Most business owners think of valuation as something you do once, right before you sell, merge, or bring in investors. But that mindset can cost you—sometimes hundreds of thousands of dollars in lost value or missed opportunities.

A valuation isn’t just a number; it’s a thorough health check of your company that can guide better decisions, uncover hidden risks, and help you build long-term value. Yet only about 20% of small businesses ever successfully sell,[^1] often because owners wait until it’s too late to discover and address critical value gaps.

Treating valuation as an ongoing process, rather than a one-time event, gives you the insight and control you need to thrive in your industry.

The Myth of the One-Time Valuation

Too often, owners only call a valuation expert when they’re preparing to exit or handle a triggering event—retirement, divorce, new investors. But by then, you’re reacting, not optimizing.

A single, last-minute valuation gives you a snapshot, but not the story behind the numbers. Without regular check-ins, you might miss red flags such as overreliance on a single customer, declining profitability margins, or inefficient asset management. These issues can slash your valuation and are nearly impossible to fix quickly when you’re already in negotiations.

The business owners who achieve the strongest exits are those who began planning years in advance, using regular valuations to guide their strategic decisions and systematically addressing gaps that could limit value.

Why Ongoing Valuation Pays Off

1. Evaluate Investments and ROI

Valuations help you measure whether your strategic moves are actually working. Are your investments in new technology, product lines, or market expansions driving returns above your cost of capital?

The business valuation industry has grown to $2.8 billion in 2025, with revenue increasing at 5.1% annually over the past five years[^2]—reflecting growing recognition that professional valuation isn’t optional for serious business owners. Regular valuations ensure your capital allocations are optimized, not just spent.

2. Identify Where to Improve Value

Detailed valuation reports identify the specific factors that drive or hinder value: risk profile, cash flow quality, growth potential, and competitive position. That knowledge is power.

Valuation reports expose the weak points in your business and clarify exactly where to focus your efforts to maximize shareholder value. Think of it as a roadmap showing you which improvements will deliver the highest returns—whether that’s diversifying your customer base, strengthening your management team, or improving operational efficiency.

3. Support Strategic Planning and Decision-Making

When evaluating potential acquisitions, new market entries, or major capital investments, regular valuations help you model how each option will impact your overall business value. You’re not guessing—you’re making data-driven decisions backed by objective financial analysis.

This strategic clarity helps you navigate your business journey with confidence, knowing exactly how your choices affect your most valuable asset.

4. Tax Planning and Ownership Transitions

For gift and estate tax filing purposes, business owners often seek valuations only when required, then wind up shocked by the resulting tax liability. Estate and gift taxes quickly reach the 40% bracket,[^3] making strategic planning crucial.

Preemptive valuations assist with tax planning and help smooth the process of gifting or estate transitions, potentially saving hundreds of thousands of dollars. Regular valuations also establish fair market value for buy-sell agreements, succession planning, and equitable ownership transitions—protecting all stakeholders’ interests.

5. Strengthen Your Position with Lenders and Investors

Lenders and investors require reliable valuation information to make informed decisions. A well-documented, professionally conducted valuation enhances your business’s appeal and can be the difference between securing favorable financing terms or being declined altogether.

As your business evolves, maintaining current valuation data positions you to move quickly when opportunities for expansion, acquisition, or strategic investment arise.

How Often to Revisit Valuation

Most businesses should perform a valuation annually, like a routine doctor’s checkup. But certain triggers call for an update sooner:

1. Launching or discontinuing major product lines
2. Securing (or losing) a significant customer or contract
3. Leadership changes or ownership transitions
4. Taking on substantial new debt or capital
5. Major industry or regulatory changes
6. Contemplating retirement or exit within five years
7. Significant market shifts affecting your industry’s valuation multiples

Valuation multiples have experienced notable fluctuations in recent years due to interest rate changes, inflation pressures, and evolving industry dynamics.[^4] Regular updates ensure you understand how these market forces affect your specific business value.

Proactive updates mean you’re always ready—whether that’s to fine-tune your business strategy, seize an acquisition opportunity, negotiate a loan, or respond to a buyout offer.

Making Valuation Part of Your Business Rhythm

To make valuations truly useful, weave them into the normal rhythm of running your business.

Keep your financials clean and timely. Reliable and interpretable books make every valuation faster, more accurate, and more insightful. Implement accounting practices that meet buyer and lender expectations, making your business more attractive and trustworthy.

Don’t overlook intangible assets. Processes, intellectual property, customer relationships, and even company culture can add real, measurable value but are often under-documented. Make sure these assets are properly identified and protected.

Benchmark regularly. Compare your performance and risk profile to peers in your industry to understand where you’re strong and where you might need to improve. Industry-specific insights are critical—what drives value in manufacturing differs significantly from what matters in professional services or technology.

Work with specialists who know your market. A firm with deep industry knowledge won’t just hand you a number but will deliver practical insights you can act on to increase long-term value. They understand the unique complexities of your industry and can provide tailored strategic guidance.

From Overwhelmed to Empowered

Business owners who implement regular valuations report a fundamental shift in how they run their companies. Instead of feeling uncertain about whether their decisions are building value, they gain clarity. Instead of discovering problems during a sale process, they identify and resolve issues years in advance. Instead of accepting generic advice, they receive industry-specific strategic guidance that actually moves the needle.

This is the transformation from reactive to proactive, from guessing to knowing, from overwhelmed to empowered.

Final Thought

Think of valuation like your business’s annual physical. You wouldn’t only see a doctor when you’re critically ill. You go for regular checkups to stay strong and catch problems early.

When valuation becomes part of your business rhythm, you gain clarity on whether your investments are working, how to reduce risk, and where to increase value. And when the time does come to sell, merge, or raise capital, you’ll be ready with the confidence and numbers to back you up.

Ready to Understand Your Business’s True Value?

Don’t wait until you’re ready to exit to discover what your business is worth. HBK CPAs & Consultants delivers not only exceptional valuation services but comprehensive business consulting solutions designed specifically for your industry’s unique complexities.

Our experienced valuation team combines technical expertise with deep industry knowledge to provide insights you can actually use—helping you make strategic decisions with confidence, identify opportunities for value enhancement, and build a business positioned for long-term success.

Schedule your consultation with HBK’s valuation services team today. We’ll help you understand your current value, uncover opportunities you might be missing, and create a roadmap for maximizing your business’s potential.

Contact us now to get started. Because choosing HBK means you’re securing a partnership that truly understands your industry and needs.

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References

[^1]: 45 Day Exit, “Valuing a Small Business for Sale,” October 2024. https://45dayexit.com/how-to-value-a-small-business-for-sale/

[^2]: IBISWorld, “Business Valuation Firms in the US – Market Research Report (2014-2029),” 2025. https://www.ibisworld.com/united-states/industry/business-valuation-firms/4797/

[^3]: Eqvista, “Succession Planning Valuation: Founder’s Guide,” March 2025. https://eqvista.com/company-valuation/founders-approach-valuing-business-succession-planning/

[^4]: Andersen Global, “Trends Impacting Business Valuation in 2024,” August 2024. https://eg.andersen.com/business-valuation-2024/

If you’re navigating the complexities of integrating automation and AI into your manufacturing operations, you’re not alone—and the opportunity has never been greater. Automation and artificial intelligence (AI) are revolutionizing the manufacturing industry, ushering in an era of unprecedented efficiency and precision. From predictive maintenance and real-time quality control to autonomous robotics and supply chain optimization, AI technologies are streamlining operations and reducing waste. Factories equipped with smart sensors and machine learning algorithms can now adapt to changing conditions, detect anomalies before they become costly problems, and even self-correct production errors. This transformation is not just about faster production, it’s about smarter, more resilient systems that can respond dynamically to market demands and operational challenges.

However, the rise of AI in manufacturing also raises critical questions about workforce displacement. We understand the concerns: as machines take over repetitive and labor-intensive tasks, many traditional roles are being phased out, prompting worries about job security and economic inequality. Yet, this shift also creates opportunities for new kinds of employment—roles focused on AI oversight, data analysis, and system integration. The challenge lies in managing the transition: investing in reskilling programs, fostering collaboration between humans and machines, and ensuring that technological progress benefits workers as much as it does bottom lines. Balancing efficiency with empathy will be key to shaping a future where innovation uplifts rather than replaces.

To fully harness the benefits of AI in manufacturing, collaboration between industry leaders, policymakers, and educational institutions is essential. Governments can play a pivotal role by incentivizing innovation while safeguarding workers through updated labor policies and social safety nets. Meanwhile, companies must prioritize ethical deployment—ensuring transparency in AI decision-making and fostering inclusive growth. Educational institutions can bridge the skills gap by aligning curriculum with emerging technologies, preparing the next generation for hybrid roles that blend technical expertise with human judgment. Together, these efforts can shape a manufacturing landscape where AI enhances human potential rather than replaces it.

Ready to explore how automation and AI can work for your manufacturing operation? To discuss your company’s use of automation and AI, contact a member of HBK Manufacturing Solutions at manufacturing@hbkcpa.com. 

The Office of Management and Budget (OMB) announced a delay in releasing the 2025 OMB Compliance Supplement due to administrative backlogs. Traditionally issued in May, this annual publication provides essential guidance that auditors rely on when performing Single Audits for organizations receiving federal awards.

Understanding the Single Audit Landscape

Single Audits are a critical compliance requirement for organizations that expend $750,000 or more in federal awards during their fiscal year.^[1] In fiscal year 2023 alone, over 40,000 Single Audits were submitted to the Federal Audit Clearinghouse, representing billions of dollars in federal funding across nonprofit organizations, educational institutions, and state and local governments.^[2]

The Compliance Supplement serves as the auditor’s roadmap, providing program-specific audit guidance for the largest federal programs. Without this finalized document, auditors cannot complete the compliance testing required to issue an official Single Audit opinion—even when all fieldwork has been completed.

Key Considerations for YOUR Organization

If your organization receives federal funding and has a June 30, 2025 fiscal year-end, this delay could impact the timing of your audit deliverables:

• The Single Audit cannot be finalized until the official 2025 Compliance Supplement is released by OMB.
• This delay may affect the timely submission of audit reports to federal agencies or pass-through entities. Under the Uniform Guidance, Single Audits must typically be submitted within nine months of fiscal year-end—meaning March 31, 2026 for June 30, 2025 year-ends.^[3]
• However, your financial statement audit can still be completed and issued separately without interruption.

Why This Matters More Than You Think

Organizations facing audit delays may encounter several cascading challenges:

• Grant reimbursement delays: Some federal agencies may hold payments pending receipt of compliant audit reports
• Compliance concerns: Late audit submissions can trigger findings in subsequent years
• Board and stakeholder relations: Delays require careful communication to maintain confidence
• Future funding at risk: Patterns of late audit submissions may impact future grant applications

According to recent federal oversight data, approximately 15% of Single Audits are submitted after their deadline each year, with delays often cited as a contributing factor to findings in subsequent audit periods.^[4]

How HBK Is Responding

Our firm has obtained the draft version of the 2025 Compliance Supplement through the AICPA Government Audit Quality Center (GAQC). While this draft cannot be used to issue final Single Audit reports, it enables our engagement teams to:

• Begin preliminary planning for Single Audit engagements.
• Identify key compliance areas and potential changes from prior years.
• Prepare audit procedures and programs in advance of the official release.
• Maintain momentum on your engagement to minimize delays once the final Supplement is published.

At this time, OMB has indicated that no significant revisions are anticipated between the draft and final versions of the Supplement.

What Makes This Situation Different

Unlike routine audit planning, this administrative delay is entirely outside your organization’s control. The challenge lies in maintaining audit progress while managing stakeholder expectations. Organizations that proactively address this situation demonstrate strong governance and accountability—qualities that strengthen relationships with funders and oversight bodies.

Next Steps

Financial Statement Audit:
You may proceed with your financial statement audit as planned. We recommend discussing with your audit team and users of your financial statements the option to issue the financial statement audit separately from the Single Audit if reporting deadlines require it.

Single Audit:
Planning and preliminary fieldwork may continue, but the final Single Audit report cannot be issued until the official 2025 Supplement is published.

Communication Strategy:
We encourage proactive communication with federal agencies, pass-through entities, and major donors to inform them of the potential delay and to align expectations regarding report submission timelines. Consider these key messages:

• Acknowledge the delay and its industry-wide impact
• Confirm your organization’s commitment to compliance
• Provide updated timeline expectations once the Supplement is released
• Highlight steps being taken to minimize the ultimate delay

Our Commitment

HBK is closely monitoring updates from both the OMB and the AICPA GAQC and will promptly notify clients once the final 2025 Compliance Supplement is released. Our team remains committed to completing your audits efficiently, accurately, and in full compliance with all federal requirements.

You don’t have to navigate this complexity alone. With our proven track record as a Top 50 accounting firm specializing in governmental and nonprofit audits, we understand the unique challenges your industry faces. Our experts have guided hundreds of organizations through audit complexities, ensuring compliance while minimizing disruption to your operations.

For questions about how this delay may affect your organization—or for assistance with stakeholder communication—please contact your HBK engagement team or reach out to our A&A Specialist Group.

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Footnotes:

[1] 2 CFR § 200.501, Audit Requirements, Office of Management and Budget Uniform Guidance (2024).

[2] Federal Audit Clearinghouse, U.S. Census Bureau, “Single Audit Database Statistics” (data as of September 2024), https://facweb.census.gov/

[3] 2 CFR § 200.512(a), Report Submission, Office of Management and Budget Uniform Guidance (2024).

[4] U.S. Government Accountability Office, “Single Audit: Opportunities Exist to Improve Oversight and Address Audit Quality Issues,” GAO-22-104450 (November 2022).

If you recently financed a new vehicle—or you’re a lender who provides car loans—there’s new tax guidance you need to know about. The IRS just released simplified reporting rules for 2025 through Notice 2025-57 PDF that could affect your tax deductions and compliance requirements.

What’s the New Deduction?

Under the One Big Beautiful Bill Act (OBBBA), individuals can now deduct up to $10,000 in interest paid on qualified car loans for vehicles purchased between January 1, 2025, and December 31, 2028. This applies to personal-use vehicles that meet these criteria:

• Cars, minivans, SUVs, pickup trucks, or motorcycles
• Weigh less than 14,000 pounds
• Assembled in the United States
• Purchased with a loan taken out after December 31, 2024

What Does This Mean for Lenders?

If your business receives $600 or more in interest payments on these qualified vehicle loans during the year, you’re required to report that information to both the IRS and the borrower.

The Good News: Simplified Reporting for 2025

The IRS is making things easier this year. Instead of complex formal reporting, lenders can meet their 2025 requirements by simply making the total interest amount available to borrowers by January 31, 2026 through:

• An online customer portal
• Monthly statements
• An annual summary statement
• Any similar method that provides accurate information

Better yet, the IRS won’t impose penalties on lenders who follow these simplified guidelines, even if they don’t file traditional information returns for 2025.

What Should You Do Next?

Whether you’re claiming this deduction or you’re a lender navigating these new reporting requirements, the details matter. One misstep could mean leaving money on the table or facing unexpected compliance issues.

Partner with Advisors Who Understand Your Industry

At HBK CPAs & Consultants, we don’t just explain the rules—we help you apply them strategically to your specific situation. Our team stays on top of evolving tax guidance so you can focus on running your business with confidence. From maximizing deductions to ensuring seamless compliance, we provide the tailored expertise you need to thrive in your industry.

Schedule your consultation today to discuss how this new guidance affects your business and discover what other opportunities you might be missing.

Strategic acquisition adds specialized expertise in real estate, high-net-worth individuals, and family offices.

PARAMUS, NEW JERSEY – HBK, a leading accounting and advisory firm, announced today the acquisition of Konner, Harbus and Schwartz, PC (KHS), a boutique accounting firm based in Paramus, New Jersey. The transaction, closing at the end of October, will establish the firm’s newest office location in Northern New Jersey. Ira Rosenbloom of Optimum Strategies advised both firms on the transaction.

KHS brings a distinctive client portfolio that includes significant concentrations in real estate, amusement and recreation, high-net-worth individuals, and fiduciary services. Despite its size, the firm has built a reputation for delivering sophisticated services typically associated with larger firms, but with a personalized approach that has attracted clients throughout the tri-state area and beyond.

“KHS has carved out a unique position in the market by providing Big 4-level expertise with the personal attention and responsiveness that high-net-worth clients and their families value,” said HBK CEO and Managing Principal Thomas M. Angelo, CPA, CTIP. Their track record of attracting clients who previously worked with larger firms speaks to the quality of their service model. This is exactly the type of specialized capability we want to bring into HBK.”

The firm’s proximity to New York City has enabled KHS to develop deep relationships with clients in private equity, real estate, and other sophisticated industries. Many of these clients have transitioned from national firms seeking more personalized service without sacrificing technical expertise.

As part of the acquisition, Dina Schwartz and Marc Harbus will join HBK as Principals. Dina will lead operations at the Paramus location, while Marc will divide his time between HBK’s Boca Raton, Florida and Paramus offices.

“We’ve built our practice on the principle that high-net-worth individuals and complex clients deserve both technical excellence and personal attention,” said Marc Harbus, Principal in the new Paramus office. “Joining HBK allows us to enhance our service offerings while maintaining the boutique approach our clients expect. We’re excited about the additional resources and expertise we can now bring to our relationships.”

The addition of KHS supports HBK’s strategic initiatives, focusing on proactive growth through strategic acquisitions, geographic expansion, and enhanced service delivery capabilities. The Paramus location will offer HBK’s full range of accounting, tax, and advisory services with particular strength in real estate, fiduciary services, and high-net-worth individual planning.

About HBK: HBK provides businesses, their owners and operators a wide range of financial solutions, including accounting, tax, and audit services; wealth management; business valuation; transaction advisory services; forensic accounting; litigation support services; and business consulting, including broad expertise in a number of major industries. The CPA firm dates back to 1949 and added its wealth management practice in 2001. HBK CPAs & Consultants and HBKS Wealth Advisors serve clients out of offices in Columbus and Youngstown, Ohio; Pittsburgh, Philadelphia, Erie, Hermitage, Meadville, and King of Prussia, Pennsylvania; Holmdel, Cherry Hill, and Paramus New Jersey; Long Island and Fredonia, New York; Fort Myers, Naples, Stuart, Sarasota, and Boca Raton, Florida; and Delhi, India. HBK also ranks in the Top 50 on Accounting Today’s list of the largest U.S. CPA firms; HBKS Wealth Advisors is a Top 100 registered investment advisory.

Media Contact: Loriann Facenda, Director of Communications, lfacenda@hbkcpa.com

What is SOC 2?

SOC 2 is a reporting framework developed by the American Institute of Certified Public Accountants (AICPA) that provides a standard for service organizations to ensure they protect customer data effectively.

The framework is built around five Trust Services Criteria (TSC): Security, Availability, Processing Integrity, Confidentiality, and Privacy. Organizations can align their controls against these criteria to demonstrate their commitment to data protection. Of these five categories, Security is the only required area and serves as the foundation. It comprises nine components, known as Common Criteria (CC), which incorporate the COSO internal control framework.

The Three Stages of SOC 2 Compliance

Organizations typically progress through three stages when integrating SOC 2 into their operations or demonstrating the effectiveness of their controls:

Stage 1: Readiness Assessment
This introductory stage helps organizations understand where they stand in relation to SOC 2 requirements. The results are intended for internal management use only and serve as a roadmap for compliance efforts.

Stage 2: Type 1 Coverage
Type 1 represents a point-in-time assessment that confirms controls have been properly designed and implemented to align with the Common Criteria. However, this stage does not test whether controls are operating effectively over time. The resulting report can be shared with external stakeholders and typically serves as an interim step toward achieving Type 2 attestation.

Stage 3: Type 2 Coverage
Type 2 provides the strongest level of assurance by examining controls over a period of time, generally twelve months. This stage validates the operating effectiveness of identified controls through comprehensive testing. The report can be shared with external users, and organizations typically maintain ongoing coverage through periodic reviews to ensure continuous compliance.

SOC 2 Readiness Assessment: Your First Step

The Readiness Assessment is the crucial first step a service organization takes when working toward SOC 2 compliance. At this stage, the goal is not to pass a formal audit but to understand your organization’s current position in relation to SOC 2’s Trust Services Criteria. Think of it as a preparation phase where internal practices are measured against what will eventually be reviewed by an independent auditor.

What Happens During a Readiness Assessment?

During this stage, organizations review their policies, processes, and technical controls to determine whether they align with SOC 2 expectations. This assessment covers critical areas such as:

• How systems are secured against threats
• How sensitive data is managed and protected
• How employees are trained, both during onboarding and throughout their tenure
• Whether documentation meets audit standards

The assessment typically reveals gaps or weaknesses that could create problems during a formal audit. For example, an organization might discover it lacks a written incident response plan, or that certain security monitoring processes are not formally documented or kept current. These findings are invaluable for prioritizing improvements.

The Readiness Report

The outcome of this effort is usually a set of internal findings or a Readiness Report. It’s important to note that this document is not an official SOC 2 deliverable and should not be shared with customers or external stakeholders. Instead, it serves as an internal management tool that identifies where improvements are needed and helps prioritize remediation efforts. The report provides a clear roadmap of next steps, giving the organization actionable guidance on what must be accomplished to meet compliance standards.

Why Readiness Matters

The Readiness stage helps organizations enter a formal SOC 2 audit with confidence. By identifying and addressing issues ahead of time, organizations significantly reduce the risk of failing to meet requirements during the official examination. This proactive approach offers several benefits:

• Risk mitigation: Problems are discovered and resolved before they can derail a formal audit
• Cost efficiency: Fixing issues early is typically less expensive than addressing audit findings
• Internal awareness: The process builds stronger understanding of security and compliance responsibilities across the organization
• Smoother audits: When the formal audit arrives, the organization is better prepared, increasing the likelihood of a favorable outcome

Ultimately, investing time in a thorough Readiness Assessment sets the foundation for successful SOC 2 compliance and demonstrates to stakeholders that your organization takes data protection seriously.

Inventory costing methods are among the most consequential accounting decisions a manufacturing company makes. The choice between FIFO, LIFO, weighted average, or specific identification determines how cost of goods sold and ending inventory are calculated—directly affecting profitability, tax liability, and key financial ratios.

1. First-In, First-Out (FIFO)
   Concept: FIFO assumes that the oldest inventory items are sold first.
   
   Advantages:
   • Matches older costs with current revenues.
   • Ending inventory reflects recent costs, which is useful in inflationary environments.
   • Often aligns with physical inventory flow.
   • Does not require complex calculations.
   
   Disadvantages:
   • Higher taxable income during inflationary periods.
   • May not reflect actual cost of goods sold if prices fluctuate significantly.
   
   
2. Last-In, First-Out (LIFO)
   Concept: LIFO assumes the newest inventory items are sold first.
   
   Advantages:
   • Matches recent costs with current revenues, which can reduce taxable income in inflationary periods.
   • Useful for companies with large inventories and rising costs.
   
   Disadvantages:
   • Ending inventory may be undervalued.
   • Not permitted under IFRS.
   • Can distort financial ratios and is more complicated for inventory management.
   • Requires calculations that may need to be calculated by an outside party or complex spreadsheets.
   
   
3. Weighted Average Cost
   Concept: Inventory cost is based on the average cost of all items available during the period.
   
   Advantages:
   • Smooths out price fluctuations.
   • Simple to apply and consistent.
   
   Disadvantages:
   • May not reflect actual inventory flow.
   • Less accurate in periods of significant price volatility.
   
   
4. Specific Identification
   Concept: Tracks the actual cost of each specific item sold.
   
   Advantages:
   • Most accurate method.
   • Ideal for high-value or unique items (e.g., vehicles, jewelry).
   
   Disadvantages:
   • Impractical for large volumes of homogeneous inventory.
   • Requires detailed tracking systems.
   

Strategic Considerations

• Tax Strategy: LIFO can reduce taxable income but may not be allowed under certain accounting standards.
• Financial Reporting: FIFO and weighted average are more commonly accepted under both GAAP and IFRS.
• Operational Fit: The method should align with the company’s inventory flow and business model.

Conclusion

Choosing the right inventory costing method is not just an accounting decision—it’s a strategic one. It affects financial statements, tax planning, and operational efficiency. For manufacturing firms, where inventory valuation can be complex due to raw materials, work-in-progress, and finished goods, aligning the costing method with business realities is crucial.  To discuss the inventory costing method best for you, please contact a member of the HBK Manufacturing Solutions team at manufacturing@hbkcpa.com. 

In today’s complex healthcare landscape, medical practices face mounting pressures to maintain financial stability while delivering high-quality patient care. One often overlooked yet pivotal factor in achieving this balance is the negotiation of commercial insurance contracts. These agreements dictate reimbursement rates, payment terms, and operational expectations between healthcare providers and private insurers, directly impacting a practice’s revenue cycle and long-term sustainability. For medical practices, mastering the art of negotiation is not just a business strategy—it’s a necessity. Firms like HBK Healthcare Solutions, led by experts such as Joshua J. Zarlenga, CPA, MBA, offer specialized support to navigate this critical process, driving revenue growth and operational efficiency.

The Financial Stakes

Commercial insurance contracts typically account for a significant portion of a practice’s revenue, often surpassing reimbursements from government programs like Medicare and Medicaid. Unlike government payers, where rates are largely non-negotiable, commercial insurers offer a window for negotiation that can make or break a practice’s bottom line. A well-negotiated contract can secure higher reimbursement rates, ensuring that physicians are fairly compensated for their services. Conversely, accepting a boilerplate contract without scrutiny can lock a practice into undervalued payments, eroding profitability over time.

For example, a 2023 study by the American Medical Association found that reimbursement rates for the same procedure can vary by as much as 20-30% between different commercial insurers in the same market. Practices that fail to negotiate effectively may leave substantial revenue on the table—money that could be reinvested in staff, technology, or patient care initiatives. With operational costs rising (e.g., a 4.5% increase in healthcare inflation reported by the Bureau of Labor Statistics in 2024), securing favorable terms becomes even more critical. HBK Healthcare Solutions, under the leadership of Josh Zarlenga, helps practices maximize this opportunity by leveraging data-driven insights to negotiate rates that reflect their true market value.

Beyond Rates: Operational Implications

Negotiating isn’t just about securing higher payments—it’s about shaping the terms that govern day-to-day operations. Commercial contracts often include clauses on prior authorizations, claims submission deadlines, and denial appeal processes, all of which can burden a practice with administrative overhead. A poorly negotiated contract might impose stringent requirements that increase staff workload and delay payments, while a thoughtfully crafted agreement can streamline these processes, improving cash flow and operational efficiency.

Take prior authorizations as an example. A 2024 survey by the Medical Group Management Association revealed that 89% of practices reported an increase in prior authorization demands from commercial insurers over the past two years, with delays averaging 10-14 days. Negotiating to limit these requirements or expedite approvals can reduce disruptions to patient care and minimize revenue losses from postponed treatments. HBK Healthcare Solutions specializes in identifying and addressing these operational pain points, working with practices to negotiate terms that reduce administrative burdens and enhance revenue cycle performance.

Market Leverage and Data-Driven Negotiation

Successful negotiation hinges on understanding a practice’s leverage. Factors like patient volume, geographic location, and specialty can strengthen a practice’s bargaining power. A practice that serves a large share of an insurer’s covered lives or operates in an underserved area has a compelling case for better rates. Similarly, specialists with unique expertise (e.g., oncology or orthopedics) can command higher reimbursements due to their scarcity.

To wield this leverage effectively, practices must arm themselves with data. Benchmarking reimbursement rates against regional averages—available through tools like the FAIR Health database or MGMA’s compensation reports—provides a factual basis for negotiation. Tracking denial rates and payment timelines from existing contracts further highlights areas for improvement. Insurers are more likely to concede when presented with evidence of below-market rates or operational inefficiencies tied to their terms. Josh Zarlenga, as National Director of HBK Healthcare Solutions, brings extensive experience in analyzing such data, helping practices build a compelling case to secure higher reimbursements and more favorable terms.

Avoiding the Pitfalls of Inaction

Failing to negotiate can have dire consequences. Many practices, especially smaller ones, accept initial contract offers due to time constraints or lack of expertise, assuming they lack the clout to push back. However, this passivity can perpetuate a cycle of underpayment and burnout. A 2024 report from the Physicians Advocacy Institute noted that 60% of independent practices cited declining reimbursements as a key factor in mergers or closures over the past five years. Proactive negotiation, by contrast, can preserve autonomy and financial health. HBK Healthcare Solutions steps in to bridge this gap, offering tailored strategies that empower even small practices to negotiate effectively.

Moreover, contracts often renew automatically with minimal adjustments unless challenged. A practice locked into a multi-year agreement with stagnant rates risks falling behind inflation and rising costs, effectively losing money each year. Regular review and renegotiation—ideally every one to two years—ensure terms evolve with the practice’s needs and market conditions. Zarlenga’s expertise in revenue cycle reviews and profit enhancement ensures that practices stay ahead of these trends, renegotiating contracts proactively to protect their financial future.

How HBK Healthcare Solutions and Josh Zarlenga Help

HBK Healthcare Solutions, led by Josh Zarlenga, provides comprehensive support to medical practices navigating commercial insurance contracts. With over 18 years of experience since joining HBK in 2006, Zarlenga has focused heavily on the healthcare industry, working with private medical practices, skilled nursing facilities, and ambulatory surgery centers. His team offers a range of services designed to boost revenue and streamline operations:

• Contract Analysis and Negotiation: HBK reviews existing contracts to identify undervalued reimbursement rates and burdensome terms, then negotiates with insurers to secure better deals. Zarlenga’s background in financial reporting and profit enhancement ensures that negotiations prioritize both immediate gains and long-term sustainability.
• Revenue Cycle Optimization: By conducting operational and revenue cycle reviews, HBK pinpoints inefficiencies—such as high denial rates or slow payment timelines—and negotiates contract adjustments to address them, improving cash flow.
• Data-Driven Insights: Leveraging industry benchmarks and practice-specific data, Zarlenga helps clients demonstrate their value to insurers, strengthening their negotiating position. This includes highlighting patient volume, quality metrics, or regional scarcity to justify higher rates.
• Specialized Healthcare Expertise: With a focus on medical billing, credentialing, and contract assistance, HBK tailors its approach to the unique needs of each practice, whether it’s a solo physician or a multi-specialty group.

For instance, a private practice struggling with low reimbursements might turn to HBK for a full contract overhaul. Zarlenga’s team would analyze current payer agreements, benchmark them against market standards, and negotiate with insurers to increase rates by 10-15%, potentially adding tens of thousands of dollars to annual revenue—all while reducing administrative hassles like excessive prior authorizations.

Building a Negotiation Strategy

Effective negotiation requires preparation and, often, professional support. Practices should start by assembling a team, whether in-house (e.g., a practice manager with billing expertise) or external (e.g., HBK Healthcare Solutions). This team can analyze current contracts, identify pain points, and develop a proposal grounded in data and patient care priorities.

When engaging insurers, timing is key. Approaching negotiations well before a contract’s renewal date—typically 90-120 days—provides ample room for discussion. Practices should also be willing to walk away if terms don’t align with their goals, as insurers often rely on provider participation to maintain their networks. A united front, such as negotiating as part of a physician group or IPA (Independent Practice Association), can further amplify leverage. HBK guides practices through this process, offering strategic advice and hands-on support to ensure successful outcomes.

The Bigger Picture

Beyond immediate financial gains, negotiating commercial insurance contracts is about advocating for the value of medical services. Fair reimbursement rates enable practices to invest in advanced equipment, hire skilled staff, and expand access to care—outcomes that benefit patients and communities. In an era of consolidation and rising administrative burdens, mastering this skill empowers practices to thrive independently and uphold their mission. With HBK Healthcare Solutions and Josh Zarlenga’s expertise, practices gain a powerful ally in this effort, turning contract negotiations into a catalyst for growth and stability.

In conclusion, negotiating commercial insurance contracts is a linchpin of financial resilience for medical practices. It demands time, expertise, and a strategic mindset, but the payoff—higher revenue, smoother operations, and sustained viability—far outweighs the effort. As the healthcare industry grows more competitive, practices that partner with specialists like HBK Healthcare Solutions and leverage leaders like Josh Zarlenga will not only survive but flourish.

Your mission matters. But today’s nonprofits face mounting pressure — from complex IRS rules to evolving donor expectations and new financial reporting standards. A single misstep can cost your organization its tax-exempt status, funding, or reputation.

That’s why the Fall 2025 issue of HBK Nonprofit Insights delivers clear, actionable strategies to help you stay compliant, resilient, and mission-focused.

Key Insights from This Issue

🛡️ Guard It With Your Life

Principal Kathleen Clayton, CPA, PSA, MBA explains how nonprofits can lose tax-exempt status — and how to prevent it.
Stay current on Form 990 filings, avoid “mission creep,” and monitor private benefit or unrelated business income. Missing three consecutive 990s leads to automatic revocation — and the loss of donor confidence.

⚖️ Manage Conflicts of Interest

A clear, written conflict-of-interest policy isn’t optional — it’s a best practice that protects credibility and satisfies the IRS. Clayton shares how to document, disclose, and monitor conflicts using the IRS’s sample policy as a foundation.

💻 Adapting to Crypto and Fair Value Accounting

With FASB ASU 2023-08, crypto donations must now be measured at fair value, reflecting real-time market conditions.
Principal Sean Kocan, CPA, explains how this shift increases transparency — but also requires tighter controls and disclosures.

💡 Future-Proof Fundraising

Donors want connection, not transactions.
National Director Daniel Sefick, CPA, CGFM, outlines how to stabilize revenue through recurring gifts, donor-advised funds, and data-driven engagement — building a fundraising engine that lasts.

🌟 Client Spotlight: Bayonne Economic Opportunity Foundation

Celebrating 60 years of impact, BEOF continues to empower low-income residents of Hudson County, NJ, through education, financial empowerment, and housing initiatives. With guidance from HBK, they’re expanding into the new Stepping Stone Academy to reach even more families.

Read, Reflect, and Reinforce Your Mission

Your mission deserves stability and strength.
📖 Read the full Fall 2025 HBK Nonprofit Insights
💬 Connect with an HBK nonprofit specialist → info@hbkcpa.com
🌐 Learn more → Nonprofit Solutions | HBK

HBK Nonprofit Solutions — Helping nonprofits thrive through clarity, compliance, and connection.

Construction work is booming across the country. Projects are everywhere, profit margins look attractive, and expansion opportunities keep presenting themselves. But here’s the harsh reality that catches most contractors off guard: the very growth that promises success often becomes the force that destroys profitable construction companies.

Smart contractors are making fatal mistakes every day—taking on projects too large for their capacity, expanding into unfamiliar markets without proper planning, or chasing volume at the expense of profit margins. The result? Cash flow disasters, damaged reputations, and businesses that crumble under the weight of their own ambitions.

The good news? These growth-killing pitfalls are entirely preventable when you know what to watch for.

The 6 Most Dangerous Growth Traps Every Contractor Must Avoid

1. Unrealistic Growth Expectations: The $5M to $20M Death Trap

The Problem: Contractors routinely attempt to quadruple their revenue in a single year—jumping from $5 million to $20 million, or $20 million to $50 million—without the infrastructure to support such expansion.

Why It Kills Businesses:

• Taking on projects beyond your experience level leads to cost overruns, delays, and penalties
• Accepting “bad jobs” just for growth destroys relationships with general contractors
• Insufficient crews result in poor workmanship and missed deadlines
• Slim margins mean any mistake wipes out profits entirely

The Solution: Scale methodically. Increase capacity by 25-50% annually while building the systems, personnel, and experience needed to handle larger projects profitably.

2. Unfamiliar Market Expansion: The Geographic Growth Gamble

The Problem: Contractors see opportunity in distant markets—areas experiencing population booms or recovering from natural disasters—and rush to establish operations without understanding local dynamics.

Hidden Costs Include:

• Hiring crews, project managers, and superintendents in unfamiliar territory
• Leasing facilities and purchasing equipment far from home base
• Navigating new State and Local Tax (SALT) requirements
• Competing against established local contractors with existing relationships
• Managing cultural integration between existing and new teams

The Smart Alternative: Consider acquiring an established local contractor instead. Mergers eliminate competition while providing immediate market knowledge, relationships, and operational infrastructure.

3. New Construction Types: When Expertise Doesn’t Transfer

The Danger: A successful residential contractor decides to tackle commercial projects. An architect enters Design Build. A plumbing contractor expands into HVAC work. Each represents a fundamental business shift, not just service expansion.

What You Need Before Making This Move:

• New licensing requirements and regulatory compliance
• Specialized project managers and superintendents
• Different subcontractor networks and supplier relationships
• Updated bonding and insurance coverage
• Capital investment in new equipment and training

Success Strategy: Treat new construction types as separate businesses with their own profit centers, management structures, and growth plans.

4. Volume Obsession: The Revenue Trap That Destroys Profit

The Fatal Flaw: Pursuing higher revenue numbers at any cost, including accepting unprofitable projects just to increase volume.

Consequences:

• Poor project selection erodes overall profitability
• Insufficient supervision spreads management too thin
• Razor-thin margins leave no room for error
• Client relationships suffer due to overstretched resources

The Fix: Focus on profit per project, not total revenue. Better to complete 10 profitable projects than 20 break-even jobs.

5. Unrealistic Promises: The Penalty That Wipes Out Profits

Real-World Example: A bridge construction project worth $91 million included completion penalties of $100,000 per day after the November 1st deadline. A 30-day delay would cost $3 million—turning a 10% profit margin into 7% instantly.

Common Promise Pitfalls:

• Overly aggressive completion schedules
• Unrealistic budget commitments
• Performance guarantees beyond your control
• Weather-dependent deadlines without contingencies

Protection Strategy: Build realistic timelines with buffer periods and include weather/delay clauses in contracts.

6. Equipment Over-Purchasing: The Cash Flow Killer

The Mistake: Buying all the equipment you think you’ll need for projected growth, often through debt financing.

Why This Backfires:

• Equipment payments drain cash flow needed for operations
• Idle equipment generates costs without revenue
• Maintenance and storage expenses add up quickly
• Sureties may reduce bonding capacity due to high debt-to-equity ratios

Better Approach: Lease equipment until utilization justifies purchase. Build lease costs into specific project bids, then return equipment when projects complete.

The Hidden Profit Killer: Job Fade Analysis

Most contractors ignore job fade—the difference between estimated and actual job costs—yet it’s one of the most critical growth metrics.

Common Causes of Job Fade:

• Shifting costs between projects to improve certain job margins
• Cost overruns not anticipated during estimation
• Poor project management and oversight
• Inaccurate initial estimates
• Rising material costs not factored into contracts

How to Combat Job Fade:

• Analyze fade by project manager, estimator, and construction category
• Track patterns to identify systematic issues
• Implement better change order processes
• Improve estimation accuracy through historical data
• Strengthen project management protocols

Your Path to Profitable, Sustainable Growth

Growth challenges aren’t signs of business failure—they’re natural transitions that separate successful contractors from those who flame out. The contractors who thrive are those who:

• Plan growth methodically rather than chasing every opportunity
• Invest in systems and people before expanding capacity
• Focus on profit margins over revenue volume
• Analyze performance data to prevent recurring problems
• Build financial discipline into every business decision

The construction industry will always reward contractors who can deliver quality work on time and on budget. But it will ruthlessly punish those who grow too fast, promise too much, or ignore the fundamentals of profitable operations.

Ready to scale your construction business the right way? Start by conducting a job fade analysis on your last 12 months of completed projects. The patterns you discover will reveal exactly where your growth strategy needs strengthening.

If you’d like guidance on implementing these growth strategies or need help analyzing your current financial position, our team specializes in helping contractors navigate profitable expansion. We’re here to help you avoid these costly pitfalls and build the sustainable growth your business deserves.