Explain the scope of fraud and why it impacts small businesses to a greater extent than large businesses. What should the owners or managers do to prevent fraud from occurring in the first place?
Fraud has been a targeted problem that many businesses from all types of industries have held a guard on. Fraud happens really everyday, at stores, ID Theft, credit/debit card usage, hacking into accounts or computers, etc.… When starting your own business it is crucial to not pinch pennies on how to set up your bank accounts, or what platform of e-commerce you are going to use. Make sure to always choose a e-commerce platform you feel most comfortable with and go on and use it. Set up a secure website where all your data is encrypted and secure. If you are opening your shop/store make sure to a secure payment gateway in place, and always try not to only accept cash, because you are bound to be robbed much easily rather than accepting both cash and debit/credit card payments because in the eyes of the robber, if they see a CASH ONLY sign you could be setting up yourself for more chances to get robbed, it is best to take every precaution possible.
Accounts Receivable Management:
How does the extensive use of credit cards by their customers affect small businesses?
The business can be affected in regards to the fees that the fees that the business owners have to pay, but this is already included in the selling price that business owners have to charge already upfront, it is necessary to understand that the fees and costs today are much more competitive among the variety of options that business owners have, you have square, shopify, PayPal, and your own bank merchant services who all provide the service for businesses, it all depends on the volume of transactions you will be processing to decide which one to choose from.
Why is factoring not generally a viable long-term strategy for a small business?
As a small business long-term strategies can pretty much jump across the board. It is crucial to look into the options you need to take into account, who to use for payment processing, what bank to bank with, what are the financial decisions you will make will be your overall cost. If you look into businesses and entrepreneurs, all share one common trait. They all need to know and learn about financing, marketing, sales, customer service, etc.… As a start up you must understand the basics of business in order to do business or you will have a harder time getting your business off its feet.
Explain the four C’s of credit. Which is the most important and why?
- Capacity – Is the availability to pay back a business debt, and the average of how much you can have in return of revenue.
- Capital – It is what assets you have in cash at hand.
- Collateral- is what you are guaranteeing to help secure a loan, could be cash or assets (building, cars, etc.).
- Character- Businesses need to show their credit history in order to quality for many loans, both the credit history and the businesses financial statements will show how solid the business has been and if they are successfully proving themselves as profitable than they have a better chance getting the loan they are requesting.