Capital Cone

As BetterPartners’ business is growing, several types of asset will be built. Here come the categories and the rationale behind their growth.

1. Cash & cash equivalent: the fee structure of our project requires our clients to deposit certain amount of service fee up front. This up-front fee goes into the “cash & cash equivalent” category and as we start more projects, the total size of up-front fee will grow as well.

2. Accounts receivable: accounts receivable in our business is the service fee excluding up-front fee. This type of asset will grow as we start and complete more projects.

Since we are a service provider, we do not have many tangible assets such as property, plants and equipment. We do have certain equipment such as printers and laptops which are regarded as one-time investment at the very beginning of the business and whose value does not fluctuate along with our business.

Both cash & cash equivalent and accounts receivable tie closely with the single most important metric of our business: number of projects. They are both indicators of the health of our business in terms of both current status and growth potential. Therefore, both of them factor into our working capital line of credit. Nevertheless, I would argue that cash and cash equivalent serves worse as a business indicator than accounts receivable because other elements, for example retained earnings and owner’s equity, also influence this item, diluting its ability to directly reflect business’ health.