From: TomCrouser@aol.com
Date: Wed, 12 Jun 1996 14:49:50 -0400
Subject: More Letters
Content-Length: 18137
X-UIDL: 834617672.001

e Letters
Transmitted from Jacksonville, Florida

In This Issue: ADVERTISING Specialty Comments; WHO Pays? (dealing with an
error); ACCOUNTANT S Charges; ACCOUNTS Payable (what is and what is not);
DEPRECIATION and Expensing; two REQUESTS for your opinion on equipment; and
HAMADA, what should I tell them?. 

*************
ADVERTISING Specialty Comments. . .Well, let s start with a couple of
 comments on Cy and the Advertising Specialty Institute he wrote about last
week.
***** ***** *****
Subj:	Re: Hotline Cy: Advertising Specialties
From:	SCOTTBOAT1
To:	TomCrouser

I have been selling ad specialties for 10 years now and have never found it
necessary to join ASI. When asked for my ASI#  My standard response is always
the same 

I am a distributor of ad specialties but do not belong to ASI. The
only time I ever encounter a problem is when occasionally a line is
Franchised. There is another source for ad specialty distributors called
Impact . They are the people who put out the catalogues with listings of
various vendors items. Scott Levine....Minuteman Press of Glen Oaks, NY
*****
Subj:	Re: Hotline Cy: Advertising Specialties
From:	ENOW626
To:	TomCrouser

Somebody once said that there s more than 1 way to skin a cat. Same is true
with ASI. A few years back we made a pass at specialties and joined ASI. Got
our number and sold some specialties. Everything Cy said is true but there s
an interesting twist. - - - - We did not renew the 2nd year cuz it is indeed
expensive, however we continued to get catalogs from ASI sources, and was
able to use our defunct number to open the gate. We got and still do get
residual use from our former number.

To 

qualify

 for ASI, - - - I believe you need 10 specialty sources from
which you ve done business, we used forms co. s, Carlson Craft, Regency and
every piddly transaction we d ever made. No sweat getting a number. You gotta
pay the $$.

I disagree somewhat with the thought that it is a nice profit center. UNLESS
you have a person who specifically concentrates on the center it s like
anything else - - - you do a half way job of it.
If we get in a pickle I call a friend who is in ASI, and ask him to find such
& such for me. We also use Cy s list, however have never been able to get the
updates on line and didn t hang in there with it. 

We sell some specialties but only to our present customers if we can do it
painlessly. We are good at what we do and NOT good (won t spend the time) in
specialties, because we like to sell our produced services, get past break
even and rake in the $$$. Lotsa top line $$$ (i.e. from specialties) doesn t
cover basic overhead. Ed.
***** ***** *****
QUICK PRINT EXPO: Hope you ll plan to stop by our booth during Quick Print
Expo in Chicago July 11-13th and say, 

Hey.

 You ll also get to see the
latest developments in our software, Crouser s Print Shop Manager, including
our recently released Accounts Receivable package. Also preview the
forthcoming Accounts Payable, General Ledger and other accounting add ons to
Crouser s Quick Estimator which estimates (fully customizable pricing or
reproduce our pricing), does work orders, invoices, prints price lists, etc.
For a free PC based evaluation copy, message Crouser@aol.com and include your
name, company, address, telephone and fax. P.S. I know it is not called Quick
Print Expo anymore, but I don t remember the new name off of the top of my
head. Tom
 ***** ***** *****
WHO PAYS? (Dealing With An Error) Now, let s get a couple of answers to the
question of who pays. If you remember, a reader previously asked. 

Who pays
the bill?

 First, an abbreviated version of the situation.
*****
. . . Our salesman sold a 4 color job designed by my staff and printed by
another printer.  The job took 3 times as long to design than was quoted
because the customer kept changing her mind. She was not accurately apprised
of all of the additional time that she was incurring. . . . she signed off
(on a proof).  The job went to press and. . .the registration was off
somewhat.  The customer flat out rejected the job and would not accept any
discount.  She did . . .want it reprinted with changes . . .  She was told
that there would be additional charges for the film corrections.  She
rejected this idea and did not want us to reprint.

To make a long story short, she insisted that we return her $1600 deposit
even though we were willing to give her the disk or mechanicals. We wanted to
keep $450 to cover some of the art time.  Instead of talking to us, she hired
the most expensive attorneys to sue us for damages.  We gave her back the
$450. The problem is the printer insists that we owe him the $900 for the
job. We had been keeping him abreast of the situation as it developed.  What
do you think? One more question, is the salesman held accountable for any of
this money, if we end up giving some to the printer?  He of course did not
get a commission for this job.
*****
Well, here s what Larry Nebel said on the subject.
*****
From:	LarryHN
To:	TomCrouser

First - I think that you are DUMB to be selling 4 color if you don t know how
to do it - and the facts show that you do not. 

Second - no mention was made of the selling price, but this is a good case
for why you CAN NOT SELL buyouts for less than double your cost. From the
sound of the story I suspect you were looking to get a 30% markup most of
which would go to the salesman.

Third - again on pricing - it sounds like selling the design for $450 when it
took several months and lost of ACs is giving it away - a sure way to attract
BAD customers

As to who pays - the one who made the mistake - the owner. Certainly the
salesman does not get paid any commission since there was not sale - but you
can not charge an employee for their mistakes (at least not in California).
If the job was printed poorly I would not pay the printer - they have to
stand behind their work too. As to returning the deposit, I probably would
not, but the right thing may be to have done it - that s a very delicate
decision and depends on a lot more than can be told in an e-mail

As to offering the 

bad

 job (if the customer thinks it is bad IT IS) for a
discount - I suggest that that is the worst thing you could ever do. Either
make it right or eat it. What possible good can come of having a customer
with 10,000 

bad

 brochures thinking 10,000 separate times, 

Boy that printer
sure screwed me

 and thinking once 

boy I sure saved some money on this job

.
Never discount a bad job - FIX it or eat it.

Larry Nebel
***** *****
Okay, Larry (Tom wonders if Larry is holding back his real feelings in this
matter). Let s here from brother Keith Einstein in Dallas who has just
returned from vacation. . .and I didn t even got a post card. Anyway. . .
***** *****
Subj:	A Question for you: Who pays?
From:	EinPrint
To:	TomCrouser

This is an age old problem of brokering. Unless you re going to be very
specific on every step of the brokering process you will set yourself up for
big time problems. With no clear written ground rules all parties will claim
their own standards as the written law and of course those standards will
vary depending on their best interests. 

>From your description of the events, everyone shares some level of
responsibility. Unfortunately you re the one who will probably pay, although
the printer must collect from you which is his problem.

Use this situation as a learning and training opportunity. Evaluate what
should have been done at each step of brokering process that would have
prevented the final outcome. In response to the question, should the
salesperson be required to share in the cost, I say NO. If he had ignored
written procedures and specific directions that resulted in the problem then
fire him, otherwise offer him good solid training on proper procedures for
outsourcing. Good Luck, Keith Einstein
***** ***** *****
Our Next Power Pricing Seminar will be in Ft. Lauderdale on June 29th, then:
Philadelphia July 27th and Colorado Springs on August 24th. Call (304)
342-5100 if you want to attend this FREE session.
***** ***** *****
ACCOUNTANT S CHARGES
Here s a printer who has a question regarding an accountant s charge.
***** *****
Subj:	accountant
To:	TomCrouser

Do you remember the problem I had with the IRS on the payroll tax deposits
(we discussed over the telephone)? We had a $5400 penalty. My old accountant
wrote two letters to the IRS and got no results. . . . He wrote the letters
at no charge. My new accountant charges $450 per month (versus $145 the old
one charged) to do my monthly reports. He charges $45 extra per quarterly
reports. He wrote a letter to the IRS and made some phone calls to the local
office and got the penalty reversed. (Great news!)

(However!) I got a $1,000 bill from the accountant for his efforts. I
inquired about the bill and they said that it was legitimate. I asked how
many hours the spent on it and they said that they had quite a bit of time on
it and besides they considered that a good return on the dollar for me. Kinda
sticks in my throat you know. I do not believe they spent over 2 or 3 hours
on it. 

I would like your opinion. Thanks. Burned.
***** *****
Dear Burned: My first thought was that, yes, you are a few thousand dollars
ahead. But after checking with our staff CPA and doing some research, it
appears that most Societies of Certified Public Accounting throughout the US
really frown on any type of value based pricing schemes for their members.
Their professional position is that the work done should be paid for based on
the quantity and quality of that work. Contingency fees, specifically, are
frowned upon if not down right outlawed (depending upon your state). The
thinking goes that the accountant should be paid for their work and that a
contingency fee would bias the work done. For instance, it may take as long
to prepare a tax return for someone who gets back $20,000 as someone who owes
$100. A contingency fee based on results is therefore frowned upon by most
Societies and you have a right to a detailed billing regarding the work done
on your behalf in this matter. So, you might have a legitimate concern.
Request a detailed billing statement. If you still are not satisfied, contact
the Board of Accountancy in your state which is located in your state s
capital city.
***** *****
ACCOUNTS PAYABLE
Subj:	accounting: A/P, other items
From:      Accruing in Carolina
To:	TomCrouser

Tom- My accountant has made a request that got me thinking about current
ratios and other exciting topics (that I know you want me to think about more
often)...

As you know, we are using a spreadsheet for compiling an aged trial balance
for A/R and A/P. From the start, because we wanted to see the ENTIRE 

debt


picture, we included bank note payments, leases, utilities payments, rent,
you name it. Now, I would guess that items that are technically due on the
31st for the following month should be paid before the end of the month or be
included in an end of the month A/P report.

However, my accountant says that we are including some things in this aged
trial balance (for A/P) that shouldn t be in there. Stuff like rent (for the
next month) that would probably have been paid by the 2nd or 3rd, and copier
leases, etc. Also, since we have some of those leases that aren t really
leases ($1.00 buyouts), then I assume that, instead of appearing on an A/P
report, they need to be split into current and non-current liabilities. Any
comments? It seems that some of these changes would affect current ratios
pretty drastically.
***** *****
Dear Accruing. You re right. Stuff that is not due on the date the accounts
payable list is created is not a payable, therefore should not be included on
accounts payable aging. You would be advancing your costs. . . for instance,
you could include all of the next twelve months rent payments which would
reduce your income drastically this month, but make the future months look
better. . . .same thing could occur with copier lease payments, etc. All in
all, this is a cut off problem and violates the basic accounting principle of
matching income and expenses to determine net income. So, I agree with  your
accountant. . .don t do that. (This should also improve your income picture
for at least one month as well as your current ratio). As for leases that
aren t really leases, if they aren t really leases then they should be
capitalized and put onto the balance sheet and that will affect the current
ratio negatively. 

So, yes, you should get 

right

 so you can see better where you are. So, off
the top of my head, your accountant appears to be telling you the straight
skinny. Good luck.
***** *****
DEPRECIATION AND EXPENSING
Our earlier discussion about depreciation brought this 

taxing

 question.
***** *****
Subj:	Costing Prepress Equipment
From:	RPOOLER
To:	TomCrouser

Won t it be best to expense out a pre-press purchase rather than try and
depreciate it over 5 years. I know of several large printing operations with
large numbers of Macs who have taken to buying new machines for cash rather
than financing the purchases. The expense is written off immediately and the
numbers games is simplified.

On a related note, the new digital presses, (i.e., Chromapress, Indigo and
etc.) are the bulk of the machines going to Large operations trying to fill a
niche or a current HOT Button, or are they going to new or small operations
trying to fill the same niche. And how are they able to justify the price
tags. I was at a show when someone mentioned that the waiting period for a
new machine was 2 years and the financing was only for 5 years, and the new
machine cycle was probably going to be 1-2 years, so the guy signs up now,
waits for his machine to be delivered and watches the machine he orders
become obsolete before the manufacturer can deliver it. And the financial
guys wonder why we get crazy over the paper work. Just my $.02
***** *****
Yes and no to your idea of expensing the pre-press purchases. Only a certain
amount of dollars of purchases of this type can be directly expensed per
year. Additionally, regardless of whether one pays cash for the equipment or
finances it, has no bearing on its treatment under IRS regulations. As for
the digital presses, I would like to think they are going to larger companies
with the financial strength to develop a niche market. However, in Iowa, I
found one small shop who is through some 18 months of the 24 month waiting
period and they are the only shop in town. I truly do not know how they are
going to make it work.
***** *****
REQUESTS FOR YOUR OPINION
And here s some requests for information from you. First, what kind of
suggestions do you have for someone who has a Xerox breathing down their
neck?
***** *****
Subj:	High Speed Copying
From:     X ed@copied.com
To:	TomCrouser

Need info-I know you can direct me to the right source. Have 2 1090 s leases
up in 6 months.  Need Docutech, can t afford!  What machines (does not need
to be the big X) should I look at?  Screen quality very important!  Do lots
of computer manuals.  Presently running 1/2 mil per month between both
machines.  They are not up to the quality that I need.  Now on the all you
can eat plan and I know Xerox is going to get me as soon as the lease is up.
 They are breathing down my neck now!!!   Help!
***** *****
And here s a fellow who is going to buy a two color Heidelberg GTO and would
like some comments about his plans.
***** *****
Subj:	Re: Stuff . . .
From:     GonnaBuy
To:	TomCrouser@aol.com

Tom: Thanks for adding me to your mailing list.  I had almost (but not quite)
forgotten the nuances of your down-to-earth, suggestive style of writing. . .
.Considering a major upgrade...perhaps a 2-color GTO with appropriate
pre-press and post-press services.  In addition to a couple of new employees
(yuk!), I would be called upon to invest a considerable sum of money in
equipment.  But I haven t the slightest notion as to all that I would need in
the way of computer output capabilities, scanning, direct-to-film or
direct-to-plate, etc., etc.  Will you advise? Best to all. GonnaBuy.
***** *****
Personally, I d find out if I needed the thing in the first place, but. . . .
Okay, feed GonnaBuy with some realities from the marketplace of what he s in
for. I ll publish soon.
***** *****
HAMADA - What should I tell them? I have the opportunity next week to address
the Hamada dealers in North America on the general subject of pricing
printing and how to assure we pass along costs to customers. It occurs to me
that you might want me to deliver a message or two to your favorite Hamada
dealer. If so, send it along and I will see that it gets delivered. Thanks.

Meanwhile, Happy Trails.
Tom and Pamela working in north Florida.