It's no big mystery why cloud accounting has become a popular and effective way to manage agricultural businesses. Cloud accounting offers a savvy, robust way to track complicated expenses such as water and labor - and especially when you're working across multiple partnerships, thorough records are critical.
"Oftentimes, our Ag Team works closely with our internal Grimbleby Coleman cloud accounting specialists to provide expertise to ag clients ready to make the jump to QuickBooks or Intacct," says Ag Team Lead and Principal Jeff Bowman. "This hybrid client-service approach has proven valuable for many of our ag clients recently, allowing them to evaluate income from the actual crop year, not just residual revenue from the fiscal year."
Why Should You Try Cloud Accounting on the Ranch?
Cloud accounting allows you to scale based on your needs. For example, we recommend tracking by field to truly monitor actual costs. That information is invaluable, especially if you're trying to decide whether to reinvest in your orchard or evaluate new opportunities.
"With water being so scarce, our clients really need to know how they will be able to afford and nurture a young field or orchard," Bowman says.
Many family - and even corporate - ranches have operations within various partnership entities. That makes tracking paramount, especially when each entity is providing complementary services such as paying for labor, water rights, equipment rentals, or providing cash flow to another entity. Cloud services will allow you to capture and articulate your full financial portfolio.
In the past, growers have been able to evaluate production expenses by comparing fields side-by-side; however, actual field costs were harder to track. Now growers can account for costs, labor, and various expenses such as poling, pruning, and harvesting to provide comparisons between fields, seasons, or even varieties.
Recommended Cloud Accounting Tools
When using QuickBooks Online or Intacct, the first step is to determine what you would like to track regularly. Most customers opt to see cash by account, accounts payable, debt with available lines of credit, cash on hand for each entity, and cash requirements over the next week and month. Easy-to-read graphics and charts make it easy to understand your full picture - as long as you're working with good information.
"If you put garbage in, you'll get garbage out," says Implementation Specialist Tami Davis. "With cloud services, you have to be conscientious of your inputs to gain the information you need."
QuickBooks Online provides plenty of power for small entities. It uses "classes" to track items such as acres and types of crops, and it's easy to customize the user-friendly interface for your needs. Our cloud accounting team can access your QuickBooks Online account remotely to assess records, which is an especially helpful perk if you need assistance or coverage for your regular bookkeeper.
Click here to learn more about our QuickBooks seminars, led by Linda Bossard.
We prefer Intacct for multi-entity businesses, especially those with several partners.
Intacct's customizable dashboard allows us to track expenses by lot, which means you can access a quick P&L report for each entity.
Intacct's security settings can be easily adjusted so parent companies can view the big picture while monitoring the books within each business. As with QuickBooks Online, our team can easily access the service and provide oversight and recommendations from afar. Intacct also offers storage for PDFs, Microsoft Word documents, bank statements, and other relevant attachments. Their easy tracking system allows you to include other non-financial information such as seed, chemical, and field service logs.
"It can be easy to get a little carried away with all of Intacct's features," Davis says, "but a simplified chart of accounts can actually provide better reporting."
How Can Your Business Work with Our Cloud Accounting Services Team? The Accounting Services and Cloud Accounting Services Teams can seamlessly integrate into your business on a temporary or permanent basis. We can serve as bookkeeper, controller, accountant, or even chief financial officer. We're excellent trainers for internal teams, as well.
"We're here to fill the gaps as needed," Lisa Mazza, Principal, CPA and Cloud Accounting Team Lead says. "Oftentimes our services are used to take accounting beyond the expertise of the client's bookkeeper. This results in more meaningful accounting data for analysis, decision making and tax planning.
Cynthia Guerrero, CPA and Manager, has been with Grimbleby Coleman since 2005 and utilizes her skills to help clients meet their present needs and future goals.
"Knowing that we can bring clients peace of mind, even if in just one aspect of their lives, is what makes our work worthwhile," she says.
Cynthia is an active member of the Stanislaus Estate Planning Council and is training to become an estate planning expert. Cynthia has served on the Board of Directors for the CalCPA San Joaquin Chapter and has participated in the Relay for Life.
Learn more about Cynthia here.
Do you know how much your business is worth?
If you were to put it on the market today, how would you know which price is fair? If you were planning on buying your partner's share of the business, how would you remove doubts and come to a deal that benefits everyone?
If your business is in transition, it might be time to think about deploying an important tool: a business valuation. Knowing the true worth of your business can help you plan properly and make better decisions. Our team provides this service for many of our business clients. Marty Fox, Principal and CPA, leads our valuation analyst team. He holds both Accredited in Business Valuation and Certified Valuation Analyst designations and is one of only a handful of qualified business appraisers in the Modesto-Stockton area.
Marty began performing business valuations more than 15 years ago because he saw the natural connection between profitability consulting and valuations. The purpose of his consulting work is to increase profitability and lower business risks. Most business valuations operate under one core principle: The lower the risk, the higher the value; the larger the cash flow, the more valuable the business.
"Understanding what drives business value made me a much better business advisor," he says. "Ultimately, we want to build our clients' nest eggs."
Grimbleby Coleman typically handles business valuations for one of four reasons:
Reason #1: Estate & Gift
These are usually suggested by an attorney to help settle estate and gift tax issues. For example, the IRS requires an appraisal if a person who owns an interest in a business dies or if the owner wants to make a transfer. The main purpose is to establish the amount of any estate or gift taxes due. A valuation can also save you a lot of taxes when transferring partial business interests.
Reason #2: Succession Planning
If you're a business owner who wishes to transfer part of a business to a family member or other individual, we strongly recommend a valuation to determine a fair market price. Once the price is determined, you and the receiving party can decide how to establish terms that make sense.
"When it comes to family succession planning, the valuation serves as a starting point to minimize future conflicts," Marty says.
Reason #3: Sale or Purchase of Business
If you're looking to buy or sell a business or your interest in a business, our team can represent the buyer, the seller, or both. As consultants, we can provide a strategic review of financial statements, owners' compensation, or rents and other personal expenses that are being run through the business. We pay particular attention to buried perks and use industry benchmarks to analyze financial performance.
Reason #4: Buy-Sell Agreements
A valuation is often required when a transfer of ownership is subject to a buy-sell agreement between the partners or shareholders. These agreements commonly cover transfers due to death, disability, or retirement of one of the owners. We often help advise both parties on the sale as an independent third party.
If you have any questions regarding business valuations, our team would be happy to assist. Please contact Marty at 209-527-4220 or firstname.lastname@example.org.
July 22, 2015
We’re in the sweltering center of summer, the most fast and furious time of year for our construction clients. At this time, not only do our construction clients need to make sure their jobs are running on schedule, they also need to be diligently checking to ensure they’re on budget. Remember, there should always be enough time to stop and conduct a proper check-in to make sure you have — and will have — the working capital to finish the job.
With a little bit of structure and process, your business will scale and grow strategically. It’s a much better option than cleaning up bookkeeping and accounting messes at the end of the year, or even worse, when your cash runs out in the middle of a project and you’re asking a banker for help.
Our number one recommended best practice for all of our construction clients is to create a one page summary of jobs in process to know the fiscal status of each project at all times. By doing so, you’ll have quick answers to critical questions such as: Are we making money? Losing money? Did something happen? How can we plan better or quickly course-correct? Each job must be monitored to understand the company’s big-picture financial capacity.
Open dialogue and pre-scheduled meetings with your project manager will help to keep track of the money spent on a project, especially if the project requires one or more change orders from the original job specification and bid. If you don’t know how to start a monthly financial meeting with project managers and other key employees (or explain why it is important), our team can step in and help. Many of our construction clients rely on our construction team to start and facilitate monthly meetings to help review jobs and provide recommendations.
“Job costs can escalate quickly over the course of a few hours,” says Ian Grimbleby. “If you’re reviewing jobs at the end of the job — or, even worse, at the end of the year — it’s too late. Our most successful clients know where they stand throughout the project thanks to regularly scheduled check-ins.”
Helping our customers to operate in a more fiscally sound, efficient, and profitable fashion is our goal. Please contact us so we can help you kick off these internal processes.
Interested in learning more operational construction tips from Ian Grimbleby and our construction team? Please click here to check out a construction Q&A with Ian!
July 22, 2015
What is an example of an agenda for the monthly finance check-in meeting?
- Review each line item of the budget: Are we under or over? Need to issue any change orders to accommodate customer requests?
- Billing: Are we hitting milestones and is billing timely for each job?
- Collections: Are we collecting from the customers?
- Estimate to complete and projections: Check your overages and understand the costs to complete, not just the costs incurred.
- Big Picture: How accurate have our estimates been? What in the contract process do we need to change?
What is the best timing to schedule the check-in?
It is best two weeks after the month closes; approximately on the 15th of each month. Often times the financial trail is 2-3 months, which is fine for financial planning; however, from an operational perspective, that is challenging to manage because you are not able to make change orders with a client, if required.
What does budget vs. actuals mean?
Each job should have a budget (estimate) that you can compare to actual costs incurred. Are your actual costs coming in as originally planned? If not, do you know why? Labor overruns? Sub-contractor issues? Unplanned material cost inflation?
How do we manage cash flow and financing requests?
If you have an accurate look at your per job expenses, forecasting will be easy because of the timely understanding of the job. You’ll understand the cash flow and upcoming required purchases. When dealing with cash flow, ask yourself: Is our accounts receivable going to come in, or will we need to pull from the line of credit? You’ll especially need to know this information for bigger jobs because there are more challenges than the typical fixed costs. As Ian Grimbleby explains, “Job expenses are the outliers when it comes to cash flow, especially for sub-contractors. Managing cash flow and financing is critical because subs tend to be paid last, so they have to think about financing upfront.”
When do you contact a banker for help?
Ideally, you want to have an established relationship with a local banker before you need financial support, so that the process will move quicker when you are in need of a loan or line of credit. If you’re in financial trouble and need help now, Ian suggests calling your banker and your accountant immediately to course-correct before it’s too late. Access to working capital is critical, even if it is not needed immediately. Knowing it’s there can help with financing growth or with bonding requirements.
What will the banker ask you if you’re looking for a loan?
They’ll want to review the following financial statements: cash, accounts receivable aging, accounts payable aging and key ratios (KPI’s). Specifically, KPI’s such as gross profit and on-the-job margins, working capital, and current ratio. This will help the banker understand your ratio of assets to liabilities. Lastly, they’ll want a solid understanding of cash balance versus revenue.
How much cash on hand is enough?
Our team recommends a minimum of 10 percent of revenue available as cash and/or in the form of a liquid investment.
Last question! How can the Grimbleby Coleman construction team help?
Ask us to help you launch project management and financial review meetings. We’ll prioritize and kick off the internal processes that will help you with long-term profitability and financial planning.
Interested in more operational construction tips from Ian Grimbleby and our construction team? Please click here to learn more!