What was the amount of Management Recruiters' prepaid workers' compensation as of December 31, 2021?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
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HireQuest, Inc. Consolidated Balance Sheets
| December 31, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets | ||||
| Cash | $ | 1,255,520 | $ | 13,667,434 |
| Accounts receivable, net of allowance for doubtful accounts | 38,239,036 | 21,344,499 | ||
| Notes receivable | 1,481,200 | 2,178,299 | ||
| Prepaid expenses, deposits, and other assets | 659,403 | 344,091 | ||
| Prepaid workers' compensation | 369,215 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the company's prepaid workers' compensation was $369,215 as of December 31, 2021. This figure is part of the current assets listed on the balance sheet. For a prospective franchisee, prepaid workers' compensation represents an upfront payment made for workers' compensation insurance coverage, which is an essential expense for businesses with employees.
This prepaid expense indicates that Management Recruiters has already paid for a portion of its workers' compensation insurance coverage extending into the future. The amount reflects the portion of the premium that covers future periods. It is important to note that this prepaid amount can fluctuate year to year, as demonstrated by the $1,434,583 listed for December 31, 2020.
Understanding the prepaid workers' compensation is crucial for franchisees as it impacts the initial capital outlay and ongoing operational expenses. Franchisees should inquire about the factors influencing these prepaid amounts and how they are managed to optimize cash flow and minimize risks associated with workers' compensation claims.