Advice for CEOs

CEO’s and Boards are usually inclined to think that changes in accounting rules are matters that only their CFO needs to worry about. Not true at all in the case of the new revenue recognition standards recently promulgated under the converged authority of the (U.S.) Financial Accounting Standards Board and the International Accounting Standards Board.

Just as a seller needs to make their home shine to get it ready for an open house, companies seeking financing need to present as attractive a face to the market as possible. Failing to put your best foot forward by pursuing a half-hearted approach to arranging credit could easily result in disappointing outcomes. Growth requires financing: working capital, permanent capital and possibly acquisition financing. While finance companies and other asset-based lenders fill needed roles in the early stages of corporate development, their loan pricing, terms and resulting constraints on operating flexibility are typically less advantageous to the borrower than bank financing. For an emerging growth company the ultimate goal should be to obtain unsecured credit facilities. Putting your best foot forward is the first step.