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August 2014

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Welcome to CWB FootNotes

Greetings!

 

We hope that regardless of the nature of your business, you will find something useful in this newsletter. If you have questions about any of the topics covered in this issue, please feel free to call us for assistance. We thank you for partnering with us as, together, we strive for success in this fast-paced business environment.  
 How to Avoid Seasonal Bumps in Your Cash Flow

 

Many businesses operate with seasonal peaks and valleys. Retail stores will approach the holiday season soon enough. Construction contractors are busy when the weather is good.  Accountants are very busy from January through April, but they also experience a quarterly peak in July and October. 

 

Your business may have its own calendar of busy and slow times. If your business goes through slow times, then your cash flow may suffer at certain times of the year. But having seasonal sales is only one of the reasons for a bumpy cash flow. 

 

You might also have a business that receives annual payments for many items such as equipment purchases, software licenses, insurance renewals and other large costs. On the revenue side, it could be that your clients pay annually, which can be hard to predict. 

 

There are many solutions that can help smooth out the seasonal bumps, and here are a few ideas for your consideration.

 

Plan for Prosperity

When income and expenses go up and down, it's hard to know if you have enough money for the obligations you have coming up. Creating a budget can help a great deal. Consider creating two budgets: one that shows the ups and downs and one that averages a year's income and expenses into 12 equal parts. 

 

With both budgets, you'll be able to see which months will deviate from the average and by how much. From there, it's easy to create forecasts so you can stay on top of your cash requirements.

 

Cash vs. Accrual Basis 

It might help your business decision-making to convert your books from cash basis to accrual basis. This is a huge decision that should be made with an accounting and tax expert, as there are plenty of ramifications to discuss. 

 

In some cases, the accrual basis of accounting will help keep those annual payments from sneaking up on you, as 1/12 of the payment can be accrued on a monthly basis to a payables account. This also keeps a steady net income figure from month to month. 

 

If your clients prepay their accounts on a yearly basis, you can book the income monthly and keep the difference in a prepaid account. This spreads your revenues out and recognizes them over time. 

 

'Hiding' Money

If you feel accrual-basis accounting is a little too much of a commitment, your accountant can still work with you to help you avoid the impulse of spending too much during the cash-rich busy season. Perhaps the excess cash can be put into a savings account until it's needed. You can draw out 1/12 each month as you need it. A little planning, such as the above-suggested forecasts, will help you determine how much you can take out each month. You can even name the savings account "Do Not Spend!" or "Save for a Rainy Day." 

 

If it's just too tempting to have all that excess cash building up in the good times of the year, try one of the ideas above to take back cash flow control and smooth out those bumps.     

 

Still have questions or concerns?

Feel free to reach out so we can continue the conversation. Call 901-685-7500 or visit http://cannonwrightblount.com.  


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Are you an 'Ostrich Investor?'

 

"Ostrich" is a term often used to describe someone who prefers to put their head down and not deal with their finances.And it's more common than you think! If you sometimes struggle with managing your personal finances, you are not alone. 
  • According to a survey conducted by the National Foundation for Credit Counseling, one in four people wish they did not have to deal with their finances at all.
  • Only 8 percent of respondents said that they fully understand and know how to manage their wealth.
  • This feeling of helplessness when dealing with money is not uncommon, especially since less than half of the United States education systems require a personal finance course as a requirement for high school graduation. 
  • Financial habits are often passed down from parents to their children - which means that if a parent struggles with managing wealth, then the child is likely to do the same.

Chances are you or someone you know feels this way. If so, don't hesitate any longer - contact us today and let us help you learn to enjoy taking control of your finances.

 

Photo courtesy of CALI
 

Go Green with E-Statements

 

At this point in the year, we have been reviewing client accounts, and we would like to encourage you to go green with e-statements if you have not already done so.

 

Call the Schwab Alliance team at (800) 515-2157 to be walked through the simple steps to receive paperless billing. Of course, if you wish to continue receiving statements in the mail, you can certainly do so.

 

Please let us know if you have any issues.
 

To schedule an appointment with Red Door, please visit http://www.reddoorwealth.com/

 

Want more great wealth management information? Email [email protected] to sign up for The Entryway, Red Door's quarterly email newsletter. 

Issue: 30

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In This Issue
Featured Article
Red Door Wealth
Mike Wages Named CWB Partner
Media Coverage

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Mike Wages Named Partner at CWB

 

We are proud to announce that Mike Wages has been named as a third partner of Cannon Wright Blount.

 

Mike is a native of the Memphis area, has been a Cannon Wright Blount colleague for more than 10 years and has steadily worked his way up to secure a top leadership position within the firm. He began his career at Cannon Wright Blount as a senior associate within the tax department, and he was eventually promoted to manager, then senior tax director. Mike works with partnerships, individuals, corporations, S corporations, estates and trusts, providing tax and consulting services.

 

In his new role as partner, Mike will continue to work heavily in the management of the tax department but will also extend his duties within the firm to include business development, enhancing employee and client communication, and promoting internal learning and growth.

 

Many of you knew our late partner and friend, Richard Blount. Richard's tax knowledge and client commitment were second to none. You will be happy to know that Richard served as Mike's direct mentor. We know he will carry on the culture of excellence Richard worked to build.
 

Mike's partnership represents CWB's commitment to the next generation of leadership. We are confident that both our clients and our firm will benefit from Mike's energy and fresh ideas as we prepare for the challenges and opportunities ahead.

 

You can learn more about Mike on our website, and if you have any questions about this development within our company, please contact us at 901-685-7500. 

 
Media Coverage 
 
July 28, 2014 
Memphis Business Journal
People on the Move: Mike Wages

Aug. 9, 2014
Memphis Daily News

Aug. 13, 2014
Memphis Daily News
Featuring John Phillips of Red Door Wealth Management

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Contact Us 

 

Cannon Wright Blount 

756 Ridge Lake Blvd., Memphis, TN  38120

901.685.7500

www.cannonwrightblount.com