Florida CFO Group Blog

Helpful topics from Florida CFO Group's experienced CFOs

Understanding Loan Covenants

Florida CFO Group partners Dan Polen, Joe Price, and Ginger Mentzer discuss loan covenants and their potential impact on your business.

Ginger: Loan covenants are fundamental to all commercial and business loans and protect the lender by making sure that the borrower fulfills conditions or prohibits the borrower from doing certain things over the life of the loan.

Joe: Typically, they are financial covenants but they can be non-financial in that you cannot do certain things such as acquire a business or have a significant member of the management team leave.

Dan: A negative covenant restricts a company from doing something, such as selling a portion of its assets, paying management fees to related parties, taking out cash distributions or purchasing certain assets. You may be able to get around these, but you must get the lender’s permission before you do so.

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What You Need to Know About Cash Forecasting

Florida CFO Group partners Joe Price, Dick Trueblood, and Tom Walker discuss the importance of cash forecasting for small and large organizations.

Tom: Cash flow analysis is very important for a business to be successful. 82% of businesses fail due to poor cash flow management skills. It doesn’t matter how great a business model, how profitable, or how many investors a business has lined up. You will not survive if you don’t manage cash flow.

Joe: Knowing what your cash balance in the company bank account is NOT cash flow management.

Dick: Right. And just because your business is profitable, it doesn’t mean that it has good cash flow.

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