Nonprofit Blog

Audits are seen by many as the “gold standard” in financial reporting. But this level of assurance isn’t necessary for every business. In some cases, management may prefer to downgrade to a less expensive service. When a borrower wants to downgrade its financial statements, it’s important for lenders to understand the key differences between reviews, compilations and preparations, including how these services have changed under the American Institute of Certified Public Accountants’ (AICPA’s) recent Statement on Standards for Accounting and Review Services (SSARS) 21.

Many successful small businesses are run by married couples. But when divorce strikes, business performance may suffer. Lenders can help divorcing borrowers set aside hurt feelings, remind them about the importance of keeping their personal and business lives separate, and recommend a financial advisor to identify and work around potential roadblocks. In some cases, collaborative divorce arrangements are a creative solution to minimize costs and business disruptions — and teach former spouses how to work together after they’ve parted ways personally.

Weak financial performance can cause borrowers to default on loans. So, it’s important for lenders to recognize the early warning signs that a company is underperforming. Often these are nonfinancial cues that raise a red flag before problems show up on the financial statements.

CFOs are unlikely to lose sleep over the bogeyman or monsters under the bed. But they are worried about economic uncertainty, benefits costs, attracting and retaining qualified employees, and other critical business issues, according to the third quarter 2015 Duke University / CFO Magazine Global Business Outlook survey. Despite these concerns, most CFOs are optimistic about the year ahead.

Nowadays, most borrowers are under extreme pressure to cut costs and minimize waste. Operating inefficiencies are one of the biggest struggles small and midsize companies face — and those that lose the battle may go out of business. A roll-up, where several smaller companies in the same or similar industries join forces to form a larger company, can reinforce a struggling borrower’s defenses.

There’s a mounting grassroots movement favoring domestic-made products. People want to feel good about their purchases and, for many, this means products that are locally sourced from companies that they feel they can trust. This trend is good news for retailers and manufacturers that operate primarily in the United States — and their lenders.

Interest rates have been near historical lows. But as rates slowly start to increase, now may be a smart time for customers with variable-rate loans to lock into fixed-rate loans. But fixed rates aren’t right for everyone.

Hackers may steal sensitive data from retailers, manufacturers, health care providers, contractors and professional services firms of all sizes. However, closely held borrowers stand to lose the most, because they typically lack the resources to absorb losses from data breach. In a high-tech world, every lender’s due diligence should include an inquiry into their borrowers’ data protection efforts.

Lenders who provide a helping hand to entrepreneurs stand to become trusted advisors as the business grows. But which start-ups are worth the risk? And how can you build long-term customer loyalty?

Going global may seem like a smart growth strategy. But there are several pitfalls that need to be factored into the decision and administrative tasks that need to be managed once a company decides to take the plunge into overseas markets. Borrowers who take this decision lightly could be headed for stormy seas, taking their lenders along for a turbulent ride.