kchrisman

Entries by Katie Chrisman

Understanding Debt Structure: Matching Farm Loans to Cash Cycles

Debt is a normal part of most farming operations. Land, equipment, livestock, and infrastructure require significant capital. The question is not whether to use debt, but how to structure it wisely.One of the most common financial pressures we see in agriculture is not excessive borrowing, but mismatched borrowing. When loan terms do not align …

Debt is a normal part of most farming operations. Land, equipment, livestock, and infrastructure require significant capital. The question is not whether to use debt, but how to structure it wisely.

One of the most common financial pressures we see in agriculture is not excessive borrowing, but mismatched borrowing. When loan terms do not align with the farm’s cash cycle, even a profitable operation can feel unnecessary strain.

The solution begins with a clear understanding of when cash comes in and when it goes out during the year. Once that timing is defined, debt payments can be structured around the realities of your operation rather than working against them.

Know Your Cash Cycle

Unlike many businesses, farms often experience uneven income patterns. Expenses occur steadily or even upfront, while revenue may arrive once or twice a year.

Seed, feed, fertilizer, labor, fuel, and repairs are paid long before crops are harvested or livestock is sold. That timing gap must be financed thoughtfully.

A clear cash flow projection, updated annually, helps identify when cash is tight and when it is available. Without this visibility, loan payments may come due at the worst possible time.

Match Short-Term Needs with Short-Term Debt

Operating expenses tied to a single production cycle are best financed with short-term operating lines or seasonal notes.

These loans are designed to expand during planting or feeding periods and contract once revenue is received. The goal is to avoid using long-term debt for short-term needs, or vice versa.

When structured properly, operating lines provide flexibility without creating unnecessary long-term obligations.

Finance Long-Term Assets with Long-Term Debt

Land purchases, major equipment, building construction, and facility upgrades should generally be financed over a period that reflects their useful life.

Stretching short-term loans to cover long-lived assets creates cash pressure. Conversely, paying for long-term assets too quickly can strain working capital.

A well-structured term loan spreads repayment in a way that aligns with the asset’s productivity and preserves liquidity.

Protect Working Capital

Working capital acts as a buffer against volatility in commodity prices, weather events, and input cost increases.

If debt payments consistently erode working capital, it may signal a structural issue rather than a temporary challenge. Refinancing or restructuring debt can sometimes restore balance and provide breathing room.

Regularly reviewing current ratios and liquidity trends helps identify concerns before they become urgent.

Plan for Growth Carefully

Expansion often requires additional borrowing. Before taking on new debt, it is important to model how repayment fits within existing cash flow.

Will projected revenue comfortably cover principal and interest, even in a lower-yield year? How will new debt affect leverage ratios and lender covenants?

Growth should strengthen the operation, not expose it to unnecessary risk.

Ongoing Review Is Essential

Debt structure should not be set once and forgotten. An annual review of loan terms, repayment schedules, and overall leverage ensures that your financing continues to match your operation’s reality.

At DBC, we work with agricultural clients to evaluate debt structure in the context of cash flow, profitability, and long-term goals. Clear reporting and thoughtful planning can reduce financial stress and support steady growth.

If you would like to review whether your current loan structure aligns with your farm’s cash cycle, DBC is here to help.

Using Benchmarking to Measure Farm Performance Year Over Year

Farming has always required good instincts. Today, it also requires good data.Commodity prices shift, input costs rise and fall, and weather often remains unpredictable. In that environment, it can be difficult to tell whether a farm’s performance is truly improving or simply reflecting external conditions. That is where benchmarking becomes valuable.Benchmarking allows you to …

Farming has always required good instincts. Today, it also requires good data.

Commodity prices shift, input costs rise and fall, and weather often remains unpredictable. In that environment, it can be difficult to tell whether a farm’s performance is truly improving or simply reflecting external conditions. That is where benchmarking becomes valuable.

Benchmarking allows you to measure your farm’s financial and operational results against prior years and against comparable operations. When used consistently, it provides a clearer picture of progress and areas that need attention.

What Benchmarking Really Means

At its core, benchmarking is the process of comparing key performance indicators over time. For farms, those indicators often include:

· Gross revenue per acre or per head

· Cost of production by crop or livestock category

· Operating expense ratios

· Labor efficiency

· Debt-to-asset and working capital ratios

· Net farm income trends

Looking at these metrics consistently helps separate normal seasonal swings from meaningful change. It also reduces the risk of making decisions based on one unusually strong or weak year.

Why Year-Over-Year Comparisons Matter

A single year rarely tells the full story. Strong yields may mask rising input costs. Higher revenue may hide tightening margins.

By reviewing multiple years side by side, patterns begin to emerge. You may see that machinery costs are steadily climbing faster than revenue. Or that feed efficiency has improved after a change in process. Those insights lead to better decisions.

Year-over-year benchmarking also strengthens conversations with lenders. Clear trends and documented performance improvements build credibility and support financing discussions.

Internal Benchmarks vs. Industry Benchmarks

There are two valuable ways to benchmark.

Internal benchmarking compares your farm to its own historical performance. This is often the most meaningful starting point because it reflects your land, your management style, and your cost structure.

Industry benchmarking compares your results to regional or national averages. This can highlight areas where you are outperforming peers or where there may be room for improvement.

Used together, these comparisons provide context. If margins are tightening across the industry, that signals one type of challenge. If your margins are tightening while others remain stable, that signals another.

Turning Data into Decisions

Benchmarking is not about producing more reports. It is about making better operational and financial decisions.

For example:

· If cost of production per bushel is rising, it may be time to renegotiate input contracts or evaluate equipment efficiency.

· If labor costs are increasing faster than revenue, staffing models may need review.

· If working capital is trending downward, cash flow planning may require adjustment before it becomes a constraint.

These are strategic decisions, not just accounting exercises.

The Importance of Clean, Consistent Records

Benchmarking only works when the underlying data is accurate and consistent. Changes in accounting methods, inconsistent expense categorization, or incomplete records can distort comparisons.

Maintaining disciplined year-end reporting and consistent classifications ensures that you are comparing like with like. Even small inconsistencies can lead to misleading conclusions.

This is where thoughtful financial oversight adds real value.

How DBC Supports Agricultural Clients

At DBC, we work with agricultural producers who want more than year-end financial statements. We help clients identify the right metrics, structure reports consistently, and interpret trends in a practical way.

Our goal is to provide clarity. Clear data leads to informed decisions. Informed decisions support long-term stability.

If you would like to explore how benchmarking can strengthen your farm’s financial performance, the team at DBC is here to help.

When a Trust Complicates Farm Succession Planning

Keeping a farm in the family is rarely simple. It is not just about land or assets, but about legacy, relationships, and the responsibility of passing something meaningful to the next generation. Even with thoughtful planning, older estate documents can create challenges that were never anticipated, especially as circumstances change over time.  One situation that …

Keeping a farm in the family is rarely simple. It is not just about land or assets, but about legacy, relationships, and the responsibility of passing something meaningful to the next generation. Even with thoughtful planning, older estate documents can create challenges that were never anticipated, especially as circumstances change over time. 

One situation that comes up more often than many families expect involves testamentary trusts. These trusts are often created to protect assets and provide structure, but years later they can limit flexibility when plans need to evolve. 

When the Plan No Longer Fits the Reality 

Consider a situation we often see in farm succession planning. A farmer lost his wife more than a decade ago, and as part of her estate plan, her share of the farmland was placed into a trust. The trust specifies that, after his passing, her portion of the property will be divided equally among their four children. 

Since then, one of those children has stepped fully into the operation and built his future around farming. The father made a promise that he would find a way to keep the farm intact so his son could continue. The challenge is that the trust no longer reflects that goal, and it cannot be changed. 

This is where many families find themselves. The plan made sense at the time, but life moved forward in ways no one fully anticipated. 

Working With What You Can Control 

Even when part of the plan is fixed, there is often still room to adjust other pieces. In this situation, the father still controls his share of the property, which gives him the ability to influence how things unfold. 

He could choose to leave his portion of the home farm directly to the farming son. While that does not solve everything, it reduces the amount the son would need to purchase from his siblings. Another option is to balance things by allocating additional land from another parcel, helping create a more workable outcome for everyone involved. 

These adjustments may not be perfect, but they can move the family closer to the original intention. 

Looking at the Numbers Differently 

In some cases, the solution is not about changing the structure, but about adjusting how value is shared. 

If the trust requires full market value for its portion, the father may be able to offset that by offering more favorable terms on the assets he controls. A deeper discount on his share can help create a similar overall outcome to what the family originally envisioned. 

This approach requires careful planning, but it can help balance fairness across the family while still supporting the goal of keeping the farm intact. 

Having the Conversation Now, Not Later 

In many situations, the most important step is simply having an open conversation. 

If the goal is to keep the farm operating, it helps to bring the family together and talk through what that means in practical terms. Would the other children be open to allowing their sibling to purchase the land over time? Do they share the same long-term vision for the farm? 

These discussions are not always easy, but they are far easier to have now than during a time of loss. When expectations are clear, families are better positioned to move forward together. 

Setting Expectations With Care 

One of the more difficult moments for any family is when a will is read and something feels unexpected. Without context, decisions can feel unfair, even when they were made with good intentions. 

Taking the time to explain the reasoning behind the plan can make a meaningful difference. When family members understand the limitations created by the trust and the goal of preserving the farm, they are more likely to see the full picture. 

Planning With the Future in Mind 

Situations like this are a reminder that estate plans should not remain static. Over time, land values change, tax rules shift, and family roles evolve. What worked years ago may not support the same outcome today. 

Revisiting these plans periodically gives families the opportunity to adjust while options are still available. It also creates space to think through both the financial and personal aspects of succession. 

At its core, farm succession is about more than transferring property. It is about creating a path forward for the next generation while maintaining fairness across the family. With thoughtful planning and clear communication, it is possible to move closer to both. 

At DBC, we work with agricultural businesses and families to bring structure and clarity to these conversations. By focusing on long-term goals and practical realities, we help guide decisions that support both the operation and the people behind it. 

To read the full article by Mark McLaughlin visit https://www.agriculture.com/how-to-keep-the-farm-in-the-family-when-a-trust-gets-in-the-way-11825875 

U.S. Farm Income Expected to Decline in 2026 Despite Increase in Government Payments 

The financial outlook for U.S. agriculture is showing signs of strain. According to the U.S. Department of Agriculture, net farm income is projected to decline in 2026, even as government support reaches levels not seen in several years.  At first glance, the change appears modest. Net farm income is expected to fall ~0.7% to $153 billion. After …

The financial outlook for U.S. agriculture is showing signs of strain. According to the U.S. Department of Agriculture, net farm income is projected to decline in 2026, even as government support reaches levels not seen in several years. 

At first glance, the change appears modest. Net farm income is expected to fall ~0.7% to $153 billion. After adjusting for inflation, the decline is more pronounced, dropping $4 billion, or ~2.6% from the prior year. What stands out is how much of that income is being supported by government programs. 

A Larger Share of Income Coming From Government Payments 

Government payments are expected to account for nearly 29% of total farm income in 2026. Without that support, the picture changes significantly. USDA data shows net farm income would fall nearly 12% to $109 billion. 

That shift highlights a growing reliance on federal programs to stabilize farm operations. As one agricultural advisor noted, government payments are doing much of the work in supporting crop producers right now. 

Support Levels Not Seen Since Recent Disruptions 

USDA projects direct government payments will reach $30.5 billion in 2025 and increase to $44.3 billion in 2026, not including crop insurance indemnities. These levels have not been seen since 2020 and 2021, when pandemic disruptions and trade challenges led to similar support. 

The increase is tied to Farm Bill programs responding to lower crop prices, along with continued supplemental and disaster assistance. 

At the same time, many producers are carrying higher levels of debt while depending more heavily on these payments to cover operating costs. 

What Is Driving the Pressure 

Several factors are contributing to the current environment: 

  • Lower crop prices influenced by global supply levels 
  • A surplus in grain markets 
  • Lost export demand tied to past trade policies 
  • Ongoing pressure from operating costs, even as some inputs begin to stabilize 

While fuel and pesticide costs are expected to decline, overall financial pressure remains. 

A Mixed Outlook Across Commodities 

Income expectations vary across the agricultural sector: 

  • Corn receipts are expected to increase 
  • Soybean receipts are projected to remain relatively steady 
  • Wheat receipts are expected to decline 
  • Livestock receipts may fall due to lower egg and milk prices 
  • Cattle receipts are expected to continue rising 

This uneven performance adds another layer of complexity for farm operators managing multiple revenue streams. 

A Broader Concern Across the Industry 

Lawmakers and industry leaders are raising concerns about the direction of the farm economy. Some have pointed to growing financial stress among producers, while others have warned of the potential for broader instability if conditions do not improve. 

The USDA’s February report, which incorporated delayed data due to a prior government shutdown, has made it more difficult for economists to fully assess the pace and depth of these challenges. 

What This Means for Farm Operations 

For many farm owners, the concern is not just this year’s numbers. It is what those numbers suggest about long-term stability. 

When a larger share of income comes from external support rather than core operations, it becomes harder to plan with confidence. Cash flow, debt management, and future investment decisions all become more sensitive to factors outside of day-to-day operations. 

This is where financial clarity becomes especially important. Understanding how your operation performs both with and without government support can provide a more complete view of risk. 

Moving Forward With a Clearer View 

Agriculture has always faced cycles, but the current environment is a reminder that strong production alone does not guarantee strong financial results. A record harvest can still lead to tighter margins when prices are under pressure. 

At DBC, we work with agricultural businesses to help bring clarity to these situations. By focusing on cash flow, cost structure, and long-term planning, we help you make informed decisions in an environment that continues to shift. 

To read the full article by P.J. Huffstutter visit US farm income set to fall in 2026 despite surge in government payments | Reuters 

Farmland Lease Checklist: 10 Essential Elements Every Agreement Should Include 

A farmland lease is more than a document. It sets the tone for the working relationship between a landowner and a farmer. When expectations are clear from the start, it becomes much easier to avoid misunderstandings later on.  Some leases are built on long-standing relationships and trust. That foundation matters, but even the strongest relationships benefit from …

A farmland lease is more than a document. It sets the tone for the working relationship between a landowner and a farmer. When expectations are clear from the start, it becomes much easier to avoid misunderstandings later on. 

Some leases are built on long-standing relationships and trust. That foundation matters, but even the strongest relationships benefit from clarity. A well-structured lease helps both parties understand their responsibilities and protects the future of the land. 

Whether you are creating a lease for the first time or revisiting one that has been in place for years, there are several core elements worth reviewing.

1. Put the Agreement in Writing

Verbal agreements still exist in agriculture, but they often lead to problems. Many disputes can be traced back to details that were never clearly documented. 

Putting the agreement in writing is not about mistrust. It is about preserving the relationship by making sure everyone is aligned from the beginning.

2. Use the Correct Legal Names and Property Description

A lease should clearly identify who is involved. That means using full legal names for both the landowner and the tenant, especially when entities such as LLCs or corporations are involved. 

It is just as important to describe the land accurately. Including parcel numbers, acreage, and location ensures there is no confusion about what is being leased.

3. Clearly Define the Lease Term

Every lease should outline when it begins and when it ends. It should also explain whether the agreement renews automatically and what notice is required if either party decides not to continue. 

State laws may influence these timelines, so it is important to make sure the lease aligns with those requirements.

4. Be Specific About Rent and Payment Terms

Rent should be clearly defined. Whether the agreement is based on cash rent, crop share, or a hybrid approach, both parties should understand how payments are calculated and when they are due. 

It is also helpful to clarify how government payments are handled and what happens if the land is enrolled in a conservation program.

5. Outline Operator Responsibilities

The lease should explain what is expected from the tenant. This typically includes maintaining the land, following appropriate farming practices, and complying with state and federal regulations. 

It may also address how soil conditions and inputs are managed throughout the lease term.

6. Define Landowner Responsibilities

A strong lease works both ways. Landowners may have responsibilities such as disclosing known issues on the property or supporting improvements like drainage or conservation practices. 

Clear expectations on both sides help prevent future disagreements.

7. Address Fertilizer and Input Costs

Input costs can create confusion if they are not clearly outlined. The lease should explain who is responsible for different types of fertilizer and how those costs are shared. 

Agreeing on this structure in advance helps avoid issues during the growing season.

8. Include Insurance Requirements

Risk is part of farming, and a lease should address how that risk is managed. Both the landowner and the tenant should maintain appropriate liability coverage. 

Clear insurance requirements help protect everyone involved if an accident occurs on the property.

9. Include Hold-Harmless and Indemnity Provisions

Leases often include provisions that limit liability and define how responsibility is handled if something goes wrong. Hold-harmless and indemnity clauses help protect both parties when used appropriately. 

These sections may feel technical, but they play an important role in managing risk.

10. Plan for the End of the Lease

It is just as important to define how a lease ends as it is to define how it begins. The agreement should explain what happens when the lease term expires, including access to the property, harvest rights, and transition to a new tenant if needed. 

It may also address subleasing and how ownership changes could affect the agreement. 

Building a Stronger Foundation 

A well-crafted lease creates clarity, reduces uncertainty, and supports a stronger working relationship. It allows both parties to focus on the operation rather than worrying about what was or was not agreed upon. 

At DBC, we work with agricultural businesses and landowners to bring clarity to these types of agreements. With the right structure in place, you can move forward with greater confidence and fewer surprises. 

To read the full article by Cassidy Walter and Shawn Williamson visit https://www.agriculture.com/farmland-lease-checklist-10-essential-elements-every-lease-agreement-should-include-11746678 

Employee Spotlight: Trinity Kuipers

Since joining De Boer, Baumann & Company in 2026, Trinity Kuipers has brought curiosity, energy, and a thoughtful perspective to her role as a Staff Accountant. She enjoys understanding the story behind the numbers and the way financial insights can reveal challenges, highlight opportunities, and support better business decisions.Trinity earned her Bachelor’s degree in …

Since joining De Boer, Baumann & Company in 2026, Trinity Kuipers has brought curiosity, energy, and a thoughtful perspective to her role as a Staff Accountant. She enjoys understanding the story behind the numbers and the way financial insights can reveal challenges, highlight opportunities, and support better business decisions.

Trinity earned her Bachelor’s degree in Accounting from Davenport University. Her interest in accounting grew from firsthand experience running her own small business, where she saw how critical accurate financial information is to the daily operations and long-term success of a company. That experience continues to shape how she approaches her work today, giving her a practical perspective on the value that clear financial insight can provide to business owners.

Trinity grew up in Zeeland with her parents and two sisters and now lives on the north side of Holland with her husband. Being close to family is something she values deeply, and she enjoys the strong sense of community that comes with living and working in West Michigan.

Outside of her role at the firm, Trinity has a strong entrepreneurial spirit. During the summer months, she runs an ice cream shop with her sisters, a business she has proudly owned for eight years. Managing the shop has given her valuable experience working directly with customers, leading a team, and navigating the day-to-day realities of running a business.

Travel is another passion of Trinity’s. She enjoys exploring new places and cultures and has traveled throughout Europe, Africa, and Central America. These experiences have given her a broader perspective and a deeper appreciation for the people and communities she encounters along the way.

Trinity’s curiosity, work ethic, and entrepreneurial mindset make her a great addition to the team. We are excited to have her at DBC and look forward to seeing the impact she will continue to make.

Grant Management and Financial Reporting Best Practices 

Grants are an important funding source for many not-for-profit organizations. They allow organizations to expand programs, serve more people, and strengthen their community impact. Managing grant funds, however, requires careful oversight. It calls for transparency, accountability, and accurate financial reporting. Clear grant-management processes help ensure funds are used appropriately, compliance requirements are met, and funder trust is maintained. Why Strong Grant …

Grants are an important funding source for many not-for-profit organizations. They allow organizations to expand programs, serve more people, and strengthen their community impact. Managing grant funds, however, requires careful oversight. It calls for transparency, accountability, and accurate financial reporting. 

Clear grant-management processes help ensure funds are used appropriately, compliance requirements are met, and funder trust is maintained. 

Why Strong Grant Management Matters 

Every grant includes specific expectations. These may involve spending guidelines, reporting deadlines, or performance outcomes. A structured approach helps your organization meet those expectations while maintaining financial control and audit-readiness. 

Effective grant-management practices help organizations: 

  • Maximize the impact of awarded funds 
  • Reduce compliance risk 
  • Improve communication with funders and auditors 
  • Strengthen future funding opportunities 

Well-organized systems make it easier to demonstrate responsible stewardship. 

Core Elements of Effective Grant Management 

Develop clear policies and procedures 
Document how grants are applied for, approved, tracked, and reported. Written policies support consistency and year-end reporting accuracy. 

Assign clear responsibility 
Designate a grant manager or defined team. Clear ownership improves coordination between program staff and finance staff. 

Track each grant separately 
Maintain distinct budgets within your accounting system. Use classes, projects, or cost-centers to prevent overlap and improve reporting clarity. 

Monitor spending regularly 
Compare actual expenses to approved budgets throughout the grant period. Early review reduces last-minute adjustments and reporting issues. 

Maintain thorough documentation 
Keep organized records of invoices, payroll allocations, and supporting documentation. Clear records simplify audit preparation and strengthen internal controls. 

Financial Reporting Considerations 

Accurate reporting supports compliance and reinforces credibility. 

Reconcile consistently 
Financial reports should align with your accounting records and approved grant budgets. Regular reconciliations reduce errors. 

Distinguish restricted and unrestricted funds 
Clear classification ensures compliance with donor intent and improves financial transparency. 

Align program results with financial data 
Spending should directly support the funded initiative. Ongoing communication between departments supports accurate reporting. 

Conduct internal reviews 
A structured pre-submission review helps identify inconsistencies and ensures clarity before reports are submitted. 

Supporting Long-Term Stability 

Strong grant-management practices do more than satisfy compliance requirements. They support long-term sustainability. When financial processes are clear and well-documented, organizations are better positioned for future funding and continued mission growth. 

How DBC Can Help 

DBC serves as a trusted advisor to not-for-profit organizations seeking stronger grant-management systems, clearer financial reporting, and greater audit-readiness. If your organization is preparing for growth, new funding, or increased oversight, this is a good time to evaluate your current processes.  

Reach out to the DBC team to discuss how your current systems are supporting compliance, reporting, and long-term stability. A thoughtful review today can help strengthen the financial foundation that sustains your mission tomorrow. 

Using Client Accounting and Advisory Services for Transparent Reporting 

For not-for-profit organizations, transparency is essential to maintaining trust. Donors, grantors, board members, and regulators expect clear reporting and responsible stewardship. Delivering that level of oversight can be difficult without the right financial structure in place. Client Accounting and Advisory Services provide both operational support and strategic insight to strengthen financial management and reporting. What Are Client Accounting and Advisory …

For not-for-profit organizations, transparency is essential to maintaining trust. Donors, grantors, board members, and regulators expect clear reporting and responsible stewardship. Delivering that level of oversight can be difficult without the right financial structure in place. 

Client Accounting and Advisory Services provide both operational support and strategic insight to strengthen financial management and reporting. 

What Are Client Accounting and Advisory Services? 

Client Accounting and Advisory Services combine day-to-day accounting support with higher-level financial guidance. Services may include bookkeeping, payroll, financial statement preparation, internal control support, cash flow monitoring, and ongoing advisory discussions. 

This approach allows organizations to move beyond basic compliance and gain: 

  • Reliable, timely financial data 
  • Real-time access through cloud-based systems 
  • Structured internal processes 
  • Ongoing financial insight to support leadership decisions 

The goal is not just accurate reporting, but informed decision-making. 

Why Transparent Reporting Matters 

Clear financial reporting reinforces credibility and supports long-term sustainability. It demonstrates that resources are managed carefully and in alignment with donor intent. 

Strong reporting practices help organizations: 

  • Maintain funder confidence 
  • Support grant and regulatory compliance 
  • Improve board-level oversight 
  • Identify financial trends early 

Accurate, consistent reporting strengthens accountability across the organization. 

How Client Accounting and Advisory Services Support Transparency 

Timely financial visibility 
Up to date financial data allows leadership to monitor spending, program performance, and cash flow throughout the year. 

Structured reporting processes 
Consistent financial reporting supports grant compliance and audit-readiness while reducing last minute pressure at year-end. 

Strengthened internal controls 
Additional oversight improves segregation of duties and reduces risk, particularly for organizations with lean accounting teams. 

Clear tracking of restricted and unrestricted funds 
Proper classification supports compliance and improves reporting clarity. 

Ongoing advisory insight 
Regular financial review and planning discussions help leadership stay proactive rather than reactive. 

A Stronger Financial Foundation 

Client Accounting and Advisory Services provide more than just operational support. They offer an ongoing partnership built on consistent oversight and practical financial guidance. 

With the right structure in place, not-for-profit organizations can improve reporting accuracy, strengthen internal processes, and develop financial systems that support sustainable mission growth. 

How DBC Can Help 

DBC provides Client Accounting and Advisory Services tailored to the needs of not-for-profit organizations. Our team supports daily accounting functions while also providing thoughtful financial guidance to help leadership make sound decisions. 

If your organization is looking to strengthen reporting, improve oversight, or prepare for future growth, DBC can help you build a financial framework that supports both compliance and long-term stability.

Using Work-in-Progress Reports to Improve Profitability 

A construction project is always in motion. Labor hours fluctuate, material deliveries shift, and costs evolve as work progresses. In this environment, guessing where a project stands financially is not enough. Contractors need a clear, consistent way to understand whether they are ahead, behind, or right on track. This is where work-in-progress reports become essential. A strong WIP …

A construction project is always in motion. Labor hours fluctuate, material deliveries shift, and costs evolve as work progresses. In this environment, guessing where a project stands financially is not enough. Contractors need a clear, consistent way to understand whether they are ahead, behind, or right on track. This is where work-in-progress reports become essential. 

A strong WIP report shows the financial health of a project at any point in time. It reveals how costs compare to estimates, how much revenue should be recognized, and whether billing lines up with the work completed. When used consistently, WIP reporting becomes one of the most powerful tools for protecting profitability. 

What a WIP Report Measures 

A WIP report connects three key elements: progress, cost, and billing. By comparing how much work has been completed with how much has been billed and spent, contractors gain insight into the true status of each project. 

A well-prepared WIP report helps answer questions such as: 

  • Are we recognizing revenue accurately based on project progress? 
  • Are we overbilled or underbilled? 
  • Are costs rising faster than expected? 
  • Are we on pace to meet the original margin? 

These answers help contractors make decisions before small problems become larger ones. 

Identifying Overbilling and Underbilling 

WIP reports highlight whether billing aligns with the actual progress of the job. Both overbilling and underbilling reveal important financial information: 

  • Overbilling may improve cash flow in the short term but can reduce future billings and strain project margins if costs are higher than expected. 
  • Underbilling signals that work has been completed but not billed, which can restrict cash flow and mask profitability issues. 

Tracking these indicators helps contractors adjust billing practices and maintain a steadier financial position. 

Keeping Projects Aligned With Estimates 

WIP reports compare actual costs to estimated costs, making it easier to identify areas where the project is drifting off budget. Early detection is critical. When labor hours exceed expectations or material costs rise quickly, contractors can take corrective action before the issue affects the entire project. 

Accountants play an important role in this process by helping contractors update projections and ensure costs are allocated correctly. 

Supporting More Accurate Revenue Recognition 

Many contractors use the percentage-of-completion method for revenue recognition. WIP reports provide the information needed to apply this method accurately, ensuring that revenue reflects actual progress rather than cash received. 

This helps produce financial statements that reflect the real status of each job, which is valuable for owners, lenders, and bonding agents. 

Improving Communication Between the Office and the Field 

WIP reporting strengthens the connection between financial records and field activity. When project managers, superintendents, and accounting staff review WIP results together, they often uncover issues that were not visible from a single perspective. 

A stronger communication loop can reveal: 

  • Delays that need to be addressed 
  • Subcontractor performance concerns 
  • Material shortages that could affect schedule or cost 
  • Opportunities to improve forecasting for future jobs 

These insights improve both current work and long-term planning. 

Supporting Long-Term Profitability 

A consistent WIP process allows contractors to evaluate performance across multiple projects. Over time, patterns emerge that help refine estimating, staffing, and material planning. 

For example, WIP reviews may show that: 

  • Certain types of work consistently produce stronger margins 
  • Specific stages of a project tend to exceed estimated labor 
  • Profitability varies depending on crew size or subcontractor choice 

These findings help owners make strategic decisions about the kinds of projects they pursue and how they allocate resources. 

Building Confidence in Your Financial Picture 

When WIP reporting is done well, it becomes more than a financial document. It becomes a roadmap for how projects are performing and where adjustments may be needed. The transparency it provides helps contractors maintain profitability, plan ahead, and make decisions with greater confidence. 

At DBC, we help construction companies strengthen their WIP reporting processes, interpret results, and build financial systems that support long-term success. If you would like guidance on improving your WIP reporting or connecting it more closely to your project management practices, our team is here to help. 

Cost Overruns: How Accountants Help You Prevent Budget Blowouts 

Cost overruns can take a project that looked profitable on paper and turn it into a challenge the moment work begins. Material costs shift, labor availability changes, schedules tighten, and unexpected site conditions surface. Even experienced contractors know how quickly a job can drift off budget when several small issues stack up at once. These pressures …

Cost overruns can take a project that looked profitable on paper and turn it into a challenge the moment work begins. Material costs shift, labor availability changes, schedules tighten, and unexpected site conditions surface. Even experienced contractors know how quickly a job can drift off budget when several small issues stack up at once. These pressures make it essential to have financial systems that catch problems early and support clear, confident decision making. 

While cost overruns are common in construction, they do not have to be routine. With the right oversight and financial structure, contractors can anticipate risks, protect margins, and maintain control over project performance. Accountants play a key role by creating the visibility and clarity needed to keep budgets steady from start to finish. 

Strengthening Job Costing to Catch Issues Early 

Accurate job costing is the foundation of any effort to control project spending. When labor, materials, equipment, and subcontractor costs are tracked consistently, contractors gain a clearer view of how a project is performing in real time. 

Accountants help improve job costing by: 

  • Establishing detailed cost codes 
  • Ensuring costs are applied correctly and on time 
  • Reviewing actual costs against estimates 
  • Highlighting trends that may signal early overruns 

These steps help contractors move from reactive to proactive decision making. 

Improving Estimates and Budget Assumptions 

Many cost overruns begin long before a project starts. Underestimated labor hours, incomplete scope descriptions, or insufficient contingencies can create a budget that is difficult to follow once work begins. 

Accountants help refine estimates by reviewing historical job data, evaluating past performance against projections, and identifying cost categories where overruns occur frequently. Over time, this creates a more accurate estimating process that reduces surprises in the field. 

Monitoring Work in Progress for Real-Time Visibility 

Work in progress (WIP) reporting is one of the most important tools for preventing budget blowouts. A strong WIP report compares the percentage of work completed with the costs incurred to date. When these two do not align, it may indicate job delays, underestimated labor, or billing issues. 

Accountants use WIP reports to: 

  • Track profitability throughout the project 
  • Identify underbilling or overbilling 
  • Highlight costs that are rising faster than expected 
  • Provide owners with clear, actionable insights 

Regular WIP meetings help ensure that financial information stays connected to what is happening on site. 

Enhancing Cash Flow Management 

Cash flow problems can contribute to cost overruns by delaying material purchases, limiting available labor, or forcing rushed decisions. Accountants help contractors plan for cash needs by analyzing projected expenses, contract terms, and payment timing. 

A structured cash flow plan helps contractors: 

  • Prepare for high-cost phases of the project 
  • Avoid delays caused by funding gaps 
  • Maintain steady operations even when billing cycles fluctuate 

This stability supports stronger project execution and cost control. 

Improving Change Order Processes 

Change orders are unavoidable in construction, but without strong processes they can quickly contribute to budget overruns. When changes are not documented promptly or priced accurately, costs can accumulate without being captured in the contract. 

Accountants help strengthen change order management by ensuring: 

  • Costs associated with changes are tracked separately 
  • Pricing reflects both direct and indirect impacts 
  • Documentation is submitted in a timely manner 
  • Financial records match field activity 

Clear processes protect profitability and reduce disputes with clients. 

Reviewing Contract Terms for Hidden Risks 

Contracts influence how risk is shared, when payments are received, and how unexpected costs are handled. Accountants help contractors evaluate terms such as retainage, billing schedules, pricing structures, and scope definitions. Understanding these details upfront helps prevent misunderstandings and financial strain as the project progresses. 

Learning From Completed Projects 

Post-project reviews offer some of the most valuable insights for preventing future overruns. Accountants work with contractors to compare estimated costs to actual spending and identify where differences occurred. 

A well-run review may highlight issues such as: 

  • Labor hours consistently underestimated 
  • Material cost volatility not included in the budget 
  • Inefficient subcontractor coordination 
  • Inaccurate cost allocations in job costing 
  • Delays not reflected in the project timeline 

These lessons help contractors build stronger processes for future jobs. 

Bringing Financial Clarity to Construction Projects 

Cost overruns may be common, but they can be significantly reduced with the right systems in place. Accountants bring structure, visibility, and financial discipline that help contractors keep projects on track and maintain profitability. When field experience and financial insight work together, both budgets and timelines become more predictable. 

At DBC, we partner with construction companies to strengthen budgeting processes, improve project forecasting, and build financial systems that support long-term growth. If you would like guidance on preventing cost overruns or evaluating your current job costing processes, our team is here to help. 

About us

De Boer, Baumann & Company provides professional accounting, tax, and business advisory services to individuals and businesses in West Michigan and the surrounding areas. With expertise in a variety of industries, DBC specializes in comprehensive and innovative solutions to help clients achieve their financial goals.