Tuesday, June 29, 2010

FBS User Conference Connects People, Progress and the Planet

Registration is now open for the annual FBS User Conference, August 24-26 in Moline, Illinois. This year's event features new speakers and topics, a wide range of breakout sessions geared to different interest groups and release of some exciting new technologies. A 30th Anniversary banquet, sponsored by DTN, will honor FBS clients and look back on some of the milestones of ag computing.

New presenters include nationally-known consultants Steve McWilliams ("Do You Need a Controller / Are You Ready for a CFO?") and Moe Russell ("Incorporating FBS Data Into Risk Management Decisions" and "Crop Cost Benchmarks").

This year, registrants can pre-select the breakout sessions they wish to attend by clicking on this survey link. http://www.surveymonkey.com/s/B57MGQ5 (Final agenda determined by responses received as of July 31, 2010.)

The deadline for hotel reservations is Wednesday, July 23. Call the Stoney Creek Inn at 309-743-0101 to reserve you room now.

Discounted seminar reservations are available until Friday, July 30. Click on this link to download a brochure or register. www.fbssystems.com/uc2010

PORK$HOP Speakers Identify Opportunities Tempered With Caution

From the 2009 cost of production benchmarks through the outlook for 2010 and beyond, presenters at the 2010 PORK$HOP seminar on June 8th in Amana, Iowa, defined the new boundaries of playing field as well as the rules pork producers will need to adopt to survive in the years ahead.

“The big change (in cost of production) is corn, which dropped on an average of $1.26 per bushel from 2008,” reports Mark Penningroth of Latta, Harris, Hanon & Penningroth L.L/P., which compiled the cost benchmarks from 41 operations. The $12.93 per live hundredweight range of production costs within farrow-to-finish participants illustrate the opportunities for even healthier profit margins, and in spite of conventional wisdom, the lowest cost producers are not necessarily the largest operations.

For more information on the LLHP benchmarks, visit their website at http://lattaharris.com/ or contact John McNutt at jmcnutt@lattaharris.com .

Kent Bang from the Bank of the West reported that the hog cycle is still alive, but has changed to a longer down cycle due to higher investments in fixed assets, more contractual arrangement and more specialized production segments. He believes the up cycle has also lengthened because of increased volatility which has limited lenders interest, as well as the unfavorable location and age of existing facilities and competition which discourages new entry.

Bang recommended these defensive strategies:
  • Continually update your budget / projections

  • Analyze liquidity and equity after projected losses

  • Review loan covenants and communicate with your lender

  • Watch for opportunities to lock in profits

  • Know your costs and controllable expenses

  • Reduce risk exposure you cannot afford

  • Rather than focusing just on low cost of production and efficiency to manage risk, have a “margin” mentality

“In the past two years we were making decisions based on futures prices that were not materializing,” says Bang. “You need a written risk management plan. Bells need to go off when you hit the target margins.”

Saturday, June 26, 2010

Q&A of the Month--Write-Off an A/R Invoice

Q. What's the best way to handle an Accounts Receivable invoice that has been outstanding for a long time and which you no longer expect to be paid? In other words, how do you write-off a “bad” A/R?

A. One approach to write off an old A/R invoice—yet maintain a balanced general ledger—is to enter a new A/R invoice in the same accounting year as the “bad” A/R. Use the same Ledger Account, Center, and Division as the original entry except reverse the amount. To document the purpose of this entry, type something like “Write off A/R ####” in the Description field (where “####” is the original invoice number). Also remember that whenever you make changes in a prior accounting year, you must re-create accounting beginning balances (Utilities Create Beginning Balance) and to re-calculate retained earnings (General Input Accounting Calculate Retained Earnings) for each succeeding year.

Note when following this procedure, the original and offsetting invoice can either remain “open,” or are both paid on the date the decision is made to write-off the original A/R.

Other options are also available for handling this tricky transaction. Remember to always consult with your accountant before making changes in a prior accounting period.