What is a Loss Carry-Forward?
A Loss Carry-Forward (LCF) is a tool in WinMORE used by Owners and Investors of a Market Center to recoup money and losses when opening a Market Center and if the following has occurred per the Policies & Guidelines Manual:
- Opening a Market Center (first 18 months)
- Natural Disaster
- National Emergency
- Normal market fluctuation resulting in a loss
A LCF will override the Profit Share calculation by offsetting profitability by the LCF amount so a Market Center will reduce or not profit share that month. If the full balance is not used the amount will continue to be “carried-forward” until such time that the amount is exhausted.
When the events above occur, a Market Center may apply for a “LCF-Reinstatement” in which a Market Center accumulates the losses and applies towards profitable periods. This amount must be approved by the Regional Director.
Why is it called a Loss Carry-Forward Reinstatement?
A new Market Center automatically gets a LCF for the first 18 months of its operations to help the Owners and Investors recoup their investment. After the 18 months, one of the events mentioned must occur in order to “reinstate” a LCF.
- Click here to learn more about Loss Carry-Forward Reinstatement.
- Click here to see a visual representation of when to apply for LCF Reinstatement.
What is a Loss Carry-Forward Write-off?
A Market Center that has been approved for a LCF can “write-off” the current balance of their LCF and profit share for the month.
A NEW Market Center (less than 18 months) can only apply for one if the following has occurred:
- Three months of consecutive profit
- Strong Company Dollar projections
- Strong cash flow
- A KWRI Financial Statement Review
An established Market Center that has been in business more than 18 months may also write-off the balance of the LCF Reinstatement at any time. This approval must be approved by the Region and KWRI.
There are 3 options to implement a write-off. They can be found in the Policies and Guidelines Manual.
- Click here for further guidance on how to calculate a LCF Write-off and the 3 options to implement a write-off.