Increase Cash Flow in Partnership with Suppliers

Suppliers can be a better source of cash than a bank!

Employee salaries, utility bills, taxes, payments to suppliers—these and myriad other transactions cause cash to flow out of your company. If your company isn’t keeping pace with these bills as they come due, you’re headed for trouble. Too often, suppliers help manage your cash only when you cannot pay them. Why not use them to help manage it? Here are some ideas to help slow down cash outflow with your suppliers.

  • Treat them as partners. It’s crucial to maintain positive relationships with companies that supply your raw materials, provide ancillary services, and otherwise keep revenues flowing. First identify your key suppliers. Then meet with them periodically to know how they are doing and create a relationship based on trust. If you are forecasting tight cash periods, let them know. If you need to pay late, proactively call them BEFORE the bill is due and let them know when you will be sending payment. Whatever you do, deliver on your promise.
  • Extend terms. Some invoices are due on receipt; others, a few days later. Negotiate the longest payback terms possible and ask for early-payment discounts. A two percent discount might not seem significant, but on bulk orders savings can accumulate. Depending on your industry, you might set up a vendor payment schedule that better reflects your accounts receivable history. For example, if you print catalogs, get a price quote with 120 day terms from your printer. The extended terms allow you to mail the catalog and receive orders to help pay the bill. The supplier can quote their price with the cost of the extended term built into their bill.
  • Simplify. Set up automatic payments from your company bank account. You won’t have to remember when a bill is due and the money will stay in your account as long as possible. Electronic fund transfers doesn’t eliminate the need to monitor cash flow or scrutinize payment terms, but they can reduce some of the headaches associated with paying bills on time. You might also consider moving from invoice payments to monthly statements. This allows you to reduce the processing work and make one payment per month.
  • Prioritize. Develop a priority payment list. Although everyone needs to be paid eventually, some vendors are more crucial to your success. They’re the ones you rely on to keep shelves stocked and customers coming back. Pay them first.
  • Release management. The principal here is to pay for inventory when you have a sale and not before. This helps match the cash outflow of the supplier payment with selling the product. One way to do this is to implement just in time (JIT) delivery, where you place the order with the supplier and they then deliver or ship it. Another way to do this is to provide a blanket purchase order to lock in lower pricing, but take delivery of the product over time. Then you pay for inventory when it is delivered versus when it is produced.

If managed correctly, your key suppliers can be an essential key to your business’ success.

 

Shaking hands

 

As always, we hope you find our tips and news for businesses valuable, and look forward to receiving your feedback. Companies focused on growth have sought the help of Insero & Co. for more than 40 years. During that time they have consistently experienced the peace of mind that comes from knowing their CPA firm takes the concept of integrity seriously. Should you have any questions, please contact us directly.

Nonprofit Update: April 2019

IRS answers questions on tax-exempt executive compensation
The IRS released Notice 2019-09 providing guidance to assist taxpayers in implementing new executive compensation rules under section 4960. The Notice provides a number of definitions and clarifies a number of items. An IRS notice is not enforceable guidance, but this Notice can be relied upon until further guidance is issued.

What is a Virtual Accountant?
Nonprofits are increasingly choosing to outsource to virtual accounting firms that provide extensive expertise and allow organizations to focus on their core competencies.

IRS releases guidance on qualified transportation benefit deductions
The IRS provides guidance to assist in determining expenses for parking fringe benefits for purposes of section 274(a)(4) and 512(a)(7). The qualified transit pass expenses, qualified van or transit bus expenses and qualified parking expenses are generally still excluded from employee income under section 132(f), but to the extent the employer provides these benefits as defined in section 132(f), the section 274(a)(4) rules apply to limit the employer’s tax deductions.

Wearable tech: Good for employee health care and good for business
Wearable tech’s transformative power promotes healthy lifestyles, lowers insurance coverage spending and increases employee engagement. Fitbit recently announced that their newest device, Inspire, will be available only to “corporate, wellness, health plan and health systems partners and customers of their organizations, participants and members.” This announcement comes on the heels of tech giant Apple’s publicized relationship with health insurer Aetna to offer Attain, an app that rewards users with prizes if they achieve certain health care goals.

Tax issues arise when employers pay employee business travel expenses
Business travel arrangements require employers to carefully analyze and determine proper tax treatment for employees. Most employers pay or reimburse their employees’ expenses when traveling for business. Generally, expenses for transportation, meals, lodging and incidental expenses can be paid or reimbursed by the employer tax-free if the employee is on a short-term trip.

 

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP. So, in addition to articles from our own staff, we include regular updates from RSM on the latest insights for nonprofit organizations.
Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/muse.html

Nonprofit Update: February 2019

Determining an appropriate reserve level for nonprofit organizations
Setting a financial reserve level is a key process for a nonprofit organization, providing necessary funding to continue operations during a host of potential challenges or taking advantage of strategic opportunities. However, many nonprofits do not have a defined process to establish reserves, exposing the organization to undue risks. In an environment of economic and political uncertainty, implementing an effective method to set reserves is critical to long-term organizational sustainability.

Proposed accounting alternatives for not-for-profit entities
The Financial Accounting Standards Board has proposed accounting alternatives for not-for-profit entities for goodwill and certain identifiable intangible assets. The Financial Accounting Standards Board recently issued a proposed Accounting Standards Update (ASU) that, if finalized, would extend the scope of two private company accounting alternatives to not-for-profit entities – the accounting for goodwill and the accounting for identifiable intangible assets in a business combination. Also, in a business combination, a not-for-profit entity would have the option to subsume into goodwill and amortize certain customer-related intangible assets and all non-compete agreements.

Setting up a security steering committee
In many cases, companies isolate security into its own segment. Responsibilities are typically split between low-level IT staff, who must juggle break/fix situations with technology investments, as well as security tasks. However, this scenario often results in security best practices being overlooked for the sake of convenience, and little alignment between the IT group and the rest of the organization regarding security decisions.

District of Columbia government issues notices concerning exemption expiration
The notice states that over the 2019 calendar year the District of Columbia Office of Tax and Revenue (OTR) will begin to expire tax exemptions granted under District law.  The notice states that all exempt entities will be required to renew their exemptions or they will have their classifications changed to being taxable entities.

 

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP. This includes regular updates on the latest insights for nonprofit organizations.

Nonprofit Update: December 2018

Foundations for Board Governance
Looking to increase the effectiveness of your nonprofit’s board? RSM’s guide highlights common problems and practical solutions related to board governance.

The evolving role of outsourcing within nonprofit organizations
Adjusting existing outsourcing strategies can help streamline service delivery and further increase efficiency and productivity.

Phishing awareness: Recognizing, addressing and avoiding threats
Phishing is one of the most common and most successful forms of cyberattack. Learn how to recognize the warning signs of potential phishing.

IRS issues guidance for determining UBTI for separate businesses
The IRS issued Notice 2018-67, providing interim and transition rules for determining UBTI for separate trades or businesses.
Read more.

Recorded webcast: Annual tax update webcast for nonprofit organizations
Learn about the current tax landscape for exempt organizations as well as look ahead to 2019.
View the webcast.

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP. This includes regular updates on the latest insights for nonprofit organizations.

Nonprofit Update: October 2018

Is there really a tax cut in the TCJA for exempt organizations?
Potential tax increase for exempt organizations hidden in the TCJA as part of the corporate tax cut.

Cybersecurity: Understanding the threat
Answer our five-question online assessment to help evaluate how your security program stacks up.

Changes to accounting for grants and contributions made and received
An overview of the clarifications to identifying reciprocal and nonreciprocal transactions and conditional and unconditional contributions.

Managing lease accounting for public and private higher education
Colleges and universities must adjust to the new level of judgments and estimates required under ASC 842 and GASB 87 lease accounting.

Recorded webcast: 2018 federal grants management update
Learn about current developments in grants management compliance requirements for nonprofits.

 

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP. This includes regular updates on the latest insights for nonprofit organizations.

Non-Profit Update: July/August 2018

New standards for nonprofits present their own challenges
New standards for nonprofit financial statements and revenue recognition will need to be implemented over the next two or three years.

How IT outsourcing strengthens security for nonprofits
The evolving complexity of strong cybersecurity underscores the value of an outsourcing partner dedicated to keeping cybercriminals out. It often requires just a series of emails to get senior finance executives to begin looking beyond their own IT departments to safeguard their businesses against cyber-hackers.

GDPR enforcement is here…is your organization prepared?
General Data Protection Regulation (GDPR) noncompliance could mean potentially significant fines and penalties. Organizations must know where they stand and how to react before it’s too late. The following infographic provides key insights into GDPR compliance requirements, helping your organization understand critical elements of the regulation.

Nonprofit tax reform resource center
The recently enacted Tax Cuts and Jobs Act has produced widespread tax law changes for exempt organizations. Learn more about the latest updates in our resource center. Our resource center features the latest in developments related to the potential effects of the new tax law for exempt organizations.

 

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest insights for non-profit organizations.

Non-Profit Update: May/June 2018

Nonprofit tax reform resource center
The recently enacted Tax Cuts and Jobs Act has produced widespread tax law changes for exempt organizations. Learn more about the latest updates in our resource center.

Donor-advised funds: Accounting implications related to pledges
This article addresses the accounting implications related to a donor’s use of a donor-advised fund to service a pledge. According to the National Philanthropic Trust’s 2017 Donor-Advised Fund Report, there were approximately 285,000 individual donor-advised funds (DAFs) in 2016 with aggregate charitable assets of $85 billion.

Understanding and managing 2018’s key risks
RSM’s recent 2018 economic and risk webcast analyzed emerging economic and risk trends, and detailed four specific risks that your company will likely face this year. This infographic summarizes the webcast to help you understand new innovation, automation, cybersecurity, and data privacy risks and potential management responses.

Planned giving strategies: Strategies, tactics and tools
Once a nonprofit understands the charitable visions of its donors, it’s time to discuss strategies that will help the organization accomplish its goals.

On demand: Annual nonprofit accounting update webcast
Miss our webcast on Thursday, April 19? View the annual accounting update on demand, answer polling questions and complete the final exam to be eligible for CPE credit for this course.

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/muse.html

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest insights for non-profit organizations.

Non-Profit Update: March/April 2018

Nonprofit tax reform resource center
The recently enacted Tax Cuts and Jobs Act has produced widespread tax law changes for exempt organizations. Learn more about the latest updates in our resource center.

Important fringe benefit changes for exempt organizations
Certain fringe benefits now required to be included in exempt organizations’ unrelated business income subject to tax.

Planned giving strategies: The conversation that makes the difference
By discovering what matters most to the individual, nonprofits can uncover a donor’s passion and connection to the organization.

Annual nonprofit accounting update webcast
Join us on Thursday, April 19, for an informational session to discuss the latest accounting updates and issues that could affect nonprofit organizations.

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/muse.html

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest insights for non-profit organizations.

Not-for-Profit Update: January/February 2018

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest insights for not-for-profit organizations. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Nonprofit tax reform resource center
The recently enacted Tax Cuts and Jobs Act has produced widespread tax law changes for exempt organizations. Learn more about the latest updates in our resource center.

IT risk management for nonprofits: Securing your technology and data
Nonprofit organizations must understand how to implement strategies to protect technology and information assets.

IRS offers guidance on certain distribution from donor advised funds
The Treasury Department and the IRS are considering developing proposed regulations under section 4967 of the IRC.

What your nonprofit board members need to know about Form 990
A two-part white paper series to help board members develop a better understanding of why the IRS asks for the information contained in the Form 990.

The top 5 things nonprofits should expect from an outsourcing provider
Nonprofits need outsourcing providers who can not only help build a strategy for the future and help implement that strategy, but who can adjust and grow as your mission expands.

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/muse.html

Not-for-Profit Update: November/December 2017

At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP (formerly known as McGladrey LLP). This includes regular updates on the latest insights for not-for-profit organizations. We hope that you find these informative and useful, and invite you to reach out to us if you have any questions.

Exempt organization-specific provisions in the House Bill H.R. 1
The tax reform legislative process was formally kicked off Nov. 2, 2017, with the release of H.R. 1, the Tax Cuts and Jobs Act.
Read more

Going global: How to plan strategy and building local relationships
Nonprofit organizations can successfully expand operations around the world with strategic planning and cultivation of local relationships.
Read more

Nonprofit webcast series: Optimizing your nonprofit’s outsourcing strategy
Join us for this informative two-part webcast series as we discuss the importance of evaluating whether your outsourcing provider’s capabilities are meeting your needs and expectations.
Register now

On-demand webcast: Annual tax update for nonprofit organizations
Miss our webcast on Tuesday, Oct. 31? View the annual tax update on-demand, answer polling questions and complete the final exam to be eligible for CPE credit for this course.
View on demand now

Source: RSM US LLP
Used with permission as a member of the RSM US Alliance
http://rsmus.com/our-insights/newsletters/muse.html