Making Work Pay Credit: IRS Will Waive the Penalty for Underwithholding

In the spring, the IRS issued revised withholding tables to allow taxpayers to take advantage of the Making Work Pay Credit. The Making Work Pay Credit is the lesser of: 6.2% of an individual’s earned income or $400 ($800 for a joint return). It is phased out for higher income taxpayers. The revised withholding tables have caused many taxpayers to be underwithheld.

The instructions to the 2009 version of Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, state that the IRS will waive the penalty for adjustments to the income tax withholding tables that took effect in the spring of 2009. To request a waiver, a taxpayer must check box A (for a waiver of the entire penalty) or box B (for a waiver of part of the penalty) in Part II of Form 2210.

Tax Credits Available for Energy-Saving Home Improvements

Recent law changes have increased, broadened, and liberalized the non-business energy property credit and the residential energy property credit.

Non-business Energy Property Credit(25C):
For years beginning after 2008 and before 2011, a taxpayer can claim a credit equal to 30% of the sum of the cost of: qualified energy efficiency improvements to his/her home and residential energy property expenditures, up to an aggregate amount of $1,500 in credits. Qualified energy property expenses include expenditures for: a qualified natural gas, propane, or oil furnace; a qualified natural gas, propane, or oil hot water boiler; an advanced main air circulating fan; or an energy-efficient building property that meets specific energy standards. Examples of such energy efficient building property include electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane or oil water heaters; or stoves burning biomass fuel.

Residential Energy Property Credit(25D):
Except for qualified fuel cell property, no dollar limit applies for the residential energy property credit. A taxpayer can claim a credit of 30% of qualifying expenditures made for solar water heating, geothermal heat pump, small wind energy, and solar electric property used in the taxpayer’s principal residence. For qualified fuel cell property expenditures, the credit for any tax year can’t exceed $500 for each .5 kilowatt of capacity of the qualified fuel cell property to which the expenditure relates. This credit is available for property placed in service before 2017.

IRS Announces 2010 Standard Mileage Rates

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car, van, pick-up or panel truck will be:

*50 cents per mile for business miles driven

*16.5 cents per mile driven for medical or moving
purposes

*14 cents per mile driven in service of charitable
organizations

For additional details, please visit:

http://www.irs.gov/newsroom/article/0,,id=216048,00.html

"Fantastic Mr. Fox" Offers Fantastic Business Advice

Have you read “Fantastic Mr. Fox” by Roald Dahl, author of other beloved classics such as “Charlie and the Chocolate Factory” and “James and the Giant Peach”? Did you happen to see the movie this weekend? I had the distinct pleasure of doing both with my family over this Thanksgiving holiday. While devout “read the book first” advocates will likely disagree, I highly recommend both the book and the movie in no particular order.

While there are great lessons to be gleaned from “Fantastic Mr. Fox”, I will be careful not to divulge too much of the storyline. Suffice it to say, Mr. Fox takes chances, even enlisting the help of friends and family. Then, he finds himself in a less than desirable situation. In his case, you might even say he’s got his back against the wall.

Now you may not be in that dire of straits, but if you are like most of us, you are likely experiencing challenges such as decreased sales, tighter lending requirements, slimmer margins, and the list can go on. As you are thinking about your business for the upcoming year, I would suggest taking some tips from the charming Mr. Fox.

• 
  Go to the drawing board.
• 
  Think outside the box.
• 
  Develop your plan.
• 
  Delegate.
• 
  Let everyone do what they do best.
• 
  And most importantly, DIG!

Developing a Cash Flow Forecast

Cash Flow is an essential factor in the ongoing health of a business. Knowing how to maintain cash flow is essential to sustaining a successful business. But what exactly is cash flow? The 3 key components are:

• 
  Funds on hand at the beginning of any period
• 
  Funds received and spent during an ensuing period
• 
  Funds remaining at the end of that period

Keep in mind that cash is not profit. Profit is the difference between the total amount of money your business earns and all of its costs, usually assessed over a year or other trading period. Cash, on the other hand, is the amount of money you have on hand to pay debts. You can be showing a good profit and still not have enough cash to cover an immediate debt. Income and expenditure cash flows rarely coincide yet you must always be in a position to meet your scheduled payments. Cash flow management is basically about speeding up your inflows and slowing down your outflows. To achieve this requires planning, also known as a Cash Flow Forecast. The key elements of a Cash Flow Forecast are:

• 
  Receipts
• 
  Payments
• 
  Excess of receipts over payments
• 
  Opening bank balance
• 
  Closing bank balance

A Cash Flow Forecast will assist you with working capital management to meet your cash needs as well as applying for new financing. To learn more about creating a forecast for your business, visit http://www.simonsbitzer.com/ or call 782.3070 for details.

Ask Not What You Can Do For Your Accountant...

For many business owners, tax time represents the beginning and end of their contact with an accountant each year. Other owners have discovered that their accountant can offer much more. A good accountant is aware of the wider economic, legal and financial environment affecting their client’s business, as well as being acquainted with its key drivers of revenues and costs. These businesses make extensive use of their accountant as an advisor whose knowledge they can call on for counsel and recommendations to help them grow their business. Seeking specific business advice from an accountant can save you time and help to make their business more profitable.
A modern accounting practice is able to offer a range of assistance over and above recording transactions and generating financial statements and compliance documents. These days an accountant can be a primary resource for a wide range of advice.

Tax planning:
Preparing financials for tax purposes should be just the first stage of managing the tax obligations of a business. A number of other business decisions through the year will have tax implications, and advice on how to structure these issues can limit the tax liability involved. The key to minimizing overall tax liability is to seek advice on the tax implications of major day-to-day operational decisions as they arise.
Business Advisory:
The financial statements an accountant creates have more use than as just tax documents. Using a number of key performance ratios to analyze the figures in them can reveal a great deal of information about how different parts of the business are performing, or underperforming. They can point out pending problems in areas such as cash flow and inventory. Financial statements only tell where the business has been. Ratio analysis can convert financial data into actionable business intelligence to help the business go somewhere. An accountant can take that one step further and offer specific solutions to specific operational problems — fraud proofing the business, risk management, lease versus buy decisions, managing inventory, depreciating equipment, pricing, and even marketing.
Personal finance advice:
A business owner’s personal finances are integrally linked to their business finances. To manage them best they need to be managed together. An accountant can advise on how to structure business and tax commitments. They can investigate different methods of valuing the business as well as help you create a succession plan that will ensure trouble-free transfer of management when the time comes.

Using an accountant as a trusted business advisor provides the owner with an opportunity to lift their head from the grind of daily operations, look at the bigger picture and get an independent assessment of their situation. Consider the value of receiving real, balanced evidence and practical advice to point out the pros and cons of any proposed strategy — before implementation makes it an irreversible commitment. A business owner who is not using their accountant for more than just tax preparation is missing out on a great opportunity to access sound business advice.

Inter-related Tips For Managing Through The Economy

Business owners and managers have probably never faced such a period of change as we have seen this year and continue to see even today. Change carries risk, but where there is risk there is also opportunity.

There are three principal areas that management must focus on to survive and prosper in this period of change.

• Revise your valuable formula-that competitive element that generates profit and sustainable success for the business.
• Modify operations-change the way the business works to adapt quickly to the environment.
• Manage for cash-while the storm is (still) blowing, prioritize cash even over profit and investment.

These are inter-related and ignoring any one of these while focusing on the others will be detrimental to the long term success of your business.

2 Tips For Managing Through the Economy

So, the recession is over. Feeling better? If your business is not yet growing and if sales are still shrinking, you may need to change the way you manage your business. For those who seek out and find the profit-building strategies that work in any economy, not just a prosperous one, success is almost guaranteed.

Not everyone's business has slowed in this economy. Many grew their profits by 50 to 100 percent or more last year, and you can do the same. If you're a solution seeker instead of an excuse maker, here are two simple steps you can take to keep your business on track and make next year your most profitable:

1. Stay Confident
The biggest mistake you can make is to lose confidence in your products and your services.
Starting to doubt your unique competitive advantage and your ability to improve your marketing could kill your business. You will lose the race before it starts.

Like an animal smells fear, your customers will notice your hesitancy and they may buy from a competitor who appears confident of success. You could potentially lose even more business.

2. Focus on Your Valuable Formula
Obviously you are doing business in a very different economic climate than you were a few years or even a few months ago. The strategies that may have helped you stay afloat in the past may not work today.

To succeed in this economy, your business needs to be more focused and specialized. Big companies who sell a bit of everything might close their doors, but we see this happening to small businesses as well. Generally, companies that try to provide too many products or services are struggling. Their prospects can't figure out at what they excel.

On the other hand, businesses that target a specific service or product are holding their own. We are hearing that business is steady and, in some cases, growing! Learn more about how to identify your valuable formula and the other key elements to surviving in recessions.

So Where Do You Go From Here?

You can’t get your business to a different place by following the same road or without direction. After identifying your core strengths and weaknesses through a Business Diagnostic, you need to develop Strategic and Operational Action Plans. The S.W.O.T. analysis that you perform on your business will help determine what needs to be done in your business, and in what order, to reach your goals.

You should begin by developing action plans based directly on the challenges you face. You must take into account the key stakeholders involved-you, your team, your customers and your suppliers. The result is a structured, step-by-step strategic and operational project plan that outlines what needs to be done, when it will happen, and who is responsible for each action step.

Ensuring that the action plans get underway and the work gets done is the most crucial stage in the process. You should set specific action steps required for each challenge and monitor the output. To ensure you stay on track, you will need a project workplan to monitor progress. It may sound a little overwhelming but it is the best way to realize the benefits of participating in a S.W.O.T. analysis and reach the goals you set for your business.

What Do You Want Your Business To Do For You?

When you first went into business, you had hopes and dreams about what your business should be like, how it should operate and where it should go in the future. Running a small to medium sized or family-owned business today means you are faced with an overwhelming array of daily challenges that can take your focus away from the future because you are simply trying to survive today.

Are your original dreams still alive?

If you are like most business owners, you have a good sense of how your business is doing right now. What is probably more difficult for you is determining where you should be going in the future and how to get there. A personalized and strategic operational review of your business, known as a business diagnostic, can help you determine if you are headed in the right direction.
The business diagnostic process starts with determining your objectives and reasons for being in business. Knowing what you want is very important. Next comes a review of the external factors that affect your business, such as customers, competitors, industry and technology. Finally, a diagnostic will review the internal factors that affect your business. These areas include, but are not limited to, your vision, your strategy, and your systems and processes.

A complete business analysis provides you with a detailed report that reviews the strategic position of your business and its operational performance. This “health check” will tell you how you are doing in each of the nine key areas of your business.

Tune in next week to find out where you go from there…

S.W.O.T. - Your Business Health Check

Business success does not come from luck or by accident. It comes from planning. I recently had lunch with a business banker who reiterated these same sentiments. He mentioned that he sees businesses fail, not because they are not profitable but because they don’t cash flow. Some simple analysis of your business can guide your strategy over the next year in a very focused way to avoid some of the cash flow challenges you might otherwise face.

You may be familiar with the term S.W.O.T. analysis-Strengths, Weaknesses, Opportunities, and Threats. It is essentially a technique for analyzing your business to come up with the most suitable strategies for success. A S.W.O.T. analysis provides an internal assessment of your organization as well as an external assessment of your business environment. It asks these questions:

STRENGTH: As an organization, what do we do well?
WEAKNESS: As an organization, what could we be doing better?
OPPORTUNITIES: What possibilities exist in the marketplace that can help our business realize our vision?
THREATS: What particular situation exists in the marketplace that could prevent us from realizing our vision?

Objective self analysis is difficult. A S.W.O.T. analysis keeps you focused and realistic. When you have answered the questions, you can then begin to build on your strengths to take advantage of opportunities and develop new strategies to neutralize weaknesses. This invaluable analysis can provide greater security and growth prospects in a constantly changing business environment.

Managing Your Accounts Receivable

Wouldn’t it be great if all customers paid promptly, in the full amount, and never had to be reminded about payment? Then you would never be worried about how to provide commercially attractive payment terms that did not end up threatening your cash flow.

Let’s think about how payment time affects your business. Remind yourself that invoices represent money that is actually yours. What would it mean to your business if you had that money on hand and you could use it for purposes such as investing in your business or paying the next installment on equipment or supplies recently purchased? Money outstanding is your money that you could be using profitably. Carrying too much in the way of receivables can endanger your cash flow and your business survival. It absolutely needs to be managed.

Below are some straightforward rules you could be operating by to prevent excessive receivables and reduce the amount of time receivables remain outstanding.

*Develop a credit policy.
*Send out invoices promptly.
*Be systematic about tracking accounts receivable.
*Measure the key performance indicators, such as average days to payment.
*Take action on accounts immediately that go past due date.
*Build good payment habits among your customers.

Find ways to help your customers meet their financial obligations. You will protect your client relationships while safeguarding your cash flow.

Managing Your Cash Flow

Cash Flow is an essential factor in the ongoing health of a business. Knowing how to maintain cash flow is essential to sustaining a successful business. Today, managing Cash Flow is one of the most difficult challenges facing owners of small and medium sized businesses. While a business can survive for a short period with a drop in sales and/or profits, it cannot survive without cash.

The best way to ensure that Cash Flow remains positive, timely, and available is to have a Cash Flow Plan and Forecast. In order to stay in control, this plan needs to be measured and monitored on an ongoing basis so that you can manage the business proactively. The following drivers of cash flow should be managed on a regular basis:
· Receivables
· Suppliers
· Inventory
· Assets
· Costs
· Seasonality
· Sales Volume
· Taxes
If you are not monitoring your actual results regularly, you cannot capitalize on any opportunities that improved cash flow might offer. Keep in mind that what you can measure, you can manage and there is always room for improvement!

Reducing the Cost of Processing Payroll

In soft economic times, business owners are looking for new ways to trim costs. Of course there are big ticket items, such as a reduction in employees and/or their benefits. Have you thought about cutting some small ticket items that can truly add up throughout the course of the year? Here are some suggestions, for example, on how to slim the burden of producing your payroll.

1. Outsource payroll: organizing each payroll is a time consuming, therefore costly, process. With the regulations and procedures that need to be navigated and the forms and returns to be filled in to get it right, there is an element of danger added due to the possibility of making a mistake. It may be more cost effective to outsource payroll to a service provider who will carry out all processes in accordance with the latest regulations, insert this information into the correct forms and get salaries deposited into your employee’s bank accounts.
2. Use direct deposit for salaries: a good way to save money is to use direct deposit of payroll (DDP) in place of issuing paper payroll checks. There is a significant cost differential between an online transaction and the processes around preparing and issuing checks.
3. Extend the payroll period: switch from a weekly to a biweekly or monthly payroll period to reduce processing costs.

The actual cost of producing the payroll (calculating pay, producing checks or making deposits and keeping track of employee information) is itself an area where savings can be made. Always ask for expert advice if you have questions concerning the processing of your payroll.

Getting on Top of Business Forecasting

The best way to remain in business in this climate is to plan; however, the days of the three to five year plans are over. Instead, focus on the next 18 to 24 months with plenty of scenario planning and stress testing.

Build Scenarios: Create a forecast for the next 18 months to 2 years. Take your business plan and then impose a series of scenarios. A business-as-usual scenario, for example, might have flat growth. Another scenario might project a 10% drop in revenue and a 20% increase in input costs. These scenarios show you the effect on the business of outside forces. They also allow you to develop contingency plans to mitigate their effect if you start to detect their impact through your monthly reports.

Develop Your Business Plan: Critical to forecasting is your business plan. It should cover market analysis, organization and management, strategic analysis, marketing and sales, products and services, the amount of funding needed, and financials. The best business plans are updated every three months.

Helpful Tools: Business owners can build a basic financial forecast model using Excel spreadsheets. It is a very structured process where you look through the historical financial statements and the balance sheet history.
Track Targets and KPIs Constantly: Analyzing your balance sheet every three months is simply not frequent enough in this climate. Make sure that your key performance indicators, such as sales targets for each week, are in place. Analyze the month end financials comparing the actuals with your budget to see where you are performing well and where there are shortfalls.

With help in creating your business forecast, contact Simons Bitzer at (317) 782-3070.

Small Ticket Cost Cuts Add Up!

Caught in the crunch between tightening credit and increasing costs, a business owner’s mind turns to … cost cutting! Great idea, but where does one begin? Use lower quality materials to cut down inventory cost? Maybe leave out that final inspection before packaging up? Cancel the ad in the Yellow Pages? Reduce staff? Pruning the big ticket items will save on costs quickly, but at what long term consequences to the quality, reputation and awareness of your product.

There may be any number of costs lurking in your everyday activities and procedures that just do not get noticed simply because they are not large ticket items. That does not mean they cannot add up to significant spending nonetheless. Look around and see if the tips below can help drive down your costs before making drastic decisions that may come back to haunt you.

Fuel:
Organize your errands so you can take care of several on one trip.
Arrange delivery schedules, sales calls or installations according to the shortest route between them rather than zigzagging across neighborhoods.
If delivery is a courtesy rather than an integral part of your sales process, then consider cutting it out, offering it to only your best customers, scheduling it in late morning or early afternoon when traffic is lightest, or introducing a fee for it.

Utilities:
Turn off equipment that is not in use - computers, photocopiers, lights, air conditioning.
Switch to energy efficient light bulbs.
Use high efficiency rated appliances.
Install automatic light switches and put the air conditioner on a time switch.

Office supplies:
Purchase only essential supplies.
Reduce printing to essential documents and use the reverse side of paper for copying drafts and internal documents.
Recycle and use recycled paper.
Purchase locally – shipping costs from distant distributors can sometimes double costs.

Communications:
Cut back on unnecessary phone service add-on features such as music on hold.
Compare pricing on phone service providers and consider a VoIP solution.
Evaluate cell phone plans and usage.
Compare pricing website hosting service providers.
Consider next afternoon or two- or three-day service instead of express shipments.
Use email instead of postage mail when possible.

Make cost cutting a continuous improvement program:
While you may have been pushed into a cost cutting exercise by the current economic situation, it is smart to make cost review a normal and regular part of running the business. Now that you have carried out this review, ensure the process of actively searching for cost cutting opportunities stays alive and continues to increase your profitability.

Ask employees:
Do not forget to ask your employees to help develop cost saving measures. They are often the first to notice an area of spending that can be changed or improved.

Green Accounting-Should Your Business Be Doing That?

If your company is like most, you define profit as the difference between revenues and expenses. In recent years, however, there has been a growing trend to look beyond the traditional definition of profit and include the social and environmental impacts of operating a business. The term “triple bottom line” was coined in the mid-1990s and is a way of accounting for the effect a business has on people and the planet. Triple bottom line accounting, sometimes abbreviated as TBL or 3BL, is a way for organizations to attempt to go beyond measuring traditional profit and account for their impact on society and the environment.

The 3 P’s:
People: considering staffing needs as well as contributions to society
Planet: minimizing your negative impacts on the environment including those of your vendors and suppliers
Profit: the economic benefit a business creates for society as a whole, not only for its owners

The benefits of TBL seem to be strong; however, there are many points to consider when deciding if it is right for your business. Some experts believe that adopting a TBL will increase traditional profits in the long run. Others argue that TBL can hinder a company in the market when competitors are only looking at traditional measures of profit. Another potential drawback is that a TBL adds another layer to their accounting system.

Companies that are socially responsible can adopt environmentally sustainable and community friendly practices without using a TBL. But these businesses will not be able to measure and track their progress over time. As the TBL grows in popularity, more companies will need to choose whether to follow it. It can deliver many benefits, but you need to plan carefully and seek advice from your accounting business advisor before implementing a TBL in your business.

Driving Down Vehicle Expenses-Part Two

Last week we began looking at ways to reduce vehicle expenditures during this tough economy. Today, we'll conclude this series with a few more helpful tips that can be implemented easily and efficiently.
Look for fuel bargains:
Some Chambers of Commerce offer fuel cost savings as benefits to their members and numerous supermarkets have fuel discount-for-purchase deals going with various gas stations.Check out the range of alternative fuels available – maybe a conversion to propane or a low ethanol mix gasoline suitable for standard engines is in order. Find the least expensive station using one of the internet sites that track fuel prices.
Lease your vehicles:
There are advantages in leasing over outright purchase, such as no large down payment, fixed monthly payments, and potential reduced maintenance and service costs. There may be tax benefits as well. There are, however, some potential disadvantages to leasing over purchase, the most obvious one being that the vehicle is never owned by you. The maintenance agreement can run against your interests as well, making you responsible for too many of the costs. Leasing vs. owning is one of those situations where you need to do the math carefully and get a number of quotes before making the decision.
Minimize insurance coverage costs:
Your commercial car insurance should be a business tax deduction. Additionally, a portion of your personal car insurance should come off your business taxes also if you are using your vehicle for business related purposes. Different companies can charge very different premiums for the same coverage – do some price comparison checking on your vehicle insurance needs.
Change vehicles:
Use the most efficient vehicles for the purposes you are putting it to. Doing the bank run in the company truck is not efficient. With the government's stance on the environment, eco-friendly vehicles that improve fuel economy and reduce road tax are becoming more appealing. Lower emission vehicles are now available in most types from small runarounds to commercial light duty up to heavyweights weighing 18,000 - 33,000 lbs gross vehicle weight.

As always, please contact a Simons Bitzer team member with questions or comments.

Driving Down Vehicle Expenses-Part One

The current economic downturn may have pushed fuel and vehicle costs lower for the time being but that is not going to outlast the first signs of economic improvement. If you want to avoid being held hostage by increasing fuel and vehicle costs in the future, now is a good time to look at how you can manage your vehicle related business costs.

Limit the use of company vehicles to company work:
Allowing employees to use company vehicles for private jobs or to take home for the weekend is opening you up to large scale abuse, not to mention the added fuel expense and wear on the vehicle.

Claim all mileage allowances and vehicle related expenses:
People using their private vehicle for business journeys can claim tax free expenses for that journey. Most small businesses could legally increase their tax deductions simply by keeping better records of their business related travels. Log each day’s trips and any vehicle related expenses incurred during that day. Put the information in a spreadsheet for your accountant to use at the end of the year so you do not lose track of the real amount expended.

Keep your vehicles properly maintained:
Poorly maintained vehicles can boost fuel consumption by up to 15%; a clogged air filter by 10%; just one 8 psi (56 kPa) under-inflated tire can reduce its life by 10,000 miles and increase fuel consumption by 4%. Keeping your vehicle in top operating condition saves fuel and money, keeps it reliable, preserves resale value and reduces long term maintenance costs.

Consolidate your trips:
Plan errands and deliveries so that you do them together rather than as separate trips. Schedule deliveries in particular areas for particular days. Invest in a GPS and plan the daily run to take the shortest overall distance or most efficient route.

Strategies for Getting Paid on Time-Part 3

Three weeks ago Simons Bitzer & Associates launched a weekly blog dedicated to providing advice to today's business owners. We wanted to begin by discussing a topic that we felt would be of great interest and provide an immediate impact. Over the last two weeks, we have discussed some easy to implement strategies that allow you to collect your receivables on time. Today will be our final feature in this three-part series.


Empower Your Invoice: Instead of a monthly run, consider sending invoices as soon as a service has been carried out or when a product is supplied. Print the actual due date on the invoice rather than a “within 30 days” instruction.

Calculate Average Debt Age: You run regular reports to check debt age, but how do you use the results? To measure average payments against your target terms, divide your accounts receivable by annual sales on credit (not cash sales) and multiply by 365. This shows how efficiently you are managing debts compared to your goal of say a 30 day payment cycle. A result of “55” for example shows that you are averaging 25 days over your 30 day target.

Collect Information: Securing thorough information about a new account avoids obstacles to debt recovery. Collect as many telephone numbers and email addresses as you can to make contact with the client more likely.

You will almost always have some customers who fall behind; however, these simple changes will assist in speeding payment, improving cash flow, and identifying problem accounts more quickly.


For more guidance on cash flow management, accounts receivable and other areas where your business can be improved, please contact Simons Bitzer & Associates by visiting http://www.simonsbitzer.com/ or calling 782-3070 for a FREE one hour consultation with one of our team members.

Strategies for Getting Paid on Time-Part 2

This is part two in our series of discussions on helping business owners to get paid on time. Remember, uncollected income is the most obvious impact on your cash flow. Preventative measures will save you the hidden wasted costs of time spent chasing payment. Here are two additional strategies to employ:
Set a collection policy:
The chance of recovering payment reduces the older a debt becomes. Establish firm rules for follow-up, such as: a phone call at 7 days overdue; a letter at 14; another call at 21 days; stop supply or service at 30; turn to more formal approaches, such as collection agencies, at 60 days. In line with this schedule, set suitable options at certain stages such as partial payment, an installment plan, and whether or not future purchases are allowed.
Focus recovery power in the right hands:
Avoid the trap of turning your sales people or service staff into debt collectors. Mixing messages about employee roles will do more harm than good in the long term. Give the job of bad debt follow-up to one person, along with a set of clear guidelines for action and most importantly, your full support.
Do not hesitate to ask firmly for due payment because you fear losing customers. Non-paying customers may not be worth keeping.
For more guidance on cash flow management, accounts receivable and other areas where your business can be improved, please contact Simons Bitzer & Associates by visiting www.simonsbitzer.com or calling 782-3070 for a FREE one hour consultation with one of our team members.

Simons Bitzer & Associates' Inaugural Blog

Since 1995, Simons Bitzer & Associates has been committed to helping business owners and their teams realize growth, improve efficiencies, and maximize profitability. With that in mind, we are pleased to announce the launch of the Simons Bitzer weekly blog where we will discuss timely and effective business strategies, most often as they relate to the field of accounting. We truly hope you will enjoy our posts and we look forward to receiving your feedback as we enter the age of social media.

Strategies for Getting Paid on Time-Part One

If we don’t get paid, we go out of business. With more debtors delaying payment in these tough times, taking action to collect money should be a top priority for business owners. Few small businesses can afford to turn customers away, but being timid about stretched credit terms puts your company in danger. If you are not being paid on time it is harder to find money to settle your own outstanding debts. How can you collect money owed, and at the same time, avoid bad feelings developing between current and new customers who begin to fall behind on payments?

Try these simple in-house strategies:

Check credit on all new clients:

It is worth the fee to do a background check on new clients, despite the temptation to automatically take on any new clients when business is slow. The cost of your staff’s time chasing money and the potential price of debt collection later is not worth the risk. A reference check should be accepted as “company policy” by new customers.

Set terms at the sale:

The best time to get the message through about payment terms is when you close the sale. Outlining credit expectations early sets the right tone and foundation for late account follow-up if necessary. Make it a prominent part of the agreement when customers place orders.

For more guidance on accounts receivable and other accounting issues, please contact Simons Bitzer & Associates by visiting www.simonsbitzer.com or calling 782-3070 and receive a free one hour consultation with one of our team members.