Category Archives: Business

Where Money and the Law Meet

Businesses large and small often share one thing in common. Many companies use banking services as part of their operation. These services include handling payments from customers, accounts payable and investing or loan servicing. These relationships have been a cornerstone of the capitalist system throughout history.

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During business operations problems arise because of conflict with customers, suppliers or taxing authorities. Sometimes these conflicts take the form of litigation between parties and the legal system gets involved. At times, a financial expert witness is employed to help sort out the difficulties. These issues typically arise over three areas of business operations.

Customer Business Conflicts

Disagreements over what was promised at the time a transaction took place are common. Many of these are settled before involving the legal system. If the amount of money in question is quite large though, litigation may ensue.  Conversely, if a customer refuses to pay for goods or services for some reason the business may have to resort to legal means to recover their rightful payments.

Supplier Business Conflicts

Timely payments or quality issues make up these problems. Suppliers often ship goods to a business and invoice the business for payment within 30 days. Disruptions in business operations may interfere with a company’s ability to conduct transactions with customers and adequately profit to pay for the goods supplied in a timely manner. Alternatively, if a supplier delivers goods that do not meet quality standards specified by the business, payment conflicts may emerge.

Taxing Authority Business Conflicts

Payment of taxes to a government authority is part of the cost of doing business. Generally, conflicts that occur here are over the way a business calculates its taxable income. Complex tax legislation and accounting practices used by businesses often result in these kinds of problems. These are the kinds of issues most commonly requiring outside assistance from experts.

The business world is in some ways a reflection of the web of relationships in other human affairs. Conflicts arising over money are very much like the conflicts that occur in these relationships. Fortunately, a system of laws and tools for sorting out and solving these problems exists and is available for parties engaged in commerce

What You Need to Know About Outsourcing in Manufacturing

Outsourcing is an increasingly common practice in many industries, whether it’s getting contract machining done for a few components of your product or turning the entire manufacturing process over to an offshore facility. Most often, businesses outsource to reduce production costs. Is it always the right idea, though? Consider the following when deciding if your business should outsource.

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What Outsourcing Can Save You

Cost reduction has always been the primary reason to outsource manufacturing. This comes in a few different forms:

  • The overhead costs of owning and operating a manufacturing facility can be mitigated by outsourcing. This means needing less in-house equipment and less downtime for maintaining said equipment. Additionally, you reduce costs associated with utilities.
  • Labor costs are also reduced by outsourcing, as you have less full-time employees on your payroll. This applies for both overseas production and turning to temporary agencies.

On top of reducing costs, outsourcing allows a company to focus its efforts and resources on sales, marketing, etc. instead of machinery that may become less relevant as product demands change.

Long-Distance Logistics

A decentralized production line presents its own challenges, however. For starters, outsourcing introduces new costs and fails to eliminate some other costs. Shipping and distribution may now include moving product components around, and you need to locate suppliers and negotiate contracting costs with them. Overhead costs like insurance premiums aren’t reduced, either. Also, if you need small batches of specialized parts, contracts may cost too much to be worth it.

Outsourcing also means loss of control over aspects of manufacturing, especially when it comes to overseas production. Without this oversight, there’s not much you can do when a production batch goes wrong or the facility experiences downtime, and your R&D can’t provide quick feedback to the manufacturers when it’s necessary.

Ultimately, you need to weigh the costs reduced and the costs incurred by outsourcing—including costs that aren’t purely financial. Transitioning back to in-house production can be difficult if outsourced manufacturing doesn’t work out, so weigh your options before acting.

The Four Steps in Closing a Commercial Real Estate Deal

Closing on commercial real estate purchases involves each party being aware of their duties. There are not as many regulations for commercial real estate sales as there are for residential sales, so it is up to the buyer and seller to ensure the deal is good by going through four steps.

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1. Authority Verification

Because commercial purchases are often on behalf of a business or group of investors, there has to be a formal agreement on who has the authority to sign the legal documents that are part of the process. Property metrics explains authority verification is simply getting an agreement on who can legally sign documents on behalf of all the buyers or sellers.

2. Due Diligence

Due diligence is the process of checking out the details of the transaction. Since laws concerning commercial real estate are not as strict as those for residential real estate, there may be some information the parties fail to provide to each other. It is up to each party to make sure they understand the deal completely, including any issues, which means it may be a good idea to consult with a commercial real estate attorney Austin.

3. Escrow

Escrow is the process of paying money upfront to secure trust between the seller and buyer. There is an escrow agreement that controls the process and gives conditions to meet to come out of escrow and complete the sale. It will also cover how to back out of the deal should one party want to leave.

4. Document Finalization

The actual closing of the deal comes when both parties sign all documents and there is a transfer of payment. At that time, everything is final and the buyer takes possession of the property as the new owner.

Making the Purchase

The process of closing a commercial real estate deal is often more complex than a residential deal because of the type of property and the types of buyers and sellers involved. It is important to understand for those new to this industry.