If you have read any of the articles I’ve written for this magazine, you likely know I always write about business-related issues pertaining to the Arabian industry. This month I was asked to write about my business, EQ Bookkeeping, and the services we provide. I have never written about myself, so this is a new adventure for me.
EQ Bookkeeping provides accounting services solely to the equine industry. While the services we provide are vast, the primary functions are day-to-day accounting, tax preparation services, and consulting. What does this mean?
Shouldn’t that be obvious?
Well, maybe not. Recently, I was chatting with a judge from the Region 13 show, Brian Ferguson, and he asked me if EQ Bookkeeping tracked farm expenses. I said yes. He asked if it managed cash flow. I said yes. Then he asked me what hardware requirements it had. I was initially confused, and then I realized he thought EQ Bookkeeping was computer software. I was quick to point out that we aren’t a software program, we are people.
It was at that moment I realized that what I thought was obvious, wasn’t obvious to all.
So what is EQ Bookkeeping?
We are an accounting firm. We have a staff of accountants who work only with horse business owners. Our clientele includes breeders, trainers, farm owners, veterinarians, farriers, and other horse related businesses, including the shows themselves.
What does EQ Bookkeeping do?
Our services are wide-ranging and flexible. We don’t do exactly the same thing for all of our clients. For some of them, we do EVERYTHING:
· we pay their bills
· invoice their customers
· collect money from customers who haven’t paid
· process payroll and file payroll taxes
· manage cash flow
· create budgets
· give advice about purchases
· help secure financing money
· prepare income tax returns at year end
· give tax related advice.
We also negotiate with vendors for better pricing, analyze operations and provide recommendations for more profitable changes. For others, we only provide some of these services.
However, our goal, and THE most important thing we do, is to help the business owner make more money!
Believe it or not, horse businesses can be profitable! And our goal is to help them get there.
After explaining this to people, the next question I am always asked is: How do you do that?
And I always answer “It’s simple.” At least it is for us. The typical business owner sees accounting as an annoying necessity that has to be done at the end of the year to determine how much tax needs to be paid (or how much of a refund they will be getting.) Accounting is really a daily process of business tracking to provide factual data that can be used to make all business decisions. Thus accounting is THE most powerful management tool.
Why is this important and why do people hire us?
If you are a horse business owner, you don’t have time to sit in an office crunching numbers. You didn’t get into an equine business to do accounting. Your time is better spent working with horses and riders (doing revenue producing activities.) Not to mention the vast majority of you HATE accounting so you put it off until absolutely necessary.
It is important for you to know that putting off accounting can be detrimental to your business. Here are just some examples of how not doing accounting routinely and understanding the numbers had a huge negative effect on a business. (I will try not to get too “accountant like” in these examples.)
1) It was October 2009 and a breeder in Florida needed a new tractor to mow the hay field. He really didn’t think he could afford it at the moment, because he knew he needed to save his cash for his estimated tax payment due in January. He decided to put off the tractor purchase until spring and rent one in the interim. However, if he had bought the tractor in 2009, he would have been eligible to accelerate the depreciation and actually lowered his tax payment in January. He would have known this had he spoken to his tax professional. He could have afforded to get the tractor when he needed it. He also wouldn’t have wasted his cash on equipment rental.
2) A trainer was charging $0.55 per mile for hauling to/from shows. He had analyzed the cost of fuel and knew the money he was receiving was covering the fuel cost. What he didn’t take into account was repairs or wear and tear on the truck and trailer. When we did a complete analysis, we found he needed to be charging $0.67 per mile just to cover his costs. Because of this oversight, he lost $3,267 in 2010. And when the trailer needed a $2,500 repair, he had difficulty funding the repair cost.
These are only a couple of examples…I could give you many more.
The last of the major services we provide is collections. Yes, we call on your clients to collect the money they owe to you. It is very difficult for you to be the “bad guy” and collect money. It puts you in an adversarial position with your client, which is not productive and causes difficulties for you to do work with them and their horses. It is easier for us, an unbiased third party, to contact them on your behalf and they typically will pay us faster. Since we are an accounting firm, and not a collections agency, we don’t have the negative stigma associated with collections. We are simply the accountant trying to do accounting.
Earlier this year, we added a new equine mobile veterinary client who came to us with $48,000 in invoices that were over 90 days past due. Within 45 days, we collected $28,000 and within 90 days we had collected over $45,000. Collections is about having a system, and it is very difficult for equine business owners to manage a collections system when they are working with horses in the barn.
How do we actually do the work?
We are very technology driven. We don’t use any fancy equine accounting software. We simply use QuickBooks. It allows us to manage all of the accounting functions including segmenting revenue and costs by show, location or other differentiator. We host a QuickBooks file for all of our clients and provide on-line access for easy retrieval of financial information.
We receive detailed transaction information online from our customer’s bank or credit institutions and pay their bills using online bill pay from their bank.
We receive other information, like show closeout sheets, in a variety of ways. Some of our clients like to fax, some like to email and others upload the scanned documents into our online shared Dropbox. There are also a few who still like to send information via postal mail.
We communicate via phone, email and text messaging. We understand that those in the equine world don’t work 8am to 5pm so we are available evenings and weekends (usually from our barns.)
Now that you know what EQ Bookkeeping does and how we do it, there is only one remaining question: How much does it cost?
By far, the reason most equine business owners are afraid to call us is because they think they will never be able to afford our services. They have the perception that it will be cost prohibitive. They think “I pay my tax accountant $150 per hour and it takes 8 hours each week to do my own accounting, so this will cost me nearly $5,000 per month.”
There are two things wrong with this assumption. First, we don’t charge $150 per hour. Second, accounting is all that we do and we are very efficient at it; so what may take you 8 hours per week, takes us much less.
So how much does it cost? The answer is “it depends.” We analyze each client’s needs individually and provide a free quote in advance so you know what to expect. Our smallest client pays $250 per month for basic service and our largest client pays $2,000 per month for all of the services we offer.
EQ Bookkeeping is a business I started to fund our family hobby and has grown into a business filling a huge need in the equine industry. We love being able to bring accounting structure and order to a world where chaos is the norm.
We want horse business owners to focus on what they know best, horses, and let us focus on the day-to-day accounting.
Jennifer Foster, President of EQ Bookkeeping LLC, www.eqbookkeeping.com