Not-For-Profit Cooperatives have few options for raising funds for improvements or long-term plans. One way is to raise rates – which can be unpopular among the customer base. The other option is taking on debt, which may have a negative connotation to board members and management; however, it can be a helpful tool that allows growth and improvement while protecting member’s rates and wallets.

Investing in Infrastructure, Technology and Members   

There are several reasons entities such as these need to raise cash.   These reasons include: repaying members as part of the cooperatives patronage retirement plan, managing cash flow, infrastructure upgrades and improvements, or investing in growth.  LWG helps our clients examine the pros and cons of borrowing, their financial situation and tax implications, interest repayments and debt-service ratio.

Through this process, we also help board members better understand that debt isn’t always something to avoid when it is used for improvements that ultimately benefit both consumer and company. For instance, a company considering a million-dollar purchase such as a completely automated meter reading system that allows members to check their usage while improving meter reading and other efficiencies for the cooperative may seem unnecessary or unattainable.

Likewise, an automatic payment system that allows greater convenience for customers to pay bills and leads to a quicker accounts receivable turnover and increased internal controls from a cash receipt standpoint, may seem equally unnecessary or unattainable.

LWG is equipped to help them see how it ultimately increases efficiency and decreases costs over the long term.  We can also help them plan and maintain their patronage repayment schedule while continuing to invest in infrastructure improvements and upgrades and what it means for budgeting processes and customers.

LWG is here to Serve

Since every utility is a bit different, having a CPA explain all the options for raising funds helps management and the board members make good decisions, and helps them relay the information to their membership or customers. Our LWG staff often attends board and annual meetings to ensure the debt financing plans are clearly understood by all.  Our team is on call to help you through the process.

We’ve worked with many clients with either cash flow or budget planning and rate discussions while factoring in current and future work plans, discussing projects they want to work on, and how to fund them. We’ll run the numbers and see if it makes sense to raise rates or take out debt. Since many of our clients have been with us for years, this auditing and budgeting service is a natural extension of our ongoing relationship.

As technology continues to streamline everything from payments to production, investing in your company’s growth will always be a smart plan. Leveraging debt to increase efficiency for both company and consumer makes it a great solution.

Questions?  Please contact us today:  www.lwgcpa.com