Office of the CFOPresented by: Brett Redd, CPA

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Office of the CFO

Confidence

Profit

Cash flow

Compliance

Confidence

FIELD

Bankers

Merchant providers

Investors

Regulators

Profits

What is the VERY most important driver of profitability in direct sales?

Profitable Sales

0% 5% 10% 15% 20% 25% 30% 35% 40%

PROFITS

GEN & ADMIN

SELLING

PRODUCT

Dialing It In

0% 5% 10% 15% 20% 25% 30% 35%

PROFITS

GEN & ADMIN

SELLING

PRODUCT

Leading Indicators

Sales revenue

New consultants/reps

Number of parties/size

Activity percentages

Profits vs. Cash Flow

Revenue 350,000 375,000 400,000 Product costs (80,000) (275,000) (29,500) Commissions (118,700) (122,500) (131,200) General & Admin (112,000) (116,250) (120,000) Net Income 39,300 (138,750) 119,300 Net Margin 11% -37% 30%

Cash Flow Killers

Inventory

Merchant reserves

Overhead

Growth

Must forecast both profitability and cash

Compliance

Multi-state sales tax

Foreign income tax

Gross receipts tax / use tax

1099 and payroll taxes

Merchant covenants

Bank covenants

Business licensing

Sales Tax Mayhem

8,000+ taxing jurisdictions

Nexus and direct selling

Reseller permits

Trust funds of the state

Remember – it is a pass through

Sales Tax Set Up

1) Research – product, price, customer type

2) Rates

3) Set up software

4) Register

5) Collect and remit

Brett Redd, CPAwww.squire.com

brettr@squire.com801.310.6989