Bulletin Board Magazine 2021 Volume 3

Future Market

I NEVERWANTTO PREDICTTHE FUTURE But I’ll Try for Construction’s Sake by Bill McNamara, CPA,The Curchin Group, LLC

Bill McNamara, CPA The Curchin Group, LLC

I t is risky business to forecast the future— and yet riskier not to look forward. Trends and current events are strong indicators of subjects we should be ready to address in the construction industry. The business world changes quickly and those best prepared are able to adapt with fewer interruptions. We are all smarter after COVID-19. We reexamined our core essentials, ushering in policies, procedures and practices to work through the challenges presented. As we enter the fourth quarter of 2021, here are five important topics to generate future- focused discussions in management teams. A National Infrastructure Spending Plan Both political sides of our country favor it, but many details, as of this writing, are far from concrete. The general acceptance, however, is a strong indicator that a bill will be enacted. While it may take some time to materialize, planning should start today. Just how well positioned is your company to expand its operational footprint? Is your company’s strength being flexed to capitalize on new business growth? From the accounting perspective, we always emphasize to management the importance of a strong balance sheet before taking on new business ventures.

Examine critical areas like receivables, equipment, lines of credit (LOC) and long- term debt. Expansion is almost always fueled by cash flow. Have we reviewed our collection efforts and ensured our credit terms are appropriate for a customer’s size, profitability and payment history? An evaluation of our equipment will identify capital needs to be addressed. We want to see a downward trend in repair costs and assurance that the equipment is sufficient for the project’s requirements. LOCs provide liquidity to counter-balance swings in cash availability. Be sure that any LOC’s terms are extended and previous borrowings reduced to provide management with the greatest flexibility in meeting operational costs. If our review of fixed assets identifies the need to purchase, then our debt- to-equity ratio becomes vital to support new funding of assets. Management may need to consider refinancing or combining loans for more favorable rates and terms. Tax Reform A number of potential tax rate changes will increase the cost of doing business. It’s almost an inescapable fact. Issued in April 2021, President Biden’s proposal, The Made in America Tax Plan, outlines a number of significant changes. The proposal includes increases to the corporate tax rate from 21%

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