Many of you are required, either from a bonding standpoint or highway prequalification requirement, to have an audit of your financial statements as of and for the year ended December 31, 2010. As you approach the end of the year, there may be things that you should be doing in order to improve your working capital position. I mention improving working capital since this is an area that affects bonding capacity and, if you are a highway contractor, also affects the amount of prequalification you may receive from the Highway Transportation Cabinet.
With only days left in December, time is running out for you to do anything about improving your company’s working capital. With that in mind, if you have short-term debt, you may want to consider a restructuring of debt whereby you push out beyond twelve months principal payback requirements. By getting debt out of current liabilities, you may increase working capital. Additionally, if you have related party loans receivable that are classified as long-term assets on your balance sheet, you may want to consider obtaining financing personally and paying off those related party receivables whereby company cash is increased with a corresponding increase in working capital.
/posted by Wayne Sturgeon, CPA
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