The Impact of Bad Debt on Sales

28 Oct
business vision concept and man standing on money

Companies may sometimes become accustomed to thinking of bad debt as a cost of doing business. After all, every accounting department has to write off bad debt every once in a while, right?

That’s not necessarily the healthiest way to view any bad debt you may have out there. Instead of worrying about your write offs, you want to be able to focus on new sales, revenue growth, profitability, and brand awareness. And as we all know, reducing bad debt can, and will, have a direct impact on your bottom line.

By the Numbers

When you have to write off large portions of bad debt, you simultaneously must increase the pressure on your sales team and marketing staff to recoup the revenue you lost in those write-offs. Ultimately, you want your sales to drive growth, improve cash flow, and create new opportunities for your business.

A cash-positive business can hire more employees, expand into new locations, and upgrade equipment. When you’re drowning in bad debt, however, you’re too busy making up for losses.

If you’re using your sales to cover write-offs you’re reducing your business’s accounts receivable management efficiency and leaving money on the table. Worse, your sales, advertising, and marketing employees are faced with enormous stress as they scramble to improve customer acquisition and retention rates.

To understand how bad debt impacts sales, you need to know two metrics:

  1. Your net profit, and
  2. The amount of money you’ve written off.

Let’s say that you’ve written off $100,000 in bad debt and your profit margin is 5 percent. In this scenario, you’ll need to generate $2 million in profit to offset that loss.

Check your DSO numbers to determine whether you’re operating efficiently. Companies with a DSO of fewer than 45 days (and ideally 30 days) typically enjoy better cash flow and fewer write-offs. If your DSO has extended to 60 or 75 days, however, your bad debt could have an increasingly negative impact on your sales.

The solution is two-fold.

First, create a solid debt-collection strategy. Don’t wait until the 90-day mark to start calling customers and asking about unpaid invoices. Take a more active approach.

Consider working with a professional, third-party debt collection company. Some businesses don’t have the resources to mount a full-scale debt collection strategy cost up-front. Working with experienced experts should increase the amount of unpaid debt you collect, which automatically reduces potential write-offs – and offsets the relatively modest cost compared to in-house efforts.

Second, stop thinking about bad-debt write-offs as a cost of doing business. Profitable companies focus on revenue growth and stability. They don’t like to feel hampered by bad debt. “Fire” clients who don’t pay their bills, vet potential customers carefully and urge your sales team to take a full-funnel approach to acquiring and retaining clients.

Yes, bad debt can impact sales. Fortunately, there are available solutions to help avoid this trap. We encourage you to learn more about how to optimize your revenue so you don’t get stuck in the bad-debt trap.

Contact Me Directly

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
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3 Debt Collection Strategies That Work

19 Oct

Ever wonder why some business have better luck collecting debts than others? Let’s find out. Hint: Luck has nothing to do with it.

When your customers owe money, you send an invoice and expect to receive a check in return. However, history tells us that you won’t hear anything but crickets chirping from some customers. About one in every 20 Americans has defaulted on some type of non-mortgage credit. You don’t have to resign yourself to writing off bad debt, though. You might just need a better strategy.

Shift Your Mindset

Your current strategy doesn’t work, so why keep using it?

Effective debt collection starts with a paradigm shift. Instead of thinking about unpaid accounts in terms of “collections” and “bad debt,” start thinking about your entire accounts receivable cycle. Just as preventive medicine can keep patients from getting sick, a holistic approach to finance can improve cash flow and help you predict future obstacles.

That’s why we use analytics to score our customers’ accounts receivables and to help them avoid unnecessary risks. If you have an effective accounts receivable management strategy in play, you won’t have to face collections as often.

Does this mean that you’ll never have to send an overdue payment notice? Probably not. However, you won’t have to worry about bad debt crippling your business because you’ll make smart, holistic financial decisions for your business.

Change Your Approach

Fear and panic won’t help your customers pay their bills faster.

Research shows that financial troubles can cause depression, anxiety, and other mood disorders in consumers. Some people use unhealthy coping mechanisms to handle stress, often denying that a problem exists. In other words, your overdue payment notice gets shredded with the other collection letters. The customer just can’t face the problem.

A compassionate debt collection strategy might help you collect cash faster. Instead of intimidating, threatening, or berating your customers, show them that you understand their predicaments and that you’re willing to work with them.

We’ve discovered that customers pay faster and more reliably with our empathetic approach to collections. We start with gentle reminders and continue collections even when accounts move from unpaid to dormant.

Work With Accurate Data

A customer moves and doesn’t give a forwarding address. Now what do you do?

When you don’t have accurate information for your customers, you can’t collect their debts. Account scrubbing technology proves invaluable when you need to correct errors in your master files so you don’t waste time and effort on bad information.

We have a database that contains more than 450 million records. We use that database to update your information so that collection practices can continue without obstacles.

If you’re struggling to collect bad debts, you might need a change of strategy — or you might need an experienced partner. We’re experts in the accounts receivable management field, and we help our customers remain financially solvent every day. Learn more about how to optimize your revenue, then get in touch. We’re excited to help you turn ineffective collection strategies into cash.

Contact Me Directly

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
Visit my Youtube channel by clicking here

Bonus Depreciation – Tax-Saving Tool for Your Business

14 Oct

Bonus depreciation is a valuable tax-saving tool for businesses. It allows your business to take an immediate first-year deduction of 100% deduction on the purchase or renovation of eligible business property.

Depreciation of a building would normally be spread out over the life of the asset

What is Depreciation?

Depreciation allows (or requires) businesses to spread out the cost of long-term assets over the life of the asset. The alternative would be to take the cost of the asset in the first year after the asset is acquired by the business, but this isn’t realistic. The most common way to depreciate a business asset is by spreading out the cost evenly over the asset life – called straight-line depreciation. Increasing in popularity, especially with the new Tangible Property Regulations, is the Cost Segregation Method or Accelerated Depreciation.

Accelerated Depreciation  allows you an additional deduction of 100% of the cost of qualifying property

What is Bonus Depreciation?

Bonus depreciation is a method of accelerated depreciation which allows a business to make an additional deduction of 100% (this was 50% prior to the new Tax Cuts and Jobs Act passed last month) of the cost of qualifying property in the year in which it is put into service.  Bonus depreciation can be applied to any new asset with a 20 year life or less.  This includes land improvements which are not considered personal property.

  • The 50% Bonus Depreciation rate is increased to 100% for qualified property acquired or built after September 27, 2017.
  • Bonus Depreciation has been expanded to apply to both newly constructed buildings and used property purchased and acquired after September 27, 2017. Bonus eligible property must have a depreciable life of 20 years or less.
  • Qualified Leasehold Improvements, Qualified Retail Improvements, and Qualified Restaurant Property are all replaced with Qualified Improvement Property (QIP), which has a 15-year recovery period and is eligible for 100% bonus (restaurants now have a class life of 39 years).
  • Structural items like interior supporting framing, escalators, and elevators are not included in QIP. The improvements must have begun at least one day after the building was put in service for its intended use.
  • Items removed, discarded, or abandoned have value that should be removed from the depreciation schedule and identified as a partial asset disposition (PAD). This must be done in the same tax year as the removal or the tax payer loses the ability to capture the write down.

Contact me directly

If you own commercial or income property and have not had a conversation with a trusted cost segregation provider, don’t wait. Contact me today for a free estimate of the tax benefits you may be missing.

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
Visit my Youtube channel by clicking here
Learn more about Cost Segregation by clicking here
See my blog post on The Tangible Property Regulations
See my blog post on How To Select a Cost Segregation Firm

4 Benefits of Using Merchant Funding Rather Than a Bank Loan

16 Sep
Merchant Funding

While a bank loan might be the first thing you think of when you need cash for your business for capital improvements or to cover a slow season, there are alternative choices to consider that can be just as strategic—maybe even more so. Merchant Funding is one of them.

Utilizing Merchant Funding, a business owner can receive a lump sum of capital in exchange for a certain amount of their business’ future sales. Merchants utilizing this as their best financing option reap plenty of benefits.  

1. The application process is easy.

For starters, applying for merchant funding is quick and easy. More often than not, you can fill out a short, simple application, providing specific information and documentation pertaining to your business, such as your Business ID and recent bank statements. This shouldn’t take long to complete, and most providers will respond within 48 hours. Such a simple process lets you stay focused on your business, rather than being swamped with hour-long applications that don’t lead to any replies, while still having the opportunity to receive funds.

2. It gives you access to capital, quickly.

If your application is approved, you could receive the capital from your provider in less than one week. Obtaining these funds in such a short amount of time enables you to start putting money back into your business and improve cash flow.

For example: Some merchants choose to invest in new advertising campaigns in order to reach more consumers, while others use the cash to purchase updated equipment to improve internal efficiencies or to cover payroll.   Those are just a few possible ways to utilize your newly acquired funds. You could also give your workspace a much-needed facelift. Or maybe paying off outstanding debt is what you’re focused on–and words cannot describe how good it feels to become debt-free.

3. Your credit won’t be affected.

Securing a merchant cash advance won’t negatively affect your business’ credit. This is because you’re not taking out a loan, but instead, simply selling future credit card sales for capital. As a result, you won’t have to worry about making monthly payments. Plus, many providers don’t use your FICO score as qualification, so you won’t need to spend time trying to improve your credit before applying. In fact, the newfound funds from a merchant cash advance can improve your credit if you use it to pay off debt.

4. You won’t be as stressed.

Although owning a business is extremely rewarding, it comes with great responsibilities, too. This can be stressful, especially if you’re tight on cash. Merchant Funding help alleviate some of these pressures, thus lowering your stress levels. Eliminating financial stresses will enable you to endcjoy your job again and remember why you love being a business owner.

Contact Me Directly

I can help you determine very quickly how much quick cash you could receive. To get pre-approved, or just get more information, contact me directly.

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
Visit my Youtube channel by clicking here

The Business Benefits of Streamlined Debt Collection

9 Sep

“Streamlined” is an adjective most people wouldn’t normally associate with debt collection. B2C or B2B debt collection can be fraught with challenges, and it isn’t always straightforward. Yet developing a streamlined solution to debt collection is essential for businesses in order to keep cash flow positive and ensure the business always has sufficient working capital.

When you can’t collect on what people owe you, business becomes more complicated. Not only do you have to pursue that debt so you can collect what you’re owed, you may have to deal with complications like bumpier cash flow and lower working capital. In other words, problems from uncollected debt ripple outward, potentially affecting your entire business.

Debt Collection Get Results While Protecting Your Brand

Streamlined debt collection services exist, and the best ones not only collect the money people owe you, but they also do so with utmost attention to protecting your brand, your data, and your customer’s data. Many small and medium enterprises simply don’t have the personnel and time necessary to devote to creation of a streamlined debt collection process.

Brand protection is essential in the internet age, when people regularly do online research before choosing products and services. For B2B business in particular, brand protection is essential during the process of B2B debt collection, because business relationships have enormous influence on reputation and the ability to succeed long term.

Accounts Receivable Management Can Prevent Debt Collection Problems

One way to streamline your debt collection process is to prevent the need for it in the first place. However, managing accounts receivable (AR) is a big job, and many small and medium enterprises don’t have a designated AR officer who can focus on this crucial responsibility.

Fortunately, there are debt collection specialists that offer a range of services, including AR management, and this alone can streamline debt collection for small businesses without a designated AR officer. And when the same debt collection specialist has to deploy more traditional debt collection techniques, they’re prepared to act without delay.

Pre- and Post-Charge Off Services Help Maximize Revenues

Pre-charge off debt collection is an excellent first line of defense in debt collection. Early intervention is essential when pursuing debts, because the likelihood of collecting decreases with every day that passes. When your debt collection service pursues early debt recovery, the result is fewer delinquencies and defaults, and maximum cash directed back into your business.

Post-charge off debt collection is more challenging, but if your debt collection provider has experience in this process, you can minimize losses due to unpaid debts and help ensure healthier cash flow. With technological tools that allow faster skip-tracing, your debt collection specialist can more quickly locate the correct party and accelerate recovery of even the most challenging cases.

It’s not easy for small and medium enterprises to stay on top of AR management and debt collection, yet these processes must be managed well to ensure good cash flow and sufficient working capital.

Contact Me Directly

For more information on streamlining the debt collection efforts for your business or medical/dental practice, contact me directly.

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
Visit my Youtube channel by clicking here

The Tangible Property Regulations for Commercial and Investment Property Owners

3 Sep
Tangible Property Regulations
Magnifying Glass and Tax

AN ADVANTAGEOUS TAX CHANGE

One of the largest changes to tax code since 1986 was passed in 2015, and these changes directly affect real estate owners and investors. These regulations are extremely taxpayer friendly, but most owners and investors are not aware of them. They are called the Tangible Property Regulations (TPRs), under code section 263a (1-3). The regulations put all the past court cases and past regulations into one single code that also contains a few interesting twists.

WHAT ARE THE TPRs?

The TPRs clarify which expenditures and repairs on buildings can be written down and which must be depreciated over 39 or 27.5 years. It is very advantageous for the building owner or investor to write down as many repairs as possible. This is because they not only receive a one-time expense of the entire expenditure but will also have reduced capital gains upon the sale of the building.

Generally, they are as follows:

The expenditure (or renovation) can be expensed if it meets these criteria:

  • done more than two years after purchase
  • did not make the component being repaired or replaced materially better
  • affected less than 33% of all the like components.

IRS SAFE HARBORS

There are also three Safe Harbors which allow certain expenditures to be expensed without IRS scrutiny.

  1. The De Minimis Safe Harbor is for expenditures under $2500.
  2. The Small Taxpayer Safe Harbor covers many expenditures on buildings with a purchase price of under $1 million.
  3. Routine Maintenance Safe Harbor is for expenditures to keep the building in its normal operating condition which will also have to be repeated at least once in the subsequent 10 years.

POTENTIAL REVERSALS

The amazing opportunity is under code section 481A, if past expenditures (not De Minimis or Small Taxpayer) which are currently being depreciated would not be depreciated today, (based on the regulations), they can be expensed in the current year.

So, the regulations will positively affect the building owner or investor moving forward but in addition can create a permanent tax deduction right now.

CONTACT ME DIRECTLY

For more information on the Tangible Property Regulations and other cash-flow producing and tax-saving strategies for property owners, contact me directly.

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
Visit my Youtube channel by clicking here

6 Warning Signs of Financial Trouble for Your Small Business

28 Aug

Any entrepreneur knows there’s a chance that their business may not take succeed. Risk is inherent in any new business venture, of course. The Small Business Administration says that, while about 80% of small businesses make it through their first year, only 50% of small businesses make it past the five-year mark. Only one in three celebrate their 10th anniversary.

While most small business owners lack the crystal ball clarity of knowing what their future will hold, there are some clear warning signs that the company is faltering and in danger of failing.

Warning Signs of Small Business Trouble

  1. A failing income statement.
    Keeping an eye on the income statement is imperative no matter the age of the company. Red flags include a rising accounts receivables line or outright losses. If outstanding debt is high and you’re failing to collect on it, this could signal real trouble.
  2. Low cash on hand.
    Watching the balance sheet unbalance should make any CFO nervous. If cash on hand is shrinking or if you need to sell assets to make payroll, that’s a bad sign. Are sales down? Are your shelves filled with inventory that isn’t moving? If your business has a credit line, is it maxed out? Watch out for company bills not being paid quickly or increasing debt as a signal of trouble.
  3. External market factors signal increased competition.
    When a company feels competitive pressure, they must have the cash flow to shift tactics. If cash flow is a problem, a competitor could outbid or undercut on price, which could drive you right out of business.
  4. Legal troubles.
    Beware the corporate lawsuit. For companies struggling to stay afloat, a host of legal issues could arise such as vendors suing for nonpayment of bills, lenders pursuing property or equipment repossession, or even, failure to pay quarterly taxes.
  5. Failure to make payroll.
    If payroll checks bounce, there is a huge problem with the health of the company. One missed paycheck could have a long lasting impact on the employment relationship Once trust is lost, employee morale can decline in a self-perpetuating loop that customers will definitely notice.
  6. Bookkeeping holes.
    The health of a business can almost always be determined by the quality of the financial documentation. Clean books impact the company’s decisions about purchasing and growth. Without an accurate record, how can companies create a strategic plan for expansion? The simple answer is – they cannot.

While small companies can go through financial hills and valleys, these signs may signal that the business is in real trouble. If your company is struggling, talk to me about debt collection and other services that can improve the bottom line. There is no charge for this consultation, and it might just save your business.

Contact me today!

Call me at 770-224-8504 or 888-780-1333
Email me by clicking here
Visit my website by clicking here
Visit my Youtube channel by clicking here

Medical Providers: Still Waiting for Your Personal Injury Cases to Settle?

7 Aug

Personal injury cases are taking longer than ever to settle, 18-22 months in some cases and possibly much longer. Many of the medical providers I speak with tell me that it takes WAY too long to get paid on their personal injury liens and LOPs (Letters of Protection). This causes serious cash flow challenges and excessive staff time needed to continue to monitor the status of cases and negotiate the reductions often requested by attorneys on the case.

If you treat personal injury patients on a lien or LOP, chances are you are facing the same kind of challenges to both your cash flow and staff time.

Get Paid Sooner, Not Later

I am now working with a firm that specializes in helping medical practices like yours get paid or treating personal injury patients. They purchase medical liens. This allows you to receive your payment sooner, and they work, and negotiate, with the attorneys to receive payment at the end of the case. Regardless of how the case ultimately resolves, you will have been paid for your services and relieved of your payment risk.

What’s In It For You?

Benefits of working with Velocity Medical Receivables Solutions, LLC.

  • No cost or financial investment required for the medical provider
  • Predictable cash flow on future receivables
  • Removal of payment risk
  • Money in advance of case settling, no waiting for cases to resolve
  • Confidence in accepting more personal injury cases knowing you won’t have to wait for your payment.

Let’s Talk!

I would love to show you how you can turn your waiting on personal injury cases into regular cash flow.

Let’s talk! Schedule a quick conversation about your practice at your convenience by CLICKING HERE.

See other ways that Cash Flow Strategies, Inc. can help you improve your practice cash flow by visiting our web site by CLICKING HERE

Choosing a Firm to Conduct Your Cost Segregation Study

30 Jul

When you’re dealing with taxes, you want to do everything exactly by the book.  So, when you’re implementing accelerated depreciation of your assets, you want to be sure your cost segregation study is done correctly.  We’re here to help you get the tax savings you deserve and keep them by helping you choose a cost segregation firm that’s going to do everything right.

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Accuracy

Before you choose a firm, research cost segregation studies, and be prepared to ask the firm some questions. We’ve mapped out some things you should ask and be aware of before you decide to hire a firm to conduct this analysis. After all, it is your money; you should be able to take what’s yours and not have to return it because the analysis wasn’t conducted correctly.

Compliance

As you know, U.S. tax code dictates the rules you must follow. Because cost segregation is part of the tax code, there are suggested methods you need to follow if you are to conduct this type of analysis. You need to be sure that the cost segregation firm stays in compliance with all rules specified by U.S. tax code. Why should you be penalized for this third-party firm not following all the rules?

Specialization

You wouldn’t go to a doctor that didn’t know everything there is to know about your ailment; you would likely choose a specialist. So why should the cost segregation firm you hire be any different? You want to go to the firm that eats, breathes, and sleeps everything taxes. They need to know tax codes inside and out, and have researched past court cases on these related topics. Do your research and ask the questions so you can pick the firm that is the most knowledgeable about cost segregation analysis.

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Peace of Mind

Finally, when choosing a cost segregation firm, be sure to do your homework.  When it comes to your tax savings, this is especially important. You want to go with a firm that has in-depth tax knowledge and a substantial amount of rave reviews from past clients. You want to choose the firm that will defend their study in the event of an audit.

The best advice we can give you when choosing a cost segregation firm is to ask the questions, get answers and get your money back.

For more information, call me today at 770-224-8504, or email me at David.Wiener@cashflowstrategies.us.

Also, check out my video series, “The Cash Flow Minute.”

YOUR CPA MAY BE COSTING YOU MORE THAN YOU THINK: CHOOSE WISELY

22 Jul

Most of us like to spend as little time as possible with our CPA.  Our once a year meeting is plenty and we try to keep it as short as possible. Who really likes to talk about how much money the government is going to take from us this year?

Proactive or Reactive?

Your choice of CPA can have a huge financial impact, and I’m not speaking of the fees that your CPA charges you for doing your taxes each year.  Many CPAs operate reactively, simply accepting the documentation you send to them and preparing your taxes.  But by the time you have put together your receipts, donations, W2s, and 1099s together for the year, you have likely missed out on many great ways to minimize your tax liability and preserve your wealth.  You need to check your attitude toward working with your CPA, and both of you must take a proactive approach to your strategy.

The effectiveness of any CPA depends immensely on approach, timing and expertise when it comes to your taxes.  It is vital for you to know what to look for when you are choosing a CPA.  Failure to carefully choose will cause you to overpay your taxes, sometimes by a massive amount.  The optimal CPA, using the correct resources, can potentially save you tens or hundreds of thousands of dollars or more.

Finding a CPA

When you look for a CPA, here is what you need to look for.  The best CPA for you and your business will:

  • Be in regular contact with you regarding your standings and developments.
  • Consistently review your tax liability and manage it the best way possible within the tax code.
  • Have trusted advisors that can handle niche tax benefits and beyond.
  • Have a full knowledge of the IRS and be able to best represent you to them in case of an audit.
  • Be proactive in his or her approach, looking at all areas of your business to determine the best way to avoid unnecessary tax burdens.

For example, let’s say that you did your own accounting for last year and end up paying $25,000 in federal and state income taxes.  If you had a CPA who simply accepts your information at the end of the year and files your taxes, he might charge you $1,000 and bring your tax liability down to about $22,000.  Good deal, right?  Hold on … maybe not such a good deal.

The US Tax Code

The good news and the bad news are the same.  Our tax system in the United States is immense.  It is almost 75,000 pages and growing all the time.  As a result, there are thousands of intricacies, exceptions, rules and loopholes.  It is far more than the average person could ever fully understand, and they are constantly in motion.  

My Best Example

My dad was a CPA, and he always told me that “in order to be a CPA in today’s world, you need to be ‘ten miles wide and a foot deep’.  What he meant was, you need to know a little bit about a lot of things, and you need to know people who understand, and can help you with, the things you don’t fully understand.  He had a group of trusted advisors that could help him, and his clients, do the things that he couldn’t do well, and he used them.  My father was one of the best CPAs I have ever known.  His style was was not only proactive; he was relentlessly proactive.  He also always told me that “Tax evasion is a crime, but tax avoidance is mandatory.”  

It’s Not About The Fee

Your CPAs level of dedication is the crucial element.  A CPA cannot possibly understand and execute on the complexities of the tax code. Anyone can have a long list of clients, a beautiful office, and a great personality.  The long and short of the matter is the amount of time and effort that your CPA is willing to invest in ensuring that your wealth is managed in the best possible way. The fees that are charged by CPAs vary widely.  There are some cases where you get what you pay for, but that isn’t always true.  

What Makes The Difference?

A great CPA will bring in those who specialize in things like cost segregation studies for their clients who own, or renovate, commercial or investment property, or to identify R&D tax credits, retraining or other innovative tax credits for which you may qualify.  There are unique little-known tax strategies that cover all different markets, so to expect that your CPA will know how to use them for all industries is just not realistic.  But if you have a CPA you know who is willing to utilize all the methods at his disposal, you can rest easy knowing that your wealth is in good hands.

With the help of a solid CPA you could, possibly, get that original $25,000 in taxes down to somewhere closer to $10,000 plus a few thousand or so to free yourself of the stress of managing your own taxes.  THAT’Sa good deal!!

What you can do

If you don’t feel that your CPA is doing EVERYTHING possible to help you save on taxes, chances are very good that he or she is not.  If someone is overseeing your finances, you should feel comfortable, informed, and confident in that relationship.  Your taxes, your money, and your future is at stake.

I work with a large network of proactive CPAs across the United States.  I am confident in the ways they deal with their clients and the taxes they pay.  I’d be happy to introduce you to one or more of these great people to help you.  Just give me a call or email me.  I’m happy to help.

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