23 Jul Ways KCPA Can Help Your Farm Operation
By Brandy Swope, CPA
For the past few days, I have been participating in a National Agriculture Conference developed by the AICPA (American Institute of Certified Public Accountants). Many nationally-recognized experts have been speaking.
Kline’s CPA Group prides itself in our understanding of the agricultural industry. It has been a pleasure to be part of this national event and to strengthen our knowledge base.
As I’m sure all of my farm clients are well aware, the farm economy is in a stage where prices are low, net incomes are slim or nonexistent, there are trade uncertainties, and financing is tough. Working capital is weak and equity is being burnt up with no real end in sight.
So how can Kline’s help your operation through these tough times? We can. . .
- Assist in preparing fair market value balance sheets and accrual income statements for you and your lending institutions. We can also assist with cash flows.
- In many situations, we find that clients do their best to fill out their yearend balance sheets for the bank but that they may be missing pertinent information that the banker needs for an insightful analysis.
- We also notice that not all lenders understand that just looking at a tax return will not give them an accurate picture of what an operation’s true net income is.
- Review financials in order to calculate liquidity ratios, profitability ratios, leverage ratios, etc. These ratios are extremely important to lending institutions when they are trying to compare your numbers with their internal standards.
- Compare your ratios with other operations your same size and location to identify strengths and weaknesses.
- Give input on how to utilize your strengths to improve your weaknesses. Many times, this involves working with your bank to structure things so that all parties are benefited.
A few other things to note that were covered in detail during the conference. . .
- Marketing your crop in this environment is very important! Be sure to mitigate your risk. If you don’t have anyone that you are working with on this, we can suggest some resources.
- Review your need for crop insurance to mitigate risk. Again, if you don’t have anyone that you are working with on this, we can suggest some resources.
- Don’t forget about succession planning. Make time to begin the process!! If you’ve already begun, continue. If you’ve finalized a plan, review it for applicability.
- Details about the Tax Cuts and Jobs Act. Please join us on August 14th for a review of this Act at our Customer Appreciation Day!