OPM. Other people’s money.

In the world of investments that’s usually how an enterprise gets funded.  The days of banks being the leading (or only) source for loans and funds for investing have been waning for quite some time.

Have you taken advantage of using funds from private investors to fund and grow your company? If you have, you know that it can be an adventure, but it can also be a positive way to grow and expand.  But if you take this road, what should be considered in handling other people’s money?

Here’s a list of considerations:

• Involve a third party, like an attorney or money manager, to accept, handle and return money.
• Set up separate accounts just for the private lending cash; also consider not co-mingling the cash from multiple investors.
• Consider assigning each loan a specific role—i.e., operational improvements or warehouse expansion.
• Be sure and follow your state’s regulations on reporting and filing any reports.
• Repay your investors promptly and to the plan agreed to. Continue to pay interest until their portion of the investment is paid off.

Whatever you do, start with a clear plan and then stick to it.  As the saying goes, “those who fail to plan, plan to fail.”

For more on how to work with investment groups and individuals and handling investor’s money, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Allef Vinicius and Sharon MCutcheon, photographers)

Out of sight, out of mind, right?

Used to be, the boss could call an all-hands meeting in the company cafeteria and look everyone in the eye and interact.

Well, in the age of COVID, having off-site employees might mean they are out of sight, but they really aren’t out of mind. And when it comes to payroll and other basics of human resource management, they really should be top of mind.

They might be in California when HQ is in Texas.

Having a remote workforce, particularly one that that spans multiple cities and states—and maybe even countries—is more the norm than it has ever been.  However, when it comes to payroll and other things that impact them, things change dramatically if they are in L.A. and you are in Dallas.

Here’s a list of considerations:

• Payroll
• Income and other taxes
• Hiring rules
• Wage and hour requirements
• Immigration rules

Just because someone works for your company doesn’t mean the rules of your corporate home state (or even city and county) apply.  The fact is they reside some place else.  This means the rules where they are doing the work apply.  If an employee works for a Dallas company remotely in Atlanta, then payroll and income taxes for Georgia apply to them and must be paid to the state of Georgia.  Ditto the rules on the conditions of their employment and how their work hours are governed.

For more on how to manage your people, payroll and other important assets, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Chris Montgomery, Keem Ibarra and Jamie Lopes, photographers)

The very utterance of the word makes even seasoned businesspeople cringe and cower in fear.

“Audit? Why do we need to do an audit?”

OK, before you go into hiding and crawl into the fetal position in a corner, let’s stop and realize just what an audit is, the kinds of audits there are and that an audit can actually be a good thing.

“Really? Oh, pray tell, please continue,” she said.

Actually, there are nine different types of audit.  And they all play a role in the success—or failure—of your business:

• Internal
• External
• IRS tax (the one we all think of)
• Financial
• Operational
• Compliance
• Information system
• Payroll
• Pay

Audits are a way to objectively examine and assess a company’s performance—operational, financial, and other aspects of the company—to ensure things are working and where there might be room for improvement.  They all involve:

• A review
• Assessment of findings
• Recommendations

In many cases, audits are a legal requirement.  But in the end, they all are about measuring performance and compliance with some entity’s rules. While having the IRS look at your books is daunting at the very least, if you are complaint and have kept up with your books, it will be a valuable exercise and worthy of lessons learned.

For more on how to manage your finances and use audit to your full advantage, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

*photos courtesy of Unsplash (Stephen Dawson, Markus Winkler and Mwangi Gatheca, photographers)

We all know two times two is four.  Is there ever a time when it isn’t?

Maybe when you’re selling online?

If you think business is business is business, look again.  Brick-and-mortar businesses operate differently than online, virtual stores or e-commerce concerns. And, as such, there are differing financial considerations. The differences lay in these areas and, consequently, impact your financials:

• Pricing.
• Shipping and handling and inventory.
• Payment processing (collections).
• Store build-out and “rent.”
• Sales commissions and compensation.
• Equipment.
• Online sales and marketing.

If your overhead is different (among other things), then your pricing model will change. Inventory and shipping and handling becomes all that much more important as goods move differently through your supply chain (no storefront). Payments are collected and processed all online or through alternative systems from a traditional storefront. Where you sell from (your own site or sites like Amazon) changes your expense model dramatically. Payroll and commissions also change because of how your sales are accounted for and who makes them. Instead of a sales floor and a traditional point-of-sale unit, everything from fulfillment to inventory to the final transaction has to be done by something—meet the new age equipment. And how you go to market is vastly different that having walk-up customers.

For more on how to manage your finances for your online enterprise, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Mark Konig, Chris Liverani photographers)

*With apologies to Tom Lehrer and his song, “New Math.”

Or, why you need to seek approval to get things done inside an organization.

Now, don’t get defensive and listen to Aretha and call it a “Chain of Fools!”

Really.  It’s not about giving up anything.  Actually, it is about maintaining order and ensuring that things get paid or processed and the left hand knows what the right hand is doing. Besides, having approvals for payments and spending authorizations ensures that money is going where management (that most likely is you) wants it to go.  And according to some kind of strategic plan.

Here are some key reasons to have a chain of command, or hierarchy, within your company, particularly when it comes to all things financial. It:

• Sets expectations at every level.
• Helps employees understand who to turn to when they need help.
• Clarifies roles for every employee and defines what they can—and cannot—do.
• Makes clear who has the last word (who is ultimately in charge).
• Defines the shape of the organization both structurally and culturally.

When it comes to finance, having a clear path to approval for spending and budget allocation becomes even more critical.  Having an organization structure ensures:

• Who sets budgets and authorizes spending.
• How much any given manager or employee can spend of the company’s money in the scope of their job.
• An audit trail for when, who and how much is spent.

Every organization, no matter how large or small, has a structure or should have a structure.  Use what you have to ensure accountability and traceability.  It will ensure you make money and get to keep more of it if everyone involved knows what they should be doing.

For more on how to manage your finances, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

*photos courtesy of Unsplash (Eyatsu Etsub, photographer; and Museums Victoria); Aretha Franklin courtesy Atlantic Records and the Detroit Free Press

ZZ Top said it best and it continues to be a major theme in business.  If you provide goods and/or services, you need to be paid for them.

These days there are more ways to be paid beyond cash and checks.  Peer-to-peer payment apps and systems are taking over this space. What is available, and which one should you use?

First, let’s make a list.  Here are a few of the top systems out there:

• ACH
• CashApp
• Facebook Messenger
• GooglePay
• PayPal
• Venmo
• Zelle

ACH or automated clearing house, is a network that coordinates electronic payments and automated money transfers. Use it to move money between banks. There may be a fee.

CashApp is just that: an app on your phone.  It is a service offered by credit card processor Square. It has a maximum transfer amount of US$7,500.

Facebook Messenger is new to the payment space and relies on its users having a Facebook profile. However, it may take up to five business days to receive payment.

Google Pay is popular because of the search engine and its accessibility.  Integrates well with Gmail but can take up to 24 hours to receive payment.

PayPal is the original payment system.  Once acquired and then sold by eBay, it allows for fee-free transfers (between PayPal accounts) to family members.  However, if you have a business account, expect fees up to 3.5%.

While owned by PayPal, Venmo is a separate platform.  It is best for reimbursing your friends after a shared dinner or as a way to get cash to someone quickly.  No fees if you can wait more than a day. But you can only send money via the app.

Offered by the big banks including Wells Fargo and Chase, Zelle is a way to send cash from account to account on the same day without a fee.  You can use either your desktop or smartphone.

Are you responsible for payables at your company or just want to be paid as an individual or contractor?  Consider one of these options. As with any service, product or offering, there is no one-size fits all: check out demos, read up and consider a trial before buying or downloading.

For more on how to manage your finances, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

*photos courtesy of Unsplash (Nathan Dumlao and David Dvoracek, photographers)