When your Customer becomes your Competition-Customer Management

David Looking Into the Eye of Goliath
In an article in the Wall Street Journal (August 24, 2014) Amazon is preparing to challenge Google in the Advertising business. According to the article, Google Adwords brings in $50 billion and Google counts Amazon as one of their biggest customers. This raised a question to us when we read the article: What do you (your company) do when your biggest customer turns into your biggest competition?

We often hear the adage, “Don’t put your eggs in one basket” but what if it’s one large egg in one of several of your baskets? Will that make a big enough difference to your Gross Profit?

With all these questions spinning around, you need to take a long, hard look your sales reports and Accounts receivable report. We will break these down for you over the course of several blogs:

1)    Sales by Customer.

In Quickbooks, this report is by Summary or Detail. Select Summary. Select a period, preferably a 6 month or more period. Then add the percentage option to the report. In QB that would be Modify Report, % of column. Now sort by Amount with the highest customer on top. What do you see? The case we are looking at while writing this blog has 9 customer representing 17% of their income. For this business this is good. The sales are spread out evenly. No one customer is spiking, the work is slow but steadily growing.

Now look at the bottom of the list. Those are the small customers. Are they worth the time invested to keep those customers accounts open? Perhaps you should consider setting a minimum order policy to eliminate your company being nickled and dimed. We have one client who gets large orders from large clients, then really small orders from small clients. There are no in-between clients. This is not a healthy balance.

What is the balance of your Customer sales ratio and who are your biggest customers? We’ll talk more about this in our next blog.

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Full Maturity

Double Self-Portraig with Old Man

Recently Ben Fritz wrote an article in the Wall Street Journal (May 21, 2014 issue) reporting on Redbox’s sales plateauing. One analyst stated Redbox “has reached full maturity.” Redbox’s owner, Outerwall, Inc, reports that 86% of their income is tied to Redbox sales. With so many alternative home entertainment options, what is Redbox to do? The article addresses some of the things Redbox is trying.

We would like to encourage you to take a Redbox look at your Company and ask the following questions:

  • Do you currently sell a product or service that has a defined life span?
  • From where is most of our Revenue coming? Do you have one big product you are selling and all of your income is from that? We call that putting all your eggs in one basket. What if that basket gets squashed?
  • How can you diversify your Revenue streams with existing assets and resources your company has on hand? Example: If you sell Consulting services for Marketing, consider adding Product Placement research to your service roster.
  • Who is your company’s competition? What are their sales forecasts and what are they doing to increase their revenues?

Reviewing your Company’s financial statements, the Balance Sheet and Profit & Loss Statement (P&L) regularly will tell you what products are selling well and what products are slowing down. Do comparisons of the P&L within your accounting software. Look for patterns between years and break them down to even quarters to see where your peaks and valleys are in your sales.

Don’t let your company be the next Blockbuster that sailed away. And watch for signs and plan ahead to avoid the Redbox effect of “full maturity.”

Posted in Accounting Tips and Tricks, Bookkeeping, Current News, Frequently Asked Questions, Quickbooks, Taxes, aging, business, cash flow, help, how do I, old, running a small business, small business, wall street journal | Leave a comment

Corporate Compliance Center Annual Minutes Notice

We and many others are in receipt again of a form by Corporate Compliance Center about an Annual Minutes Compliance Notice. This is a bogus request for your money and information. As a business owner, before responding to any notifications in the mail (let alone emails), please do an internet search to see if the company is legitimate. Our clients have been receiving these notices for years. Although bogus, CCC has been allowed to continue as a business and not be shut down by the government because they do state at the bottom of their notices, “This product or service has not been approved or endorsed by any government agency…”

Here is the real truth: If you are a corporation, you are suppose to be having annual meetings (and sometimes more often), per your By-Laws. At the meetings you name the Officers and Directors, among other things you should discuss. This bogus form merely asks you to fill in the officers and directors and calls those “minutes.” That is not sufficient. But it does provide Corporate Compliance Center an easy $150 of your money to send you a nice form based on the information you filled out on the Notice they sent you. We estimate they are making about $600 an hour popping out these forms to ill-informed consumers. Please shred the notice when you get it or better yet, forward to your attorney or accounting consultant for review to ensure you don’t pay for something you don’t need.

We did a quick internet search and came up with many links to learn about this scam.

Here is a copy of the notice for your reference.

Corporate Compliance Center

Shred this paper

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Art of Accounting: The color of Relationship

In the Mist by Igor Zenin. Used with permission

This post is along in waiting. The Art of Accounting, as I mentioned, is about Relation, Space, and Effectiveness.

The Relation of Accounting is what your business is telling you. Are you close to your accounting, do you know it intimately? Or are you a stranger to your accounting? I realize a lot of our readers are afraid of accounting and the thought of being close to it, well… makes them cold and distant. Like any relationship, you need to spend a little time with it. Don’t go overboard and try to “learn” about the relationship in a long weekend. Instead, take some time each day to spend with your accounting. Think of the transactions you enter into your acounting software as “trees” and those trees create a “forest” of a story for you. Reflect on the bank balance. Look at your Accounts Receivable. Learn to relate to the reports found in the art of accounting.

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Accounting as Art

I catch my breath sometimes when I look at certain art. Van Gogh’s Starry Night does that to me every time. Some Degas and even Dr. Suess can stir my senses. What makes art Art for me? Well I could rattle off a lot of things that my art teacher in college taught me: Shapes, Shadows, Angles, Layers. But what drills down to me as Art is the beauty of how well it fits.

You could call it ambiance but that is not the right word tone for what I mean for Art. It’s really several ideas all wrapped up into the Art. Let me throw out some thoughts: Placement, Relation To, Space, Effect (as opposed to Cause). Here’s an example: If I hung Van Gogh’s Starry Night on a wooden pole in my front lawn it would soon lose its shape. The sun and moist air would bear down on it. The wind would whip it around. The trees and flowers around it would not appreciate the picture’s beauty for it is too different from their intrinsic beauty. And the neighbors would think I had money to burn for putting such a piece of art on a pole on my front lawn.

I say this all to build up to my idea that I think Accounting is a form of Art. I realize this is a bold statement but allow me to elaborate more in this blog and future blogs. Double-entry accounting, the formulaic process of debits and credits, was first invented by Benedetto Cortugli as a means to record trade. Frater Luca Bartolomes Pacioli took Cortugli’s ideas (giving him credit for it of course) and refined it to the double entry accounting method we know practice. How well Accounting fits in Relation to business, the Space it requires to grow and become Effective is more Artful to me than some of the strange placements of black strokes I’ve seen placed on white canvas.

In my next blog about this subject, I will endeavor to “paint” Accounting in such a way that perhaps you too will see the Art in it.

Posted in Accounting Tips and Tricks, Bookkeeping, Current News, Frequently Asked Questions, Quickbooks, Relationships, What if, art, how do I, running a small business, small business | Tagged , , , , , | 1 Comment

Website help a crap shoot?

At least once a week I hear a vendor tell one of our clients, “Oh, just log on to our website, download the form, fill it out, and send it to us asap.” No directions, no human contact to walk you through the form process, nada. And God forbid someone come to the office, sit next to you and explain what you are signing How much time are these companies saving by having the customer do all the reading, education, and follow through? And yet the vendors still charge the same rates. Their fees have not gone down in relation to the lack of customer service. Just the opposite; fees have gone up and service has gone down. Here is today’s example:

Guidant Financial set up our client, John Smith Company (JSC) with a 401k plan back in 2010. The paperwork was half done and the sales person went on to the next prospect. A year and a half later, Guidant sends computer generated letters and emails telling John he has to do this and that and submit to Guidant. Meanwhile, Guidant has been charging $90 a month for an empty 401k plan. Now a May 15th deadline looms so I call Guidant and talk to a human who sends another email requesting completion of three forms, a log in project to complete another form, a request for a CPA to verify some financial info, and all this asap. Do you think John is going to get a rep to come down and explain these highly sophisticated, highly legal forms? Nope!

I would not stay in business one day if I instructed my clients to fill out my paperwork, log on to my website and download forms, all without a scrap of explanation what it all means.

To be fair to Guidant, I have yet to work with a 401k administrator I like. Mass Mutual, Nationwide, Paychex, and Principal are just as bad. I was just hoping Guidant was the exception instead of the norm.

Caveat: Don’t fall for the “log on” trick. Get a sales rep who will walk you through the process to its completion; make them earn their keep.

Posted in Accounting Tips and Tricks, Bookkeeping, Current News, Frequently Asked Questions, Relationships, What if, help, how do I, office help, running a small business, small business | Leave a comment

Paychex finally helps; Part IV

This is the final installment, Part IV, of Bob Jones’ headaches with Paychex and handling his payroll for Bob Jones Company (BJC).

Refreshing the story from February, Business-keepers Consulting (BKC) was hired by Bob Jones Company (BJC) to handle bookkeeping needs. BKC discovered that Paychex was not handling BJC’s Florida payroll tax issues and BJC received a FL notice for $2400.

In March Paychex made some concessions with BJC to fix the problem with FL and get FL to reduce the penalties down to $750.00 from $2400.00. Paychex still expects client to pay the $750.00. It was our recommendation that Paychex provide free payroll service for a year to make up for this gross negligence.

Moral of story: Just because you hire a payroll service to do their job doesn’t mean they will do it. They will always expect you to know the facts and be liable for any mistakes they make.

Is there a better payroll service out there? Yes; usually the smaller companies are better because they treat their employees better. It’s all about how much the employees care.

Does your payroll service care?

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Paychex: an indifferent company – Part III

This is Part III of Bob Jones’ headaches with Paychex and handling his payroll for Bob Jones Company (BJC).

Resuming our episode, Bob hired Paychex to handle the payroll for his company, Bob Jones Company (BJC) several years ago. I left off my last blog with Paychex offering the Power of Attorney (POA) but still assuming BJC was filing its Florida (FL) tax returns manually since Paychex still didn’t bother to get BJC set up to file electronically. And BJC assumed Paychex was filing electronically.

Once I discovered this indifference on Paychex’s part, I help the client process the Power of Attorney (POA) form from Paychex, got the client to sign and send it back to Paychex in July 2011. I also had the client sign, cut checks and mail the FL tax returns that had not been mailed for two years along with the money for the taxes, which was only about $200 total.

Another quarter passes and the client assumes Paychex is filing the FL return. I check and sure enough Paychex had not filed the return electronically and said they have not received proof of the FL ID number. I follow up again with the client and he was unaware of this continued indifference with Paychex. I obtained a paper copy of the return from Paychex and helped the client process it manually.

In early January I discovered yet another FL quarterly return had not been electronically filed by Paychex because George still had not received proof of the FL ID and indifferently had not bothered to check with the client as to why there is a delay. I relentlessly insisted that Paychex call FL directly and ask for the proof. Paychex had the POA for over six months now, so why could George just call FL himself and get the ID? I did not have the POA, and I did not process the payroll so it was mute for me to call. On January 10, 2012, within an hour—an hour—Paychex had obtained the proof (that they had needed for two years) to now start filing the FL quarterly returns electronically.

This ended an eight month battle with Paychex’s indifference to their client’s payroll needs. The client had to pay a third party, BKC, to watch over Paychex’s cavalier attitude towards service and now FL wants $2400 in penalties. The taxes are already paid but FL charges $300 per quarter for each late filing and there were eight late filings (2 years’ worth of non-electronic filing) because the client was expected to file paper copies and wasn’t aware of this.

I have asked Paychex to pay the $2400 penalty; they still have not responded to this request.

What is your viewpoint on payroll services?

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Corporate Compliance Center–a “certificate” not worth its paper.

This is a cheesy form from Corporate Compliance Center. I am not an attorney and therefore do not claim to provide legal services. However, I do know that corporations are supposed to have annual stockholder meetings and take minutes documenting what was discussed at the meetings. Also, the state of California requires a Statement of Information be filed annually that discloses Officers and Directors and charges $25 to process this required statement.

There is a company out there called Corporate Compliance Center (CCC). The owners of this company have found a little, sneaky niche that is probably making them a fortune. They send out a form they created called Annual Minutes Compliance Notice to corporations. The form looks official and tells you some of the legal requirements of maintaining your corporation. It leads you to believe this form is in lieu of minutes at stockholders meetings and basically asks all the questions that the Statement of Information requires. Oh, and they charge you $150.00 to “process” your compliance and in return you get this cheesy “certificate” on some fancy paper with a two-bit seal.

The State of California has nothing to do with this company that calls themselves Corporate Compliance Center and yes, you still have to complete the annual Statement of Information. The fact that the form CCC sends is called Annual Minutes Compliance Notice and yet there are no minutes of the stockholder meeting is a tip off that this company, CCC, is in the business of being sneaky. I have included an image of this form from CCC for your reference. We recommend consulting with legal counsel about your corporation’s legal needs and not falling prey to CCC’s “compliance” gimmick.

Does your company receive other forms in the mail of which you are not sure of their validity?

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Paychex: an indifferent company – Part II

Go Climb a Tree

This is part two of Bob Jones’ headaches with Paychex and handling his payroll for BJC.
Resuming our episode, Bob hired Paychex to handle the payroll for his company, Bob Jones Company (BJC) several years ago. BJC is a California corporation but has an employee in Florida (FL). When BJC added this FL employee to its existing payroll, no one at Paychex bothered to ask Bob to complete a form to apply for a Florida ID number (IDN). This IDN is typically requested from any state with which you have payroll. It ties your company name to a number so the state can keep track of your tax liability.

So now, the scene is set that BCJ thinks Paychex is handling the payroll tax return filing and payment for FL and Paychex is indifferent to whether or not it is being handled by the client. In walks Business-keepers Consulting (BKC) which was hired in May 2011 to get BJC accounting in order and maintain it on Quickbooks (QB). Upon reviewing the payroll, we discovered FL hasn’t been paid and now the tax notices are rolling in. Paychex states they cannot file a Florida IDN on behalf of the client and provides a Power of Attorney (POA) to give Paychex power to deal with Florida payroll issues. This suggestion of a POA for FL is two years after the Florida employee was hired and at no time is it mentioned that this POA could help them solve this FL ID issue. Paychex just realized they should have one on file.

What does this look like to an outsider peering in? Paychex calls our client every other week to run payroll. Every two weeks for two years (26 x 2), 52 times, the Paychex payroll representative, whom we will call George, called and asked for payroll but never once followed up and asked how the Florida IDN is coming along.

Have you had problems with Paychex’s indifference? How do you view customer service through the eyes of your customers?

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