New research shows that performance-based contracting can lower costs.

The concept behind it — “power by the hour” or performance-based logistics — seems intuitively logical. That is, the price you pay for a product or service goes up as the level of service and up time it offers increases, rather grows as you run into problems. So, rather than pay an IT consultant to come out when your network goes haywire, you pay a fixed fee upfront for your system to remain running and problem-free. As a 2007 paper from Knowledge@Wharton notes, “The idea behind performance-based contracting is quite simple: One buys the results of product use (e.g., value creation), not the parts or repair services required to restore or maintain a product.” more

While CFOs may be skeptical of pronouncements that the recession is over (see this blog post), small and midsize business owners around the world appear to glimpse some light at the end of the tunnel, particularly when it comes to global trade. On average, the 3,500 respondents to a recent HSBC survey put their confidence at 110, on a scale of 0 to 200, with 100 being neutral. While that might be just barely positive, it’s positive nonetheless. more

Corporate finance chiefs who are concerned about their companies’ loan maturities looming over them increasingly are turning to “amend and extend” arrangements. Year to date, about $40 billion in amend-and-extends have been issued, says Ioana Barza, vice president and senior market analyst with Thomson Reuters LPC. Overall, amendments to existing loans account for about 80 percent of leveraged lending activity, she adds. more

One way a company can manage its cash when it doesn’t actually have much to manage is to draw out payment terms – with or without letting its suppliers know what’s going on. If your company is on the other end, it essentially becomes a lender to these suppliers.

This scenario has been playing out more frequently in recent months, given that many traditional financing sources have been dry as the Sahara. “Companies that otherwise would have strong balance sheets are having difficulty getting financing for operations, so they’re pushing more heavily on key suppliers,” says Scott Blakeley, an attorney with Blakeley & Blakeley LLP, a Newport Beach, Cal., a law firm focusing on creditors’ rights. more

If you’ve been assuming that the Foreign Corrupt Practices Act (FCPA) isn’t a concern for folks in the finance and treasury areas, think again. To be sure, the FCPA historically has been seen as an issue for operations or sales – after all, they’re the ones who may be tempted to bribe a government official in the hope of winning a lucrative contract or two. Today, however, finance types also need to understand the law and their companies’ exposure, says Joe Zier, head of the West Coast FCPA Investigative and Consulting Services practice for Deloitte. In the last few years, as more companies have increased their global exposure through business partnerships, joint ventures, cross-border sourcing, and the like, they’re having to manage money differently. more