news archives: Manufacturers & Distributors

Sign up for accounting email bulletins | F&D BostonSIGN UP HERE

Get Employees to Join the Fight Against Fraud

U.S. businesses lose millions of dollars to white-collar criminals every year. The manufacturing sector is especially vulnerable to fraud schemes involving billing, corruption and noncash assets, such as theft of inventory and equipment. Research suggests that businesses that provide a convenient and confidential way for employees to report unethical behavior are more likely to unearth wrongdoing sooner and suffer smaller losses than those without established “whistleblower” policies. This article recommends ways to make reporting hotlines as effective as possible. A sidebar outlines the benefits of using an outside forensic accounting specialist when fraud strikes.

It’s Not Too Late for Year End Tax Planning

Manufacturing and distribution companies that expect to owe substantial federal taxes in 2015 can still take steps to soften the blow. But many tax breaks hinge on legislation that Congress might restore before it adjourns for the holidays. This article highlights some last-minute tax-saving strategies to consider before December 31.

ESOPs Can Help Owners and Employees Fund Their Golden Years

Employee stock ownership plans (ESOPs) are a popular retirement planning tool, especially among manufacturers and distributors. Most ESOPs are set up to provide a market for a departing owner’s interest in a closely held business. But they can also serve as a supplemental employee benefit plan or a mechanism to borrow money under favorable tax rules. This article explains how ESOPs work, outlines special guidelines that may apply and identifies key financial benefits ESOPs can provide to owners and employees.

Why Smart Manufacturers Review Their Contracts

Manufacturers and distributors may enter into various types of long-term contracts, including property and equipment leasing, raw materials, confidentiality, exclusivity and joint venture agreements. This article explains why these contracts should be reviewed regularly to ensure that they remain enforceable, compliant and financially advantageous. It also introduces another reason to check up on long-term contracts: ASU No. 2014-09, Revenue from Contracts with Customers. Although the FASB has postponed implementation of the updated guidance for an additional year, proactive companies will start tracking the effects of the changes as soon as possible to meet the FASB’s retrospective application requirements.

Manufacturers Attract Fresh Talent

Owners of manufacturing companies know firsthand just how rewarding careers in this sector can be, both financially and intellectually. Some have found creative ways to breathe new life into their mature companies by enticing millennials to join their workforces. This article explains how flexible work options, personal development opportunities, investments in intuitive technology and participation in Project Lead the Way programs can help manufacturers close the talent gap. A sidebar discusses possible solutions to the driver shortage that many distributors now face.

Should Manufacturers Consider the Expired Research Tax Credit?

On Dec. 31, 2014, the research credit expired yet again. The congressional track record of continually renewing this credit suggests that it’ll be available again in 2015. This article provides a four-factor test that research expenses must pass to qualify for this tax break and explains various ways the credit may be calculated, so manufacturers can be prepared if Congress renews the research credit again this year — or possibly file amended returns to claim the credit for recent years.

Financing Alternatives for Manufacturers and Distributors

Private manufacturers and distributors can select from a wide menu of loan options from financial institutions. Popular choices include lines of credit, term loans, leases, mortgages and Small Business Administration (SBA) loans. This article helps owners and managers decide which option makes the most sense in today’s low-interest, tight-credit lending environment.

Pay Attention to Merger and Acquisition Deal Structure

The merger and acquisition market is picking up along with the performance of the manufacturing sector. If you’re planning to buy or sell soon, you’ll need to negotiate more than just the selling price. This article discusses how deal structure can have a major impact on expected cash flow and exposure to potential liabilities after the dust settles.

Manufacturers Fight Inventory Fraud

Inventory is one of the biggest assets on a manufacturer’s balance sheet. It’s also one of the hardest assets to measure and track. This article explains why inventory is so susceptible to fraud and how fraudsters typically steal or misstate inventory in a manufacturing environment. A sidebar reveals which types of manufacturers are the most at risk for fraud and why.

Manufacturing Subsidies for Investing in Technology and Training

The White House recently announced a series of executive actions for subsidies totaling roughly $550 million for investments in advanced manufacturing. These actions provide financial incentives for your company to increase spending on technology and training, if it’s not already part of your 2015 budget. This article discusses the three pillars of support that underlie the president’s manufacturing initiatives: enabling innovation, securing the talent pipeline and improving the business climate.

Distinguishing Employees from Contractors

As a recent class action lawsuit demonstrates, worker classification is a hot button for manufacturers and distributors. Making a clear distinction between employees and independent contractors is critical to avoiding class action lawsuits and audits by the IRS and state taxing agencies. This article lists the characteristics that distinguish employees from contractors and provides policies that can help you draw the line between these two types of workers.

Using an IC-DISC to Reduce Tax Burden

Manufacturers and distributors who export products should consider the use of an interest charge domestic international sales corporation (IC-DISC) to reduce their tax burden. This article answers some frequently asked questions about this strategy.

Safeguard Your Manufacturing Business Against IRS Audits

Everyone has at least one pet peeve. The IRS has many. This article describes items that the tax agency may target on a manufacturer’s 2014 tax return: owners compensation, travel expenses, meals and entertainment, and net operating losses. A sidebar explains how to proceed if the IRS mails a notice of inquiry.

“Made in the USA” Makes a Comeback

The trend of outsourcing to overseas suppliers and contractors may be losing some of its luster. Many businesses are returning to U.S. manufacturers — also known as reshoring — to obtain goods faster and at lower costs than foreign suppliers can offer. What’s more, “Made in the USA” tags can win over domestic customers who want to feel good about their purchases. This article discusses the benefits that domestic manufacturers offer and how manufacturers can comply with FTC requirements in order to claim a product is “Made in the USA.”

The Tax Treatment of Tangible Property Expenditures

Last winter, the IRS released long-awaited final regulations on the tax treatment of tangible property expenditures that apply to the current tax year. This article provides an overview of these rules, including several safe harbors, to help manufacturers file an accurate 2014 tax return. The regs address, in particular, expenditures on material and supplies and on capitalizable building improvements.

Wage Increases: Look Before You Leap

A recent Gallup poll shows that roughly three-quarters of Americans support a minimum wage increase. Factories and warehouses tend to employ a large number of entry-level and low-wage workers. For manufacturers who may be considering a wage increase for their hourly workers, this article looks at some important questions to factor into the decision. It addresses wage competitiveness and the up-front and hidden costs of an increase.

What’s the Value of My Manufacturing Company?

The scene is set for a stunning M&A display for the rest of 2014 and beyond. Sellers in some industry segments may wind up in a bidding war that drives up their values. But some buyers are still trolling for bargains, so it’s important to not take the first offer without obtaining a formal appraisal first. This article discusses three valuation approaches — cost, market and income — that appraisers use to value manufacturers, while a sidebar cautions against using industry “rules of thumb” as the sole method of valuation.

Keeping Manufacturing Workplace Violence in Check

It’s common for manufacturers and distributors to be family-owned. Unfortunately, it’s also common for owners to let estate planning fall by the wayside, causing family members to lose out on tax-saving opportunities. This article discusses the latest tax rates and exemptions and takes note of strategies that may be useful when transferring wealth and management responsibilities to the next generation.

Top 10 Measures to Control Fraud in Your Manufacturing Business

Manufacturing is among the top three sectors that reported fraud cases in the latest biennial study by the Association of Certified Fraud Examiners (ACFE). The median fraud loss was $250,000, and manufacturers are particularly susceptible to schemes involving billing, corruption and noncash theft. But this article lists the top 10 of what the study deems to be the most effective control measures to prevent fraud.

Demystifying LTL Freight Classification

The National Motor Freight Classification® (NMFC®) system can be overwhelming. But manufacturers that understand how carriers classify freight can find creative ways to lower their costs for less-than-truckload (LTL) shipments. This article describes the factors that affect freight rates and offers ways to qualify for lower, less expensive freight classes.

Regional Manufacturing Hubs: A Modern Industrial Revolution

President Obama is planning to launch a national network of up to 45 regional manufacturing innovation centers — or “hubs” — over the next 10 years with the support of Congress. This article takes a look at the first four regional pilot facilities and how the hubs are intended to work. It explains how, in addition to setting new production standards, each hub will serve as a “teaching factory.” A sidebar discusses the next hub, called the Advanced Composites Manufacturing Innovation Institute.

Proactive Estate Planning Starts Today for Manufacturers and Distributors

It’s common for manufacturers and distributors to be family-owned. Unfortunately, it’s also common for owners to let estate planning fall by the wayside, causing family members to lose out on tax-saving opportunities. This article discusses the latest tax rates and exemptions and takes note of strategies that may be useful when transferring wealth and management responsibilities to the next generation.

4 Fundamentals of Lean Manufacturing

Lean companies make their products as efficiently as possible, using the least possible staff time, equipment and working capital. Originally imported from Japan in the 1980s, lean manufacturing continues to play a key role in every successful U.S. manufacturer. Increased global competition and declining operating margins make four particular lean manufacturing fundamentals especially important in today’s marketplace. This article describes how each one contributes.

Is an Online Freight Marketplace Right for You?

A new generation of online businesses wants to cut the transportation middleman out of the warehousing and distribution equation. These new marketplaces offer manufacturers and distributors greater convenience and efficiency by directly matching them with freight carriers, cutting down on red tape and lag time. But this article cautions that, without proper research and planning, it might not be possible to achieve the desired cost savings and efficiencies. It discusses how these online marketplaces work and how to avoid potential pitfalls.

Manufacturing contracts face new Sec. 199 rules

The IRS issued new eligibility guidelines last summer that attempt to clarify which companies are eligible for the manufacturers’ deduction under Section 199 of the tax code when multiple parties manufacture a product. This article explains the deduction and how the new guidelines are intended to make it easier for manufacturers to comply with its requirements. A sidebar reminds manufacturers that Congress has yet to renew expanded Section 179 expensing limits. 

Ratio Analysis and Industry Benchmarking Provide Added Insight for manufacturers

By themselves, financial statements provide limited insight into a manufacturer’s performance. To get a clearer picture of what’s really happening requires a relevant basis of comparison. Financial ratios and industry benchmarks provide management with the tools to identify strengths and weaknesses. This article looks at a number of specific ratios that can serve manufacturers and notes several sources of benchmarking tools.

New Patent Office Procedures Take Effect

Since 2013, American inventors have faced new rules for filing and challenging patents on their products and systems. These new rules are part of the Leahy-Smith America Invents Act of 2011 (AIA), a sweeping overhaul of the nation’s patent system that took years to finalize. Many of these rules are of particular interest to manufacturers, a sector that frequently finds itself on either side of, or as a third party to, disputes over inventions. This article explains how the AIA’s new procedures can allow disputes to be settled more quickly and less expensively than in the past. 

Sunny Outlook for Distributors in 2014

The U.S. warehousing and distribution industry is about to get a whole lot faster, bigger and leaner, according to a recent survey by a telecommunications consulting firm. Yet, as this article explains, many distributors might not take full advantage of this trend because they are decidedly low-tech when it comes to inventory management and other day-to-day operations. Even though the survey indicates that many plan to beef up their technology, they are also planning to reduce their employee-training time. But this could be a costly mistake.

Health Care Reform: What Employers Can Expect In 2014

The launch of health care marketplaces under the Affordable Care Act (ACA) is just one of the many important developments that go into effect during the next year. New tax credits, recordkeeping requirements and waiting periods all require tax planning and diligence for manufacturers that already offer — or are planning to offer — health insurance policies to their employees. This article discusses options for small businesses in regard to public marketplaces, along with the option of private marketplaces for larger businesses. A sidebar discusses the ACA’s large-employer health insurance mandate, to begin in 2015.

Tracking Technologies Can Improve Inventory Management

Before investing thousands of dollars in converting to RFID tags and readers, distributors should consider whether bar coding — or a combination of these two options — is the optimal choice for their company. Bar codes are generally less expensive, but RFID offers a host of additional benefits. This article discusses how the two technologies work and the considerations that should be addressed in deciding which technology to adopt.

Are Your Information Systems Secure?

Cyber attacks are estimated to cost U.S. businesses as much as $250 billion per year, according to one estimate. Manufacturers and distributors rely heavily on electronic data systems — for example, to transfer freight manifests, track inventory with RFID tags and dispatch load routes — so they can’t afford to be unprepared for computer security breaches. This article discusses several ways to beef up information technology security.  

Use E-Verify to Confirm Employment Eligibility

Federal law requires employers to hire only U.S. citizens or foreign citizens who have the necessary authorization to work in the United States. Employers normally verify employment status with Form I-9, “Employment Eligibility Verification.” But how does a company know a new employee isn’t lying or providing counterfeit documents? This article discusses the Department of Homeland Security’s E-Verify system, which helps employers validate whether employees are truly eligible to work in the United States.

Manufacturers Can Control Costs With Defined-Contribution Health Care Plans

Rapidly rising health care costs and new federal insurance requirements may leave many managers scratching their heads at how to obtain quality insurance products at a reasonable cost. New defined-contribution insurance plans are emerging as a promising alternative for manufacturers looking to add more predictability when it comes to health care costs. This article explains how the plans provide more coverage choices for employees, while setting fixed costs for employers. A sidebar lists upcoming health care act deadlines for employers.

Leveraging Competitive Intelligence

Gathering competitive intelligence can help provide strategic insights into a rival’s future plans. This was once negatively referred to as “corporate espionage” but, in the information age, companies have a strategic imperative to analyze every bit of data they can on what the competition is doing at all times — provided they do so legally and ethically. This article discusses setting a formal policy, using the best information sources, and analyzing the data effectively, all the while remaining transparent and respecting confidentiality agreements and intellectual property laws.

Carbon Tax 101: Understanding the Potential Effects of “Cap and Trade”

Once a bipartisan idea that passed the U.S. House of Representatives in 2009, a carbon tax — also referred to as “cap and trade” — has been shelved since the recession took hold four years ago. An economic resurgence in the United States, however, is expected to breathe new life into the proposal, which would set the nation’s carbon dioxide emissions at specific levels and force energy-dependent industries to pay extra for exceeding their allotment. This article describes the findings of a National Association of Manufacturers report predicting that “the adverse effects of the imposition of such a tax would outweigh any benefits.”

New EPA Rules May Mean Higher Fuel Costs

The Environmental Protection Agency (EPA) has moved to reduce sulfur levels in the air by upping emissions and gasoline standards. But the American Petroleum Institute and other trade associations argue that the regulators are vastly underestimating how expensive the new rules will be for businesses and consumers, while doing little to help the environment. This short article notes the different cost estimates.

It’s Time to Reassess Your Manufacturing Business’ Strategy

With industry data showing that the upward trend of American manufacturing output seems sustainable for the foreseeable future, manufacturers should reassess their business strategies. This article discusses renegotiating loans and leases, reinvesting in human resources and facilities, and retooling pricing, marketing and public relations.

Stepping Up Your Budget Process

Whereas some companies simply take the previous year’s budget and update the numbers based on available funds and new goals, others take on the mindset of creating a war plan that represents numerical battle lines in which their business will fight to succeed in the coming year. This article explains the three basic components of a budget and how a budget can support a company’s mission, values and specific objectives.

Higher Expensing Limits, Bonus Depreciation Extended

As part of the American Taxpayer Relief Act of 2012, Congress extended two depreciation-related tax incentives through 2013 that can provide significant savings to manufacturers and other businesses that invest in equipment and certain other assets

Energy-Related Tax Incentives Available for Manufacturers in 2013

The American Taxpayer Relief Act of 2012 has made significant tax savings available to businesses in the United States this year, including multiple credits for converting vehicles to natural gas power and subsidies for the use of biofuels. This article looks at these and other energy-related incentives that can help manufacturers and distributors.

Big Data Strategies for Distributors

“Big Data” is a marketing buzzword used to describe any large set of electronic information that can be analyzed by businesses to increase efficiency. This article explains how, using these latest customer-behavior analytics applications, distributors can crunch their internal databases; see how their conclusions compare to those of their competitors; and more effectively analyze, track and predict their customers’, employees’ and inventory’s behavior.

Best Practices for Cash Flow Forecasting

Capital is the lifeblood of any manufacturing business. Each week, expenses must be met, even though customers might not pay on time — or in full. This article offers three best practices to help eliminate much of the heartburn associated with managing a manufacturing facility’s day-to-day capital.

Selling Your Business in a Busy Market

The oldest of the baby boomers currently are winding down their careers, including thousands of manufacturing business owners. But baby boom entrepreneurs are expected to face fierce competition when courting potential buyers. This article offers advice to help sellers position their company for a successful sale amid the buyers’ market of the coming decades. It discusses creating a transition plan and fixing company weaknesses before putting it on the market. A sidebar lists a few basic steps to establishing a successful succession plan.

Expanding your Business Across State Lines

Expanding companies need to do their homework before expanding into other states, even if it involves no physical presence. Such presence is still required today to trigger sales and use tax collection obligations, but many states require only a minimal presence to establish nexus for income and franchise tax purposes. This article shows how nexus is established and how a company can turn taxation by multiple states to its own advantage.

Tighten Your Supply Chain with JIT Purchasing

A manufacturing company’s most valuable asset — its inventory — may be sitting idle on warehouse shelves or in storage rooms, sometimes for months at a time. But just-in-time (JIT) purchasing may help the company reduce its hidden costs. This article explains how JIT purchasing can help distributors minimize the lag time between taking possession of a product and shipping it to customers.

The Sec. 166 Deduction

When customers can’t pay up, it may be possible to deduct these bad debts under Internal Revenue Code (IRC) Section 166. But it’s important to understand what counts as partially or wholly worthless bad debt and how to claim the deduction. This article describes the different types of business bad debt and how the accounting method affects how it’s reported. But it’s better to avoid bad debt to begin with, so a sidebar offers three tips to improve collections.

Crucial Steps to Prevent Fraud

When it comes to fraud, employees are a natural culprit because they have the most immediate access to funds and materials. Fortunately, there are steps companies can take to reduce the chances of fraud. This article mentions some basic steps and shows how forensic accountants can be useful. A sidebar describes several key functions of manufacturing and distribution companies that are particularly vulnerable to employee fraud and, thus, demand special attention.

5 Questions For Better Forecasting

Forecasting key business factors, such as sales demand, receivables, payables and working capital, can help manufacturers reduce excess inventory and other overhead, offer competitive prices, and keep their companies on solid financial footing. While no forecast is guaranteed, using the right method goes a long way toward getting meaningful results. This article lists five questions that manufacturers should ask to determine the right forecasting methods for their business.

Illuminate Ways To Reduce Utility Bills With A Lighting Upgrade

Manufacturers who have been considering upgrading their plant’s T12 fluorescent lights need to act soon. The U.S. Department of Energy pulled the plug last year on production of most T12 bulbs and ballasts — the most widely used fluorescent unit for the past 60 years. Another option is to invest in newer, energy-efficient T5 and T8 fluorescents. There are the up-front costs, but this article offers ways to offset them.

Massachusetts Manufacturing Classification

All tangible personal property situated in Massachusetts is taxable unless expressly exempt. A Corporation’s manufacturing equipment is exempt from personal property assessment as long as the Corporation has been classified as a Manufacturing Corporation by the Massachusetts Department of Revenue. In order to receive this manufacturing classification for 2010, the Corporation must apply for manufacturing classification with the Department of Revenue on Form 355Q (Statement Relating to Manufacturing Activities) on or before January 31, 2010.

Revised IRS Royalty Rules Can Result In Tax Benefits

Companies that pay royalties for the right to use trademarks in the products they manufacture find that the way those royalties are treated on their tax returns can make a big difference to the bottom line. Proposed changes to IRS regulations on sales-based royalties, which manufacturers pay based on the number of units of a particular product that they sell, offer a new option for capitalizing royalty expenses that could result in significant tax benefits. This article discusses a court case that led the IRS and the U.S. Treasury Department to issue proposed regulatory changes. A sidebar explains the difference between deducting expenses and capitalizing them.

Avoid Shipping Woes with Adequate Cargo Insurance

Failing to have adequate cargo insurance coverage can badly hurt a manufacturer’s bottom line, but it’s not always easy to determine the right amount or how to obtain it. This article describes problems that can arise when getting coverage through the carrier, and explains why a “shipper’s interest” cargo insurance policy, also known as all-risk coverage, might be a better option for some.

Distributors and Supply-Chain Management Professionals Should Trim Inventory Costs

Distributors and supply-chain management professionals are doing everything they can to lower inventory costs — and their efforts seem to be working. Logistics costs decreased 6% from 2010 to 2011, according to one survey. This article offers suggestions to trim inventory spending, involving inventory levels, forecasting, lead time, bulk purchasing, and ongoing evaluation.

Recovering Lost Sales

All manufacturers want customers who are eager to buy their products, but what happens when they’re unable to provide the product? Potential profits quickly turn into lost sales. This brief article offers tips for tracking and analyzing these missed opportunities, so that manufacturers can better match their inventory to their customers’ wish lists — potentially increasing sales.

Working Toward A Successful M&A

A merger or an acquisition can be a long — and delicate — process, and there’s plenty that can go wrong before it’s over. To better the chances that an M&A will be a success, up-front due diligence work is a must. This article explains what to look for in the financials, but also discusses other aspects of a company’s operations that merit scrutiny, including employee attitudes, the customer base and IT operations.

Do you Qualify for the Manufacturers’ Deduction?

The American Jobs Creation Act of 2004 introduced the manufacturers’ deduction for domestic production activities income. Also known as the “Section 199 deduction” or the “domestic production activities deduction,” it’s designed primarily for large companies, but it can yield big savings for small businesses as well. This article lists activities that qualify and shows how to calculate the deduction. For those who haven’t qualified for the manufacturers’ deduction because of a net operating loss (NOL), a sidebar explains how to take advantage of the NOL carryback and carryforward provisions.

Safeguard Against a Catastrophe with a Disaster Recovery Plan

A natural or manmade disaster can have a catastrophic effect on a business or, if less severe, can cause detrimental consequences not fully realized until months after. To keep employees and critical data safe, and operational capacity maintained, it’s necessary to create a disaster recovery plan. This article explains how to form an effective disaster recovery team, protect critical data, and evaluate insurance coverage.

Workforce Programs Offer Grants, Tax Breaks

Despite the large numbers of layoffs in manufacturing in recent years, even in today’s economy many employers say they can’t find enough skilled workers to fill available jobs. To close the gap, federal and state governments are distributing millions of dollars in Workforce Innovation Fund grants and other tax breaks to support employment and training services. This article shows how these financial incentives may be the key to filling vacant positions and boosting profitability. A sidebar discusses more specifically some of these workforce grants and programs.

Streamline Your Production Processes with VSM

Value stream mapping (VSM) is a valuable lean-manufacturing tool, and is well suited for a broad range of industries and processes. Lean practitioners of all levels use VSM to evaluate their practices. This short article discusses how a company can implement VSM to benefit its bottom line.

A Fresh Perspective on IC-DISCS

President Obama’s pledge to cut tax benefits on income generated overseas sent waves of anxiety through the manufacturing community in 2009. Even though at press time the tax proposal seems to be on the back burner (presumably because of a large lobbying push against the proposal by the business community), the announcement sparked increased interest in interest charge–domestic international sales corporations (IC-DISCs). By forming an IC-DISC, your manufacturing company may realize substantial tax savings on export-sales income.

Accuracy Counts: Make Corrections If Your Inventory Counts Are Inaccurate

Using sophisticated inventory management software is supposed to solve the problem of inaccurate counts, but that’s not always the case. Delays in order fulfillment and angry customers are inevitable when a warehouse is plagued by erroneous inventory counts. This article describes a variety of steps to improve inventory accuracy, including the implementation of cycle counting.

Is Exporting Right For Your Company?

The International Trade Administration estimates that less than 1% of 30 million U.S. companies export their goods worldwide, with small businesses making up more than 70% of U.S. exporters. This means most companies are missing out on a bevy of customers. But there are several issues to consider before deciding to export. This article looks at the importance of studying particular markets, choosing a method of exporting, developing contacts and determining tariffs. A sidebar lists six questions to ask before making the decision.

Don’t Let Supplier Costs Break the Bank

As raw material and transportation costs continue to climb, many distributors are encountering price increases from their suppliers. But, before deciding to cut one’s losses with a supplier, it’s important to consider several strategies for working around rising supplier costs. This article shows how to understand where increased costs are coming from and how to create stronger supplier relationships — or how to find new suppliers if all else fails.

Well-Oiled Machines

Powering down a plant’s equipment to make repairs or adjustments delays production and can cut into profits. This short article offers five suggestions for keeping a production line operating at maximum efficiency.

Working Toward A Successful M&A

A merger or an acquisition can be a long — and delicate — process, and there’s plenty that can go wrong before it’s over. To better the chances that an M&A will be a success, up-front due diligence work is a must. This article explains what to look for in the financials, but also discusses other aspects of a company’s operations that merit scrutiny, including employee attitudes, the customer base and IT operations.

To Outsource Or Not? What Manufacturers Should Consider

When done correctly, outsourcing can save manufacturers money and allow them to focus on their core business functions. But it’s important to consider the decision from a strategic and financial standpoint. This article lists questions to ask when deciding whether to outsource, what costs to consider when crunching the numbers, and some of the risks involved. A sidebar offers some tips for getting the most out of outsourcing if the decision is made to go ahead.


Smart Strategies for Paring Payroll Taxes

Can manufacturers reduce their payroll taxes without shedding employees? It may be possible if they implement certain strategies that can trim their tax burdens and boost their balance sheet.  This article offers three such strategies: offering tax-exempt fringe benefits instead of more money; establishing an accountable plan for employee reimbursements; and using independent contractors when possible.

Winning the war on waste

Dealing with waste often is a costly and frustrating issue for manufacturers, but it doesn’t have to be. This article shows how avoiding waste creation, finding new ways to reuse waste, and making waste smaller can help manufacturers manage it more efficiently, greening their operations while also saving money.

A Fresh Perspective on IC-DISCS

President Obama’s pledge to cut tax benefits on income generated overseas sent waves of anxiety through the manufacturing community in 2009. Even though at press time the tax proposal seems to be on the back burner (presumably because of a large lobbying push against the proposal by the business community), the announcement sparked increased interest in interest charge–domestic international sales corporations (IC-DISCs). By forming an IC-DISC, your manufacturing company may realize substantial tax savings on export-sales income.

Take care with transfer pricing

“Transfer pricing” refers to the price that related parties, such as divisions of a company, charge one another for goods or services. With revenue-hungry governments worldwide looking to keep their tax bases strong, many are stepping up enforcement on transfer pricing. Manufacturers that don’t follow the rules can be taxed twice on transactions, and face hefty penalties to boot. This article looks at “arm’s-length” requirements for transactions between related parties, along with common audit triggers. A sidebar examines advance pricing agreements for related-party transactions.

Are You Ready To Streamline Your Warehouse?

A warehouse management system (WMS) can increase efficiency and productivity for distributors, but successfully installing a WMS requires extensive planning and a fair amount of financial resources. This article explains the advantages of a WMS, but also notes that setting up and operating this application is often a complex process that may preclude some distributors from being able to justify the initial, often sizable, investment. A sidebar explains why a business management system can maximize the return on investment in a WMS.

Reaping The Benefits Of An Employee Retirement Plan

For manufacturers, establishing a retirement plan makes their company more attractive to potential hires and translates into tax benefits. And the IRS has provided several recent initiatives to encourage participation among employers and employees. This article discusses the features of defined-benefit plans and defined-contribution plans and how to maintain a plan once it’s in place.

Strategies for Shrinking Your Conveyor’s Lifetime Cost

A conveyor is one of the most vital pieces of manufacturing equipment — and one of the most expensive. But the cost goes well beyond its initial price tag, because installation, maintenance and energy usage also chip away at the bottom line. This article explains how a manufacturer can buy a conveyor that meets its needs, and why maintaining it properly can extend the system’s life and save money. It also describes current tax deductions that can shave additional dollars off a conveyor’s cost.

A Fresh Perspective on IC-DISCS

President Obama’s pledge to cut tax benefits on income generated overseas sent waves of anxiety through the manufacturing community in 2009. Even though at press time the tax proposal seems to be on the back burner (presumably because of a large lobbying push against the proposal by the business community), the announcement sparked increased interest in interest charge–domestic international sales corporations (IC-DISCs). By forming an IC-DISC, your manufacturing company may realize substantial tax savings on export-sales income.

Dust off the expansion plans

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 includes incentives designed to jumpstart spending and free up cash for businesses. This article takes a closer look at three provisions that could benefit companies: bonus depreciation, Section 179 expensing, and the Work Opportunity credit. A sidebar discusses the extension of the research credit through 2011.

Emerging Markets May Be Key to Growing Your Customer Base

Many developing countries have seen their economies expand in recent years, creating a prime opportunity for manufacturers to expand their customer bases. This article lists options for capturing customers in emerging markets, and discusses the pros and cons of each approach. It also explains steps companies should take in advance of expansion.

New IRS Measures on Liens Make Dealing with Back Taxes Easier

The IRS has relaxed its policies on liens, which are claims that the federal government puts on the assets of delinquent taxpayers. The new rules make it easier for “small businesses” to set up payment plans for back taxes and, ultimately, have their liens withdrawn. This short article looks at some of the details.

A Business Valuation Can Achieve Many Objectives

There are myriad reasons to conduct a business valuation. The main reason is in preparation for selling a manufacturing or distribution business. But knowing the company’s value can be helpful when doing succession and estate planning and for other business-related reasons. This article explores those reasons and the four valuation methods commonly used.

Higher Unemployment Taxes This Year?

One line item that appears in every manufacturer’s budget is likely to increase in 2011: unemployment taxes. Continued high unemployment means that state-run unemployment trust funds have been decimated in a growing number of states, and many are socking businesses with eye-popping tax increases to keep their systems afloat. Because either an upward or downward change in a company’s workforce could affect their employment tax liability, this article provides a primer on the essentials of unemployment insurance and what may be in store. A sidebar offers five strategies to help companies ease their unemployment tax liability.

Harnessing Capacity: How to Get the Most for Your Money

During slow periods, manufacturers scale back production. But reducing costs means cutting capacity, which shrinks potential for profits and can leave a company hurrying to catch up when demand returns. Rather than focusing solely on cost cutting, companies should look to optimize their capacity. A capacity utilization approach can balance operating expenses with product demand, trimming only unnecessary costs and identifying where additional resources are needed. This article offers ways to both streamline expenses and increase market share so as to increase capacity utilization.

Revitalize your product lineup

It’s crucial to maintain a fresh product portfolio. Even though some manufacturers may be skittish about launching new products in a slow economy, they can keep you afloat in shaky times. In fact, new products have a 20% profit margin advantage compared to older products, according to market researcher Aberdeen Group Inc.

Mate Lean Logistics Management with Six Sigma Methodology to Achieve Goals

A successful distributor must be able to reduce overall costs and cut its time to market, all while improving the quality of its delivery. This article shows how to achieve these goals by taking the practice of lean logistics management and mating it with Six Sigma process improvement methodology.

Don’t bank on it | Manufacturers shop for a better banking experience

In the wake of recent economic uncertainty, many manufacturers are exploring their banking options. Larger institutions are known for offering lower interest rates and more capital. But recent mergers have given smaller, community banks ties to larger institutions and therefore access to more funding and services, while still offering more one-on-one interaction with loan officers. This article explains that the right bank will understand the manufacturing industry and be able to suggest useful services. A sidebar shows how the 2010 financial reform will affect banks and their relationships with their manufacturing clients.

Make planning a seasonal product cycle more predictable

Accurately forecasting the demand for seasonal merchandise isn’t easy. However, distributors can better plan the boom and bust cycle of seasonal inventory by studying historical sales data, forecasting future demand and considering the unexpected. This article shows how — and what to do when, in spite of one’s best efforts, an excess of inventory remains.

Powering down | Reduce operational costs by conducting an energy audit

For most manufacturers, energy efficiency has become a must-do measure. However, while instigating a large-scale energy reduction plan may seem daunting, there are ways to make the process easier — and well worth the effort. This article shows how manufacturers can not only determine current energy usage, but employ a third-party energy audit to discover specific measures to reduce usage.

Sustainable packaging can boost bottom line results

The shift toward implementing environmentally friendly business practices is nothing new among manufacturers. And now, they’re turning to sustainable packaging as the latest way to go green — not only because it reduces waste, but also because customers are demanding it. This article describes some of the basic steps involved in making the switch to sustainable packaging.

The tech behind inventory tracking - Bar codes and RFID are two top choices

In the distribution industry, accurately identifying and tracking inventory is job number one. There are two types of technology to perform these tasks: bar codes and radio frequency identification (RFID). But which technology type is right for a particular distribution company? This article looks at how each works and explains their respective pros and cons in regard to such issues as cost, convenience, security and privacy.

One supports the other - A lean manufacturing environment benefits from lean accounting practices

Lean manufacturing is nothing new, but many don't know that lean accounting is crucial to operating in a lean manufacturing environment. Lean accounting focuses on two goals: 1) converting financial statements into "plain English," and 2) eliminating waste by taking the focus off the minutiae. This article describes some of the advantages of lean accounting vs. standard cost accounting, along with some of the disadvantages. A sidebar discusses the status of lean accounting in university curricula.

Are your prices right? Reassessing your pricing strategy can pay dividends

Layoffs, hiring freezes, and pay and budget cuts were the go-to survival tactics during the economic downturn. In the midst of this downsizing frenzy, many manufacturers neglected to reassess their pricing strategy. Doing so can help companies remain profitable and competitive in good times and bad. This article briefly discusses the steps involved.

Packing up and going home - U.S. manufacturers consider benefits of bringing operations back home

Reshoring - the act of bringing operations back onto U.S. soil - is a reaction to the myriad problems manufacturers have faced in foreign countries. This article looks at some of the specific reasons for this trend, and examines the considerations involved in determining the costs of manufacturing overseas vs. in the U.S. A sidebar discusses the recent rise in popularity of seminars, webinars and other events on this subject.

A risky proposition
Building a solid integration plan for a merger or acquisition

In this fragile economic environment, several companies have been able to take advantage of too-good-to-pass-up deals in which they acquire weaker competitors that have fallen behind. Before jumping into any acquisition, however, it’s important to build a solid integration plan, and to take into account recent Financial Accounting Standards Board guidelines that affect the M&A accounting process. A sidebar to this article forecasts M&A activity.

3 business funding alternatives to consider

The economy may be recovering, but some businesses may require additional financing to keep operations running. Three important options are asset-based financing, mezzanine financing, and Small Business Administration loans. This article explores some of the details of each.

Can your company survive a product recall?

The cost of a recall — including the time and money spent tracking down recalled products, issuing news of the recall, and refunding customers or fixing the problem — is just the beginning. Even when recalls are handled well, damage to a company’s reputation and brand can last for months or even years, resulting in decreased sales and profits. This short article provides tips on how to avoid recalls, and how to handle them if they occur.

Think before you move- When relocating your operations, seek financial advice

Manufacturers are increasingly involving senior financial executives and outside financial advisors in their site-selection and relocation plans. The reason? Executives realize that facility relocation and expansion must be as heavily scrutinized as other capital expenditures. Factors such as the price and availability of labor, taxes and financial incentives associated with the new location can either benefit a bottom line — or wreak havoc on it.

Supply Chain Management -
Choose a system that fits your needs and budget

Manufacturers have used transportation management systems (TMSs) for nearly 15 years. The good news is that these supply-chain-management software systems have evolved and improved. Learn about these improvements by reading more

Shippers Beware - Common problems with cargo insurance

Manufacturers know that cargo insurance is vital when it comes to moving valuable products and machinery, yet many have found that their coverage isn’t sufficient, leaving them with lost or damaged goods and little compensation. Read this article to learn how to cope.

An overlooked tax break that could be your big break

By forming an interest charge–domestic international sales corporation (IC-DISC), a manufacturing company may realize substantial tax savings on export-sales income. The general concept is fairly simple: A U.S. manufacturer establishes a “shell” company — an IC-DISC — and then pays its IC-DISC a percentage of the company’s export revenue, also known as commissions; the company doesn’t pay taxes on these commissions. There can be operational advantages, as well. This article looks at the qualifications required to set up an IC-DISC, while a sidebar looks at the history of this tax incentive.

Get IT right regardless of economic conditions

While some cost-cutting measures may be essential in a weak economy, slashing information technology (IT) budgets and expenditures isn’t the way to stay afloat. Smart manufacturers are creating comprehensive IT strategies that allow transparency in all facets of operations and supply chains. IT can also control costs and improve revenue through quality control and compliance. Smart IT investments can improve processes, from the enterprise and engineering stages all the way to the plant floor and distribution centers. Taking these initiatives can help a manufacturing company stay successful regardless of the economic climate.

Weighing the pluses and minuses of ESOPs

Corporate finance, employee benefits and succession planning likely are key issues the owner of a manufacturing company must contend with. But there’s a multifaceted strategy that can handle all three issues. It’s the employee stock ownership plan (ESOP). An ESOP is a qualified retirement plan that’s similar to a profit-sharing plan, except it enables employees to own part of the company that employs them. This article explains leveraged vs. unleveraged ESOPs, and their potential benefits and drawbacks.

Do you have parts smarts?

Aftermarket parts and accessories and maintenance and repair are the bane of some manufacturers’ existences. For others, they’re one of the most lucrative aspects of their businesses. No matter where a manufacturer falls on the continuum, establishing a parts and service outsourcing agreement with an experienced partner can do wonders for the company’s operations and bottom line. In addition to eliminating the need for in-house aftermarket customer service, using a partner to warehouse and distribute inventory can allow reduction of warehouse personnel and logistics costs. It can also improve distribution speed and order accuracy.

Comparing This to That-Benchmarking Financial Performance With Ratios

Benchmarking with financial ratios allows manufacturers to break their operations into individual segments to measure effectiveness against past performance, company goals and industry standards. It can provide insight into which areas of a business are strong and which need improvement. This article discusses such commonly used ratios as debt-to-assets, return-on-assets and return-on-equity, along with a number of others, and discusses the pros and cons of benchmarking. A sidebar discusses the best ratios to study before applying for a loan.

Shippers Beware - Common Problems With Cargo Insurance

Manufacturers know that cargo insurance is vital when it comes to moving valuable products and machinery. But many have found, often too late, that their coverage isn’t sufficient, leaving them with lost or damaged goods and little or no compensation. The policies often have an “endorsements” section that prevents the carrier from being held liable in many scenarios. And a broker’s “contingency cargo liability” policy offers little protection to a shipper. For that purpose, a “shipper’s interest” cargo insurance policy fills the bill.

On the Defensive - Use Available Weapons to Fortify Your Manufacturing Company Against Fraud

The Association of Certified Fraud Examiners reports that U.S. companies lost approximately $994 billion in revenue to fraud in a two-year period ending in 2008. Even more sobering is the fact that 7.2% of fraud cases occurred in manufacturing companies, accounting for a median loss of $441,000. Unfortunately, employees are a natural culprit because they have the most immediate access to funds and materials, and there are several key functions that are particularly vulnerable. This article looks at steps a manufacturer can take to reduce the chances of fraud, while a sidebar explains the importance of having a fraud prevention policy.

Supply Chain Management - Choose a System that Fits Your Needs and Budget

Manufacturers have used transportation management systems (TMSs) for nearly 15 years. As these supply-chain-management software systems have evolved and improved, many manufacturers have been leaving their third-party logistics service providers in favor of the more convenient, cost-effective alternative a TMS provides. This article discusses what to consider when deciding whether to implement a TMS.

Private Activity Bonds - Act Soon to Add More to Your Manufacturing Facility for Less -- Fall 2009 Issue

The American Recovery and Reinvestment Act of 2009, commonly referred to as the Stimulus act, has sweetened tax-exempt private activity bonds, which are available to finance “manufacturing facilities.” This definition now includes facilities used in the creation or production of intangible property, such as computer software or intellectual property. Traditional manufacturers may also benefit by using the money from a private activity bond to finance the development of on-site facilities. The act also lessens alternative minimum tax risk. But these and other tax breaks (described in a sidebar) may not be around for long, so it’s important to act fast.

How to Deal with Customer Bankruptcy -- Fall 2009 Issue

If a company has a customer who’s hovering on the brink of bankruptcy — or even wallowing through it — it needs to take certain steps to protect itself. This involves knowing about the different types of bankruptcy and the immediate steps to take when learning of one, including deciding whether to pursue repayment or write off the debt. If the former course is chosen, it will be important to participate in the court proceedings and follow certain procedures. Beyond all this, there are preventive measures a company can take to avoid being stung by customer bankruptcy in the first place.

Selling Your Manufacturing Company is Possible — Even in a Down Economy -- Fall 2009 Issue

“We’re just going to wait it out.” In an uncertain economy, this seems to be a business owner’s mantra for everything from hiring freezes to putting off large expenditures. Prudence may be preferable when it comes to some business decisions, but if a manufacturing company owner is considering selling the business, he or she doesn’t have to wait until things pick up. Although some flexibility is necessary, an acceptable price is within reach if one is perceived as a discerning and prepared seller. This article describes the steps to make it possible.

Is Your Equipment Operating at Peak Effectiveness? -- Fall 2009 Issue

These days, when many manufacturers are seeing less work coming in and less room for mechanical error, a manufacturing operation has to be in top shape. The key to avoiding costly downtime starts with measuring overall equipment effectiveness, or OEE. This short article describes what it is and how to improve it.

Strategically Planning a Business Partnership -- Summer 2009 Issue

Regardless of what industry you’re in, a strategically planned business partnership can be a smart option for starting a company. But it’s important to evaluate whether a partnership is the best option in your specific case — and it’s vital that you take the necessary steps to ensure its success. You need to consider the tax impact and the structure of the partnership, and put an agreement in writing. A sidebar discusses how you should choose a potential business partner.

Is Duplicate Data Costing You Money? -- Summer 2009 Issue

Did you know a source of revenue loss could lie in a part of your business you don’t see? It’s the extra storage space you’re paying to house redundant data. Deduplication technology can free up storage space, speed your operating system and give you the added efficiency your manufacturing company needs to stay profitable. This article defines deduplication technology and discusses the software involved.

Bartering Provides a Welcome Alternative in Tight Times -- Summer 2009 Issue

As banks become increasingly tight-fisted, more businesses are turning to bartering to recoup losses, reduce excess inventory and even come away with additional income. You can barter directly with another company, or, with the help of an exchange company, you can turn liquid assets into trade credits by selling excess products to another market. Of course, there are still tax considerations. But bartering can be an effective option to keep your manufacturing company up when the economy is down.

Offering Incentives Can Mean Extra Income All Around -- Summer 2009 Issue

Regardless of how your supply chain operates, cash back can be a motivator across the board — from distributors to retailers to consumers. That’s why rebate and incentive programs are a solid way for manufacturers to boost their bottom lines. This article discusses a variety of ways you can leverage cash-back incentives to move inventory and increase profitability.

Prepare For HVUT Before You Hit the Road -- Summer 2009 Issue

This short article discusses the ins and outs of the Heavy Vehicle Use Tax (HVUT), which applies to manufacturers that transport heavy materials using vehicles that have a taxable gross weight of at least 55,000 pounds.

Expanded ADA Boosts Employer Responsibility - Spring 2009 Issue

Recent changes to the Americans with Disabilities Act (ADA) extend coverage to more people in the workplace because of the ADA Amendments Act (ADAAA) that took effect Jan. 1. A disability is now defined as a physical or mental impairment that substantially limits one or more life activities, as well as a record of such an impairment or being regarded as having such an impairment. Transitory, minor impairments — those lasting six months or less — aren’t included, and you aren’t required to provide reasonable accommodations for those who have regarded as claims.

Can You Benefit From the R&D Credit? - Spring 2009 Issue

The research and development (R&D) tax credit can help support manufacturers’ innovative efforts, but some companies are still approaching research gingerly. Given the credit’s history, that’s understandable, but the tax advantages mean you should take a second look.

When It Comes To Collections, Shoot Straight - Spring 2009 Issue

Demanding payment for your products may not be fun, but it’s important. And in a weak economy, it may mean the difference between financial solvency and serious trouble. The challenge is to improve your collections without alienating either your employees or your customers. Fortunately, it can be done.

MEP Centers Can Boost Your Competitive Position - Spring 2009 Issue

Manufacturers of all sizes are thinking lean, training employees in needed skills and looking for new ways to compete in today’s global markets. But smaller manufacturers can be at a disadvantage. They have the knowledge and the vision to succeed, but may lack the resources and capabilities to follow through as they would like. These manufacturers are the reason the National Institute of Standards and Technology established the Manufacturing Extension Partnership (NIST MEP).

Slashing Costs- Incorporate Strategic Service Management And Reverse Logistics Into Your Cost-Reduction Program - Spring 2009 Issue

You’ve pared your operating costs to the bone, your logistics and supply chains are thrumming like well-oiled machines, and your workforce is sized to perfection. You’ve maxed out your production capacity and streamlined your lines. What else can you do to reduce costs while continuing to grow profits?

Put Your Audit in Reverse to Save Tax Dollars - Winter 2009 Issue

It’s a safe bet that the IRS will let a manufacturer know when it hasn’t paid enough sales and use taxes, but what are the odds that it’ll notify the company if it has paid too much? The chances are slim — so slim that many manufacturers use reverse audits to find overpayments and seek reimbursement on their own. This article discusses how a reverse audit works.

Do You Know How to Forecast Your Cash Flow? - Winter 2009 Issue

Cash flow forecasting is more an art than a science, but manufacturers who master it can sleep soundly at night. Whether a manufacturer wants to expand the business or just pay the bills, knowing where the cash will come from is a definite stress-reliever. This article explains how to forecast cash flow.

Cycle Counting to Improve Your Bottom Line - Winter 2009 Issue

An inventory count is an annual rite for many manufacturers, but others have replaced that ritual with an ongoing cycle count — and improved operations at the same time. Cycle counting is the process of counting some stock items or warehouse locations every day. This article explores the benefits of cycle counting.

Pretax Benefits Can Attract New Hires - Winter 2009 Issue

Baby boomers are getting ready to retire, and the competition for skilled workers to replace them is heating up. A manufacturer needs to offer more than a good salary to stand out from the crowd, but what can it do? The answer may lie in pretax benefits. This article details what pretax benefits are and which are the best ones to offer.

Know How You’ll Pay Before You Shop for Technology - Winter 2009 Issue

Cutting-edge technology can provide tremendous efficiencies and cost savings down the road, but it can be expensive for an entire manufacturing operation. That’s why it’s smart to have a technology funding plan. This short article explains how this plan type can help manufacturers buy technology that helps them achieve their objectives faster and more efficiently.

Bridging the Generational Gap | Succession Plans for Middle Managers Can Ease Disruption as Boomers Retire - September 2008

Many manufacturers’ succession plans begin and end with the keys to the executive suite. It’s important to know who’ll take over when senior executives leave, but the loss of a key middle manager can be more disruptive to day-to-day operations. This article explains the challenges middle managers face supervising a multigenerational workforce and explores the steep costs of employee turnover.

Seven Critical Business Valuation Terms You Should Know - September 2008

As a business owner, you’ll likely need to have your company appraised at some point. Appraisals are essential in the event you decide to sell or merge the business, create or update a buy-sell agreement, or devise or refine your estate plan. A good way to preempt the uncertainties of the appraisal process is to learn some basic valuation terminology. This article discusses seven terms you should know.

No Business Plan? It’s Never Too Late - September 2008

The biggest mistake any manufacturer can make with a business plan is not to have one. Even if a company isn’t seeking a loan or outside investors, a well-developed business plan is — or should be — a guide to the future. This article details what a solid business plan should cover.

Two Good Reasons to Think of Taxes Now - September 2008

The end of the year is fast approaching, which means it’s a good time for manufacturers to take stock of their financial and tax situations. Taxes aren’t due for a while, but smart manufacturers may be able to make them less painful if they act before year end. This article provides several year end tax saving tips to reduce a manufacturer’s tax bill.

Why Open Innovation Can Be Good for Manufacturers - September 2008

Manufacturers traditionally have relied solely on their own internal R&D processes to develop the technologies and products necessary to open or expand markets. But even the most competent R&D team can’t always come up with the solutions to difficult problems. Open innovation — consulting with outside entities to find answers to perplexing questions — can be the answer. This article examines how open innovation works.

Make Holiday Bonuses a Part of Christmas Past - September 2008

Many manufacturers feel obligated to hand out year end holiday bonuses. But in a soft economy, some companies are doing away with bonuses altogether. That’s an option, but a better one may be to replace across-the-board holiday bonus programs with merit-based plans that reward those who deserve extra recognition. This short article provides alternatives to holiday bonuses.

Fluctuating Workweek Method - The Little-known Secret to Cutting Overtime Pay -- June 2008

As every manufacturer is well aware, employees who put in more than 40 hours in a week are entitled to overtime pay. If a manufacturer’s production schedule varies, it may be able to reduce compensation expenses by putting nonexempt employees on salary and using the fluctuating workweek method of paying overtime. This article explains how the fluctuating workweek method works.

What FIN 48 Means to Private Manufacturers -- June 2008

When the Financial Accounting Standards Board (FASB) delayed implementation of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109, for nonpublic companies, it was issuing a reprieve, not a pardon. And guess what? Time is just about up.

Lay Waste to Waste for Big-time Savings -- June 2008

It’s expensive, it may be hidden and it’s probably leeching profits from your business. It’s waste, and you can control it. Even small changes, such as using timers or sensors on lights or getting vendors to reclaim the pallets they use to ship you parts, can add up to significant savings. For truly remarkable results, though, you may need to think bigger.

New Rules Require New Methods for M&A Accounting -- June 2008

Last year, 64% of American manufacturers were involved in some sort of merger or related activity, according to a 2007 survey by PricewaterhouseCoopers. That much activity calls for some conformity in financial reporting for mergers, says the Financial Accounting Standards Board (FASB).

Be Flexible - Use Standard Cost Budgeting to Control Your Expenses -- June 2008

There are two ways for manufacturers to approach budgeting. They can assume their production will remain at set levels throughout the budget period and plan accordingly. Or they can develop standard costs to use in a flexible budget that can be adjusted to reflect actual production.

Uniform Accounting Standards: Why Convergence is Here to Stay -- February 2008

Accounting standard-setters around the world have been working on convergence — or uniform accounting standards among countries — for decades. Progress has been slow, but it has picked up speed in recent years. And, as convergence moves closer to reality, the end of Generally Accepted Accounting Principles (GAAP) may be drawing nearer.

3 Ways to Pay: IRS Changes Rules for Estimated Taxes -- February 2008

The laws surrounding corporate estimated taxes have changed many times in the last 20 years, but the IRS has been slow to amend its rules to reflect those changes. As of August 2007, however, the IRS is up to date — and that means manufacturers need to be as well. This article details three ways to pay estimated taxes.

On the move: What to Consider Before Relocating -- February 2008

Selecting a new location for a manufacturing company can require months of analysis. Owners must consider operational, financial and logistical implications before making a final decision. This article details all aspects of a relocation plan.

Information in a Box: Data Warehousing Can Help you Make Better Business Decisions - February 2008

Many manufacturing companies rely on several databases to keep operations running smoothly. This generally works fine, but what if copies of all of a company’s databases were maintained in a single “box,” available for immediate access from any location? This article examines how data warehousing works.

Manufacturer, Know Thy Competition -- February 2008

The manufacturing industry is growing and becoming more competitive all the time. Competitive analysis can give a manufacturer a leg up in the industry, but companies need to know how to do it effectively. This short article explains the basics of competitive analysis.

The Up-front Work Matters: Due Diligence is Essential in Any Merger or Acquisition -- February 2008

Mergers and acquisitions have become a way of life in manufacturing, but their success depends on due diligence early in the acquisition process. Whether a buyer or seller, think of due diligence as a protective business strategy. This article explains what aspects of a company to scrutinize.

Don’t Let Overhead Accounts Get Ripe for the Picking -- February 2008

Overhead costs are a part of every business, and accounting for them can be problematic. For manufacturers, overhead costing is particularly complex. Accounts tend to be large, and non accounting managers don’t always understand how they work. As a result, these overhead accounts can be open invitations to fraud. This article details how internal controls can help ensure funds remain in overhead accounts.

Leading Lean Means Walking the Walk -- December 2007

Manufacturers who wish to adopt lean manufacturing principles must demonstrate to their employees the value of lean strategies. The road to excellence in lean manufacturing can be never-ending, but excelling in lean leadership can make it less bumpy. This article explores lean leadership actions.

Do You Know How to Price Your Products? -- December 2007

Like most businesses, manufacturers must make enough profit on their product sales to generate an adequate return on investment. The difference for manufacturers is that setting prices based on margin information may not adequately reflect production time. A high-margin product that moves through the plant slowly may actually be less profitable than a low-margin product produced in half the time. This article examines several ways to approach pricing.

How to Get Started Finding a Successor — and Why You Shouldn’t Wait -- December 2007

The owner of a manufacturing company must consider who eventually will succeed him or her. Be it his or her children or a qualified employee, the time will come to hand over the reins of the company to someone else. This short article explains the importance of succession planning.

Clean up your image: Building brand value -- September 2007

It’s easy to overlook the importance of branding, what with the day-to-day operational issues of running a manufacturing business. Yet beefing up a brand name can strengthen sales and improve a company’s ability to attract capital for growth. This article explores the benefits of building brand value.

The ties that bind -- September 2007 Dual sourcing can protect the supply chain

Supply chain management always is a concern for manufacturers. If global supply chains are used, the risk is even higher. One option to mitigate the risk is dual sourcing - using multiple suppliers (local and global) for the same components. This article explains dual sourcing.

An act of reconciliation -- September 2007 Balancing your financial books is an effective internal control

With the advent of the Sarbanes-Oxley Act, it’s easier than ever to run afoul of financial requirements. Of course, no one makes mistakes on purpose, but a relatively simple practice can become a valuable internal control: balance account reconciliation. This article reviews how balancing financial books can be a proactive mistake detector.

Should you attend trade shows?-- September 2007

Regardless of what products manufacturers produce, there’s certain to be at least one annual trade show for that industry. Unfortunately, many smaller manufacturers may believe they can’t afford to attend. But they should consider whether they can afford not to attend. This short article explains the benefits of attending a trade show.

Get into the mix -- June 2007

Consider mixed-model scheduling. Manufacturers that produce a variety of products with different specifications may struggle with how to schedule production. Multiple changeovers can result in multiple production gaps, which isn’t good for anyone. One option to consider is mixed-model scheduling. This article explains how mixed-model scheduling works.

10 principles every privacy policy should address -- June 2007

In the course of doing business, manufacturers collect a significant amount of information that they must protect. This can be a challenge in the best of circumstances; it can be especially daunting if they do business in more than one country. This article explores 10 principles a privacy policy should address.

Split-dollar life insurance can be a valuable planning tool -- June 2007

Business owners often use buy-sell agreements funded by life insurance policies to ensure an orderly transition of their companies to new owners. The problem is paying the premiums — especially if the designated successors are significantly younger and have significantly lower wages than the owner. This article details how split-dollar life insurance may be a solution.

Calm the stormy seas of manufacturing deductions with safe harbors -- June 2007

There are two safe harbors manufacturers can use to determine how much of their W-2 wages are allocable to their domestic production costs. One is the wage expense method; the other is the small business simplified overall method. This short article reviews both methods.

Tax law fluffs up the feathers in HSA nests -- June 2007

The Tax Relief and Health Care Act of 2006 (TRHCA) expands Health Savings Accounts (HSAs) for employees and allows business owners to make additional contributions on employees’ behalf. This article explains how TRHCA improves HSAs for employees and employers.

Could 3PL Lower Your Logistics Costs?

Under constant pressure to control costs and streamline operations, many manufacturers are outsourcing some or all of their logistics functions. Some companies choose to let third-party providers handle only transportation or warehousing; others opt to outsource everything from packaging and assembly to inbound transportation and freight consolidation. Another option is to consider third-party logistics (3PL). This article explains the advantages and risks of 3PL.

P-cards Pack Purchasing Power

When your staff needs ink for the office printers, how do they get it? If your organization is like a growing number of companies, you’re using purchasing cards, or p-cards, to streamline the process.

PPA Makes Automatic Enrollment a Retirement Plan Reality

Designed primarily to shore up ailing pension funds and ensure retirees' benefits aren't curtailed unexpectedly after they retire, the Pension Protection Act of 2006 (PPA) also addresses nonpension retirement plans. How PPA affects manufacturers depends on what type of retirement plan they provide their employees. This article details provisions of PPA.

Getting To Know You-Risk-Based Audit Standards Raise Financial Reporting Bar

Risk-based auditing standards take effect for the 2007 fiscal year, and manufacturers should be prepared to undergo heightened scrutiny of their companies and the people who run them. This article examines how manufacturers can benefit from better risk assessments and more comprehensive internal controls.

Face the Future-Strategic Planning Can Hone Your Workforce

As manufacturers fight to stay competitive, an aging workforce coupled with an increasingly global marketplace makes skilled employees more important than ever. The question is how to find enough qualified workers to replace skilled employees who are on the brink of retirement. The answer may be strategic workforce planning. This article explains different planning options.

Modernize Your Accounting Department Pay Yourself a Dividend with Automated A/P Processes -- December 2006

Manufacturers continue to increase their technological capabilities and knowledge but many still rely on paper to complete accounts payable (A/P) tasks. This article explains how an automated A/P system can boost accuracy, eliminate delays in payment transmissions and reduce the potential for lost paperwork.

Are VEBAs a Viable Alternative Benefit Plan? -- December 2006

As the cost of providing employee health and life insurance benefits continues to skyrocket, many manufacturers are looking for alternatives to standard insurance coverage. Depending on a company’s circumstances, a Voluntary Employees Beneficiary Association (VEBA) may be one alternative worth considering. This article discusses the ins and outs of VEBAs.

MEP Network Gives Small Manufacturers Competitive Cachet -- December 2006

The Manufacturing Institute cites the manufacturing extension partnership (MEP) as a best practice for small and midsize manufacturers. A network of 350 nonprofit centers that serve the United States and Puerto Rico, MEPs provide guidance in areas ranging from process improvements to information technology applications. This article explores strategies for success using MEPs.

SOA May be Manufacturers’ Missing IT Link -- December 2006

Manufacturers often run into a seemingly insurmountable problem: how to integrate multiple existing applications with new programs so that everything runs smoothly and is readily available to everyone who needs it. The Internet may prove to be the missing link in the struggle for compatibility. Web service projects have demonstrated that it’s possible to create service-oriented architecture (SOA) that doesn’t care whether an application is local or remote, or even what language it uses. This article details SOA.

IRS Offers Green for Going Green -- December 2006

Under the terms of the Energy Policy Act of 2005, owners or leaseholders of commercial buildings can deduct the cost of any energy-efficient property they install in their buildings. This short article provides the specifics of the act.

Flex Your Manufacturing Muscle with Flexible Systems -- September 2006

Increased globalization has opened new markets for manufacturers, but it also has carried some new demands. Today, manufacturers likely are to be asked to produce a wider range of products with higher quality, lower costs and shorter lead times than ever before. Flexible manufacturing systems that can easily adapt to market fluctuations are the new darlings of the manufacturing industry. This article details the ins and outs of flexible systems.

Did You Miss Your Wake-up Call? -- September 2006

The 2006 tax clock is ticking. It may seem impossible, but the clock for the 2006 tax year is ticking, and now is the time to plan year-end tax strategies. This article discusses several tax provisions that affect manufacturers.

A Sales Force to be Reckoned With -- September 2006

For a sales group to succeed, it must be the right size and in the right places. A sales group’s most critical resource is the time available for face-to-face sales calls. If a team is bogged down in administrative details or stymied by cost-reduction efforts, it may be time to take another look at how to make them more efficient. This short article explains how to better deploy a sales force.

Out of State Sales and Deliveries Taxes-- September 2006

In regulation 830 CMR 64H.6.7, UCC title rules are used to determine when the sale occurs in situations involving out of state sales and deliveries and explains the sales tax treatment of such transactions.

Medical Device Tax Credit -- September 2006

Effective July 8, 2006, medical device companies can claim a tax credit against their Massachusetts' tax liability for 100 percent of the user fees that they pay to the U.S. Food and Drug administration during the taxable year for pre-market approval to market new technologies developed or manufactured in the Commonwealth.

Sales Tax for Out-of-State Deliveries under 830 CMR 64H.6.7 -- September 2006

In regulation 830 CMR 64H.6.7, UCC title rules are used to determine when the sale occurs in situations involving out of state sales and deliveries and explains the sales tax treatment of such transactions.

Are erroneous ocean freight charges sinking your profit margin? - May 2006

Learning the terms of the trade can help you avoid obstacles. Ocean freight charges can be complex. In fact, $50 million in incorrect ocean freight charges may be waiting to be reclaimed, according to Ocean Freight Refunds. To understand ocean freight charges, manufacturers must learn the terminology involved. This article explains commonly used ocean transport terms and the costs they include.

Go green to save more green - May 2006

Sustainable processes can attract global lenders and customers. Can manufacturers be environmentally responsible and good businesspeople at the same time? A growing number of experts are responding with a qualified “yes.” But these same experts note that U.S. companies continue to lag behind countries in Europe, as well as Japan, in embracing eco-friendly processes. This article explores sustainable processes that can benefit the environment and the bottom line.

Risk management requires a group effort, not a solo act - May 2006

Risk management isn’t a trivial undertaking. Manufacturers encounter numerous risks every day, from products being damaged in shipping to increased pressure for financial transparency and accuracy. Enterprise risk management encompasses all risk types, and includes strategies for mitigating each one. The key to effective risk management strategies is coordination and communication. This article details the role of employees and technology in risk management plans.

Creating a blog for dollars and sense - May 2006

Blogs cover virtually any topic imaginable. Keeping a blog can be a real boost for a manufacturer’s marketing and public relations efforts. A positive review on a well-regarded blog can heighten interest in a product. But there is a protocol. This short article examines the ins and outs of blogging.

Speed and accuracy count - May 2006

Use automation to boost efficiency and transparency. In a world that demands ever-faster, mistake-free responses, it’s important that manufacturers use automation to improve their administrative processes and their operations. This article explores how technology, such as e-invoicing, can help the speed and accuracy of a manufacturer’s financial reporting.

Taking Stock -- March 2006

Inventory accounting requires careful consideration. Inventory may be the most costly operating item for any business that sells products. Thus, manufacturers make inventory control a top priority. Equally important to profitability, however, is inventory accounting. And it can be a challenge. This article examines the ins and outs of inventory management.

Systems Integration: There are No Quick Fixes -- March 2006

Manufacturers are under pressure to expand their technology to speed production, increase communication and enhance the bottom line. To be effective, such technology must be accurate, robust and reliable, but it also must be integrated. This article details the difficulties of integrating various computer systems.

7 Tips for Improving Collections -- March 2006

One of the most important and least enjoyable aspects of doing business is collecting accounts receivable. But manufacturers operate on tight cash-flow margins, so they can’t afford to become their customers’ bankers. This article provides seven suggestions to improve collections.

OMB Review Targets Burdensome Manufacturing Rules

Abstract: The federal Office of Management and Budget (OMB) is overseeing a review of 76 regulations that manufacturers, regulators, trade organizations and other interested parties say are hampering American manufacturers' ability to compete. In many cases, reviews by the appropriate federal agencies are targeted for completion in mid- to late 2006. This article details a few of the new reforms.

Serving up a better health care plan-FSAs offer employers and employees plenty to chew on

Today's high health care costs have left workers and companies alike hungry for a better way to cover the former's medical needs without hurting the latter's profitability. One increasingly popular option that gives both parties plenty to chew on is the Flexible Spending Account (FSA), which can also provide dependent care benefits. This article explains the details of FSAs and provides a sidebar on a similar option, the Health Savings Account (HSA).

Devising a compensation strategy for your company

Without a good pay and benefits structure, you can’t attract and retain the best employees. But devising a compensation strategy is tougher than it looks — many factors go into paying competitively without breaking the bank. Here are some ways to get it right.

F&D's Top 5 Year End Tax planning Tips

The end of 2005 is not far off, and it's always a good idea to take one last look at your tax situation while there is still time to take action. Some planning ideas need to be implemented before year-end to be effective for this year. With that in mind, here are the Top 5.

Tax Incentive on Dividends from Foreign Subsidiaries

The American Jobs Creation Act provides for an 85% dividends received deduction for certain dividends from controlled foreign corporations (CFC's).

Activity-Based Costing Makes Accounting as Lean as the Plant

Lean manufacturing is becoming an industry standard practice, but it may not be suited for traditional accounting practices. As companies adopt lean manufacturing, they may also want to consider lean accounting methods, such as activity-based costing.

For Manufacturers, Success is Spelled R&D

Manufacturers told researchers last year that launching new products is the No. 1 driver of revenue growth for their companies, but that supporting research and development (R&D) for new products isn't a top priority.

When Implementing Lean Manufacturing Principles, Don't Overlook Accounting

Lean manufacturing principles can streamline a manufacturer's operations, but how do they affect its accounting system? Most financial experts agree that standard accounting procedures can't accurately indicate all of the improvements that a move to lean manufacturing brings about. This article explains why it's important to eliminate waste in manufacturing and accounting processes.

Technology Removes the Kinks from Your Supply Chain

Manufacturers understand how improving their supply chains can add value to their operational efficiency, but too many overlook what the supply chain can add to their level of customer service and time-to-market effectiveness. In the face of shorter product cycles, increased customer demands, ever-expanding supplier locations and the need to improve time-to-market speed, virtually all manufacturers must consider what technology can add to their supply chain operations. This article discusses what technology manufacturers are currently favoring.

Refund Opportunity for EU Customs Duty

Before the extraterritorial income exclusion (EIE) was repealed, European Union (EU) countries applied additional import duties to many products from the U.S. in retaliation against export tax breaks given to U.S. companies.

Supply vs. Demand Technology May Change Manufacturing Models

As the demand for custom products increases, manufacturers are turning to demand-driven processes rather than traditional supply-driven business models. Because demand-driven processes require speed and flexibility, technology is a key component of this business model. This article discusses whether the results of demand-driven processes are sustainable.

Dividends from Foreign Subsidiaries

The American Jobs Creation Act provides for an 85% dividends received deduction for certain dividends from controlled foreign corporations (CFC’s). This provision of the new tax law was enacted in order to create an incentive for U.S. based multinationals to distribute the earnings accumulated by their CFC’s back to the U.S. parent, so that the earnings may be invested in the U.S.

How Do Your Key Performance indicators Measure Up?

Key performance indicators (KPIs) are among the most effective ways for manufacturers to measure performance, but they're worthless if they're measuring the wrong things. To be of value, KPIs must accurately reflect what a company needs to achieve to succeed. This article describes how to choose the right indicators to measure and to set attainable targets.

The Future of Manufacturing = Smarter Factories

The future of manufacturing is notoriously difficult to predict. But industry analysts agree that whatever manufacturing's future holds, technology will help make your factory more intelligent. This article covers how smart machines, business intelligence software and Web-enabled technology will affect the manufacturing process.

Share this:

related links

M&D Newsletters & Articles 

M&D PDF Newsletter Archive

Tax Services

Audit Assurance and Accounting


Tax and Business Updates

Contact Us

First Name:
Last Name:
State: Zip:
Your Question / Comments:

Call Us

RI, NH, MA Accounting Consulting Firm