A Case Study
While discussing the current state of finances with one of our brewery clients and having accurate financial data available, we were able to advise them that the excess cash on hand could best be utilized to purchase two new fermenters for their brewery:
Our client’s brewery was growing and they wanted to start mobile canning their beers for distribution, but were already at capacity in their space. They could have easily gone ahead with the mobile canning; however this would involve them trading healthy margins from onsite beer sales, to a margin cut from distributing their canned beer.
After some discussion, we suggested our client use their cash on hand to invest in new fermenters. This increases the brewery’s capacity in order to produce the extra beer they needed for distribution, without negatively affecting taproom margins. Additionally the business will receive a tax break for purchasing new equipment which in turn results in saving an income tax payment in the current year.
Had the brewery not had a good set of accounting records, the wrong decision could have been made, negatively impacting their profits and cash flow for the coming year.
