Category: Blog

Tax Planning 2024

Tax Planning 2024Personal Income Tax Planning Strategies for Year-End 2024

As 2024 draws to a close, it’s the perfect time to review your personal income tax situation and implement strategies to minimize your tax liability for the year. Proactive year-end tax planning can lead to significant savings, as well as ensure that you take full advantage of tax credits, deductions and other opportunities available to you.

1. Maximize Contributions to Retirement Accounts

One of the most effective ways to reduce your taxable income is by contributing to tax-advantaged retirement accounts. In 2024, you may contribute up to $23,000 to a 401(k) or similar employer-sponsored plan, with an additional $7,500 catch-up contribution if you’re over age 50. These contributions are made pre-tax, meaning they reduce your taxable income for the year, potentially lowering your tax bill.

Similarly, if you’re eligible, consider contributing to an IRA. For 2024, the maximum contribution limit for a traditional IRA and/or Roth IRA is $7,000 ($8,000 if you’re 50 or older). Contributions to a traditional IRA may be tax-deductible depending on your income and whether you or your spouse are covered by an employer-sponsored retirement plan. If you’re not eligible for deductions due to income limits, consider a Roth IRA, where contributions are made after-tax, but qualified withdrawals in retirement are tax-free.

2. Take Advantage of Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)

If your employer offers a Flexible Spending Account (FSA), use the remainder of your FSA funds before they expire. FSAs allow you to put away pre-tax money to cover medical expenses, and the limit for 2024 is $3,200. Depending on your employer’s plan, unused funds may be forfeited after the year-end, although some plans may offer a grace period or carryover option for a small portion of the balance.

For those eligible for a Health Savings Account (HSA), contributing the maximum allowable amount can provide immediate tax savings. For 2024, the HSA contribution limit is $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution for individuals age 55 or older.

3. Harvest Capital Losses

If you’ve realized capital gains in 2024, it may be beneficial to offset those gains with capital losses. Known as tax-loss harvesting, this strategy involves selling investments that have declined in value to realize losses, which can be used to offset your capital gains. If your capital losses exceed your gains, you can use the remaining losses to offset up to $3,000 of ordinary income ($1,500 if married and filing separately).

Make sure to consider the “wash sale” rule, which disallows a deduction if you buy the same or substantially identical security within 30 days of selling at a loss. This rule is meant to prevent taxpayers from selling assets for tax benefits and then repurchasing the same assets immediately.

4. Bunch Charitable Contributions

If you’re planning to make charitable donations, consider bunching your contributions into one year to exceed the standard deduction threshold. This strategy allows you to itemize deductions for one year by making larger charitable contributions in a single year while taking the standard deduction in the following year. The standard deduction for 2024 is $29,200 for married couples filing jointly and $14,600 for single filers, which means if your itemized deductions do not exceed these amounts, you may benefit from grouping two or more years’ worth of charitable donations into one year.

5. Review Your Tax Withholding

As the year ends, review your tax withholding to ensure you’re not over- or under-paying throughout the year. If you’ve had a major life change in 2024, such as marriage, divorce, a child or a new job, adjusting your withholding can prevent underpayment penalties or a large tax bill. You can use the IRS Tax Withholding Estimator tool to assess whether your withholding is on track or, if necessary, submit a new Form W-4 to adjust your withholding for the final paychecks of the year.

6. Plan for Estimated Taxes if Self-Employed

For self-employed individuals, it’s important to ensure you’ve made sufficient estimated tax payments throughout the year. If you expect to owe additional taxes for 2024, you may want to increase your final estimated payment by Jan. 15, 2025, to avoid penalties. You can calculate your estimated tax liability using Form 1040-ES.

Conclusion

Tax planning is an essential part of personal finance. With 2024 coming to an end, it’s the right time to review your finances and take advantage of available tax-saving opportunities. By maximizing retirement account contributions, considering tax-loss harvesting and utilizing other year-end strategies, you can minimize your tax burden and keep more of your hard-earned income. Be sure to consult with a tax professional to tailor these strategies to your unique financial situation and ensure you’re in the best possible position for the year ahead.

Common Business Accounting Calculations

Common Business Accounting CalculationsNo matter the type of business or industry, being able to analyze and deduce patterns is essential to discovering a business’ financial health. Here are four commonly used calculations to help internal and external stakeholders determine an organization’s ability to manage its finances.

Break-Even Analysis

This formula analyzes fixed costs versus the profitability a business earns for every extra item it creates and sells.

Businesses that have smaller thresholds to meet their fixed costs to realize profitability have an easier break-even point to meet and exceed. Once the fixed costs threshold is satisfied and sales revenue outpaces variable costs, a business will know when it hits the break-even point.

Break Even Point (BEP) = Total Fixed Costs/(Price Per Unit – Variable Cost Per Unit)

This takes the total fixed costs divided by the price per individual unit minus each unit’s variable cost.

Examples of fixed costs are rent, taxes, insurance and wages. Examples of variable costs are raw materials, production supplies, utilities and packaging.

Another way to determine a company’s break-even point is as follows:

Contribution Margin = Item Price – Variable Cost Per Unit

This is illustrated by: $55 = ($85 – $30)

The item’s priced at $85, with a variable cost of $30, the contribution margin is $55 of how much revenue a company earns to pay for the remaining fixed costs.

Cash Ratio Formula

The cash ratio formula offers one way to look at a company’s liquidity position by comparing a company’s cash and cash equivalents to its current liabilities or debts due within the next 12 months. It shows how well positioned a business is (or is not) able to pay debts due within 12 months, and to satisfy the near-term obligations of its long-term debt.

It’s an important ratio that lenders look at when evaluating a company’s loan application. Instead of including assets such as accounts receivables, it factors in a business’ ability to take care of its financial obligations. It’s thought of as being a more real world look at how financially stable a business is.

It’s calculated as follows: Cash Ratio: Cash + Cash Equivalents/Current Liabilities.

Gross Profit Margin

This is defined as all income minus the cost of goods sold (COGS). COGS is comprised of expenses attributable to the creation of products, which include input materials and salaries for workers to produce such goods. However, it excludes expenses for taxes, overhead, debt, asset acquisitions, etc., among others. Another way to explain this calculation is to ask how much a business retains as profit once production costs are accounted for.

It’s calculated as follows: Gross Profit Margin = [(Net Sales – Cost of Goods Sold)/(New Sales)] x 100

Debt-to-Equity (D/E) Ratio

This is used to determine how much debt or financial leverage a company has on its books. It tells internal stakeholders and external parties what percentage of debt a company is using to operate compared to the business’ available operating reserves. This ratio contrasts a business’ complete financial obligations against its shareholder equity. Its primary use is to see how extensively it uses debt to operate.

It’s calculated as follows: Debt/Equity Ratio = Total Liabilities/Total Shareholders’ Equity.

While these calculations may seem straightforward, these are only a few examples of how businesses can calculate and analyze a company’s position – be it the owner, an employee or an outside lender or investor.

5 New Year’s Financial Resolutions You Can Actually Keep

5 New Year's Financial ResolutionsYep, it’s the end of another year! Chances are, you didn’t keep every resolution you made last year, for example, those goals about working out. (No shame here; we all do this!) However, the good news is that your fiscal goals can be a bit easier to achieve. Here are a few financial resolutions that are no-brainers, simple, and, best of all, no sweat.

Get a snapshot of your net worth. This is critical. Sit down and calculate this. When you know how much you have in terms of assets and liabilities, you can more easily determine where you need to make changes to your budget. For instance, this might be spending less on dining out and stocking more away in savings and investments. Understanding how much you have to work with is the first step to reaching your goals.

Pay off credit cards. This might well be an ongoing task, but the end of the year is a great time to take a breath, make a plan, and hit the ground running in the new year. If you have high-interest cards, look for limited-time, lower-interest and/or zero-interest cards. Some lenders will even give you as long as 21 months without interest. If you find yourself using credit cards more than you like, another way to get a handle on this is to use cash when you’re out at stores and restaurants. Seeing the dollars actually leaving your hands as opposed to just swiping your plastic might give you a needed dose of reality.

Update your savings goals. If you want to easily increase your savings, choose an amount and have it auto-drafted from your paycheck or checking account into your savings every month. This way, you’ll learn to live on the amount you have left. When you never see the amount you’re tucking away, you won’t miss it.

Review and reset your investments. Take some time to pull together all your assets: IRAs, retirement accounts, and employer 401(k) plans. If you can contribute more to any of these, all the better. For 401(k)s, the IRS just announced a cost-of-living adjustment for retirement plans and IRAs – the 401(k) contribution limit for 2025 is $23,500, up from $23,000 in 2024. However, individual retirement account (IRA) contributions will continue to be $7,000 in 2025, the same as in 2024. If you’re over 50, here’s some good news: You’ll be able to make even larger catch-up contributions than other workers because of a provision in Secure 2.0, a federal retirement law. Beginning in 2025, employees aged 60, 61, 62, or 63 who participate in workplace retirement plans can make catch-up contributions of up to $11,250.

Take a look at your credit report. This is key. You’re entitled to one free credit report a year from each of the three credit agencies, so doing this is easy peasy. Pull up your report and give it a look see. If you see anything negative, take action to repair it. If there are any errors, correct them asap. To get started, go to AnnualCreditReport.com.

While there are many other money-related resolutions you can make, starting with ones that take minimal effort while yielding maximum results is a good place to begin, not to mention, a great way ease into the new year.

Sources

Financial New Year’s Resolutions You Can Keep

The IRS Revealed 2025 Changes To Retirement 401(k) and IRA Contribution Limits

Cybersecurity Best Practices for the Holiday Season

Cybersecurity The holiday season is when most people go on shopping sprees and travel. This season also witnesses a surge in online activities in today’s digital world. Unfortunately, cybercriminals take advantage of this period to launch attacks. Therefore, cybersecurity should be the top priority for a business gearing up for peak sales or a shopper looking for the best deal.

Understanding Holiday Cyber Threats

Businesses and consumers face unique challenges during the holiday season. For businesses, the increase in traffic and online transactions can overwhelm systems. This may make them vulnerable to attacks. Cybercriminals may use tactics such as ransomware, phishing scams and fraudulent transactions during the busy season. Consumers, on the other hand, get lured by malicious ads, fake websites and phishing emails that may appear as irresistible holiday deals.

Recognizing these risks is important to staying safe for both businesses and consumers. Understanding them also means taking proactive measures to reduce exposure to cyber threats.

Why Cybersecurity Matters

The lack of effective cybersecurity can lead to financial loss, reputational damage and disruption to a businesses’ operations. On the other hand, consumers face identity theft, unauthorized purchases and compromised financial accounts.

According to the Retail and Hospitality Information Sharing and Analysis Center (RH-ISAC), threats such as ransomware, phishing, and account takeover (ATO) attacks intensify as consumer activity surges. In their 2024 Holiday Season Cyber Threat Trends Report, RH-ISAC emphasizes proactive defense measures, especially during high-traffic periods like the holiday season.

Cybersecurity Best Practices for Businesses

Security measures for businesses include:

  • Set up a holiday strategy – over the long holidays, businesses tend to have a change in work schedules and fewer staff members. Having a holiday cybersecurity strategy can safeguard against potential cyber threats. This can include an emergency response plan and designating responsible individuals for cybersecurity.
  • Endpoint security – this involves protecting devices like computers and smartphones used in the business. It is important to update all software, install antivirus programs and enable firewalls to shield the business network from intrusions.
  • Employee training – human error is one of the leading causes of data breaches. Therefore, it is important to educate staff to recognize phishing attempts. They should also know the importance of strong passwords and reporting suspicious activity.
  • Monitoring systems for unusual activity – This requires a business to invest in tools that help detect suspicious behavior in its networks. This should include fraud detection systems that will help identify unusual transaction patterns. It also helps detect potential compromises from third-party vendors.
  • Backup and recovery plan – business continuity in case of an attack is crucial. Therefore, a business should ensure that data is regularly backed up and stored securely. It also helps to test the recovery process regularly.

Cybersecurity Best Practices for Shoppers

Consumers are not immune to holiday cyber-attacks. A consumer must keep the following in mind:

  • Shop from secure websites – shoppers should be cautious by checking website security. They should check that a website includes “https://” and a padlock icon in the URL. Also, confirm the correct name of the website. It is also important to avoid clicking on links from unsolicited emails or social media ads. This is a common phishing tactic.
  • Use secure payment methods – a credit card provides better fraud protection than a debit card. Consider digital wallets that have an extra layer of encryption. It is also crucial to avoid saving payment details on websites.
  • Avoid public wi-fi – shopping on the go may see some shoppers use public networks. These networks expose data to hackers.
  • Be wary of emails and messages with deals that sound too good to be true. Always verify sender authentication and, where necessary, contact the company directly.
  • Be cautious about unexpected package notifications. Unexpected package notifications can be a phishing tactic to steal personal information or install malware. Always verify the sender and avoid clicking on links in unsolicited messages.
  • Be cautious of holiday scams like fake charities, gift card scams and fake gift exchanges that prey on the season’s generosity and excitement. Scammers may trick customers into buying gift cards or sharing personal details through fraudulent schemes. Staying skeptical of unsolicited offers and never sharing sensitive information with unverified sources will help ward off cybercriminal attacks.
  • Activate multi-factor authentication (MFA) – adding MFA creates an extra layer of security for highly sensitive accounts such as email, bank, and work-related logins.

 Closing Thoughts

The holiday season is meant to be a time of celebration and connection, not worry and stress. By implementing robust cybersecurity practices, businesses can protect their operations and customers while shoppers enjoy safe, hassle-free transactions.

Making Pensions Equitable, Protecting Foster Kids, Mail-in Votes and Tracking Government Spending

Making Pensions Equitable, Protecting Foster Kids, Mail-in Votes and Tracking Government SpendingAll bills not enacted by the end of the 118th congressional session on Jan. 3, 2025, will expire.

Social Security Fairness Act of 2023 (HR 82) – This bill, with 330 bipartisan sponsors and a similar bill in the Senate, was introduced by Rep. Garret Graves (R-LA) on Jan. 9, 2023. It passed in the House on Nov. 12 of this year and is likely to pass in the Senate before the year’s end. The purpose of the bill is to eliminate the government pension offset that reduces Social Security benefits for individuals who receive other benefits, such as a pension from a state or local government. In the private sector, this would have a similar effect to withholding Social Security from people who have a 401(k). The bill would also repeal provisions that reduce Social Security benefits for spouses and widows/ers who receive their own government pensions. The provisions of the bill would be retroactive to the beginning of 2024.

BOLIVAR Act (HR 825) – This legislation prohibits the head of an executive agency to enter into a contract for the procurement of goods or services with any person that has business operations with the Maduro regime in Venezuela. The act was introduced on Feb. 2, 2023, by Rep. Michael Waltz (R-OH). It passed in the House on Nov. 18, and its fate currently lies with the Senate.

Vote by Mail Tracking Act (HR 5658) – This bill would require mail-in ballots to use the Postal Service barcode and an Official Election Mail logo. It passed in the House on Nov. 18 and is under consideration in the Senate. The bill was introduced by Rep. Katie Porter (D-CA) on Sept. 21, 2023.

Find and Protect Foster Youth Act (S 1146) – This act was introduced on March 30, 2023, by Sen. John Cornyn (R-TX). It would amend a provision of the Social Security Act to require the Department of Health and Human Services to eliminate obstacles to identifying and responding to reports of missing foster care children. Furthermore, it would assist in the assessment and screening of children who are at risk of becoming victims of sex trafficking, as well as identify best practices for effective interventions. The bipartisan bill passed in the House on Nov. 18 and is currently in the Senate.

Billion Dollar Boondoggle Act of 2023 (S 1228) – This bill was introduced by Sen. Joni Ernst (R-IA) on April 25, 2023. The bill would require the director of the Office of Management and Budget to submit an annual report to Congress detailing projects that are over budget and behind schedule. This is a bipartisan bill that has passed in both the Senate and the House, but on July 22, the House made changes and sent it back to the Senate, where it currently resides.

Rural Broadband Protection Act of 2024 (S 275) – Introduced by Sen. Shelley Moore Capito (R-WV) on Feb. 7, 2023, this bill would require the Federal Communications Commission (FCC) to vet applicants for funding of affordable broadband deployment in high-cost areas (including rural communities). The FCC would mandate a process, including a detailed proposal with technical capabilities to provide competitive awards for implementing the broadband network services. The FCC would then assess proposals in line with well-established technical standards. The bill passed the Senate on Sept. 25 and is currently with the House.

Understanding Carbon Accounting

Understanding Carbon Accounting, what is Carbon AccountingAlso known as greenhouse gas (GHG) accounting, carbon accounting is a way for managers and analysts to measure a company’s total carbon emissions. 

It’s a comprehensive approach to analyze how a company uses energy for its buildings, offices, conveyances and production processes. Carbon accounting examines firsthand, secondhand and tertiary energy uses.

Environmental, Social & Governance

Looking at ESG standards (Environmental, Social & Governance), it’s not only becoming encouraged, it’s becoming required for businesses, especially for publicly traded businesses. Whether it’s the U.S. Securities and Exchange Commission (SEC) or other governmental agencies in the global economy, these administrative organizations are mandating emission declarations for businesses to account for their carbon emissions. It’s also necessary for third parties (lenders, potential and current investors) to review and analyze a company’s current and past performance, along with industry comparisons.

It’s important to distinguish the differences between carbon and GHG accounting. Carbon accounting only looks at carbon dioxide emissions, while GHG looks at the broader category and illustrates why doing so is important. Businesses look at nitrous oxide and hydrofluorocarbons (HFCs), for example, when accounting for GHGs. However, such measurement is based on the so-called carbon dioxide equivalent or C02e. This helps standardize GHGs into the C02e standard for carbon accounting, giving government and interested parties the ability to measure across a universal standard. Two common uses for this standard are for carbon offsets and credits.  

Calculating Emissions

1. Scope 1 factors in emissions from the company’s directly controlled or owned assets. Examples include factories, production, conveyances, etc.  

2. Scope 2 looks at what the business uses in regard to climate-controlled services for their factories, offices, etc. It also looks at the company’s contracts with power suppliers.

3. Scope 3 factors in indirect emissions the business may incur. This includes commercial commuting activities, investing, how assets are disposed of, etc.    

According to the SEC, Scope 3 emissions must include those “upstream and downstream activities in a company’s value chain” if they’re necessary for investor consideration or if the business has pledged to meet certain metrics for Scope 3 levels.

From there, a business’ activity metrics are calculated according to governmental and industry standards, such as the U.S. Environmental Protection Agency, ISO Standard 14064, or The Climate Registry’s General Reporting Protocol, etc. Businesses’ results are presented against past results, where they discuss how they will improve their efficiency internally and work with their supply chain partners.

Compliance

While compliance is one important reason, third-party audiences, such as family offices, institutional money managers, lenders, etc., are equally as important. Asset managers and family offices, for example, look for ESG or environmentally friendly investments to attract retail or “smart-money” investors. Similarly, activist investors, especially those looking to make companies more environmentally friendly, can look at companies to see how their carbon emissions stack up against their industry and overall commercial peers.

Another consideration is that by meeting regulatory or industry requirements and meeting ESG standards, businesses could qualify for preferential or market rates for funding from the debt markets.

Conclusion

The more companies are well-versed in this type of accounting, the better they will meet government and investor expectations.

2025 Projected Tax Brackets

2025 Projected Tax BracketsAccording to estimates, inflation adjustments to the internal revenue code are expected to yield increases of 2.8 percent compared to 2024 amounts. This means wider tax brackets and increased exemptions, among other things. With the U.S. Bureau of Labor Statistics consumer price index (CPI) moderating, this increase is about 50 percent less than 2024’s inflation adjustment. Below, we’ll look at what the projected 2025 inflation adjustment means in terms of dollars and cents for you and your taxes.

Individual Income Tax Brackets

The tables below illustrate what the individual income tax rates and brackets are projected to be for 2025.

Projected Individual Income Tax Brackets & Rates: Tax Year 2025

Single Taxpayers
10% 0 – $11,925
12% $11,926 – $48,475
22% $48,476 – $103,350
24% $103,351 – $197,300
32% $197,301 – $250,525
35% $250,526 – $626,350
37% $626,351 and Over

 

Married Filing Jointly
10% 0 – $23,850
12% $23,851 – $96,950
22% $96,951 – $206,700
24% $206,701 – $394,600
32% $394,601 – $501,050
35% $501,051 – $751,600
37% $751,601 and Over

 

Married Filing Separately
10% 0 – $11,925
12% $11,926 – $48,475
22% $48,476 – $103,350
24% $103,351 – $197,300
32% $197,301 – $250,525
35% $250,526 – $375,800
37% $375,801 and Over

 

Heads of Household
10% 0 – $17,000
12% $17,001- $64,850
22% $64,851 – $103,350
24% $103,351 – $197,300
32% $197,301 – $250,500
35% $250,501 – $626,350
37% $626,351 and Over

 

Trusts & Estates Tax Brackets

The table below illustrates what the income rates and brackets are expected to look like for Trusts and Estates in 2025.

Projected Trusts and Estates Tax Brackets & Rates: Tax Year 2025
10% 0 – $3,150
24% $3,151- $11,450
35% $11,451 – $15,650
37% $15,651 and Over

 

Standard Deduction Amounts

The table below illustrates what the projected standard deduction amounts will be for 2025, with a comparison to 2024.

Projected Standard Deduction Amounts
  2024 2025
Single $14,000 $15,000
Married Filing Jointly $29,200 $30,000
Married Filing Separately $14,000 $15,000
Head of Household $21,900 $22,500

 

Alternative Minimum Tax (AMT)

The table below illustrates the anticipated AMT exemptions for 2025.

AMT Exemption Amounts
Tax Year 2025
Single $88,100
Married Filing Jointly $137,000
Married Filing Separately $68,500
Trust & Estates $30,700

 

Capital Gains

The rates applied to long-term capital gains are not expected to change for 2025; however, the brackets that apply to different rates will expand. Note that, in considering the table below, a 20 percent tax rate applies to capital gains that are over the 37 percent ordinary tax rate threshold. Furthermore, capital gains on art and collectibles are subject to other exceptions.

Maximum Capital Gains Rates for 2025
  Zero Rate 15% Rate
Single $48,350 $53,340
Married Filing Jointly $96,700 $600,050
Married Filing Separately $48,350 $300,000
Head of Household $64,750 $566,700
Trusts & Estates $3,250 $15,900

 

Conclusion

First, it’s important to remember that all the figures above are only projections. The IRS will not publish the official numbers until later this year. Moreover, as these rates and brackets have increased, they have done so significantly less than in 2024 and 2023, largely driven by lower inflation.

Cash Conversion Cycle (CCC) Defined

Cash Conversion Cycle (CCC) DefinedThis metric, which is also referred to as the cash cycle or the net operating cycle, looks at the time a business takes to recover its investment in inventory to eventually sell. The process starts from selling its goods, collecting on outstanding receivables or invoices, and satisfying its operating costs with the sale proceeds. It’s normally measured in days to determine the company’s financial health.

The less time necessary to complete the CCC, the healthier a company is financially because it means the business’ money spends less time tied up in inventory or collecting on outstanding inventory. It’s important to be mindful that different industries have different CCC time frames. Generally speaking, most calculations are done on either a quarterly (90 day) or an annual basis (365 days).

How to Calculate CCC

The formula is as follows:

(CCC) = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) − Days Payable Outstanding (DPO)

It can be broken down into three different stages:

Stage 1

Days Inventory Outstanding (DIO) looks at how many days the inventory takes to sell to customers. It’s calculated as follows:

DIO = (Average Inventory (AI) / COGS) x Time-Frame (In Days)

AI = 1/2 x (BI + FI)

BI = Beginning Inventory

FI = Final Inventory

It’s important to define COGS, taken from the Income Statement, which is Cost of Goods Sold or the costs personally connected to creation of goods or services (raw materials, labor or electricity). The lower the number, the faster a business is selling its goods.

Stage 2

Days Sales Outstanding (DSO) measures the time it takes the business to collect payment from all outstanding sales completed.

DSO = Average Accounts Receivable (AAR) / Daily Revenue

AAR = 1/2 x (SAR + FAR)

SAR = Starting AR

FAR = Final AR

Accounts Receivable are what companies record on their balance sheet to keep track of what customers owe for the goods delivered or services rendered. The lower the results, the better the company’s cash position is because they’re able to satisfy outstanding invoices.

Stage 3

Days Payable Outstanding (DPO) is the third and final stage that calculates how much businesses owe to their suppliers the business has sourced input materials from, within the time frame the suppliers’ invoices are due.  

DPO = Average Accounts Payable (AAP) / Daily COGS

Where:

AAP = 0.5 x (SAP + FAP)

SAP = Starting AP

FAP = Final AP

COGS = Cost of Goods Sold

There are different ways to interpret the DPO result. A low DPO means the business is taking care of its bills from suppliers. However, potential investors, internal managers, and supervisors can see if the business can either negotiate lengthier payment terms while still maintaining good terms or if the company negotiates early payment terms or invests the money on a short-term basis to earn more for the company before paying suppliers’ bills. A high DPO, after an investigation of a company’s financials, might show the company is taking longer than its peers to pay creditors.

While calculating the CCC is relatively straightforward, the more complex process is interpreting it correctly and using judgment for a business based on industry averages and how the numbers relate to current economic conditions.

5 Tips to Keep End-of-Year Spending Under Control

5 Tips to Keep End-of-Year Spending Under ControlIt’s that time of year again. Halloween has just come and gone – and now we’re hurtling headlong into Thanksgiving and Christmas. For holiday shopping, it’s tempting to turn a blind eye and put everything on your credit cards. However, if you don’t want to have a financial hangover in January, February (and so on), you might want to take a look at these tips.

Create a Budget and Stick To It

The earlier you sit down and do this, the better. Decide on a financial cap per gift per person, then shop. Then, get creative. For instance, what if you bought a pre-loved item for someone? Made something for someone? You might also decide on a gift, then shop around and compare. So, when Black Friday and Prime Days raise their heads, you’ll already have made your selections. More on that below.

Put a Lid on Impulse Buying

This is a tough one. As mentioned above, Prime Day and Black Friday are hard to avoid. They scream at you on your TV and phone scroll, so it’s easy to get off track. If you want to avoid runaway spending, here are two ways to approach these retail spectacles. First, you can keep an eye on which item you want – then plan and research. Buy it when the price is crazy low, and walk away from all the frenzy, all the while tracking your spending. Second, you can dive right in, browse all you want, then put some things in your cart. But don’t buy it then. Come back a day later and decide if the purchase is really necessary. At this moment, you might also imagine the pain you could feel in 2025 with a bunch of debt hanging over your head. Employing this mindset could make all the difference.

Use Your Credit Cards Wisely

According to Jennifer Ellis, senior consumer manager at BOK Financial, credit card debt is on the rise. And with high interest rates, if you do have a balance, you’re going to pay more for your items. Before you set out to buy gifts, try to pay your credit card balances in full to avoid big fees. This way, you won’t carry the burden of a lot of debt into the new year.

Try Envelope Stuffing

This is an old trick, but a good one. Get envelopes, put the name of your giftee on the front, then put the amount of money you’re going to spend in it. Once you’ve used up the cash in the envelope for said person, you’re done. Also, using cash is more startling – you see the money go bye-bye! It’s so easy to gloss over the actual cash amount when you’re using plastic, as it almost doesn’t seem real. Working with real moolah is a tried-and-true technique, a wake-up call that you’ll appreciate.

Plan Early for Travel

Buy your tickets early for Thanksgiving and the December holidays. Monitor airline, bus, and train websites. Set alerts to notify you when the prices go up or down. All it takes is a little time and elbow grease. In the end, it’s worth it.

Most importantly, having a financial plan during this time of year is key. Yes, life is busy, but if you want to step into the new year without carrying the shackles of debt, using some of these ideas might be your saving grace.

Sources

https://thestatement.bokf.com/articles/2024/10/the-spookiest-trend-spending-too-much-on-the-holidays 

 

Social Media Marketing: A Game-Changer for Business Growth

How to Social Media MarketingSocial media has evolved from a simple networking platform to a powerful business tool. Businesses today use these platforms with billions of active users worldwide to connect with their target audience. Social media allows businesses of all sizes to reach audiences in a way that traditional advertising, such as print or television, cannot.

The Role of Social Media Marketing in Business Growth

Social media marketing uses social media platforms such as Facebook, LinkedIn, Instagram and TikTok to promote a business’ products or services. This is done through sharing content like posts, videos and ads to engage a targeted audience and eventually make sales.

With 5.22 billion social media users as of October 2024, businesses can reach customers around the world with ease. The platforms are also suitable for sharing information, enabling companies to communicate with customers about promotions, events or new products or services.

Each platform offers different strengths, and a business can choose which ones suit its target audience. For instance, LinkedIn is more professional and a good platform for B2B opportunities. On the other hand, TikTok and Instagram are suitable for visual storytelling, making them good places to showcase products.

Benefits of Social Media Marketing

Some of the key benefits of marketing on social media include the following:

  1.  Increased Brand Awareness
    Consistently and strategically posting on social media enhances brand visibility. A brand gains recognition as users engage with the content through likes, comments, and shares. Content that goes viral expands a business’ reach, introducing new audiences to the brand.
  2. Improved Customer Engagement
    Social media gives businesses a direct line to customers. Whether replying to comments or through direct messages, these interactions help build trust and create a sense of loyalty. This two-way communication gives businesses a better understanding of customers’ needs while also allowing them to respond quickly to inquiries and feedback.
  3. Cost-Effective Advertising
    Unlike traditional advertising, social media offers cost-effective marketing solutions. With social media, a business can run targeted ads based on demographics, interests or behaviors. This ensures they reach the right audience without wasting resources. This makes it possible for small businesses to leverage paid campaigns to increase their reach while staying within their budget.
  4. Measurable Results and Analytics
    Social media marketing offers the ability to measure results through built-in analytic tools. A business can monitor follower growth, engagement rates, link clicks, and conversions. Such data-driven insights help businesses identify what is working, fine-tune their strategies, and continuously improve their campaigns.
  5. Drive Website Traffic and Sales
    Sharing links to a business website on social media drives traffic to the site and increases conversions.

Social Media Strategies that Help in Business Growth

  1. Content Marketing
    Creating engaging content is crucial in social media marketing. This involves using text, videos, images and infographics to capture the audience’s attention. One powerful tool in content marketing is storytelling – using emotional and relatable stories to connect with audiences will enhance loyalty and trust.
  2. Influencer Marketing
    Influencers have huge followings, and their endorsements can significantly help a business. However, partnering with the right influencer is important to attract new customers and boost credibility.
  3. Paid Ads and Promotions
    With paid ads, a business targets specific audiences in terms of location, age and interests. Social media also enables retargeting campaigns, which remind users about products they have previously viewed.
  4. Community Building
    Social media allows a business to create a community for long-term relationships. This is done through creating groups or pages. These communities develop a sense of belonging, and customers are more likely to engage with the business over time and recommend it to others.

Challenges and How to Overcome Them

  • Staying Relevant in a Crowded Space
    Many businesses compete for customer attention, and standing out can be challenging. Therefore, businesses should keep up with social media trends, experiment with new formats and regularly update their strategies to align with changing consumer preferences.
  • Managing Negative Feedback Publicly
    Businesses may face criticism or negative feedback. Handling these situations professionally is crucial. It calls for prompt responses that show empathy and a willingness to resolve issues. This demonstrates accountability, which can turn a negative experience into an opportunity to build trust.
  • Creating Consistent Content
    Maintaining a steady flow of content can be overwhelming, especially for small businesses. Content calendars and automation tools can help plan posts in advance, ensuring consistent engagement without added stress. Repurposing existing content across platforms is another way to save time and effort.

Conclusion

Social media marketing has become a game-changer for businesses seeking growth in the digital age. It provides cost-effective ways to build brand awareness, engage with customers, and measure real-time success. However, success requires more than just presence – it demands strategic planning, creativity, and adaptability to overcome challenges and maintain relevance.