Page 27 - BusinessWest October 17, 2022

Finance
Continued from page 24
Tax planning in volatile times could be part of your financial plan as well.
Sometimes during volatile mar-
ket periods, an advisor may strive to counsel a client to change their with- drawal strategy from their portfolio or offer advice on large purchases that can be financed another way. I have often counselled clients on the options
Covenants
Continued from page 25
available to them, from where to draw money for their monthly expenses. In a volatile market, for many clients, using cash savings to pay monthly expenses can take the stress off a portfolio that has declined.
The greatest benefit to you from using a financial advisor is having someone to listen to you, someone for you to seek out and reassure you that, based on history, industry knowledge,
and their experience in the financial world day after day, you can pursue financial independence. u
Barbara Trombley, MBA, CPA is an owner and financial consultant with Trombley Associates. Securities offered through LPL Financial. Member FINRA/ SIPC. Advisory services offered through Trombley Associates, a registered investment advisor and separate entity
from LPL Financial. This material
was created for educational and informational purposes only and
is not intended as ERISA tax, legal,
or investment advice. The opinions voiced in this material are for
general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
uid assets. A strong quick ratio indicates the company will be able
to pay its long-term obligations without needing to sell long-term assets.
How Covenants Might Affect Your Business
So you have met with a lender, gone through the approval process, and have your new loan right in front of you. Are you ready to sign it? Make sure you review any financing agreements or amendments with your attorney and accountant. Depending
on the type of loan, it could require a compilation, review, or audit-level financial prepared by a CPA.
Financial preparation ranges in complexity: the more complex, the more intrusive and costly. Going from a review-level financial statement to audited financial statements could double your account- ing fees that you already pay. This could come as an unwantedsurpriseifyouarenotreadyforit.
”
its most liq-
There are changes on the horizon. As bankers look at new loan agreements or new amendments to current loans, be aware of the adoption of new
“If you find yourself in a situation of continuously failing your covenants, your overall relationship with a bank might be impacted.
lease accounting standards by the Financial Account- ing Standards Board. Companies are not required to implement the new standard until years beginning after Dec. 15, 2021 (effective for fiscal years ending Dec. 31, 2022). This new standard could impact the definition or calculation of specific covenants.
Managing Your Covenants
You don’t want to wait until the end of the year to evaluate and determine the company’s overall posi- tion of compliance with negative and positive cov- enants. If you find yourself in a situation of continu- ously failing your covenants, your overall relationship with a bank might be impacted. To help alleviate this, a company should conduct tax planning and/or obtain advice during the year.
Debt is a great tool in a business owner’s toolbelt to grow their business. By understanding the restric- tions, or covenants that a lender might use, you can make a more informed decision about whether debt financing is right for you. You also might use a pro- fessional to plan around your new debt to foster a healthy relationship with the bank. Strong creditors lead to happy lenders, which leads to better business for everyone. u
Ian Coddington is a senior associate with the Holyoke- basedaccountingfirmMeyersBrothersKalicka,P.C.
Available through CUSO Financial Services, L.P.
Twin Hills Country Club
700 Wolf Swamp Road Longmeadow, MA 01106
Tuesday, October 18th 5:00 PM to 7:00 PM
Complimentary Retirement Planning Seminar presented by PNCU Financial Services available through CUSO Financial Services, L.P.
RSVP to Emilie Laizer at [email protected] or (413) 333-5459.
Guest Speaker:
Attorney Katie McDonough, Egan, Flanagan & Cohen
Open to all! Membership is not required to attend. Food & refreshments will be provided.
Securities and Investment Services Offered through CUSO Financial Services, L.P. Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (CFS), a registered broker/dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor.
Securities, Investment, and Insurance products:
• Are offered by CFS and NOT the Credit Union • Are NOT Credit Union Guarantees or Obligations
• Are NOT Federally or NCUA/ NCUSIF Insured • May lose value • Credit Union is contracted with CFS for investment services
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