Many private companies are strengthening their accounting practices so their large company customers can comply with the Sarbanes-Oxley act, Business Week reported. Financiers are also holding companies to a higher standard as conditions for deals, requiring documented audits and oversight committees, both Sarbanes-Oxley requirements. Colleen Cunningham, CEO of Financial Executives International, says compliance is not a matter of if, but when.
Hain Celestial, maker of Terra Chips, Celestial Seasonings, Garden of Eatin’ and other natural and organic foods, announced the final implementation of its Stock Keeping Unit rationalization program. The company is eliminating 500 SKU’s that are competitively disadvantaged, as a result of small production runs, and low volume of sales. The company expects to save $2 million, with savings coming from reduced spoilage, warehouse and procurement costs, consolidation of copackers and other efficiencies. The eliminated SKU’s have annual sales revenue of $15 million; their sales volume is expected to be replaced by introduction of new items by Hain Celestial over the next 12 to 18 months.
Here are six cash flow boosters, as provided by consultant Norm Grill, and published in the June 20th Westchester County Business Journal: 1) Establish payment terms from the start, with your proposal, estimate or contract; 2) Analyze customer payment patterns, and revise terms and payment methods so they are more favorable for you; 3) Closely monitor accounts receivable aging; 4) Negotiate favorable payment terms (e.g., discounts for prompt payment); 5) Use email for invoicing and software to manage cash flow; 6) Consider hiring a skilled finance professional
Krispy Kreme managed to stumble into most of the pitfalls in the franchise model, according to the cover story of the June, 2005 issue of CFO Magazine. It focused on growing revenues and profits at the parent-company level, while its franchises struggled. Raw materials and equipment were sold to franchisors at exceptionally high profit margins. The brand lost its mystique, as Krispy Kreme dougnuts went on sale for the first time at grocery stores, gas stations, and kiosks. In 2004, the SEC launched a formal investigation into the company’s buybacks of several franchises, while franchisors alleged “channel stuffing.” Krispy Kreme stock has dropped from it $50 mid-2003 high to $6 in early May of 2005.
The Small Business Administration has holding hearings, starting in St. Louis and Seattle, as it considers changing the definnition of small business, the Seattle Times reported. Under current rules, the definition of a small business ranges by industry, but is generally defined as having 500 or fewer employees. Last summer, the SBA withdrew a proposal that would have defined the limit of “small” at 100 employees. Hearings are to continue in New York, Chicago, Los Angeles and other cities through the month of June.
