Small businesses often place restrictions on the transferability of ownership interests in these companies. It is best to have considered the issues relating to both the transferability of ownership and the termination of the relationship among the owners early on, when the owners can agree on how to handle these matters.  

Many entrepreneurs and CEOs have come to believe that accounting is a cost center that was never intended to add value at a higher level. As a result, they tend to expect very little from their accounting department when it comes to helping them achieve their vision and strategy for the company.

Whether it comes in the form of a hurricane, fire, earthquake or any other natural or man-made disaster, businesses that properly plan for crises reduce the chance of costly disruptions in operations. They’re also able to resume normal business operations more rapidly than business that get blindsided.

So the question is: How can small companies make sure they survive these catastrophes? Experts believe proper planning is the solution. And with hurricane season fast approaching, now is the time to lay the groundwork.

This year marked my 10th trip to Omaha for the Berkshire Hathaway annual meeting. Dubbed the “Woodstock of Capitalism,” it is an event-filled weekend with many opportunities for learning. Although Warren Buffett’s name is synonymous with Berkshire, those outside the cult-like group often fail to recognize the immense contributions from Charlie Munger, Berkshire’s Vice Chairman.

“Good ingredients can be squandered in the hands of a novice” was a common phrase I heard from the cooks while working in the kitchen at my first job in a mom and pop restaurant when I was 14.

Many small business owners see bookkeeping as a highly undesirable burden when it comes to their duties and responsibilities. Some new business owners choose to prepare their own books, or perhaps hire a bookkeeper. Some choose to hire an accounting services professional, while others hire someone to teach them how to prepare their own books and records. Though all of these options result in an output, it’s not always the intended output.

Taking these five steps when granting trade credit to your customers will minimize credit risk and improve your overall accounts receivable collections efforts.

Step 1: Credit Application from Your Customer

Your credit application doesn’t need to be complicated, but it should help you gather information necessary to make a good credit decision. The application should indicate the legal name of the business and ownership; provide banking information, and information on trade credit grantors. Business often provide a preprinted “bank and trade references" list to you, but the importance of your application is that the customer, by signing it, grants you permission to contact their bank and trade creditors for payment history.