News

February 12, 2007
The Business Press

A Changing Economy Calls for Cautious Financial Management
Advising through downturns are not new to Soren McAdam Christenson’s Construction Team

Real estate developers are beginning to experience trends not seen in the Inland Empire since the ‘90s. While some economists are still optimistic, others report that the housing slump may pull the overall economy down.

Contractors and developers see the toughest times as still being ahead, according to a new survey by Wells Fargo. The survey reveals that contractors in most southern California counties are somewhat optimistic (the index was 55.7, where over 50 is considered an expanding index), while Inland Empire construction businesses had an index of only 38.9.  Just 11% of the reporting companies foresee improved demand in the IE. Thirty-three percent saw further weakening demand, in an environment where many new homes and office buildings stand vacant. These potential changes dictate that developers and contractors alike remain alert for evidence as to the magnitude and timing of the downturn.

Listening to the economists is certainly important for a broad perspective, but watching for trends in your own business can also be helpful and probably more convincing. For example, real estate developers have to remain informed about the age of their inventory and its projected pricing; arranging for financing to allow for longer holding periods might be indicated – or simply liquidation of the inventory; whereas, a contractor might want to monitor the utilization of its equipment to help in decisions about buying or selling equipment, and the timing thereof.

Both developers and contractors need to have access to management reports that identify important trends. Accessing the necessary data and developing the needed reports can be a complex task. Systems need to be developed which allow the needed information to be captured and the reports to be designed for timely access. This requires a combination of comprehensive accounting and savvy IT specialists. These two strengths don’t often come in one place, but Soren McAdam Christenson LLP, is one CPA firm where both accounting and construction IT can come in a single package.

Soren McAdam Christenson, an Inland Empire firm extremely strong in construction accounting, taxation and systems consulting, has been around since the late ‘70s, and seen its clients through a few economic downturns. With some thirty years of experience, the partners specializing in construction have seen a great deal. The firm’s managing partner, Roger Wadell, has recently joined the Construction Team, bringing the number of professionals serving the construction industry to eleven.

The combined talents of these eleven specialists in construction translate into a level of expertise and a menu of services unparalleled in the local firm environment. This expertise allows for services beyond accounting, auditing, taxation and IT. It allows SMC to consult on financing and bonding issues. Banks and bonding companies, for instance, look for certain formats and reporting standards not familiar to many firms. Because Soren McAdam Christenson works so frequently with these institutions, they comprehend the nuances necessary to clearly communicate a contractor’s financial situation, many times enhancing the contractor’s borrowing or bonding capacity. 

The Inland Empire may well be experiencing a downturn in the real estate market, and possibly all of construction, but careful developers and contractors can prepare for the longer haul, while honing management and financial reporting. Having a great construction accounting team, like Soren McAdam Christenson, can help.

For more information on SMC, contact Roger Wadell, partner, at 909.798.2222 or visit www.smc-cpas.com.

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