could lose a sizeable amount.

“If you take out $10,000 to help finance your business, depending on what tax bracket that individual is in — let’s assume that person’s in the highest tax bracket — roughly half of that $10,000 would be taken back,” he said.

Basically, the higher the tax bracket and the more money cashed out, the more that will be lost.

Woolford recommends leaving money in RRSPs until retirement and finding other means of financing a small business, such as third-party loans or personal savings if they’re available.

He also recommends investing money in the new tax-free savings account.

“If you earn $10 of interest on an RRSP, you have to report that on your income tax, unlike the tax-free savings account,” he said.

“You can take it out and you can actually put it back in the following year.”

Once a small business is up and running, however, investing in RRSPs is essential, said Carmichael.

Putting money into your RRSPs lowers your taxable income, which can keep you in a lower tax bracket and help you save at tax time.

Article Source:
http://www.metronews.ca/toronto/live/article/179602

Economy gets a makeover

noreply@blogger.com (Admin) — Wed, 28 Jan 2009 16:58:00 +0000

PM pins his hopes on infrastructure, home renovations and income tax cuts

OTTAWA–The Conservatives have delivered a fixer-upper budget meant to rebuild the economy and get Canadians working, spending $35 billion over two years on everything from income tax cuts and help for home renovations to increased jobless benefits and money for urban reconstruction.

But Canadians will have to wait until today to see if the Conservatives' economic safety net is enough to earn the support of Liberals, who hold the key to the fate of Prime Minister Stephen Harper's minority government.

Liberal Leader Michael Ignatieff initially offered only a mixed review but said he would announce this morning whether to vote down the budget – and defeat the government.

Harper's chicken-in-every-pot budget opened the taps in a flurry of spending aimed at preserving jobs and restoring confidence in the face of a global recession.

The Conservatives also offered across-the-board tax cuts.

It was the most anticipated budget in recent memory, not only because it was designed to try to pull Canadians from the economic gloom felt worldwide, but because it included the drama of a government trying to resurrect itself from a near-death experience last month when an opposition coalition was poised to defeat it.

A government that recently was boasting of budgetary surpluses is now forecasting five years of deficits totalling almost $85 billion.

Ignatieff said the budget's big-ticket spending and new assistance for the jobless was a "positive" response to "the combined pressure of the opposition parties," which have threatened to topple the Harper government if it failed to produce an adequate economic rescue package.

But "we're very preoccupied and worried that unemployment is going to rise sharply," the Liberal leader said, questioning whether Finance Minister Jim Flaherty has done enough to improve employment insurance (EI) benefits.

How Small Businesses Can Avoid Bankruptcy

noreply@blogger.com (Admin) — Wed, 28 Jan 2009 16:54:00 +0000

 THE LATEST PROFIT/BMO BUSINESS COACH PODCAST

   TORONTO, Jan. 27 /CNW/ - A weak economy can be a hazard for any business:
Suppliers begin to demand quicker - if not up-front - payment. Customers begin
to stretch their payables - or stop buying, period. In the middle is the
cash-starved entrepreneur who can't make ends meet. For some, bankruptcy
becomes the only way out. But it doesn't have to be that way. When otherwise
strong companies run into cash-flow problems, they usually just need to buy
some time to get their fiscal house in order - and there are laws that exist
for that very reason.

Read More

Monster Employment Index Canada Falls 27 Points in Q4 of 2008

noreply@blogger.com (Admin) — Fri, 23 Jan 2009 17:17:00 +0000

Year-Over-Year Decline is 22 Per Cent

2008 Fourth Quarter Highlights:

Index of online job postings declines 27 points to 118 in fourth quarter of 2008
Online postings for Q4 are down by 22 per cent from a year earlier
All job categories tracked by MEI register weaker online recruitment
All provinces and all cities tracked show declining online recruitment

MONTREAL, Jan. 22 /CNW/ - The Monster Employment Index Canada declined by 27 points in the fourth quarter of 2008, falling to 118 from 145 points overall amid weaker online recruitment activity across every province and in all major cities monitored. With the Q4 decline, the Index fell for a second consecutive quarter and is down by 22 per cent year-over-year compared to the Q4 period for 2007.

The Monster Employment Index Canada is based on a real-time review of millions of employer job opportunities culled from a large, representative selection of corporate career sites and job boards, including Monster.ca(R).

During the fourth quarter of 2008, all 10 occupational categories tracked by the Index showed weaker online job demand compared to the previous quarterof 2008.

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Business Finance News

noreply@blogger.com (Admin) — Tue, 09 Dec 2008 17:13:00 +0000

Business Financial News : Dec. 9th, 2008

More job losses expected in battered manufacturing sector
By John Valorzi, THE CANADIAN PRESS

Canada's battered manufacturing sector shed 38,000 jobs last month and has lost nearly 400,000 factory jobs since an employment peak in 2002 - a trend expected to intensify over the next year as the North American economic slump deepens and demand for everything from auto parts to newsprint dries up.

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Bank of Canada chops key interest rate to 50-year low

The Bank of Canada slashed a key interest rate by three-quarters of a percentage point Tuesday as the central bank moved to combat major economic weakness.

With the interest rate reduction — the biggest drop since one of a similar size in October 2001— the bank's overnight rate now stands at 1.5 per cent, a level not seen since 1958.

"While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity," the bank said.

Read More

VICTORIA, B.C.
With record job losses being felt across Canada, the country's trade ministers announced Friday an agreement that ensures labour mobility across the country in the new year.

Business Finance News

noreply@blogger.com (Admin) — Tue, 25 Nov 2008 19:11:00 +0000

Business Financial News - Nov. 25th, 2008

Pension Investment Association of Canada (PIAC) Calls on Finance Ministers to Ensure the Stability of Canada's Retirement System

TORONTO, Nov. 25 /CNW/ - The Pension Investment Association of Canada
(PIAC) has written to all of the Finance Ministers across the country asking
them to take action to ensure the stability of Canada's retirement system.
Over the past several years, PIAC has made numerous submissions to
various governments urging changes that will enhance the capacity of pension
plans across the country to respond to changing financial and demographic
trends. The recent market events and world-wide credit crunch have the
potential to put severe strain on Canada's pension system and urgent action is
required to ensure that pension plans, and in the case of private sector
plans, the employer sponsors behind them, are able to weather the current
financial crisis.

Read More

B.C.'s budget takes a hit
$3-billion revenue drop won't affect key programs, Hansen says
Jonathan Fowlie, Vancouver Sun
Published: Tuesday, November 25, 2008

VICTORIA -- The rippling effects of the global financial crisis are expected to drain at least $3 billion from the provincial government's revenues over next three years, Finance Minister Colin Hansen said Monday.

The significant drop means Premier Gordon Campbell's Liberal government will have to cut spending, or live within a much narrower margin in the coming years, or break its promise to maintain a balanced budget.

Hansen acknowledged the dramatic changes in world economies in recent months, and the volatility that has been imposed on British Columbia as a result.

Infrastructure building 'key' to Ottawa's recession fight
John Greenwood, Canwest News Service
Published: Monday, November 24, 2008

TORONTO - Ottawa wants to build billions of dollars of bridges, hospitals and other infrastructure as a way to lessen the blow from the financial crisis, Finance Minister Jim Flaherty said Monday.

Speaking at a conference in Toronto, Flaherty said investments in infrastructure will be "a key part" of the government's strategy to stimulate the economy.

But some observers say there's a problem with the plan. The government wants to deliver the projects through so-called public private partnerships (P3), where projects are built and financed by the private sector, but according the government's requirements. But while the P3 model has gained acceptance in much of the world, there is rising concern that the credit crunch has made it almost impossible to finance new P3s.

How to Finance Your Business Through Factoring Receivables Invoices

noreply@blogger.com (Admin) — Thu, 20 Nov 2008 17:26:00 +0000

Maintaining consistent cash flow is one of the biggest challenges faced by small and medium scale business enterprises today. The cash flow constraints particularly occur in businesses that offer credit facilities. According to cash flow management experts many debtors have a tendency of failing to honor their pledges to clear their debts within a stipulated period of time that may between 30 and 60 days. It is during such circumstances that a business entity may be required to rise to occasion by supplementing its operations through sourcing of funds either internally or externally to boost the cash flow.

One of the convenient ways of sourcing for funds is invoice factoring. Factoring refers to the process of speeding up cash flow in your business by selling the credit worthy invoices for cash. The viability of factoring as one of the most effective debt collection methods has been a blessing to many small and medium scale business enterprises.

This cash flow tool has been around for many years and has effectively evolved into a very important moderator preferred by many small business enterprises for use in competing effectively with larger businesses. Therefore by factoring invoices, small or medium scale business entrepreneurs can offer flexible terms of sale with the confidence that they will have cash for their sales within a short period of time. By so doing, your business will regain ground and your cash flow needs will be resolved without you having to waste time and money calling and seeking for your debtors for payments.

Today, there are several companies that have invented pragmatic, friendly and convenient methods of supplementing cash flow for business without burdening business entrepreneurs with excessive interest rates and time wasting application procedures. I recommend cash flow management experts to both current or prospective business entrepreneurs. This site contains amazing information about financial offers for cash infusion programs that are designed to assist business entrepreneurs overcome cash flow crisis. This particular blog contains direct links a leading international financing company, the MBS Financial LLC. Business entrepreneurs seeking to regain control of cash flow in their business can access the credit application pages for a quick loan at MBS through the direct links recommended by cashflow management experts

Business Finance News

noreply@blogger.com (Admin) — Thu, 20 Nov 2008 17:03:00 +0000

Business Financial News - Nov. 20th, 2008

Tops financial stories in the business world happening in Canada today!

Canada Stocks Fall, Led by EnCana, TD Bank, on Oil, Debt Losses

Nov. 20 (Bloomberg) -- Canadian stocks tumbled toward their worst year ever, led by banks and energy producers, after Toronto-Dominion Bank reported credit trading losses and oil prices fell below $50 a barrel for the first time in two years.

The Standard & Poor's/TSX Composite Index fell 3.4 percent to 8,198.30 at 9:47 a.m. in Toronto, extending the market's drop this year to 41 percent. Such a retreat would be its worst year ever, surpassing a 37 percent slide in 1931.

The S&P/TSX, which gets almost three-quarters of its value from finance, energy and mining shares, had fallen 44 percent before today from a June record as global credit losses approached $1 trillion and commodity prices slumped.

1 billion dollar bailout- Chrysler Canada

Chrysler Canada Inc has asked the Canadian and Ontario governments for C$1 billion in financial assistance to help it through the global economic crisis, making it the first Canadian automaker to specify how much it is seeking, the Globe and Mail reported on Thursday. However, the newspaper, citing sources, said the company had not specified what form of assistance it wants or how the payout would be split between the two levels of government.

The outlook's bleak and getting bleaker

OTTAWA -- Canada's already bleak economic outlook will likely deteriorate further.

That was the warning yesterday from Bank of Canada governor Mark Carney, who reiterated that more interest-rate cuts will almost certainly be needed to stimulate growth, and from Statistics Canada's barometer of the short-term outlook for the economy, which was undercut by plunging stock markets.

While the Harper government in its speech from the throne was promising to "protect Canadians in difficult times," their deeply depleted investment savings were being further eroded by another steep drop in stock markets, which added to the darkening economic mood.

Managing Cash Flow: Easier Than You Think

noreply@blogger.com (Admin) — Tue, 07 Oct 2008 15:51:00 +0000

Did you know that the most common cause of failure of small businesses is a shortage of cash to meet running costs? This happens because of poor cash management. Don’t let this happen to you. Take control and manage your cash effectively to minimize the risk of failure. To do this, you have to understand two fundamentals of cash management: Cash and Cash Flow.

o Cash – In this context, what is meant by cash is the actual amount of money available in the bank or in the business. It does not include inventory, neither does it include receivables or fixed assets such as property. Though these can be potentially converted to money, they are not liquid, and hence cannot be termed ready cash. In other words, cash is what you can use immediately to pay the bills and keep your business running.

o Cash flow – This refers to the movement of cash in and out of a business. Cash coming in is what you receive from customers, lenders and investors. Cash going out refers to the payments you make every month for salaries, supplies and interest to creditors. If the cash inflow exceeds the outflow, a company has a positive cash flow. A positive cash flow is a sign of good financial health. In the opposite situation, a company is said to have a negative cash flow, a problem to say the least!

How do you beat this? To begin with, develop a cash flow projection. This should be a two-fold project - short-term (with a weekly or monthly periodicity) cash flow projections to help manage daily cash needs, and long-term (ranging from one to five years) cash flow projections to finance your larger business requirements.

For small businesses, the need for cash flow management is mainly to avoid extended cash shortages, a common occurrence when expenses for purchase of materials, payment of license or permit fees and wages may have to be made before the business gets paid by its customers.

How can you close this cash flow gap and keep your business solvent? Shorten your cash flow conversion period by following 5 easy steps that can help bring in the money faster:

1. Collect payments promptly – Send out your invoices the same day goods are shipped, not a week or two later. Indicate on your invoice when payment is due, and specify the penalty interest for late payment.

2. Track accounts that are overdue – Actively pursue unpaid accounts. Call the companies and send reminders letting them know that their account is past due and the steps that will follow should they not pay.

3. Cut expenses as much as possible – Take a hard look at the expenses column on your cash flow chart. Are all the expenses listed in that column really necessary? Are there things you can do without? Is there anything you can find a cheaper deal on? Answers to these questions will probably end up saving you quite a few dollars.

4. Account for people not paying on time – Remember, people don’t always pay on time. In fact, they need to be reminded more than once that payment is due. When making your cash flow projection, account for the fact that it usually takes people longer to pay you than you think. In case you’re offering a long credit period, communicate with the company at least four weeks before the invoice is due to make sure it gets paid on time. You might even offer your customers a discount for paying their invoices early.

5. Project a ‘worst-case scenario’ – Always overestimate your expenses and underestimate your income. This will allow you to plan and be prepared for cash shortages.

To keep your business up and running, you have to have money coming in regularly. Track your cash flow closely so that you can predict potential problems and take steps to remedy them.

About The Author

Hi, I'm Akhil Shahani, a serial entrepreneur who wants to help you succeed. If you like to work smart, check out http://www.SmartEntrepreneur.net. It's full of articles and resources to help you start and grow your business successfully. Please visit us & download our special 'Freebie of the Month'!