Omar Group CPA Blog

The best way to prevent overdue accounts is to avoid doing business with customers who have bad credit histories. I have seen one too many small business owners fail because of poor cash flow that resulted from high accounts receivable.

Here are five steps that can help your cash flow.

1. Watch for new customers with a bad credit history.

You can’t expect that a company or a person with a history of bouncing checks or paying their bills late will change their ways when dealing with you. If you must do business with the chronically late, lay down your credit rules early and firmly and start the relationship off slowly. Keep the amount of product or services you offer a company with an iffy credit record to a minimum until they’ve proven themselves worthy. And no matter how much you need the business, never start doing business with another person or company until you have a signed contract clearly stating and agreeing to payment terms.

2. Once you begin doing business with someone, make sure you stamp your invoices with the date that payment is due to you.

Don’t rely on the customer to look at the invoice date and add 30 days – or whatever your payment terms are – to determine the pay date.

3. Offer discounts for early payment and add interest to late payments.

A typical discount is two percent to three percent off the total if the bill is paid within 10 days of the invoice date. The maximum amount of interest that can be charged varies by state.

4. Phone customers and start trying to collect the day after a payment is due.

Never wait – let them know that you keep close track of your accounts receivable.

5. Until a customer pays their bills, don’t do any more business with them.

Do not bend on this rule – you’ll only cause yourself more problems and scuttle any chance of collecting what you’re owed. If you really want to keep doing business with a customer who owes you, insist that any new products or services they receive from you are c.o.d. – cash on delivery.

Finally, and perhaps most importantly, make sure you review your Aging Accounts Receivable Report at least quarterly, preferable monthly.

After you have integrated the advice I have shared here to your collection process, you will find the days of high Accounts Receivables a thing of the past.

if you have any questions, please don’t hesitate to contact me at Salim@Omargroupcpa.com or visit my website at www.OmarGroupCPA.com.  We are an entrepreneurial CPA firm that helps New Jersey small business owners and professional practices with maximizing their profitability and cash flow.

One of the questions that frequently comes up when Chris and I meet with clients when reviewing their finances is what property is subject to Probate. Here’s a brief education on probate……..Probate is the legal process of settling the estate of a deceased person, resolving all claims, and distributing the decedent’s property.

At death, not all property is transferred through a will. Certain assets are automatically transferred to a beneficiary or beneficiaries when you die. Assets transferred in this way might include retirement plan accounts and life insurance proceeds. These are considered “non-probate” property. Property held in a trust and joint bank or brokerage accounts are other examples of non-probate property.

“Probate” property is passed though your will. If you don’t have a will, the probate court will decide, based on the state’s law, how your property should be distributed.

If you would like to sit with Chris for a review of your finances or would like a reference of an attorney you can talk to about this, send me an email at Salim@OmarGroupCPA.com and I’ll be happy to facilitate that.

In this post, I’ll share with you a way to deduct your spouses travel expenses.

Generally deductions are denied for travel expenses paid or incurred for a spouse, dependent or employee of the taxpayer on business unless the:

a) Spouse, etc is an employee of the taxpayer, and

b) Travel of the spouse is for a bona fide business purpose, and

c) Expenses would otherwise be otherwise deductible by the spouse, etc.

The law allows for a deduction for the single rate for lodging and frequently there is no difference between one or two occupants.  Thus virtually the entire lodging expense for an accompanying spouse will be deductible.

When traveling by car, the law does not require the allocation because the spouse is traveling in the vehicle. Thus, if traveling by vehicle the entire cost of the transportation would be deductible. That would generally also apply to taxis at the destination.  The only substantial cost that is not deductible is the cost of the spouse’s meals which even if they were deductible would be reduced by the 50% rule.

My firm specializes in small business accounting and tax services in New Jersey and if you have any questions, please do not hesitate to contact my office at (732) 566-3660 or send me an email at Salim@OmarGroupCPA.com.