Cash Flow

To a small business, cash flow is the ultimate measurement of your company's health. When cash flow is good, opportunities seem endless. Today, unfortunately, cash flow can be the most difficult hurdle when facing employee retention, new research contracts, and daily operational costs.

Through our service providers, SBIRbusiness.com provides the following solutions for your cash flow versus innovation battle:

Research & Development Tax Credit

Government contracts are a reliable source of revenue for your company, but the profit margins tend to be low and can cause cash flow problems. And while increasing revenue and profit margins is the long term goal for solving these problems, increasing capital in the short term is difficult. Federal and State R&D Tax Credits for IR&D and government sponsored R&D can help solve this problem by offsetting past, current, and future taxes. Could your company benefit from...?

• receiving refund checks for previously overpaid tax
• recovering costs tied to R&D projects and prototypes (even failed ones)
• reducing your annual tax burden
• becoming more attractive to acquisition-based firms

SBIRbusiness.com partners with Hull & Knarr, LLP to offer you R&D Tax Credit services.

 

Using Indirect Rates

In theory, if you adequately manage your research activities, you should be able to minimize your need for additional cash flow. Obviously, this depends on the type of federal award you receive. Typically, as a small business, the government will provide some flexibility in how you are paid, but you need to be careful how you handle the elements of your cost proposal. Your organization needs to be thinking about cash flow when proposing and negotiating contracts. In general, you should.

• understand your direct and indirect cost structure
• plan your contract deliverables to provide you with cash flow assistance during the earlier stages of your contract
• bill the government as timely and often as the government contractually permits
• for electronic processing, be sure that your vouchers are not rejected
• and minimize your unallowable activity to minimize the drain on your cash

Remember, planning your activities is critical since typically in a reimburseable or level-of-effort environment, you need to generate direct dollars or direct activity to recover indirect costs. Planning substantial direct activities before expanding your indirect cost structure is prudent planning for cash flow purposes while the contrary is also true.

Visit Moker CPA for assistance in this area.