Protecting Profits from Increasing Labor Costs

Protecting Profits from Increasing Labor Costs

It’s a catch 22. You need to expand your staff to increase income, but additional labor costs have the potential to cut into profits and cash flow.

There is an option: complement your recruiting plan with a proactive business plan to manage the impact of potential labor cost increases.

Let’s start with what you need to consider when developing your recruiting plan. We’re all familiar with the data. There are more veterinary jobs than candidates and according to the 2023 AVMA State of the Profession report new graduates are experiencing the highest rates of job offers ever.

Competitive pay and meaningful benefits are table stakes for Millennials and Gen Zers. In fact, pay and benefits are the number one reason Gen Zers left a job in 2022, and many indicate they won’t apply to a company that doesn’t include pay information right in a job posting.

While a number of factors impact pay, according to the American Veterinary Medical Association (AVMA), veterinarians who graduated in 2022 received an average salary of  $111,242 ($124,686 at corporate practices and $105,637 at private practices). In addition, 81% of corporate practices offered a sign on bonus (averaging $27,181) while 42% of private practices offered one (averaging $10,678).

As for benefits, medical and 401(k) plans top the list, but they are only the start. Considering the amount of student loan debt many new vets carry, student loan repayment and financial advisory services are also of interest. (The AVMA reports, “Among new veterinarians, 38% had $200,000 or more in debt from earning their veterinary degree, inclusive of 13% who had $300,000 or more in debt. Another 18% had no such debt, while 10% had debt of less than $100,000, and 34% had debt of $100,000 to less than $200,000.”)

In general, new generations of workers put more value on working to live rather than the other way around. So, work-life balance via time-off benefits and flexible schedules are priorities. According to the American Animal Hospital Association (AAHA), paid time off is one of the biggest negotiation points of recruits resulting in demands for weekends off, four-day/ 32-hour work weeks, and three to four weeks of time off.

As for the actual job, new workers want stability and are looking for an employer that offers learning and development (especially mentoring), a career path, and a sense of purpose/opportunity to make a difference. In fact, reported, “A Linkedin Learning report found that 94% of employees say they would stay at a company longer if their employer invested in their personal and professional development.”

Beyond the work, new employees are looking for fit and how a potential employer treats employees. Many are defining their own professional brand and values and using that criteria to see how a potential workplace aligns. (Remember, these digital natives grew up with social media and smart phones and will no doubt go online to check out your reputation as an employer and a place to work.)

With these factors top of mind, how can you design an employment offer that enables you to compete for talent without putting profits and cash flow at risk? Consider your options and potential financial impact before ever making an offer. For example, can you negotiate lower pay for more time off or flexibility? How can you work differently to fulfill a new hire’s mentoring, learning and development needs? Do you really need that non-compete agreement or can it be a negotiation point?

Once you’ve developed an offer, calculate its potential impact on profits and consider whether operational changes can help offset cost increases.

  • Financial management: Do you regularly track and update your budget, expenses, and revenue? Are there ways to reduce expenses (i.e., group purchasing for supplies)?
  • Fee structure: Is it competitive? Do you review it regularly?
  • Operational efficiencies: Have you used process mapping to identify potential process efficiencies (i.e., scheduling, billing, inventory management, etc.)?
  • Billing and collections: Review procedures to promote accuracy and timeliness; promptly follow-up on outstanding payments; and institute a process for overdue account collections. Consider whether payment plans or an online payment channel can help.
  • Inventory management: Track inventory levels and reordering; review usage patterns; and negotiate with suppliers.
  • Expand/diversify revenue streams: Consider offering additional services (i.e., telehealth or pet grooming/boarding).
  • Tax strategy: Consider conducting a cost segregation study to determine the impact of increasing depreciation of facility components on new construction.

If you need support to create a winning employment deal or more insights into business changes that can help pay for higher salaries, more benefits and other new hire demands, RBT CPAs and our affiliates are here to help. Give us a call to find out how we can help you with financial planning, cash flow management, accounting, taxes, audits, pricing, recruiting, retention, and more.


RBT CPAs is proud to say all of our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.

Veterinary Practice 2.0: Creating a Happier & Healthier Workplace

Veterinary Practice 2.0: Creating a Happier & Healthier Workplace

While working hard to keep your animal clients healthy and their owners happy, remember, there’s one more contingent you need to take care of – you and your team.

The toll the veterinary industry is taking on providers is shocking. Suicide, mental health issues, established practitioners walking away from the field, not to mention a talent gap that’s going to keep growing over the next decade. While veterinary school enrollment increased 4.7% between 2021 and 2022, it’s still down down over 9% when compared to pre-Covid enrollments (Boatright, Kate. “The Next Generation of Veterinarians.” October 10, 2022. There is one good thing to come out of all of this – a growing recognition that things have to change.

As reported on Veterinary Integration, “Veterinary organizations must prioritize a healthy workplace culture now more than ever. With so many industry professionals succumbing to burnout and exhaustion, clinics and hospitals that fail to focus on the wellbeing of their workforce will quickly collapse. Defining and implementing a positive workplace culture must take precedence in every veterinary group.” (Zak, Ivan. “Defining and Implementing Workplace Culture in Veterinary Groups.” July 6, 2021. Veterinary Integration Solutions.)

Here are some considerations to help get you started on defining, creating, and maintaining a workplace that promotes the health of everyone – from clients and their owners to you and your staff:

Examine your practice’s culture.

With so many competing demands each day, it can be hard to fathom taking time to define something abstract like workplace culture, but this investment can mean the difference between running a practice that goes through the motions just to keep up and creating a work environment that energizes, engages, and rewards all your constituents. Taking time to define why your practice exists (mission), what it strives to achieve (purpose), your long-term goal (vision), and how work gets done (values) helps guide day to day operations, decision-making, prioritizing, and more. Perhaps most important, these culture drivers help set boundaries and define where to put energy, giving focus and instilling calm to what can otherwise be an overwhelming and chaotic environment.

Find the right people for your team.

While the workforce shortage can easily lead to rash hiring decisions, having the right people who align with the culture you are trying to create and maintain is critical. Just one person who doesn’t fit can turn what could be a healthy, professional environment on its head. So even though it may be tempting to rush through the hiring process once the decision is made to grow your team, take the time you need to ensure a good fit for your practice, team, and future.

Be thoughtful about compensation and benefits.

With so much competition for talent, your total rewards package should show the value you place on staff, incentivize key behaviors to success, satisfy employee priorities, and align with your company’s values. While fair pay and sign-on bonuses are table stakes (that should be based on competitive practices for your geography), up and coming generations of workers give equal weighting to work life balance – one of the biggest keys to promote a healthy work environment. Practices are exploring and offering three- and four-day work weeks; flex hours; adopting no weekend work policies; offering generous time off packages; and more. If you’re concerned about how new policies may impact your practice, conduct pilot programs so you can understand implications before making something permanent. Perhaps most important: be sure to lead by example. When employees see you taking the time to unplug and recharge, they’ll know it’s okay for them to do the same.

Communicate, communicate, communicate.

While putting a lot of time and energy into marketing and customer communications, remember to do the same with your team. Weekly group meetings keep everyone moving in the same direction with a clear understanding of expectations and priorities. One-on-one discussions show each person on your team that they matter and help you understand their priorities and needs (i.e., learning, development, growth opportunities, etc.) so you can make adjustments accordingly. When done consistently, communication helps build trust, shows you care, and reinforces that your employees matter and their input makes a difference.

Evaluate and update how work gets done and who does it.

Are there opportunities to lighten workloads with new technologies? Can responsibilities be shifted to foster better teamwork and more equitably share the work? Is it time to add more staff or new roles to your practice? Should work processes be evaluated to eliminate non-value-added activities while boosting productivity? Do you need to add time and opportunities for staff to recharge throughout the day?

Seek feedback.

Taking a pulse every once and a while to make sure you’re on track to create the type of workplace you always imagined can provide you with valuable insights on what’s working and should continue, and opportunities for improvement. Embed regular temperature checks into your ongoing communication processes. This includes exit interviews, where departing employees may feel more comfortable sharing opportunities to improve.

Perhaps most importantly – ask for help when you need it.

For example, did you know RBT CPAs can be a trusted partner to help with many aspects of your business – from bookkeeping and acting as a virtual CFO to providing business advisory services, Human Resources support (via our Visions HR affiliate), and, of course, by providing accounting, tax, and audit services? We invest a lot of time in getting to know and understand the veterinary industry, so we’re in the best position to add value and promote success.

Watch for more thought leadership articles in the months ahead for deeper insights into building a happy and healthy veterinary business. If you’re ready to get started on doing more today, give us a call today – we’d love to have the opportunity to discuss what we can do to help you run a happier, healthier, and more successful practice.


All work performed at RBT CPAs is made in America by local, full-time staff and team members. We never outsource or offshore, so you always know who is handling your confidential data.

Is Your Vet Practice Under the Weather? Maybe the Cloud Can Help

Is Your Vet Practice Under the Weather? Maybe the Cloud Can Help

As an owner and/or manager of a veterinary practice(s), the last thing you need is to add a growing list of IT responsibilities to an already full workload balancing the talent shortage, ever-changing customer demands, and a wonky financial environment – not to mention taking care of animals, their caretakers, and your business. While changing your IT environment may be the last thing on your mind, perhaps you should consider making it the first, as cloud computing solutions help manage and/or address many of the challenges facing veterinary practices today.

Say goodbye to IT responsibilities.

When you move to a cloud (a.k.a. Internet) solution, your web-based solution provider takes on responsibility for keeping the system updated, working at its peak, and secure. You’ll no longer be required to buy, install, and monitor equipment like a server or manually install patches (or pay someone to do it). You won’t have to worry about backing up data, a system going down, or protecting data – that’s all on your provider, too. Rather than keeping an IT person on call, most cloud-based service providers include customer service and IT assistance as part of their fees.

Increase productivity and decrease stress.

Help yourself (and your team, if applicable) cut down on administrative work so you’re free to focus on what you do best – whether that’s boarding animals, providing same day care, and/or running a pet hospital for longer-term needs. Cloud-based software can help you communicate with animal owners; send reminders about visits, care, or prescriptions; bill for services (or follow up on bills); and more. Self-scheduling tools save time for both you and your customers. You can even operate more efficiently by accessing and updating health records and treatment plans within seconds from any examination room with just a few keystrokes.

Better manage finances, inventory, and staff.

Cloud-based services are usually by subscription, so you know how much it costs each month and can budget accordingly. Some solutions include tools that will allow you to perform back-office responsibilities (like billing, payment processing, and collections) while gathering data that can help you analyze different aspects of business (i.e., inventory). What’s more, you don’t have to be tethered to a desk, as cloud-based solutions can be accessed from anywhere there’s an Internet connection and from any Internet-enabled device (i.e., phone, tablet, or laptop).

Prepare to grow.

Cloud-based solutions are oftentimes scalable, so you can add to them, add users, or make changes as your business needs change. Plus, even if you have multiple locations now or add locations in the future, data stored in the cloud can be viewed and updated in real-time from any location.

Making the transition to a cloud-based solution may mean some short-term issues you may want to be prepared for, just in case.

  1. Shop around. There are a wide variety of vet-focused cloud-based solutions available. Consider exploring several options so you can understand the full breadth of opportunities available, evaluate pricing and contracts, and make the best choice for your business.
  2. With the implementation of new software comes new training needs. Support your staff leading up to and through the transition by hosting training to promote their comfort with new software. Also, make sure you have a point of contact at the software provider’s who can be available to answer technical questions, especially during the transition.
  3. Check data for accuracy. Upon transitioning to a cloud-based software, make sure client information and other data transferred correctly (i.e., Did your clients’ open accounts receivable balances transfer correctly?). Data accuracy will be vital to making the most of financial reporting tools. It’s easiest to identify and fix any issues identified early.

While you’re busy considering cloud-based solutions, remember, RBT CPAs is here to help free you up to concentrate on your business. We have been providing accounting, tax, audit, and business advisory services in the Hudson Valley and beyond for over 50 years, and we believe we succeed when we help you succeed. Interested in learning more? Give us a call today!

Work Less, Succeed More By Outsourcing the Financial Part of Your Veterinary Business

Work Less, Succeed More By Outsourcing the Financial Part of Your Veterinary Business

Did you happen to notice People Magazine’s recent article entitled: “New Studies Find Veterinarian Shortage Could Leave 75 Million Pets without Medical Care in 2030”? (Bender, Kelli. March 2, 2022.) There’s something ironic about People Magazine profiling the vet shortage; still, it shows just how dire the situation is and why the veterinarian industry needs to change.

The article reports that 2,700 people enter the veterinary field each year and about 2,000 retire. With pet healthcare spending predicted to increase 33% between 2019 and 2029, there will be an estimated shortage of 15,000 vets by 2030. The American Animal Hospital Association (AAHA) reports that number may even be higher, potentially coming in at 18,000 by 2031. What can a veterinary practice do?

I’m a CPA. No one would ever expect me to be able to perform a medical exam or procedure on my 17-year-old Maltipoo (named Angel). So, why are veterinarians expected to take on the dual role of managing a business and practicing medicine? There is another option.

About 25 years ago, I was hired by an animal hospital to do its taxes. Little did I know that engagement would put me on a path to build my career providing bookkeeping, accounting, and advisory services to numerous veterinarian practices in the Hudson Valley and, later, in other locations along the East Coast and across the U.S.

None of the doctors I would come to work with had taken business and/or finance classes while earning their medical degree. Eventually, this put them at a disadvantage. They immediately recognized that by engaging me, they were freed up to do what they were passionate about – taking care of small animals or, in certain cases, equines.

At the same time, I found an industry and clients who really appreciate the value I deliver, which evolved from bookkeeping, account payables and receivables, tax payments, payroll, and budgeting to include financial analysis, forecasting, and strategic business planning. In essence, I became a part-time Chief Financial Officer for many of my veterinary clients. It was a natural fit that benefited everyone. Fast forward to today…

I’m a partner in an accounting firm and most of my clients are veterinarian hospitals and practices. I love their passion for what they do and how much they value what my team and I bring to the table. More than just number crunchers, in the majority of cases, we have become part of our veterinarian clients’ strategic management and planning teams.

We know the right questions to ask and when to ask them. Do you know your numbers? Are you profitable monthly? What is your patient volume going to look like in a recessionary period? Are you getting monthly financial statements and understanding what they mean? Do you know how your business is trending to last year and benchmarking against competitors in the area? Do you need to increase rates to reflect the price of prescriptions and payroll? Given the economic environment, can pet owners afford wellness visits? Are your margins shrinking? Who is monitoring all of this? Where do you want your business to be in five years and how will you get there? Are you thinking about selling? What is your business valuation and how does it impact what you decide to do next?

We also help practice managers and doctors understand how different courses of action will impact business so they can make informed decisions. This type of support is even more meaningful given today’s economic uncertainties; supply chain challenges; changing tax, accounting, and legal requirements; cybersecurity issues; and more.

Plus having knowledge of both the veterinary industry and accounting, tax, and advisory services positions my team and I to bring solutions for a variety of challenges. For example, do you know how the Secure 2.0 Act will allow your employees to pay off student loans while you put matching funds aside for their retirement? Have you explored how the Inflation Reduction Act can help you reduce certain monthly expenses and your carbon footprint?

So, enough about me. What about you? How can RBT CPAs help lighten your workload, respond to current challenges, and set the stage for greater success in the future? We would love to have a chance to speak with you and show how we can deliver value, while freeing you up to do what you do best: take care of animals and their people. Give us a call today.

Real Estate Markets: Which Way Will They Go?

Real Estate Markets: Which Way Will They Go?

While I originally set out to write about interest rates and inventory, research into the housing and commercial real estate markets left me feeling that there are a lot of mixed messages out there, and that’s probably because there are. With so many different ways to measure what’s going on with these markets and so many different indices, I feel a need to take a step back and simplify what I’m seeing.

To start, let’s talk interest rates. The Federal Reserve increased them for the eighth time on February 1 by a quarter point. The fact that it was a lower increase than the past few may signal efforts to rein in inflation are working – which would be good news for real estate and ultimately construction…maybe.

While the Fed doesn’t set mortgage rates, which are influenced more so by 10-year Treasury yields, lenders do try to determine what the Federal Reserve’s actions mean and that eventually impacts mortgage rates, which have dropped from their high of 7.12% last October to 6.3% as of Bankrate’s national survey on February 1.  (The Mortgage Bankers Association is predicting rates as low as 5% by the end of 2023.)

Home prices are no longer soaring upward. In fact, they’re starting to stabilize or even decrease a bit, which you would think would mean a pickup in demand and sales, but there are other factors at play. Inventory for affordable housing is down for the 39th consecutive month and the number of properties for sale are down for the 37th consecutive month, according to a report from the New York State Association of Realtors.

Rather than adding to inventory, homebuilders are focusing on getting rid of their existing inventory (and boosting new home sales) and people who locked in historically low mortgage rates will likely continue holding onto their homes. While single family home starts did increase in December, permits decreased. Then starts decreased in January, sending more mixed messages.

Still, the National Association of Homebuilders (NAHB) national Housing Market Index (HMI) increased for the first time in 13 months in January and again in February. The NAHB predicts this increase in homebuilder sentiment combined with lower mortgage rates will spur permits and new starts for single-family homes, which have fallen to the wayside in favor of multi-family homes due to the expectation that people would continue to rent versus buy. However, the NAHB anticipates higher vacancy rates and tighter lending conditions may lead to a slowdown in multifamily housing starts this year, while others believe multi-family housing remains attractive to investors especially during an uncertain economy.

Turning to commercial real estate, what the Fed does has a bigger impact. When rates increase, there are corresponding slowdowns in investor activity on the commercial side. The 2023 Dodge Construction Outlook expects total construction starts to decrease, with retail, warehouse and hotel projects falling dramatically and office and warehouse sectors seeing pullbacks. There’s still a high volume of unfilled office spaces in big cities, although Moody’s Analytics indicates vacancy rates haven’t dropped below 2019 levels.

Thanks to onshoring, CHIP manufacturing and data centers, U.S. industrial real estate needs are on the rise. E-commerce continues to drive the need for warehouse and industrial space. Neighborhood retail is doing well, but malls are not. While the Dodge Momentum Index, which measures nonresidential building projects in planning and leads nonresidential construction spending, was down 8.4% in January it’s still up 32% year over year. It also doesn’t hurt that when interest rates are rising, commercial real estate is seen as a solid investment.

That’s where things stand as of 2:12 PM EST on February 23, 2023. If inflation starts increasing again, the Feds change direction, and/or mortgage rates start increasing again, the message will likely change once again.

General Contractors Face New Liability Scrutiny for Wage Theft by Subcontractors

General Contractors Face New Liability Scrutiny for Wage Theft by Subcontractors

The New Year brings with it new opportunities for growth, new projects to begin, and also, new laws to follow. In 2021, New York State passed legislation that went into effect earlier this month, which shifts liability to general contractors for wage theft cases on private construction projects.


Up until now, construction contractors weren’t liable for their subcontractors’ employees’ wages unless there was an employment relationship between the contractor and the employee of the subcontractor. But this law which went into effect Jan. 4, 2022, makes contractors on construction projects jointly liable for wages owed to employees of their subcontractors. It also allows contractors to demand payroll information from subcontractors and withhold payment if the information is not provided. The law exempts home-improvement contracts except for the construction of more than ten one-or two-family owner/occupied dwellings.

Advocates say the law will incentivize general contractors to be more selective in the hiring of subcontractors, with the hope that greater oversight will promote safer working conditions on construction sites and force illegitimate subcontractors out of the industry. Opponents vocalize various concerns about the new law, including the belief that it overcomplicates the process for contractors. 

Assembly member Latoya Joyner said, “This legislation protects the interests of hardworking construction workers over unscrupulous subcontractors. Wage theft is a crime of opportunity that disproportionately affects people who are already living paycheck to paycheck.”

The New York State Building & Construction Trades Council, representing more than 200,000 unionized employees, called the bill’s passage a “monumental victory for working people.”

Meanwhile, the Associated General Contractors of New York State, which represents construction employers, oppose the legislation. While the group supports wage theft prevention, they view the legislation unfavorably because it extends liability for up to three years after a project has been completed. The new law “creates an unmanageable level of risk for general contractors,” according to Mike Elmendorf, CEO of AGC NYS. He says it “slows payments to subcontractors, and raises the cost of construction.”

Whatever your stance is, in order to reduce exposure to wage claims under the new law, New York contractors need to act now. It’s a best practice to consider revising standard contracts and developing procedures for collecting the information that contractors are entitled to receive from subcontractors under the new law. Specifically, upon a contractor’s request, a subcontractor must provide:

  • Certified payroll records containing “sufficient information to apprise the contractor…of such subcontractor’s payment status in paying wages and making any applicable fringe or other benefit payments or contributions to a third party on its employee’s behalf”;
  • The names of all of the subcontractor’s workers (including independent contractors) on a project;
  • The name of the contractor’s subcontractor with whom such subcontractor is under contract;
  • The subcontractor’s contract start date and duration of work;
  • The identity of unions with which the subcontractor is a signatory; and
  • Contact information for the subcontractor’s designated contact.

If a subcontractor at any tier fails to provide the above-mentioned information, the contractor may withhold payment otherwise due to that subcontractor. Make sure you are operating at peak financial efficiency by leaving your financial statements, internal auditing, and overall business analyses to a professional and reputable team. At our company, we prioritize developing a positive relationship that helps you prepare for the future and all of the uncertainty that comes with it.

Sources: Governor.NY.GOV, NYSenate.Gov

Is Your Training Strategy Preparing Employees & Your Company for Future Success?

Is Your Training Strategy Preparing Employees & Your Company for Future Success?

Did you ever think your organization would be competing with Silicon Valley, startups, and major tech companies for talent? As Industry 4.0 (or is it 5.0, now?), AI, robotics, the Internet of Things, smart manufacturing, and more move full steam ahead, ensure your training strategy keeps pace and helps your company and employees secure the skills needed for future success.

We realize there’s no need to preach to the choir about current and pending staffing challenges in manufacturing – you get it. Taking a cue from buy versus build acquisition and growth strategies, have you explored investing in your current employees to build their skillsets and complement your recruiting, retention, and engagement initiatives? It can be a win-win for employees and your business.

As reported by Exploding Topics, “McKinsey predicts the demand for physical and manual skills in repeatable tasks will decline by 30% over the next decade. At the same time, the demand for technological skills will increase more than 50%, and the demand for leadership and high-level social/emotional skills is expected to rise 30%.”

What’s more, The Manufacturing Institute’s 2020 Manufacturing Engagement and Retention Study found two-thirds of those under age 25 feel training and skill development motivate them to stay with their current employers.

Armed with this knowledge, consider enhancing your training strategy and toolkit:

  • Create a reskilling strategy for your workforce. Check out Manufacturing X Digital’s free Hiring Guide, which reviews how to upskill almost 250 different roles.
  • Build relationships with local colleges and let them know the skills you seek in today’s worker and tomorrow’s. See if a college representative will visit your operation and speak with current employees about the classes, certifications, and degrees that can help them reskill for the future. While you’re at it, reach out to their internship/co-op program directors to enhance your talent pipeline.
  • Offer or enhance tuition reimbursement benefits. Nothing tells employees you believe in them and value what they bring to the table than an investment in their future. Tuition reimbursement can open doors to opportunities previously unattainable, while ensuring you’ll have the talent and skills to keep driving your company forward.
  • Explore free, online training opportunities. The Institute for Advanced Composites Manufacturing Innovation (IACMI) America’s Cutting Edge free online program teaches machinists CNC machining skills.

For more ideas, check out The Manufacturing Institute’s 2022 Manufacturing Perception Study results report.

While you focus on enhancing your company’s training strategy for the future, let RBT CPAs help free you up by taking on your tax, audit and accounting needs. We’ve been providing professional, ethical services to clients in the Hudson Valley for over 50 years. Give us a call.

Has the Supply Chain Changed for Good?

Has the Supply Chain Changed for Good?

We’re over two-and-a-half years out from when COVID basically shut down the world, setting off global supply chain issues that have yet to return to normal. While price and supply are stabilizing for some construction materials, they’re increasing in volatility for others. This may be one time the pendulum will not swing both ways. Even though we have a grip on Covid (for the most part), several other factors that caused the supply chain to implode continue, and there’s no timeline for resolution.

The labor shortage (which is expected to worsen as U.S. infrastructure work gets underway); the war in Ukraine; China’s faltering economy; a huge increase in supply chain cybercrime; and regulations all have a role to play in the supply chain’s recovery. The outlook is literally changing month-to-month, with some estimating a return to normalcy by the end of 2023 or, maybe, 2024. This begs the question: by that time, won’t new approaches have taken root, forever changing how the supply chain works (or doesn’t work)?

Border States, a supply chain solutions company, reported in mid-September that while lead times are decreasing, they’re still “85% longer than pre-pandemic across all markets and products.” Similarly, port backlog is decreasing but it is not back to normal. For construction, categories that still require long lead times include distribution equipment (circuit breakers, load centers, panels, switches); EMT fittings (1/2”–4” compression and set screw connectors); wiring devices and wall plates; PVC and weatherproof boxes; fuses; meter sockets and hubs; ground rods, and automation products controls. reported in September: “The reduction in oil prices is slowly being reflected in materials like roofing products, but that remains an area of concern. Similarly, delivery costs are easing, but there is still a shortage of drivers…Our greatest challenges are anything that involves metal, wood or glass in construction.”

In October, reported that all major indices used to track supply chain performance show it’s improving, but still has a long way to go to get back to pre-pandemic levels. For example, “ship-position data and queuing lists showed 109 container vessels waiting off U.S. ports as of Sunday. That’s down from a high of over 150, but still far above the pre-COVID normal in the single digits.” also reported in September, “Expect disruptions in the supply chain to improve but not fully return to normal in 2022. Lead times will come down for many products, especially those with fewer component parts and those manufactures in onshore or nearshore locations. However, expect labor shortages to persist in 2022, causing strains on manufacturing as well as the trucking and logistics sector. Also expect backlogs in ports and on cargo ships around the world as pent-up demand continues to outstrip the supply of containers, ships and port-space.”

In August, a Supply Chain Management Review article advises firms to “proactively address supply chain disruption; focus on building a diversified supply chain with enough slack to ride out uncertainty; build for continuity; invest in systems that enable smooth operations in periods of high labor turnover; and consider smart hedges. Make strategic decisions about where to hedge (e.g., pre-buying raw materials) and consider areas most susceptible to destabilization.”

Rather than risk an influx of projects and construction growth, some firms are opting for early-stage procurement over the Just in Time inventory strategy of the past. With early-stage procurement, all supplies and materials are purchased and stored at the start of a project, rather than in phases. This can impact everything from warehouse space and equipment to staffing, procurement, project timelines, budgets, insurance policies, and cash flow. As noted by Jason Earnhardt, Austin Commercial Supply Chain Manager, on Building Design + Construction, “We have essentially become our own in-house logistics company, all in the name of keeping our clients’ projects on track.”

While you’re working to keep client projects on track, please know you can count on RBT CPAs to keep your taxes, audits and accounting on track. We’ve served clients in and around the Hudson Valley for more than 50 years. We’re an Employer of Choice. And, we hold ourselves to the highest levels of professionalism and ethics. Give us a call today.

What’s Next for Inventory Management in Manufacturing?

What’s Next for Inventory Management in Manufacturing?

Just as supply chain issues start to ease and manufacturers think they have inventory management under control, talks of an economic downturn pick up speed. At least for the time being, manufacturers will continue walking an inventory management tightrope.

Earlier this month, The Empire State Manufacturing Index showed a big decline in business conditions, with new orders and shipments significantly down, while delivery times are steady and business inventories are up slightly. This was reiterated in the New York Fed’s description of the economy as slowing to a crawl. In June, the U.S. Fed indicated there was a downshift in economic growth, but a month later reported a slight increase in manufacturing output. Needless to say, it’s more challenging than ever to make operating decisions, especially when it comes to inventory.

Globally, manufacturers are seeing inventory levels reach record highs. While this is occurring across all 12 manufacturing sectors, automobiles, electronics, and machinery are responsible for most of the buildup. In April, the Office of the Comptroller of the Currency reported, “The uncertainty around supply chain disruptions and future demand creates risks for firms.” It went on to state, “As some, possibly many, companies look to maintain safety stocks in a just-in-case model, the risk of an inventory overbuild may be higher than in the past.”

In many cases, a just-in-time inventory management strategy worked until COVID, but then manufacturers hit a major speed bump with supply chain delays and issues. Building a just-in-case safety stock served as a work around to catch up and meet demand. Now, inflation and other economic headwinds appear to be slowing demand and increasing inventory. With a lot of speculation about what comes next, manufacturers are left in a precarious position about how to manage inventory going forward.

Safety stock provides a cushion to help a manufacturer avoid missing deliveries and losing customers. It serves as “backup” to cycle stock or inventory expected to be sold within a defined time period, and helps address a variety of issues from supplier delays and inaccurate forecasts to excess demands and financial constraints. With the right safety stock, you can continue filling orders even if your cycle stock runs out.  (Abby Jenkins, Safety Stock: What It Is & How to Calculate It, Oracle Netsuite)

While it’s tempting to reduce safety stock to zero when demand slows, it also increases the risk of not having a cushion to meet demand fluctuations or supplier delays. On the other hand, too much safety stock translates into excess stock that ties up cash, can be a considerable expense, takes up space needed for cycle stock or new products, and results in revenue losses.

Different formulas (click here for one and  here for a few others) can be used to calculate safety stock for different situations. As an alternative, some manufacturers set fixed amounts for safety stock, but this increases the likelihood of overstock. InFlow Inventory suggests comparing carrying costs against the cost of potential stock outs, when making decisions about excess inventory. A Fast Company article suggested “leveling production rates with demand” even though that demand may be difficult to forecast, especially since different industries will likely experience shortages and excess inventory issues throughout the year.

An inventory management software or platform may provide some relief by helping address a number of challenges inherent to the entire inventory management process, from tracking, warehouse efficiencies, and data issues to order management, warehouse space management, and more.

As you strategize your inventory management approach for the months ahead, please know RBT CPAs is here to take care of your accounting, tax, and audit needs. This way, you’re freed up to safely walk across that tightrope, one step at a time.

What AI & Robots Can Do For Your Construction Business

What AI & Robots Can Do For Your Construction Business

Thanks to the Infrastructure Bill construction is positioned to benefit from an abundance of work over the next several years.

With $100 million budgeted for advanced digital construction management systems and related technology solutions, no doubt Artificial Intelligence (AI) and robotics will play an important role in rebuilding America’s infrastructure.

Especially when dealing with the restrictions put in place during the COVID pandemic, a growing number of construction companies were compelled to use new AI and robotics in various capacities to keep work going. Unexpectedly many found a new way to address staffing challenges, while transforming the way they work. As one of the least automated industries, huge potential lies ahead.

So, what are construction companies currently using/planning to use AI and robots to do? Here’s a sampling…

Architectural planning

Drones help map out projects before they begin and identify things like terrain elevations and water tables so plans can be adjusted to avoid issues later.

Ceiling drilling and overhead work

After identifying ceiling work as one of the most strenuous and stressful aspects of construction, a mobile drilling robot was created to work alongside installation teams drilling ceiling holes and using building information modeling (BIM) to promote accuracy.


Primarily used in road construction, an autonomous roller is operated via computer or a geofence defining the area to be rolled. The operator can select the layer thickness, measure material stiffness, and monitor the force required to achieve desired results.

Creating concrete structures

Robot assisted technology uses an automated prefabrication process to create a 3D steel-mesh structure that gets filled with a concrete mix without formwork. It can be used to customize and optimize concrete structures and for producing complex forms for building.


Remote controlled demolition robots can demolish buildings with a variety of robotic arms designed to break, crush, and drill through materials.

Emergency response

Drones can monitor bad weather events and provide valuable information to emergency response teams to aid with disaster response.


Heavy machinery – like excavators, dozers, and loaders – can be operated remotely to dig trenches, load and haul debris, and more.  Some of the biggest manufacturers of heavy machinery already incorporate these capabilities into their equipment, while others are creating ways to retrofit existing equipment. For smaller sites, an Automated Track Loader can see where it’s going and measure material excavated using a combination of GPS, satellites, and onsite base stations.

Impact protection

For both road and building construction, specially equipped trucks can be programmed to drive autonomously and protect crews from other vehicles.

Laying bricks

One bricklaying robot works with two masons – one to maneuver it and load its materials while the other conceals wall ties, removes excess mortar, and lays bricks in hard-to-reach areas. Another type of robot uses 3D CAD models to build walls and block structures.

Layout and measurement

A robot navigates a construction site to do layout and measurement tasks using CAD drawings or BIM models.

Lifting and moving materials

Exoskeletons that workers wear and self-propelled equipment make lifting, moving, and drilling easier and safer, while also boosting productivity.

Post construction monitoring and maintenance

AI can help building managers collect information to monitor performance, identify potential issues, and decide when preventative maintenance is needed.

Safety and security

Drone technology can conduct repetitive security risk assessments, quality control inspections, and safety checks and then relay information via a mobile device or app to a project manager in a safe location.

Site/project/building inspections and monitoring

Field robotics can be used to check for a variety of issues so they can be addressed before escalating. They can examine buildings, structures, and work sites for issues (i.e., cracks and water infiltration) and structural defects. There’s even a robotic dog that can travel almost anywhere on a construction site while carrying scanning and data collection software to help ensure on-time and in-budget projects.

Tying rebar

A robot can continuously tie rebar with one person overseeing its work. A counterpart robot is in development to carry and place up to 5,000 pounds of rebar.

There are other solutions doing everything from automating piling rigs to painting and finishing drywall and paddings.

These solutions deliver a variety of benefits from decreasing waste, shortening project timelines, decreasing carbon footprints, and reducing errors to boosting productivity and quality, while saving money and other resources. While there are still challenges that need addressing – like the cost of new systems and equipment, variability from site to site, lack of regulations, and quickly scaled errors – many suggest the pros far outweigh the cons.

While you focus on your operations, you can count on RBT CPAs to focus on your tax, audit, and accounting needs. Give us a call today.