Category Archives: Manufacturing & Distribution

Don’t Miss Out on Ohio’s Workforce Training Voucher Program

ohio_workforce

The Ohio Workforce Training Voucher Program is now in its third year. This employer-driven program is targeted to provide direct financial assistance to train workers and improve the economic competitiveness of Ohio’s employers. The program is designed to offset a portion of the employer’s costs to upgrade the skills of its incumbent workforce and will provide reimbursement to eligible employers for specific training costs accrued during training.

This time around businesses will have a chance to claim a piece of $29.4 million. That’s the good news. The bad news however, is that you have to be quick if your business has a desire to claim any portion of these funds. Similar to round two of the program, a pre-application process is available. The period to complete this process began Sept. 15, and will continue until the application officially goes live on Sept. 30.

According to the state, the funds are to be made available on a first-come, first-served basis. Employers can apply for a credit that will reimburse them up to 50% of eligible training costs – which could mean the business could be reimbursed up to $4,000 per employee.

In order to qualify, training must have been performed between Aug. 1, 2014, and Dec. 31, 2015. Employers have the option to apply for vouchers for training that has already occurred.

Pre-application allows employers to enter as much information and specific details as possible. When the application goes live, all you need to do is log on to your account and submit it. We expect all funds to be accounted for within the first few hours of the application going live. We urge businesses to take time to complete the pre-application process as soon as possible.

What Is Considered Eligible Training?
• Classes at an accredited education institution
• Training that leads to an industry-recognized certificate
• Training provided in conjunction with the purchase of a new piece of equipment
• Upgrading computer skills (e.g. Excel, Access)
• Training for the ICD-10-CM/PCS diagnostics classification system
• Training from national, regional or state trade associations that offers certified training
• Training for improved process efficiency (e.g. ISO-9000, Six Sigma, or Lean Manufacturing)
• HR Certification – limited to HR staff only

What Companies Can Apply?
For-profit entities located in Ohio and that operate in one of the following industries are eligible to apply for the Incumbent Workforce Training Voucher Program:

• Advanced Manufacturing
• Aerospace and Aviation
• Automotive
• Bio Health
• Energy
• Financial Services
• Food Processing
• Information Technology and Services
• Polymers and Chemical
• Research and Development
• Companies with a Corporate Headquarters in Ohio (with limited availability of funds)

Managing Costs for a Healthier Bottom Line

profit_from_returnsYour company’s profitability depends not only on sales, but also on effective cost management. Are you adequately addressing the cost side of the business equation?

Analyze Your Cost Structure. You probably can readily identify the products and/or services that are generating your greatest sales volume. But can you identify all the costs associated with providing each product or service? Only when you know your true costs can you effectively allocate resources to the work that is most profitable for your company.

Actively Monitor Operations. As the busy owner of a small business, you can’t be everywhere all the time. But you do need to stay in circulation, regularly observing the day-to-day operations of your business and talking to your managers and employees. By staying visible and encouraging an open dialogue, you’ll be in a better position to uncover costly problems before they seriously erode your company’s bottom line.

Solicit Bids. Even if you are satisfied with a current vendor, you may want to talk to the competition from time to time. You won’t necessarily want to switch vendors simply because you are quoted a better price. But you may be able to use that price in negotiating more favorable terms from your existing supplier.

Watch for Discounts. In the interests of cash flow, your company may routinely pay its bills only when they come due. While this generally is a sensible strategy, it may not be wise if you are passing up generous cash discounts for earlier payment. In the current low interest rate environment, borrowing the funds you need to take advantage of discounts may be a better move. For example, suppose a vendor offers your company a 2% discount for paying a $10,000 invoice 20 days early. Passing up the discount will cost you $200. Instead, you might borrow $9,800 from your bank, pay the discounted invoice, and repay the loan in 20 days. If the rate on your bank line of credit is 8%, you’ll owe about $45 of interest — for a net savings of $155 on just one invoice.

Effective cost management requires good information and careful planning. Our team of costing accounting experts can help you identify your pitfalls and help you clarify yours costing system.

Forecast or Projection – Who Cares?

shutterstock_130753661Have you heard people use the terms forecast and projection interchangeably? Maybe you’re one of those people!  There actually is a significant difference between the two terms.

forecast is based upon assumptions reflecting the conditions the business expects to exist and the course of action reasonably expected to be followed.   A forecast can utilize a specific monetary amount or a reasonable range based on the various assumptions in place.    This information is not restricted and it is typically what is published to the general public for publicly traded companies.  Management expects the goals in a forecast to be met and believes them to be reasonably attainable.

projection is prepared to present one or more hypothetical courses of action that the business might follow.  It is typically prepared for a restricted specific party, often internal management. This type of analysis can definitely be thought of as less realistic, even referred to as “pie in the sky”.

A fun way to remember the difference is that a weather FORECAST is for everyone and the weatherman believes the results to be attainable.  The main difference between a forecast and a projection is the nature of the assumption; in a forecast, these assumptions are based upon specific fact patterns, making it more representative of the expectations for actual future events.  However, in a projection the assumptions are more of the desired scenario, not necessarily what is most likely to occur.

Keep in mind neither a forecast nor a projection is a budget.  A budget sets the requirements for the period of time, where a forecast is an expectation of what is likely to happen, and a projection is what you would hope to happen.

So why does it really matter?  Who really cares?   Management, investors, lenders….all involved parties do, which means YOU SHOULD!   If you are a publicly traded company and you do not understand the point of a forecast and you release poor data it will affect your stock prices and ultimately the viability of your company.  Even if you are not publically traded a good clear forecast helps bridge the gaps between the strategic plan and the operational budget.   An accurate forecast will mathematically quantify how it is possible to attain the goals you have set.    A projection, although mainly for internal use, is intended to present a clear picture of those “what-if” questions that management is always asking.  It can help make determinations on new product lines, major customer decisions to acquire or dispose of, labor decisions, the list can go on.   It is important that effort is put into a projection to see the range of outcomes for every scenario.  It is easier to implement ideas and proactively manage to the plan in place rather than react unsystematically to unforeseen circumstances.

Both forecasts and projections have a definitive place in effectively managing your business.  Make certain that you understand the purpose and process for each, and that you follow the decision making process required to make them valuable tools to drive the future profitability of the business.

By: Tara West, CPA

New Ohio Worker Training Program Announced

feat_oiwtvp

Overview. The State of Ohio has launched a new program to train Ohio’s workforce: the Ohio Workforce Training Voucher Program. This employer-driven program is targeted to provide direct financial assistance to train workers and improve the economic competitiveness of Ohio’s employers. The program is designed to offset a portion of the employer’s costs to upgrade the skills of its incumbent workforce and will provide reimbursement to eligible employers for specific training costs accrued during training. Eligible employers must demonstrate that by receiving funding assistance through the program that their business will not only obtain a skilled workforce but will improve their company processes and competitiveness. All training must begin and be completed between February 2, 2013 and June 30, 2013.

Eligibility. Eligible employers will be capped to $500,000 for training of employees who work at least 25 hours per week and earn at least 150 percent of the federal minimum wage. An employee must also be an Ohio resident and at least 18 years of age. Employers are eligible for reimbursement of up to $4,000 per employee for training qualifications such as industry-recognized certificates, improved computer skills or training from a trade association. Funds cannot go toward a GED, conference fees, management and/or leadership classes.

Eligible companies must be a for-profit entity and must fall into one of the following ten targeted industries:

  1. Advanced Manufacturing
  2. Aerospace and Aviation
  3. Automotive
  4. BioHealth
  5. Corporate Headquarters
  6. Energy
  7. Financial Services
  8. Food Processing
  9. Information Technology and Services, and
  10. Polymers

This credit is on a first come, first serve basis. Interested employers are urged to act soon. Contact your William Vaughan Company representative today.

By: Katie Mokry, Senior Accountant

Expand Deductions By Donating Inventory

inventoryDoes your C corporation have slow-moving inventory or computer equipment taking up valuable warehouse space? Of course, you could liquidate it or hold a discount sale, but you might be better off donating it to charity.

In general, when you donate inventory or property, your write-off is limited to the cost of the items or property. However, under a special provision, the tax law allows corporations a higher deduction for gifts to organizations that serve the “ill, needy or infants.” In this case, a C corporation can deduct the cost of the donated inventory, plus half the difference between the cost and the selling price. The limit under this provision is a deduction of up to twice the cost of the inventory items.

In some cases, the deduction is worth more than the amount you could make by liquidating or discounting. (S corporations, partnerships and sole proprietorships are limited to a straight cost deduction.)

In addition to the inventory tax break, another law provides similar benefits for donations of computer technology to primary and secondary schools. There could be other special tax breaks depending on what you are donating and what kind of organization you are giving it to.

One clearinghouse that acts as a conduit to match contributors to charitable organizations is the National Association for the Exchange of Industrial Resources. For more information, go to www.NAEIR.org/ or call (800) 562-0955.

For additional details about these tax breaks, contact your tax adviser.

Confirmation Bias: Is Your Perception Based On Reality?

Per Wikipedia, “confirmation bias is a tendency of people to favor information that confirms their beliefs or hypotheses.” In my house, this occurs on a continual basis. Each of my four children insists that I give the others more, or that I favor anyone but them. Just last night I had to take my youngest to the doctor to receive a painful treatment. As any good mother would, I promised her something special if she would just grin and bear it. Her request was a bag of Skittles from the closest gas station. Naturally, when she received them and no one else did, it confirmed their belief that I always favor the youngest.

My perception of confirmation bias is that it is simply human nature. We want to validate our beliefs. However, when it comes to business, this can be devastating and even sometimes fatal. Many of the consulting jobs that I am currently performing require a significant amount of data analysis. This can involve looking at trends and patterns, or trying to make decisions about financial cycles, or product costs. There are literally thousands of relationships that can be analyzed based on the Company, industry, and reason for the job.

The amount of data that any company has to analyze these days is overwhelming. There is so much data to be captured that most companies don’t even know what to do with it let alone know how use it in order to make effective management decisions. Many times, when a company begins to compile their data, I find they are “making it fit” into the parameters they believe are true. Unfortunately, numbers can easily be manipulated to “fit.” When I start a new job it always begins with a very informative meeting with Management and the finance teams explaining to me what the issues they are facing. I have to try to pull myself away from what “they think they are seeing,” and let the facts speak for themselves.

It is extremely important when looking at your financial and operational data from an analytical viewpoint that you do not to fall into the trap of confirmation bias. You must be careful not to set up your reporting or frame your data in a way that will simply confirm your beliefs. My experience has shown that there are very few organizations that are operating effectively to a point where the management team has a handle on everything and is able to explain all of the metrics.

Put your financial team to the test. You can almost always find some support to validate your hypothesis or prove intricate connections. It is much more difficult, but significantly more revealing to develop alternative explanations and connections.

By: Jennifer Kinzel, CPA, CMA, CGMA