Voluntary liquidation occurs when the members of a company resolve to voluntary wind up the company's affairs and dissolve. Voluntary liquidation starts when the firm passes the resolution, at which time the company generally ceases ongoing operations, if it hasn't already done so. If the company is solvent and the members have made a statutory declaration of solvency, the liquidation proceeds as a members' voluntary windup of business. In such a case, the general meeting will appoint the liquidator(s). If not, the liquidation will proceed as a creditors' voluntary windup and a meeting of creditors will be called, to which the directors must report on the company's affairs. Where a voluntary liquidation proceeds by way of a creditors' voluntary liquidation, a liquidation committee may be appointed.
Where a voluntary winding-up of a company has begun, a compulsory liquidation order is still possible, but the petitioning contributory would have to satisfy the court that a voluntary liquidation would prejudice the contributories.
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Friday, October 3, 2008
How Should an Accounting Department Assist in Cash Flow Forecasting
An accounting department should assist by:
Preparing forecasted balance sheets, income statements and cash flow statements with analysis of ratios compared to bank covenant requirements.
Forecasting net income and determining a dividend and distribution policy that meets the needs of both stockholders and creditors.
Providing assistance in preparing projected financial statements to obtain additional financing.
Restructuring loans and covenants and negotiating increases in their lines of credit.
Developing a plan (if the company is financially-challenged) that will enable them to continue current operations and retire outstanding bank debt.
Developing an overall business plan for use in obtaining financing.
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Preparing forecasted balance sheets, income statements and cash flow statements with analysis of ratios compared to bank covenant requirements.
Forecasting net income and determining a dividend and distribution policy that meets the needs of both stockholders and creditors.
Providing assistance in preparing projected financial statements to obtain additional financing.
Restructuring loans and covenants and negotiating increases in their lines of credit.
Developing a plan (if the company is financially-challenged) that will enable them to continue current operations and retire outstanding bank debt.
Developing an overall business plan for use in obtaining financing.
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Getting It Right on Letters of Credit
When your company is exporting, if the documents presented do not conform precisely to the terms of the letter of credit, your company may well have lost its right to receive payment. While your bank can request a waiver from the buyer, if the buyer balks, your company could be out of luck.
Therefore, it is essential that you make sure there are no discrepancies between the export documents and the letter of credit. Be sure of obvious things, such as spellings of companies as they appear on the invoice--not as a DBA name which doesn't appear elsewhere. Find out how long shipping will take. That way you can simply add 21 days as the latest date to present the documents. In addition, you should know the details of the International Commercial Term, as defined by the U.S. Chamber of Commerce.
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Therefore, it is essential that you make sure there are no discrepancies between the export documents and the letter of credit. Be sure of obvious things, such as spellings of companies as they appear on the invoice--not as a DBA name which doesn't appear elsewhere. Find out how long shipping will take. That way you can simply add 21 days as the latest date to present the documents. In addition, you should know the details of the International Commercial Term, as defined by the U.S. Chamber of Commerce.
Furnished to you by Creditor's Edge, The Internet’s Oldest Daily Business E-Newspaper Providing News on Bankrupt and Troubled U.S. Companies http://www.creditnews.com FREE SAMPLE 800-407-9044 -- steve@creditnews.com
Supplementing a Scanty Credit Report
Credit reports that contain little information are frustrating for any credit/finance executive who's considering extending open account credit to a new debtor or increasing its exposure to an existing customer. What can you do when debtors refuse to furnish a credit reporting agency the information you need to make a sound credit decision? First of all, credit reports should always be pulled on new debtors that ask for extensive open account lines of credit. For existing customers, however, there is often no need to pull a "comprehensive" credit report on a company if you have one that is less than a year old and if you have done so in the past. Many credit reporting agencies charge you full price for these reports that often contain little more than trade references. Why pay for something you know you will not be able to use! What to do?
Begin to paint a picture of the company and its principals. Even if a debtor refuses to furnish financial statements, antecedent information, etc., the extensive searching abilities or engines such as Google and others can help you find information on officers, individuals and companies that can often begin to paint a picture of the company and of its creditworthiness. For example, searching for information on XYZ Company may generate a local newspaper article on XYZ winning a prestigious environmentalist of the year award. The article may also give you information on the principals and business that gives you a "sense" this company may be worth selling to.
This often takes time, but if you are considering dramatically increasing a debtor's line of credit it is often time well spent.
Furnished to you by Creditor's Edge, The Internet’s Oldest Daily Business E-Newspaper Providing News on Bankrupt and Troubled U.S. Companies http://www.creditnews.com FREE SAMPLE -- 800-407-9044 -- steve@creditnews.com
Begin to paint a picture of the company and its principals. Even if a debtor refuses to furnish financial statements, antecedent information, etc., the extensive searching abilities or engines such as Google and others can help you find information on officers, individuals and companies that can often begin to paint a picture of the company and of its creditworthiness. For example, searching for information on XYZ Company may generate a local newspaper article on XYZ winning a prestigious environmentalist of the year award. The article may also give you information on the principals and business that gives you a "sense" this company may be worth selling to.
This often takes time, but if you are considering dramatically increasing a debtor's line of credit it is often time well spent.
Furnished to you by Creditor's Edge, The Internet’s Oldest Daily Business E-Newspaper Providing News on Bankrupt and Troubled U.S. Companies http://www.creditnews.com FREE SAMPLE -- 800-407-9044 -- steve@creditnews.com
What to Include in Credit Applications
Despite the fact that there are more tools than ever to help establish the most efficient credit limit possible, the most important tool is still your own credit application. But since there isn't really an official, formal, and standardized credit application for all credit grantors, we often find ourselves borrowing from the credit application of fellow credit/finance executives. Nevertheless, there is still no better or more complete source of information than the credit application for determining the creditworthiness of a new account.
While many of the terms on the credit application may seem like common sense, you'd be surprised how many of us simply forget to include one of more of the following key items. Be sure the credit application includes at least:
1) Complete and legal company name
2) DBAs
3) Physical street address
4) Mailing address
5) Phone, fax, email and website addresses
6) Officer's complete names and personal addresses, with phone, fax and email addresses
7) Latest audited financial statement with auditor's notes (if it's a new company, get pro forma statements)
8) If no audited financial statement is available, include a blank financial statement with signature line and date so the debtor can authorize that the information provided in the financial statement he or she completed is correct.
9) Five trade references with a section for physical street addresses, phone and fax numbers, contact names and email addresses
10) Bank references with physical street addresses, phone, fax, contact names, account numbers, balances on all accounts
11) Type of company (corporation, proprietorship, limited partnership, etc.)
12) Federal I.D. number of corporation or SS# of all owners if a proprietorship or partnership
13) Personal guarantee section with signature and date lines for all officers, along with addresses, phone and email addresses of all officers
Also, include questions such as:
14) Have you ever filed bankruptcy (corporate or personal)?
15) Have you now or have you ever had a judgment or lien filed against you?
16) Do you have or have you ever had any SBA loans outstanding?
17) Are you currently delinquent on any outstanding loans or trade credit?
18) Have you ever owned or been part owner in another company? If so, please furnish the complete legal name, address and any DBAs of that company.
Furnished to you by Creditor's Edge, The Internet’s Oldest Daily Business E-Newspaper Providing News on Bankrupt and Troubled U.S. Companies http://www.creditnews.com
FREE SAMPLE -- 800-407-9044 -- steve@creditnews.com
While many of the terms on the credit application may seem like common sense, you'd be surprised how many of us simply forget to include one of more of the following key items. Be sure the credit application includes at least:
1) Complete and legal company name
2) DBAs
3) Physical street address
4) Mailing address
5) Phone, fax, email and website addresses
6) Officer's complete names and personal addresses, with phone, fax and email addresses
7) Latest audited financial statement with auditor's notes (if it's a new company, get pro forma statements)
8) If no audited financial statement is available, include a blank financial statement with signature line and date so the debtor can authorize that the information provided in the financial statement he or she completed is correct.
9) Five trade references with a section for physical street addresses, phone and fax numbers, contact names and email addresses
10) Bank references with physical street addresses, phone, fax, contact names, account numbers, balances on all accounts
11) Type of company (corporation, proprietorship, limited partnership, etc.)
12) Federal I.D. number of corporation or SS# of all owners if a proprietorship or partnership
13) Personal guarantee section with signature and date lines for all officers, along with addresses, phone and email addresses of all officers
Also, include questions such as:
14) Have you ever filed bankruptcy (corporate or personal)?
15) Have you now or have you ever had a judgment or lien filed against you?
16) Do you have or have you ever had any SBA loans outstanding?
17) Are you currently delinquent on any outstanding loans or trade credit?
18) Have you ever owned or been part owner in another company? If so, please furnish the complete legal name, address and any DBAs of that company.
Furnished to you by Creditor's Edge, The Internet’s Oldest Daily Business E-Newspaper Providing News on Bankrupt and Troubled U.S. Companies http://www.creditnews.com
FREE SAMPLE -- 800-407-9044 -- steve@creditnews.com
The Importance of a Liquidation Analysis in a Chapter 11 Filing
When a company files Chapter 11, the creditors' committee should determine the likely distribution to unsecured creditors from the standpoint of the liquidation of the debtor's business. The committee should update that analysis if the situation changes. Such an analysis should be made even if liquidation is inadvisable and not considered, since the results of a hypothetical liquidation are an essential factor of both the rights and the bargaining power of the unsecured creditors. It should be noted that a reorganization plan can be confirmed only if it promises unsecured creditors at least as much as they would get from a Chapter 7 liquidation.
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Furnished to you by Creditor's Edge, Daily and Weekly E-Newspaper Summary of Bankrupt and Troubled U.S. Companies http://www.creditnews.com/ FREE SAMPLE 800-407-9044 -- steve@creditnews.com
Organizing Your Collection Call
Effective collections begin with organization. This doesn’t necessarily mean just knowing who the debtor is and how much they owe, it also means gathering all the necessary information available to you that will answer a number of questions prior to you picking up the phone and calling your debtor.
As an example, it is not only good to know who is the responsible party for paying your invoice but what is the best day to call that person and what time of day is best to catch him/her in the office. This information should be reflected in the debtor’s file, which you should have obtained when asking that very question on the credit application the debtor completed before doing business with your firm. “Who is the responsible party for getting invoices paid?” “What is the best day to contact this individual?” and “What is the best time of day to contact this individual?”
Also, having the correct phone number (and extension) to this individual should be obtained from the credit application. Once you have this information, review any prior calls made. Note any commitments or comments the debtor made. This will give you leverage in your collection efforts should commitments not have been met.
While there are many other factors that go into organizing your collection call, remember that writing down everything the debtor says during your call and reviewing this information before your next call, will give you a sense of not just what to expect but what parameters and challenges you will face when the debtor gets on the line.
Furnished to you by Creditor's Edge, Daily and Weekly Summary of Bankrupt and Troubled U.S. Companies http://www.creditnews.com/ FREE SAMPLE 800-407-9044 -- steve@creditnews.com
As an example, it is not only good to know who is the responsible party for paying your invoice but what is the best day to call that person and what time of day is best to catch him/her in the office. This information should be reflected in the debtor’s file, which you should have obtained when asking that very question on the credit application the debtor completed before doing business with your firm. “Who is the responsible party for getting invoices paid?” “What is the best day to contact this individual?” and “What is the best time of day to contact this individual?”
Also, having the correct phone number (and extension) to this individual should be obtained from the credit application. Once you have this information, review any prior calls made. Note any commitments or comments the debtor made. This will give you leverage in your collection efforts should commitments not have been met.
While there are many other factors that go into organizing your collection call, remember that writing down everything the debtor says during your call and reviewing this information before your next call, will give you a sense of not just what to expect but what parameters and challenges you will face when the debtor gets on the line.
Furnished to you by Creditor's Edge, Daily and Weekly Summary of Bankrupt and Troubled U.S. Companies http://www.creditnews.com/ FREE SAMPLE 800-407-9044 -- steve@creditnews.com
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