Monthly Archives: January 2015

How your construction contracts can help strengthen cash flow

cash flowAll businesses experience the ebbs and tides of cash flow at some time or another. But it can be particularly hard if your construction company is experiencing hard times. Fortunately, the very document you sign when starting a job can help you turn that tide around.

Pinpointing payment terms
Payment terms have an enormous impact on cash flow. A contract that calls for payment on completion of specified phases of the project, for example, creates uncertainty — making cash flow forecasting difficult. A contract that requires payment in equal installments over the course of a project provides greater predictability but may not correspond to your expenditures on the job.

It’s not unusual for a construction project to involve significant upfront costs. If possible, negotiate a “front-loaded” billing schedule that reflects your greater cash needs in a project’s early stages. You might also ask for accelerated payment methods, such as wire transfers or electronic checks.

Before you even start a job, assess the financial strength and creditworthiness of the owner as well as other contractors, suppliers and vendors involved. Doing so can give you a better idea of whether the payment terms are realistic.

In addition, many contractors find it helpful to prepare project-specific cash flow forecasts to get a better idea of how the payment terms will affect their overall financial positions going forward.

Negotiating retainage
A 5% or 10% retainage can easily defer your entire gross profit on a job until after completion. To reduce the impact on your cash flow, try to negotiate a lower percentage or ask for retainage to be phased out over the course of the project. For example, the contract might provide for 10% retainage, reduced to 5% when the job is 50% complete and eliminated when it’s 75% complete.

Clarifying change orders
Change orders are an inevitable part of most construction jobs. It’s critical that your contracts establish clear terms and procedures for approving and paying them. Train your staff to identify changes in the scope of work and to promptly prepare and document change orders in accordance with contract terms.

Avoiding disasters
Contracts often disallow requisitions for materials until the materials have been installed. To avoid cash flow disasters, try to negotiate requisition terms that allow you to request payment once materials have been delivered to the job site.

Remember that cash flows in two directions, and outflow is just as important as inflow. If feasible, don’t make payments to contractors, suppliers or vendors earlier than required unless you’re entitled to a discount for doing so. Try to negotiate payment terms that, to the extent possible, match your cash outlays with your receipts from the owner or general contractor.

Reading the fine print
When entering into a contract, it’s essential that you read every word, especially the fine print,  and clarify any ambiguous terms. Your financial advisor can help you apply these and other ways to ensure your contracts strengthen, rather than weaken, your cash flow.

The construction experts at Ciuni & Panichi have a number of ways to help with your cash flow.  Contact John Troyer at 216.831.7171 or for more information.

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Internal Controls

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Use These Three Tax Credits on Your 2014 Return

Tax extenders for businesses

calcThe Tax Increase Prevention Act of 2014 (TIPA) extended through Dec. 31, 2014, a wide variety of tax breaks, including many tax credits which are particularly valuable because they reduce taxes dollar-for-dollar.  Here are three credits that your business may benefit from when you file your 2014 returns:

  1. 1. The research credit. This credit (also commonly referred to as the “research and development” or “research and experimentation” credit) rewards businesses that increase their investments in research. The credit, generally equal to a portion of qualified research expenses, can be complicated to calculate, but the tax savings also can be substantial.
  2. The Work Opportunity credit. This credit is available if you have hired from certain disadvantaged groups, such as food stamp recipients, ex-felons and veterans who’ve been unemployed for four weeks or more. The maximum credit ranges from $2,400 for most groups to $9,600 for disabled veterans who’ve been unemployed for six months or more.  This can lead to big savings on your tax bill.
  3. The Sec. 45L energy-efficient new home credit. An eligible construction contractor can claim a credit for each qualified new energy efficient home that the contractor built and that was acquired by a person from the contractor for use as a residence during 2014. The credit equals either $1,000 or $2,000 per unit depending on the projected level of fuel consumption.

Wondering if you qualify for any of these tax credits? Or what other breaks extended by TIPA could reduce your 2014 tax bill? Contact Jim Komos at 216.831.7171 or for more information.

The tax experts at Ciuni & Panichi have been assisting organizations like yours for over 40 years, and we look forward to helping your company in the future.

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Save on your taxes by accelerating deductions

© 2015

Fraud and Your Employees’ Expectation of Privacy

Prevent Fraud – Write it Down

lockerEmployers can effectively reduce their potential fraud liability for violations involving workplace searches by lowering employees’ expectation of privacy in the workplace.  The best method that employers can use to lower this expectation of privacy is to adopt a written privacy policy that puts all employees on notice that the workplace is not private and require all employees to sign it.

Courts have generally ruled that when there is a written policy that usage of employee communications devices is subject to monitoring at work, employees have no (or a very low) expectation of privacy, and their devices may be subject to search.  This can, however, turn on a number of factors, such as whether or not the policy has been enforced in the past.
A written fraud prevention and privacy policy should be posted in a prominent place in the workplace and contain the following information:

  • Provide that, in order to maintain the security of the employers operations, management may gain access to and search all work areas and personal belongings, including desks, file cabinets, lockers, briefcases, handbags, pockets, and personal effects.
  • State that workplace areas are subject to surveillance and business phone calls may be monitored.
  • Make it clear to employees that the employer reserves the right to physically and digitally search any devices with storage or memory capabilities that they might bring to work and to make copies of any files found therein.
  • Notify employees that computer systems are solely for business use, and that the Company reserves the absolute right to review, audit, monitor, and disclose all matters sent over the system or placed in storage.  Computer systems specified in the policy should include Company email, internet, hardware, and software files.

In addition to a written fraud prevention and privacy policy, employers can use the following measures to limit their potential liabilities for violations involving workplace searches:

  • Requiring employees to provide keys to all personal locks
  • Retaining a key to all desks, lockers, file cabinets, etc.
  • Obtaining consent to search workplace areas.

As always, if there is a question of whether or not you’re allowed to perform a search of your employee’s possessions in the workplace, it’s best to consult with an experienced employment attorney first.

Reggie Novak is a Senior Manager in the Audit and Accounting Services Group.  As a Certified Fraud Examiner, Mr. Novak can assist you with prevention services including recommending internal controls and other measures to be implemented to prevent theft or misappropriation.  If fraud is suspected he can investigate and present his findings and recommendations.  Contact Reggie Novak at 216.831.7171 or for more information.

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Use These Three Tax Credits on Your 2014 Return

Save on your taxes by accelerating deductions

© 2015

Protecting Yourself Against Email and Internet Fraud?

cyber crimeDo more to prevent fraud.

Internet fraud is one of the most popular and widespread forms of cybercrime, with the Internet used increasingly to steal the identities and financial information of unsuspecting users.  Fraudsters use unsolicited email messages, as well as websites, social networks, chat rooms and message boards, in order to get access to the information they need.

Today, it is easy for criminals to create websites that look professional and generate emails that appear to be from legitimate sources.  These websites and emails may try to get you to provide private information that could be used to steal your identity, or trick you into paying them money.

There are definite patterns to watch out for, and armed with technical advice and common sense, it’s possible to prevent internet fraud from happening to you.  The following are a few ways you can protect yourself against email and internet scams:

  1. Check your bank statements: It’s easier than ever for fraudsters to go after bank details thanks to online banking; but, it’s also easier for users to check bank statements now that every detail is available at the touch of a button.
  2. Be careful when opening attachments: Think carefully before opening email attachments, especially when these come from senders that you don’t know.
  3. Keep your operating system (OS) and software up-to-date: This doesn’t just apply to your Internet protection software though; most software manufacturers, including your OS provider, regularly release security patches that make it more difficult for fraudsters to get hold of your details.
  4. Use a strong password: Choosing a strong password for all services you use (preferably a different password for each service) will make it harder for thieves to gain access to your details.
  5. Read the website’s privacy policy: If you are asked to enter any confidential or personal data, take a look at the site’s policy. If you do not trust the site, do not enter any details.
  6. Don’t give away your PIN code: Your bank will never ask you for your PIN code – over the phone, via email, or on the website.
  7. Open websites in new browser windows before entering personal details: Don’t enter any personal information if you’ve arrived on a website from an external link or pop-up ad, even on a real site.
  8. Use encrypted sites where possible: If the site is preceded by “https,” this is an indication that it has been independently verified and is a secure site.  A padlock symbol will also be displayed in the address bar, which means that any log-in or payment processes on the site are secure.
  9. Check for company email addresses: Banks do not correspond with their customers from email addresses provided by, yahoo, etc. – it’s safer to avoid sending personal details via email at all if you can avoid it.
  10. Destroy financial data when throwing it away: Ensure that you destroy any personal information before throwing it away by shredding bank statements and expired cards.

Reggie Novak is a Senior Manager in the Audit and Accounting Services Group.  As a Certified Fraud Examiner, Mr. Novak can assist you with prevention services including recommending internal controls and other measures to be implemented to prevent theft or misappropriation.  If fraud is suspected he can investigate and present his findings and recommendations.  Contact Reggie Novak at 216.831.7171 or for more information.

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Worried about tax fraud?

Donations and Tax Deductions
© 2015