By Leonard Leff, President of the CDS Companies, based in Lynbrook, New York.
Many times an accountant’s clients from the small business sector are under a great deal of pressure. These diminutive enterprises are struggling to make sales, bring in revenue and devise ways to expand their operations, while keeping up with all of the required payments: everything from taxes, fees, monthly obligations, payroll and more.
As promising as the outlook for said business may appear to look, real problems and issues often driven by a need for regular cash flow remain constant. In a small situation, invoicing, billing, issuing statements of account, issuing credit, and collections (while managing cash flow at the same time) can chew up an enormous amount of time. It is effort that gets diverted from the core business, making sales and generating new income. Especially with a solo proprietor or “mom & pop” scenario with limited manpower, the lost time and energy that must be spent on the above can have severe adverse effects on a concern’s progress.
So the accountant is often thrust into a ticklish dilemma. The accountant wants to see the business stay afloat. At the same time, all of the financial, legal encumbrances and compliances must be met. Does the accountant recommend a “backroom” operations service provider to re-vamp invoicing procedures, step up payments on accounts receivable, go after collections (and in the case of my company) to provide some financing for cash flow?
It is understood that the accountant wants to do the right thing. But often, they are fearful that their own role and purpose in the business is potentially diminished. And perhaps, a different way of doing things by a "backroom" operations consultant will create a misperception that there were some accounting discrepancies or inadequacies? It could cast the accountant in an unfavorable light. Of course, if the company is at risk of going under, facing serious trouble, the accountant is left with no choice but the recommend a company like CDS.
By and large, accountants should realize that a "backroom" operations consultant is generally not a threat to them. In fact, if the accountant is pro-active in making recommendations and being influential in the recruitment initiative correctly nurturing the relationship with the “backroom” consultant, everyone with the proprietor should be harmonious as a team. (The accountant’s client can feel that his practitioner has in fact, provided him with a solution to the problems in the business.)
Many small businesses today reach an impasse on whether or not they can continue growth. Many times especially in the current business climate, their customers and clients want terms and credit in order to have a relationship. Especially if the small business is dealing with a much larger company that is processing checks on a fixed payment schedule, the small service provider has few options for prompt payment after issuing an invoice.
So the need for a "backroom operations" consultant to offer cash flow financing is critical. It may cost a little more than what a small business normally expects to pay via a bank. But if a bank will not extend any additional financing to an enterprise, and if the activity of this operation turns volatile, the proprietor may have little choice but to use this type of financing.
And while there is a higher cost, when compared with the financial strength it brings to a company, and the payments it brings in from accounts receivable, the value far outweighs the extra expense. The rocky periods when a company enjoys a decent supply of cash, and suddenly has none available, become more stabilized.
Accountants will find out that the bookkeeper-like services offered by a “backroom” consultant are in fact, not a menace to the rapport with their clients. Rather, the services complement each other. And if the business (which has been supported by proper financing) grows to the next level---the accountant is then in a better position to seek out higher fees.
Leonard Leff is President of the CDS Companies, based in Lynbrook, New York. Founded in 1972. CDS is a national financing and "backroom office" service provider focused on small business. CDS and its affiliated business unit, myreceivables.com handles about $250,000,000 in annual transactions, some 10,000,000 transactions per day and 5,000,000 invoices per month. Additional information about Mr. Leff and his companies can be found at www.myreceivables.com, he can also be reached directly at (516) 379-1053 or at www.myrecievalbles.com