Elizabeth Heil Recognized by STL Small Business Monthly

We are excited to announce that Elizabeth Heil has been named by St. Louis Small Business Monthly as one of the Top 100 St. Louisans to Know to Succeed in Business for the publication’s April issue. Elizabeth has been with our firm since 1999 and is a Manager in our Edwardsville office. She is a member of the Recruiting Team, the Financial Institutions Group, and volunteers her time for Scheffel Boyle Shares and a variety of local community organizations. We are so proud of her for this great achievement. Congratulations, Elizabeth!.

St. Louis Small Business Monthly’s team of editors and community leaders identified the honorees for this year’s edition. They are all key executives, financiers, notable achievers, connectors, and other business-community leaders. The judges chose the individuals based on their contributions to the area businesses and the overall business community.


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House Tax Bill Released

On November 2, 2017, the House of Representatives released a draft tax reform bill titled the “Tax Cuts and Jobs Act.”  The bill would reduce individual and business tax rates, would modify or eliminate a variety of itemized deductions as well as repeal the estate and alternative minimum taxes, and would change the taxation of foreign income.  The Ways & Means Committee intends to formally markup the bill the week of November 6 with full House floor consideration planned before Thanksgiving.  Most of the provisions would be effective starting in 2018.


Under the House bill, individuals would be subject to four tax brackets at 12, 25, 35, and 39.6 percent.  The 39.6 rate would apply at $1 million for married taxpayers filing jointly and $500,000 for other filers.  The standard deduction would be increased, from $6,350 to $12,200 for single filers and from $12,700 to $24,400 for married taxpayers filing jointly.  Personal exemptions would be repealed; however, the child tax credit would be expanded.

Itemized deductions would be changed significantly by the bill.  Deductions for state and local income and sales taxes would be eliminated for individuals, and the deduction for local property taxes paid would be capped at $10,000.  Mortgage interest expense deductions would be limited to acquisition indebtedness on the taxpayer’s principal residence of up to $500,000 for new mortgage indebtedness, reduced from the current limit of $1 million (existing mortgages would be grandfathered).  Home equity indebtedness would no longer be deductible. Cash contributions to public charities would be limited to 60 percent of the donor’s adjusted gross income, an increase from 50 percent adjusted gross income limitation under current law.  Deductions for tax preparation fees, medical expenses, moving expenses, and personal casualty losses would be repealed, but the deduction for personal casualty losses would remain for relief provided under special disaster relief legislation. The overall limitation on itemized deductions would also be removed.  The individual alternative minimum tax (AMT) would be repealed. Transition provisions would ensure taxpayers with AMT carryforwards would be able to use the remaining credits between 2018 and 2022.

Notably, most of the reform provisions are effective beginning after 2017; however, the changes to the mortgage interest expense deduction are effective for debt incurred on or after November 2, 2017.

The exclusion of gain from the sale of a principal residence would be phased out for married taxpayers with an adjusted gross income in excess of $500,000 ($250,000 for single filers) but the act changes the use requirements and calls for taxpayers to live in the residence for five of the previous eight years to qualify, up from the current requirement to use the residence for two of the previous five years. The bill further repeals the deduction for alimony payments effective for any divorce decree or separation agreement executed after 2017.

Estate, gift, and generation-skipping transfer (GST) tax exclusions for individuals would be increased to $10 million (as of 2011) and then adjusted for inflation, and the estate and GST taxes would then be repealed after 2023 but would maintain the step-up in basis provisions. Beginning in 2024, the top gift tax rate would be lowered to 35 percent with a lifetime exemption of $10 million and an annual exclusion of $14,000 (as of 2017) indexed for inflation.

Impacting businesses, the corporate tax rate would be reduced from 35 percent to 20 percent, and certain “business income” from pass-through entities would be taxed at 25 percent instead of an owner’s individual rate.  Bonus depreciation of 100 percent would be available for qualifying property placed in service before January 1, 2023, new property types would qualify for bonus depreciation and expense amounts would be expanded.  The bill proposes to eliminate the Domestic Production Activities Deduction and change other aspects of entertainment expenses, net operating losses, like-kind exchanges, business credits, and small-business accounting methods, among other provisions.  The bill would also repeal the corporate alternative minimum tax (AMT) and make existing AMT credit carryforwards refundable over a period of five years.

Taxation of a corporation’s foreign income would change from a worldwide system to an exemption system, with a 100-percent exemption from U.S. tax for the foreign source portion of dividends paid by a foreign subsidiary to U.S. corporate shareholders that own 10 percent or more of the foreign subsidiary.  To transition to the exemption system, the bill also includes a transition tax for untaxed foreign earnings accumulated under the current worldwide taxing system. The House bill also includes provisions to prevent base erosion. A separate tax alert discussing in more detail the House bill’s proposals relating to the taxation of foreign income and foreign persons is forthcoming.

The bill would impact tax-exempt entities as well through the expanded application of unrelated business income tax (UBIT) rules and a flat 1.4 percent tax of the net investment income of entities including private foundations.

The release of the House bill represents the first significant and detailed legislative step toward tax reform under the Trump Administration.  As drafted, most of the provisions would be effective for the 2018 tax year.  The House Ways & Means Committee is expected to formally markup the legislation the week of November 6, with full House consideration planned before Thanksgiving.

There are additional provisions in the proposed legislation effecting education credits, retirement accounts, deferred compensation, and private foundations, among others.

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Tax Cuts and Jobs Act Summary

Individual Highlights

Unless otherwise noted, the changes are effective for tax years beginning in 2018 through 2025.

  • Tax rates. The new law imposes a new tax rate structure with seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The top rate was reduced from 39.6% to 37% and applies to taxable income above $500,000 for single taxpayers, and $600,000 for married couples filing jointly. The rates applicable to net capital gains and qualified dividends were not changed. The “kiddie tax” rules were simplified. The net unearned income of a child subject to the rules will be taxed at the capital gain and ordinary income rates that apply to trusts and estates. Thus, the child’s tax is unaffected by the parent’s tax situation or the unearned income of any siblings.
  • Standard deduction. The new law increases the standard deduction to $24,000 for joint filers, $18,000 for heads of household, and $12,000 for singles and married taxpayers filing separately. Given these increases, many taxpayers will no longer be itemizing deductions. These figures will be indexed for inflation after 2018.
  • Exemptions. The new law suspends the deduction for personal exemptions. Thus, starting in 2018, taxpayers can no longer claim personal or dependency exemptions. The rules for withholding income tax on wages will be adjusted to reflect this change, but IRS was given the discretion to leave the withholding unchanged for 2018.
  • New deduction for “qualified business income. Starting in 2018, taxpayers are allowed a deduction equal to 20 percent of “qualified business income,” otherwise known as “pass-through” income, i.e., income from partnerships, S corporations, LLCs, and sole proprietorships. The income must be from a trade or business within the U.S. Investment income does not qualify, nor do amounts received from an S corporation as reasonable compensation or from a partnership as a guaranteed payment for services provided to the trade or business. The deduction is not used in computing adjusted gross income, just taxable income. For taxpayers with taxable income above $157,500 ($315,000 for joint filers), (1) a limitation based on W-2 wages paid by the business and depreciable tangible property used in the business is phased in, and (2) income from the following trades or businesses is phased out of qualified business income: health, law, consulting, athletics, financial or brokerage services, or where the principal asset is the reputation or skill of one or more employees or owners.
  • Child and family tax credit. The new law increases the credit for qualifying children (i.e., children under 17) to $2,000 from $1,000, and increases to $1,400 the refundable portion of the credit. It also introduces a new (nonrefundable) $500 credit for a taxpayer’s dependents who are not qualifying children. The adjusted gross income level at which the credits begin to be phased out has been increased to $200,000 ($400,000 for joint filers).
  • State and local taxes. The itemized deduction for state and local income and property taxes is limited to a total of $10,000 starting in 2018.
  • Mortgage interest. Under the new law, mortgage interest on loans used to acquire a principal residence and a second home is only deductible on debt up to $750,000 (down from $1 million), starting with loans taken out in 2018. And there is no longer any deduction for interest on home equity loans, regardless of when the debt was incurred.
  • Miscellaneous itemized deductions. There is no longer a deduction for miscellaneous itemized deductions which were formerly deductible to the extent they exceeded 2 percent of adjusted gross income. This category included items such as tax preparation costs, investment expenses, union dues, and unreimbursed employee expenses.
  • Medical expenses. Under the new law, for 2017 and 2018, medical expenses are deductible to the extent they exceed 7.5 percent of adjusted gross income for all taxpayers. Previously, the AGI “floor” was 10% for most taxpayers.
  • Casualty and theft losses. The itemized deduction for casualty and theft losses has been suspended except for losses incurred in a federally declared disaster.
  • Overall limitation on itemized deductions. The new law suspends the overall limitation on itemized deductions that formerly applied to taxpayers whose adjusted gross income exceeded specified thresholds. The itemized deductions of such taxpayers were reduced by 3% of the amount by which AGI exceeded the applicable threshold, but the reduction could not exceed 80% of the total itemized deductions, and certain items were exempt from the limitation.
  • Moving expenses. The deduction for job-related moving expenses has been eliminated, except for certain military personnel. The exclusion for moving expense reimbursements has also been suspended.
  • Alimony. For post-2018 divorce decrees and separation agreements, alimony will not be deductible by the paying spouse and will not be taxable to the receiving spouse.
  • Health care “individual mandate.” Starting in 2019, there is no longer a penalty for individuals who fail to obtain minimum essential health coverage.
  • Estate and gift tax exemption. Effective for decedents dying, and gifts made, in 2018, the estate and gift tax exemption has been increased to roughly $11.2 million ($22.4 million for married couples). The gift allowance for 2018 has been increased to $15,000 from $14,000.
  • Alternative minimum tax (AMT) exemption. The AMT has been retained for individuals by the new law but the exemption has been increased to $109,400 for joint filers ($54,700 for married taxpayers filing separately), and $70,300 for unmarried taxpayers. The exemption is phased out for taxpayers with alternative minimum taxable income over $1 million for joint filers, and over $500,000 for all others.
  • 529 plan distributions. 529 plan distributions are tax-free if used to pay “qualified higher education expenses” of the beneficiary (student). Before the TCJA made these changes, tuition for elementary or secondary schools wasn’t a “qualified higher education expense,” so students/529 beneficiaries who had to pay it couldn’t receive tax-free 529 plan distributions. The TCJA provides that qualified higher education expenses now include expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school. Thus, tax-free distributions from 529 plans can now be received by beneficiaries who pay these expenses, effective for distributions from 529 plans after 2017.There is a limit to how much of a distribution can be taken from a 529 plan for these expenses. The amount of cash distributions from all 529 plans per single beneficiary during any tax year can’t, when combined, include more than $10,000 for elementary school and secondary school tuition incurred during the tax year. NOTE – Illinois has indicated that 529 plan distributions made to pay elementary or secondary education expenses would be taxable distributions to the extent that a deduction was previously taken for those contributions.

Business Highlights

Unless otherwise noted, the changes are effective for tax years beginning in 2018.

  • Corporate tax rates reduced. One of the more significant new law provisions cuts the corporate tax rate to a flat 21%. Before the new law, rates were graduated, starting at 15% for taxable income up to $50,000, with rates at 25% for income between 50,001 and $75,000, 34% for income between $75,001 and $10 million, and 35% for income above $10 million.
  • Alternative minimum tax repealed for corporations. The corporate alternative minimum tax (AMT) has been repealed by the new law.
  • Alternative minimum tax credit. Corporations are allowed to offset their regular tax liability by the AMT credit. For tax years beginning after 2017 and before 2022, the credit is refundable in an amount equal to 50% (100% for years beginning in 2021) of the excess of the AMT credit for the year over the amount of the credit allowable for the year against regular tax liability. Thus, the full amount of the credit will be allowed in tax years beginning before 2022.
  • Net Operating Loss (“NOL”) deduction modified. Under the new law, generally, NOLs arising in tax years ending after 2017 can only be carried forward, not back. The general two-year carryback rule, and other special carryback provisions, have been repealed. However, a two-year carryback for certain farming losses is allowed. These NOLs can be carried forward indefinitely, rather than expiring after 20 years. Additionally, under the new law, for losses arising in tax years beginning after 2017, the NOL deduction is limited to 80% of taxable income, determined without regard to the deduction. Carryovers to other years are adjusted to take account of the 80% limitation.
  • Limit on business interest deduction. Under the new law, every business, regardless of its form, is limited to a deduction for business interest equal to 30% of its adjusted taxable income. For pass-through entities such as partnerships and S corporations, the determination is made at the entity, i.e., partnership or S corporation, level. Adjusted taxable income is computed without regard to the repealed domestic production activities deduction and, for tax years beginning after 2017 and before 2022, without regard to deductions for depreciation, amortization, or depletion. Any business interest disallowed under this rule is carried into the following year, and, generally, may be carried forward indefinitely. The limitation does not apply to taxpayers (other than tax shelters) with average annual gross receipts of $25 million or less for the three-year period ending with the prior tax year. Real property trades or businesses can elect to have the rule not apply if they elect to use the alternative depreciation system for real property used in their trade or business. Certain additional rules apply to partnerships.
  • Domestic production activities deduction (“DPAD”) repealed. The new law repeals the DPAD for tax years beginning after 2017. The DPAD formerly allowed taxpayers to deduct 9% (6% for certain oil and gas activities) of the lesser of the taxpayer’s (1) qualified production activities income (“QPAI”) or (2) taxable income for the year, limited to 50% of the W-2 wages paid by the taxpayer for the year. QPAI was the taxpayer’s receipts, minus expenses allocable to the receipts, from property manufactured, produced, grown, or extracted within the U.S.; qualified film productions; production of electricity, natural gas, or potable water; construction activities performed in the U.S.; and certain engineering or architectural services.
  • New fringe benefit rules. The new law eliminates the 50% deduction for business-related entertainment expenses. The pre-Act 50% limit on deductible business meals is expanded to cover meals provided via an in-house cafeteria or otherwise on the employer’s premises. Additionally, the deduction for transportation fringe benefits (e.g., parking and mass transit) is denied to employers, but the exclusion from income for such benefits for employees continues. However, bicycle commuting reimbursements are deductible by the employer but not excludable by the employee. Last, no deduction is allowed for transportation expenses that are the equivalent of commuting for employees except as provided for the employee’s safety.
  • Increased Code Sec. 179 ExpensingThe new law increases the maximum amount that may be expensed under Code Sec. 179 to $1 million. If more than $2.5 million of property is placed in service during the year, the $1 million limitation is reduced by the excess over $2.5 million. Both the $1 million and the $2.5 million amounts are indexed for inflation after 2018. The expense election has also been expanded to cover (1) certain depreciable tangible personal property used mostly to furnish lodging or in connection with furnishing lodging, and (2) the following improvements to nonresidential real property made after it was first placed in service: roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; security systems; and any other building improvements that aren’t elevators or escalators, don’t enlarge the building, and aren’t attributable to internal structural framework.
  • Bonus depreciation. Under the new law, a 100% first-year deduction is allowed for qualified new and used property acquired and placed in service after September 27, 2017 and before 2023. Pre-Act law provided for a 50% allowance, to be phased down for property placed in service after 2017. Under the new law, the 100% allowance is phased down starting after 2023.
  • Depreciation of qualified improvement property. The new law provides that qualified improvement property is depreciable using a 15-year recovery period and the straight-line method. Qualified improvement property is any improvement to an interior portion of a building that is nonresidential real property placed in service after the building was placed in service. It does not include expenses related to the enlargement of the building, any elevator or escalator, or the internal structural framework. There are no longer separate requirements for leasehold improvement property or restaurant property.
  • Depreciation of farming equipment and machinery. Under the new law, subject to certain exceptions, the cost recovery period for farming equipment and machinery the original use of which begins with the taxpayer is reduced from 7 to 5 years. Additionally, in general, the 200% declining balance method may be used in place of the 150% declining balance method that was required under pre-Act law.
  • Like-kind exchange treatment limited. Under the new law, the rule allowing the deferral of gain on like-kind exchanges of property held for productive use in a taxpayer’s trade or business or for investment purposes is limited to cover only like-kind exchanges of real property not held primarily for sale. Under a transition rule, the pre-TCJA law applies to exchanges of personal property if the taxpayer has either disposed of the property given up or obtained the replacement property before 2018.
  • Availability of the cash method of accounting. Under pre-Act law, C corporations and certain other taxpayers were prohibited from using the overall cash method of accounting.  Those restrictions have been narrowed under the new law.  For tax years beginning after 2017, taxpayers may generally use the overall cash method of accounting if a gross receipts test is met.  That test requires a taxpayer’s gross receipts for the 3-prior tax years to average $25 million or less.  This provides qualifying taxpayers the opportunity to possibly defer income.
  • Availability of the completed contract method for contractors. Under pre-Act law, contractors did not qualify for the completed contract method if their average annual gross receipts for the 3-prior tax years exceeded $10 million.  Under the new law, that restriction has been raised so that it now only applies to taxpayers whose 3-year average annual gross receipts exceeded $25 million.  This provides qualifying taxpayers the opportunity to defer income.
  • Capitalization of inventory costs. Under pre-Act law, only small producers and resellers (3-year average gross receipts under $10 million) were exempt from the requirement to capitalize certain costs into inventory.  This had the effect of delaying deductions for a taxpayer.  The new law expands that exception to provide that small producers and resellers are defined as those whose 3-year average annual gross receipts exceeded $25 million.  This provides qualifying taxpayers the opportunity to accelerate expenses when compared to the old capitalization rules.
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Making 2017 Retirement Plan Contributions in 2018

Personal tax exemptions and the standard deduction have looked largely the same for quite some time. But, in light of the Tax Cuts and Jobs Act (TCJA) passed late last year, many individual taxpayers may find themselves confused by the changing face of these tax-planning elements. Here are some clarifications.
For 2017, taxpayers can claim a personal exemption of $4,050 each for themselves, their spouses and any dependents. If they choose not to itemize, they can take a standard deduction based on their filing status: $6,350 for singles and separate filers, $9,350 for head of household filers, and $12,700 for married couples filing jointly.
For 2018 through 2025, the TCJA suspends personal exemptions but roughly doubles the standard deduction amounts to $12,000 for singles and separate filers, $18,000 for heads of households, and $24,000 for joint filers. The standard deduction amounts will be adjusted for inflation beginning in 2019.
For some taxpayers, the increased standard deduction could compensate for the elimination of the exemptions, and perhaps even provide some additional tax savings. But for those with many dependents or who itemize deductions, these changes might result in a higher tax bill — depending in part on the extent to which they can benefit from family tax credits.
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Agribusiness Tax Reform Seminars

The Tax Cuts and Jobs Act will have a large impact on the agribusiness community. Join our Agribusiness Team as we partner with Sievers Equipment for free, one-hour programs on how these changes may affect you.

We will be hosting three different sessions of this program. Drinks and light appetizers will be provided. We hope to see you there!

Click here for an informational flyer on these great events.

Hamel Agribusiness Tax Reform Seminar

Monday, February 12th, 7pm
Sievers Equipment Co.
406 N. Old Route 66
Hamel, IL 62046

Jerseyville Agribusiness Tax Reform Seminar

Monday, February 19th, 7pm
Knights of Columbus Hall
307 N. State Street
Jerseyville, IL 62052

Hillsboro Agribusiness Tax Reform Seminar

Tuesday, February 20th, 7pm
Sievers Equipment Co.
8080 State Route 16
Hillsboro, IL 62049

Please RSVP to Sarah Wells at 618.656.1206 if you’d like to attend.

Reducing Employee Turnover

American workers’ median tenure with their employers is 4.6 years. However, younger employees (those ages 25 to 34) have a median tenure of only three years.* A revolving door of employees can be a major problem for companies.

Consider the Costs

If your construction firm has experienced high employee turnover, then you know first-hand the high costs of recruiting and training replacements. A study by the University of California** reports that it costs about $2,000 to replace blue collar and manual labor workers and up to $7,000 to replace professional and managerial employees.

But financial costs are not the only concern. Disrupted schedules, additional work for other employees, and high stress levels also can be problems. You can avoid the expense and the work associated with high employee turnover by implementing strategies that help new hires settle in and become valuable, long-term employees.

Mentor New Hires

Very few employees will hit the ground running. The majority will need time to adjust to learning new skills, absorbing company protocols and procedures, and developing new relationships. That’s why creating a structured process of welcoming and acclimating new employees can go a long way in increasing employee retention rates.

Consider assigning an experienced mentor or coach to each new hire for at least 90 days. Providing new hires with an organizational chart with names and titles that illustrates the company’s hierarchy is also helpful.

New hires need to know that they will have a future in your company. Providing them with a career development plan that outlines short- and long-term goals can help reassure them about their future prospects.

Over time, the mentor should introduce new hires to managers, supervisors, and coworkers to facilitate team building and encourage a sense of belonging. Also, it’s important that owners and managers deliver regular performance reviews, provide regular feedback, and answer any questions a new hire may have.

The ultimate goal of this process is to give employees the resources they need to do their jobs effectively and to help them reach their full potential. Engaged, motivated employees who feel their efforts are valued are more likely to be satisfied and productive long-term employees.

* U.S. Department of Labor, Bureau of Labor Statistics, News Release, Employee Tenure in 2014

** Arindrajit Dube, Eric Freeman, and Michael Reich (2010), “Employee Replacement Costs,” IRLE Working Paper No. 201-10, www.irle.berkeley.edu/workingpapers/201-10.pdf

“If your construction firm has experienced high employee turnover, then you know first-hand the high costs of recruiting and training replacements.”

Maximize the Impact of Your Company’s Website

Your company’s website is an important marketing tool. For many people, your website may be their first point of contact with your construction firm.

An effective website can help you generate business, establish your reputation for quality work, and showcase your company’s skills and abilities. However, you are not leveraging the power of the web if your site is tough to navigate, lacks contact information, and provides little in the way of content specific to your firm’s area of expertise.

You can maximize the marketing and branding power of your website if you:

  • Provide an easy-to-navigate and intuitive format
  • Create a mobile-friendly design for your site
  • Ensure your company is represented in keyword search results
  • Include contact information in a prominent place
  • Offer practical information that is relevant, up to date, and directly targeted at your market
  • Use pictures and graphics
  • Educate visitors with content that focuses on your company’s expertise and highlights the range of projects it can undertake
  • Display customer testimonials prominently

Delivering a steady stream of up-to-date, relevant content across different web platforms can help boost your website’s ranking in search engine results.

Developments in Tax and Business

Work Zone Safety Issues

Eighty-nine percent of highway contractors believe stricter enforcement of existing laws would reduce the number of work zone crashes, injuries, and fatalities, according to a recent survey by the Associated General Contractors of America. Highway contractors also said that a stronger police presence on highway work zones (85%), an increased use of barriers (79%), and more frequent safety training for workers (69%) would be beneficial.

Construction Employment by Occupation

There were more carpenters (516,340) than electricians (424,810) in the U.S. in 2014, according to data released by the U.S. Department of Labor’s Bureau of Labor Statistics. The data also shows that there were 697,980 construction laborers, 215,140 operating engineers and other construction equipment operators, and 180,640 construction managers.

Warning Signs in Your Financial Statements

A regular review of your company’s financial statements can help you catch warning signs that may alert you to future problems. Detecting problems early can help you prevent long-lasting damage to your firm’s financial health. Here are five warning signs you should be on the lookout for.

Issues with Available Cash

Cash flow is the lifeblood of a business. You should be concerned if your cash flow is insufficient to cover expenses because payments for a project are slow in coming. Another red flag is when your cash reserves accumulate rather than being spent. Excess funds may be parked in short-term investment accounts, but ideally, they should be used for ongoing projects.

High Underbillings Ratio

The underbillings-to-equity ratio measures the percentage of your business’s net worth represented by project work that is underbilled.

Essentially, it is a snapshot of the level of contract volume being financed by the owner. Substantial underbillings may be caused by inadequate estimating or poor billing systems.

Excessive Capital Expenditures

Since new equipment is such a significant expense, you need to carefully manage your equipment needs. Frequent purchases of expensive equipment may impede cash flow, raise debt levels, and limit your ability to take on new projects. In addition, consider how financing a large purchase could affect your ability to obtain credit for other needs.

Before committing to any large capital expenditure, you should analyze your upcoming cash needs and try to match purchases of equipment to existing cash flow. Or, you could consider leasing.

Leasing rather than buying equipment allows you to budget payments over an extended period. You may also be able to tailor the payment schedule to your normal cash flow patterns. Essentially, leasing is a good option if your cash flow is not as good as it should be.

Declining Gross Profit Margin

If you notice that your gross profit margin is shrinking over several periods, your production costs may be rising at a faster pace than your prices. Or, it may be due to the fact that you may be charging less for your services than in the past. Both possibilities present a real threat to the financial health of your business.

Receivables Growing Faster Than Sales

If your receivables are growing faster than sales, then this is a sign that your customers are not paying what they owe you in a timely manner. It’s also a sign that you should evaluate and potentially tighten up your collection procedures.

A good first step is to be proactive and consistent about issuing invoices and providing any necessary supporting documentation. In addition, contact customers as soon as you detect any delays in payment, and stay on top of accounts that are past due.