The old rationale for local offices or branches was the need for direct contact with customers, prospects, and salespeople. But business now operates in a nearly real-time environment and is not concerned with regional cultural differences, interpersonal contact, the transmittal or exchange of paper-based documents, or geographic distances. As strategies change through advances in telecommunications, the computer, and the Internet, a local presence is not required for business transactions. A careful evaluation is necessary to understand existing procedures, ascertain the peculiarities of legacy systems, and determine which costs are avoidable.

Mergers and acquisitions (M&As) often require financing and bank loans. But the problem that corporations face in obtaining loans hasn't been much relieved in the years since the 2008 credit crisis. The author of this article, a financial consultant, reports that clients are constantly complaining about the difficulty in obtaining financing. And many clients blame the banks for their plight. This article discusses the complex issues impacting this situation and strategies that corporate treasurers can take to cope with the problem.

The current economic crisis has focused attention on banks here and abroad. Some have called for more international bank transparency. But how will this trend affect your company?.

The current economic crisis has focused attention on banks here and abroad. Some have called for more international bank transparency. But how will this trend affect your company?.

The March-April 2011 issue of JCAF included the first part of an article by this author on cutting costs by focusing on working capital. This second part of the article covers the next step: how to determine current practice, or the “base” case. Documenting that status helps a firm decide whether change is necessary and feasible—and how much the change will cost.

Researchers estimate that at least 75 percent of all merger-and-acquisition (M&A) deals fail to meet the expectations of the acquirer, of the acquiree, or of investment bankers. The reasons cited include incompatible management cultures, marketing strategies that do not mesh, overly optimistic financial projections, and more. But one critical factor in M&A—too often overlooked—is the accuracy of important current asset accounts, particularly accounts receivable and inventory. These concerns are often forgotten as investment bankers, accountants, and attorneys focus their attention on the “big picture” of the deal. This article examines these two current asset accounts, provides examples of problems that occurred in publicly held and private companies, and suggests specific metrics you can use to monitor receivables and inventory in takeover candidates.

The March-April 2011 issue of JCAF included the first part of an article by this author on cutting costs by focusing on working capital. This second part of the article covers the next step: how to determine current practice, or the “base” case. Documenting that status helps a firm decide whether change is necessary and feasible—and how much the change will cost.

Abstract Researchers estimate that at least 75 percent of all merger-and-acquisition (M&A) deals fail to meet the expectations of the acquirer, of the acquiree, or of investment bankers. The reasons cited include incompatible management cultures, marketing strategies that do not mesh, overly optimistic financial projections, and more. But one critical factor in M&A—too often overlooked—is the accuracy of important current asset accounts, particularly accounts receivable and inventory. These concerns are often forgotten as investment bankers, accountants, and attorneys focus their attention on the “big picture” of the deal. This article examines these two current asset accounts, provides examples of problems that occurred in publicly held and private companies, and suggests specific metrics you can use to monitor receivables and inventory in takeover candidates. © 2012 Wiley Periodicals, Inc.

Abstract Managing working capital involves organizing your company's short-term resources to sustain ongoing activities, mobilize funds, and optimize liquidity. The two most critical cost efficiencies are float and processing expenses. The author gives some examples of firms using working capital management to control costs, and he includes a checklist of 20 actions companies should take to understand their working capital requirements—and produce cost savings. © 2011 Wiley Periodicals, Inc.

Abstract Companies often wonder about a bank's credit-decision process. How is it decided to approve or reject a company's loan request? The author explains the five-step process that many financial institutions use, and how companies can avoid potential problems when applying for credit. © 2011 Wiley Periodicals, Inc.

Credit decisions by commercial banks are based to a large extent on the financial statements provided by corporate borrowers as monitored using financial ratios specified in loan covenants. This paper examines selected standard ratios used to measure the financial condition of a firm and concludes that generally accepted ratios are quite misleading. Instead, total receipts-to-cash flow as a measure of liquidity was determined to be a superior metric to the current ratio. In addition, the ratio of cash flow-to-total debt was found to be more reliable than the usual measures found in credit agreements: interest coverage and the debt ratio. An extensive database was developed for this study using information reported by a standard source for ratios as well as alternative metrics. Suggestions for application of this result and further research are noted.