CFO Research Services, in collaboration with American Express, released a report last month titled Cash and Working-Capital Discipline, which describes the financial obstacles for the finance team at mid-size companies.
The report identifies the loss of bargaining power with vendors as the most prominent obstable to improving cash and working-capital:
"... companies seek relief from the pressure they feel on the sales and collections front by extending payments to their own suppliers and vendors, creating a ripple effect of more-robust collections efforts and extended-payment negotiations throughout the broader population of firms."
For help reversing this trend and increasing your bargaining power, contact KSM Profit Advisors.
KSM Profit Advisors, an affiliate of Katz, Sapper & Miller, helps companies increase profits and become more competitive by reducing costs through innovation and improved efficiency. For more information about how KSM Profit Advisors can help your company, contact Scott Grotjan at sgrotjan@ksmpa.com.
If your business is considering steps to "going green," grant money is available. The Indiana Department of Environmental Management's Recycling Market Development Program is designed to aid private businesses in purchasing equipment needed specifically to remanufacture recyclable materials into finished products or industrial feedstocks. The grants range from $25,000 up to $200,000 with a required 50 percent match.
Grant money that helps you reduce costs and is helpful to our environment. Everyone wins!
KSM Profit Advisors, an affiliate of Katz, Sapper & Miller, helps companies increase profits and become more competitive by reducing costs through innovation and improved efficiency. For more information about how KSM Profit Advisors can help your company, contact Scott Grotjan at sgrotjan@ksmpa.com.
When the Patient Protection & Affordable Care Act (PPACA) was passed in March 2010, a number of mandates became law. While some of these mandates have been widely discussed – such as the employer requirement to provide affordable health coverage and the requirement for individuals to buy health insurance by 2014 – other directives are not as well known. One of the lesser known mandates is the act’s new Form W-2 reporting requirement. Effective for 2012 W-2s, employers must report the cost of coverage under an employer-sponsored group health plan.
To learn more about the new reporting requirement, view the full article on our website.
As part of an ongoing series co-sponsored by Katz, Sapper & Miller's Transportation Services Group (KSM), KSM Transport Advisors and Scopelitis, Garvin, Light, Hanson & Feary, KSM recently hosted a Trucking Owners Business Roundtable.
The roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses.
In their presentation to attendees, Thom Albrecht, managing director, BB&T Capital Markets, and Mark Davis, partner and senior analyst, Cleveland Research Company discussed the 2012 economic forecast for the trucking industry. Time was also spent discussing the results of a recent benchmarking survey.
View a video replay of all of the presentations here.
A new tax reporting obligation is being imposed on U.S. individuals that have an interest in specified foreign financial assets when the total aggregate value of those assets exceeds an applicable reporting threshold. This reporting obligation is effective starting for tax year 2011 and is satisfied by attaching Form 8938, Statement of Foreign Financial Assets, to the individual taxpayer’s 2011 Form 1040. The penalties for failing to file a required Form 8938 are severe. Thus, U.S. individuals with interests in foreign assets must carefully analyze their potential obligation to report such interest on a Form 8938 attached to their 2011 Form 1040.
To read more about this new reporting obligation, view the full article on our website.
On February 1, 2011, Indiana Governor Mitch Daniels signed into law a right-to-work bill, which makes Indiana the 23rd state in the U.S. to become a "right-to-work" state.
In simple terms under the new law, individuals are neither required to nor prohibited from becoming members of a union. The law makes it a Class A misdemeanor to require an individual to become or remain a member of a labor organization, or pay dues, fees, or other charges to a labor organization, as a condition of employment. The law also establishes a private right of action for violations, including the ability to obtain damages, civil penalties, and attorneys’ fees.
Governor Mitch Daniels was quoted after signing the bill:
Seven years of evidence and experience ultimately demonstrated that Indiana did need a right-to-work law to capture jobs for which, despite our highly rated business climate, we are not currently being considered. ... This law won’t be a magic answer, but we’ll be far better off with it. I respect those who have objected, but they have alarmed themselves unnecessarily: No one’s wages will go down, no one’s benefits will be reduced, and the right to organize and bargain collectively is untouched and intact. The only change will be a positive one. Indiana will improve still further its recently earned reputation as one of America’s best places to do business, and we will see more jobs and opportunity for our young people and for all those looking for a better life.”Only time will tell what the impact will be on Indiana's manufacturing sector and the overall economic environment of Indiana.
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
Five cardiologists are girding for a defense of their choices in practicing medicine around the use of stents for their patients. Specifically, a whistleblower lawsuit filed by a fellow physician states that these five physicians violated the False Claims Act by submitting claims to Medicare for services that were not medically necessary or in some way overbilled.
A link to the story can be found
here.
The accusation in part stems from the relator's belief that there were a number of high volume referring physicians that the hospital (University of Pittsburgh Medical Center - Hamot) identified and paid significant fees under "sham" medical directorships. This obviously implies there was either no bona fide services performed under the medical directorships or there were no independent healthcare compensation studies ordered.
Stark compliance requires that compensation paid be established in a way that does not take into account the value or volume of referrals. Therefore, fees paid under medical directorships are typically awarded based on expected or actual hours of service a physician provides for which a hospital has a need and receives appropriate benefits. (Tripping up on the Stark rules brings in liability under the False Claims Act, which is why the medical director issue is tied into the whistleblower lawsuit.)
If this matter gets litigated, I will be watching to see if any outside fair market value analysis was performed on the medical directorships or if any coding and billing reviews were performed as a part of the hospital's compliance program--that could make or break the case!
As many accountants work through their education, they learn about the Committee of Sponsoring Organizations of the Treadway Commission (COSO)'s framework for internal controls. This framework has been the guiding foundation for creating internal control policies and procedures in the outstanding majority of business throughout the world. The framework that COSO created was originally issued in 1992. Businesses and the way that business is done have evolved significantly since 1992 as they are more complex and tend to run at a faster pace today than they did in 1992.
With the ever-changing world of business in mind, COSO has decided that it is time for an update to the framework that has guided many accounting professionals for the past 19 years. COSO chairman David l. Landsittel sums up the need for an update best with the following statement:
"Issued in 1992, the COSO Internal Control-Integrated Framework has become the most widely used internal control framework in the world. The key concepts proposed in our original framework are timeless, yet the changes we have seen in the business and operating environments have driven the need for this update. The update should allow organizations to more effectively utilize the framework to develop and maintain systems of internal control in support of their long-term success"
The five components of the COSO framework (control environment, control activities, risk assessment, monitoring and information and monitoring) as well as the definition of an internal control will remain the same. The most significant change comes from codifying the internal control concepts in the original framework into 17 principles along with their supporting attributes. It is hoped that this structure will help organizations to apply their judgment in managing risk and improving their performance in the ever changing and complex business environment.
COSO has asked for practitioners to submit commits about the exposure draft of the updated framework. The exposure draft in full can be found on COSO’s site. Comments can then be submitted here. The deadline for comments is March 31, 2012.
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
Twain is attributed with a quote that goes something like this: "Rumors of my demise have been greatly exaggerated." Although there is some debate whether this actually his quote, I cannot help but think of it when I hear people state that management arrangements are out of style.
That is, I believe the demise of the management company / co-management arrangement has been greatly overstated. While there is a great deal of physician employment by health systems and hospitals, a number of my clients either cannot or strategically do not wish to employ physician specialists. In many of these cases, utilizing a physician co-management arrangement is an efficient and effect method of clinical integration and physician alignment outside of the large run of healthcare mergers and acquisitions occurring in the marketplace.
I am personally working on five active management arrangements in various forms of development / fair market value analysis. Additionally, my firm has proposed on valuing the compensation for several others in recent months. So, based on my view of the market, clinical co-management arrangements are not only alive and well, but still a valuable tool for hospital-physician alignment.
Management arrangements are a much smaller capital investment commitment for hospitals and physicians and provide more flexibility in terms of terminating the relationship if results are not in line with expectations. Although it may not be the right fit for your situation, I believe they still have their place in the hospital-physician alignment playbook.
If you see it differently, please leave a comment and share your perspective!
Recently, the
Indianapolis Business Journal spotlighted a study on emergency room utilization patterns. The general conclusion was that there is much less loyalty towards one hospital or health system than previously assumed.
The full article can be found
here.
What this story did not dwell on was the need for regional technology alignment for healthcare providers. Based on this study, I believe that vehicles such as health information exchanges ("HIE") are more important than previously believed in terms of saving lives and managing the total healthcare spend.
The findings are evidence that HIEs can foster meaningful clinical integration across health systems and may be a cheaper, more efficient way to bend the cost curve and improve quality than all of the recent healthcare mergers and acquisitions.
Much of the health reform legislation had staggered starts, including the so called "sunshine" provisions around disclosure of financial relationships. There are a number of interesting implications under the proposed rules around Stark and fair market value compliance.
A quick summary is that companies providing remuneration to physicians beyond very minor incidental benefits will have to make a public disclosure of the activity. Even for unintentional non-disclosure, fines range from $1,000 to $10,000 per incident and go up by a factor of ten for intentional non-disclosure.
A full write up can be
found here.
You can expect hopeful qui tam relators, attorneys general and other enforcement agencies to be mining the data to see where compensation is out of line with the related activity. For instance, compensation of $3,000 for attending a local, half-day weekend seminar may actually be an activity designed to induce a referral and therefore a disguised kickback. Companies out there providing legitimate education might want to invest in a fair market value opinion or some other valuation to ensure compliance if scrutiny is applied to their business activities.
In June, 2011, President Obama announced the launch of the Advanced Manufacturing Partnership (AMP). The AMP is an effort by the federal government to partner with manufacturers in industry and academic experts to invest in ways it improve or "advance" the U.S. manufacturing industry. The plan calls for more than $500 million to help start the efforts. President Obama announced the following key steps are being taken by the government to ensure the success of the AMP:
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Building domestic manufacturing capabilities in critical national security industries
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Reducing the time to develop and deploy advanced materials
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Investing in next-generation robotics
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Developing innovative energy-efficient manufacturing processes
Over the past few years, many Americans have lost jobs with strong manufacturing companies. Professors at Massachusetts Institute of Technology (MIT) are hoping that the efforts of the AMP program are able to restore many of these jobs. The goal is to create an environment through partnerships with government, academia and private industry to create new means of manufacturing more for less, therfore increasing manufacturing profitability.
MIT political scientist Suzanne Berger says, “This isn’t just about ways of moving widgets around. What we’re talking about is a whole new set of technologies.’’
The work at MIT and other universities is already beginning to impact the current manufacturing environment. MIT labs sparked the idea that created the lithium-based batteries that are now beginning to truly impact the auto manufacturing sector. MIT has created a strong working relationship with five other universities with the hope that the more academia involved, the more impact there will be. Only time will tell how successful the AMP initiative will truly be, but as Jason Miller, assistant to President Obama, states in a recent speech at MIT, it's not about the past. It's about the future.
"It's not about some desire to return to a romantic notion of the past, of what manufacturing was," Miller said. "It is about a fundamental recognition that without a robust and vibrant manufacturing sector, it's going to be difficult for us to sustain a robust and innovative economy."
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
Ideally, the title to this article caused you to pause and consider the concept. What happens when you don’t know what you don’t know?
Most companies feel secure in what they’re paying for products and services when, in reality, what they’re paying is likely well above market price. Helping companies better understand this is the basis for our cost reduction and profit-improvement work.
One of the most powerful tools that comes from cost reduction consulting is benchmarking – the knowledge of the market price that similar companies are paying for the exact same product or service. How does the price that your company pays compare to the market price? This benchmarking process involves many facets such as bottom-line price, contract compliance, incentives, and efficiency improvements. In order to improve, you first have to measure where you stand today.
Here are two examples of recent profit improvement programs that our team implemented:
- A logistics company engaged us to review a handful of expense categories, including forklift propane. During our discovery phase, we uncovered two crucial areas that would result in significant cost savings. The first, their CPA firm (not Katz, Sapper & Miller) overlooked a credit that was available on forklift propane. Once corrected, our process resulted in significant savings. The second was the actual price for forklift propane. Our work in this area will save them almost six figures annually. Combined, our client will enjoy more than $500,000 in profit improvements.
- A physician practice group used a laundry service to launder their lab coats, patient gowns and facility linens. The prices and components of their vendor invoice were ripe with opportunity. We corrected these, and this client is now realizing a consistent savings of 48% each month.
Our cost reduction work is done across most expense categories, and we have clients all over the United States. Many times we will see a vendor offering “something better” in another geographical region. Our work will help bring these savings back to you.
Many times our clients tell us, “We never would have found that on our own.” When we hear this, it always brings us back to the beginning – what happens “when you don’t know what you don’t know”?
What you don't know could be costing your company; perhaps significantly. Accept your blindness and you might well have better sight.
KSM Profit Advisors, an affiliate of Katz, Sapper & Miller, helps companies increase profits and become more competitive by reducing costs through innovation and improved efficiency. For more information about how KSM Profit Advisors can help your company, contact Scott Grotjan at sgrotjan@ksmpa.com.
A recent report from the Institute for Supply Management (ISM) has indications that the manufacturing sector will lead growth in the overall economy during 2012. The ISM report shows that most manufacturing forecasting plans show growth in purchases (an anticipated 5.5% growth for 2012) and in capital investment (an anticipated 1.9$ growth for 2012. While growth during 2012 is anticipated, it might not be to the same extent as what actually occurred in 2011. However, growth is growth, and it is far better than the alternative. The ISM report is also forecasting an increase in sales of approximately 7% and an increase in employment of approximately 1.3% for 2012.
“Manufacturing has demonstrated its resilience throughout this challenging economic recovery period, with consistent growth dating back to August of 2009,” Bradley Holcomb, chairman of the group’s factory survey, said in a statement. Manufacturers “expect to see continued growth in 2012.”
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
Most of us grew up learning that to be truly successful and to find a great job we needed to earn a four-year college degree. We learned that there were exceptions to this rule (Bill Gates), but those were few and far between. However, a recent survey by the
National Association of Manufactures (NAM) suggests that this may not be the case among manufacturers.
The survey found that even in a receding economy, approximately 1/3 of NAM members are still looking to employ individuals with a two-year technical degrees. As employers continue to look at effective ways to increase manufacturing profits while maintaining a high level of quality, employing individuals with a two-year associate's degree (compared to a four-year bachelor's degree) starts to become a viable option.
The information in the NAM survey should be looked at and considered by many individuals including high school students, manufacturers, and policy makers, especially given the current state of unemployment in the United States. Students that are not interested in a four-year college degree should strongly consider a two-year technical degree. Manufacturers should continue to encourage growth in this sector by including the hiring of individuals with two-year technical degrees in their manufacturing business plans. And finally, policy makers that have thus far focused their efforts on getting individuals into four year colleges, should start to look at incentives for two-year trade schools.
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
"Right to Work" legislation has been a hot topic in Indiana for some time, and it is one that could have a large impact on the manufacturing sector.
The Indianapolis Star recently ran an
op ed authored by Brian Bosma, speaker of the Indiana House of Representatives, regarding this very issue:
With my recent announcement that attracting more jobs to Indiana will be the top priority for the upcoming session, folks on both sides of the worker freedom issue are speaking out. Notwithstanding the rhetoric and scare tactics, it's time for straight talk about making Indiana the 23rd right-to-work state in the nation.
While Indiana ranks near the top on virtually every state ranking for job creation environment, the national malaise has kept our unemployment rate hovering at around 9 percent. Despite the state's strict fiscal discipline and innovative job creation measures, some 275,000 Hoosiers who want work can't find a job, and tens of thousands more are underemployed. The job prospects for young college graduates are dim, and nearly a quarter of returning veterans are without jobs. These are grim statistics.
After a summer study committee found that nearly half of all national employers specify "right-to-work states only" when considering their expansion opportunities, and after testimony from economic development experts that Indiana has lost substantial employment opportunities for the same reason, it's time to move forward with a Hoosier Right to Work Act.
Read the complete editorial
here.
Bosma essentially takes a complicated issue that could have a large impact and breaks it down to a simple idea: Workers should have the right to choose whether they join a union and that the payment of union dues cannot be a manditory requirement of employment. Is it really that simple? This issue could potentially have a large impact on the Indiana manufacturing industry as manufacturing companies consider budget and workforce implications.
While the outcome is yet to be determined, this piece of legislation is one that manufacturers should keep a close eye on.
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
Multiple sources have shown growth in the US manufacturing sector during the month of November. In fact, some of theses sources note that the manufacturing sector grew faster in November than October. Either way, signs of growth are encouraging given the current economic state.
- Christopher Rugaber writes for the AP, "Factories are producing more. Construction is growing. Americans are buying more cars. The holiday shopping season is off to a strong start. Normally, all that would suggest a bright outlook for the economy. Problem is, employers still aren't hiring much, the number of people seeking unemployment benefits remains high and Europe's debt crisis poses a grave threat to the future."
- Josh Mitchell reports in the Wall Street Journal that the U.S. was just one of a few large economies where manufacturing grew faster in November than in October. In the U.S., the ISM index rose to 52.7 in November from 50.8 in the previous month. A reading above 50.0 indicates the sector is expanding.
- BBC News reports, "According to the ISM report, manufacturing sectors that reported growth included textiles, electronics, and food and drinks. Chemicals, transport equipment and machinery were among sectors that contracted."
- Finally, Bob Willis reports in Bloomberg News, "Corporate purchases of new equipment, export demand, stronger consumer spending during the holidays and leaner inventories lay the groundwork for a pickup in production. At the same time, risk of recession in Europe may restrain US manufacturing, the industry that spurred the recovery."
Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.
In the midst of a huge wave of physician integration, a very important regulatory compliance requirement regarding compensation is showing up in every transaction: fair market value. This is often a source of frustration and misunderstanding in the negotiation process.
This article excerpted from
Physician’s Money Digest. For the full text,
please click here.
Randy Biernat is a director in Katz, Sapper & Miller's Healthcare Resources Group. For more information, contact Randy at 317.844.4851 or rbiernat@ksmcpa.com.
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