Finance Tips

Cash Discounts – Cash is King.

In the current business climate investors are moving away from fundamentals in evaluating a stock to a very detailed look at a firm’s balance sheet. One of the reasons for this paradigm shift is some companies are taking advantage of the allowance for bad debt to artificially inflate the company’s earnings. In doing so, the company’s fundamentals will continue to look strong when in actuality they have underestimated the amount of bad debt they are carrying in accounts receivable. Some businesses attempt to reduce the exposure to uncollectable debt by reducing the use of accounts receivable in general but there are cases when this is impossible. A predominate way of keeping accounts receivable to a manageable size is to offer cash discounts which benefit both the seller and buyer of a good or service.

A cash discount is a fixed percentage off of the cost of a good or service for prompt payment. For example if a painter provides a quote to paint a house for $1,000 but if the owner pays in cash at the time of service the painter will only charge $950. On the surface this situation gives the impression that the customer received a benefit from the cash discount in the amount of 5% of the quoted price but the painter received no such benefit. In fact the impression could be given that the cash discount was detrimental to the painter because the overall fee was reduced by $50. Digging deeper into the painters thought process benefits of the cash discount will become apparent. Firstly by receiving the payment in cash the painter does not have to worry about fees for a credit card transaction (2%-4%). Additionally the painter is then protected from charge backs and fraudulent credit cards due to identity theft. If the homeowner chose to finance the cost of the service then the painter would be exposed to the possibility of the homeowner not paying the debt. If this happens the painter would have to expend time in attempting to collect that debt or sell the debt to a collection agency at a loss. If the painter is paid cash at the time of transaction both of these scenarios are mitigated; there is no credit card fees to pay and there is no threat of a non paying customer. Continue reading ‘Cash Discounts – Cash is King’ »

IT’S NOT THE ROLE OF THE FEDERAL GOVERNMENT TO CREATE JOBS AMERICA!!!!!!!!!!!

AMERICANS must regain their resilience and move the economy forward. It’s not the role of the Federal Government to create jobs. That’s a job for the people. Government can only set the stage by creating as level a playing field as possible, create incentives, assistance and any necessary catalysts with which to engage those with the entrepreneurial spirit to take action. After that point it up to every well thinking ambitious American with this Country’s interest at hart, to assume their responsibility and not sit around like some third world people who are lacking the education, the skills and or the opportunities glaring at them for self- empowerment. Waiting? What are Americans waiting for? If and when we force government to begin to think, plan and do for us, what we can do for ourselves, we are really asking to be treated as third world citizens existing, not living, under the heavy thumb of elected tyrants, who take it for granted that they may ignore what the people really want in the interest of paying lobbyists simply because we have surrenders our independence.

May be; just may be, one day soon, very soon, since we certainly can’t stand to wait, we will all come to the very clear realization that it’s not the role of the Federal government to solely fix the economy. Americans like most free loving people don’t want to see the FEDERAL Government or any other government for that matter become so involved in our lives that the line between freewill and freedom becomes merely an academic exercise, and not one we experience in actuality. Continue reading ‘IT’S NOT THE ROLE OF THE FEDERAL GOVERNMENT TO CREATE JOBS AMERICA!!!!!!!!!!!’ »