A Partnership for Growth
The manufacturing industry thrives on the challenge of making a valuable product with a leaner, faster, or more profitable workflow than the competition. Hodge Tool Company, a Lancaster-based international manufacturer of precision CNC machining, navigates the challenge expertly, tripling business over the last few years and expanding to include a subsidiary in China. This rapidly growing business needed an accounting team that could navigate international compliance issues and had the experience in the manufacturing industry necessary to understand their unique needs.
Having been let down by their previous CPA firm, Hodge Tool Company needed to be cautious in selecting the right firm to partner with their growing business. The Walz Group became the best fit to support a rapid growth model, closely monitor international compliance, and fully explain the financial value behind their business transactions.
Learning from Past Mistakes
In the beginning, Hodge Tool Company partnered with a small, local firm for their tax services. However, that firm was soon bought and sold several times to progressively larger firms. With every purchase, the CPA firm became bigger, and Hodge Tool Company seemed less important.
“As it went through the phases of being bought, the relationship began to deteriorate,” said President and CEO of Hodge Tool Company, Ed Hodgen. “I felt like we were too small for them.” For a company that was sometimes doubling in size in a single year, feeling small was a big deal.
Soon, Hodge Tool Company started slipping through the cracks: not only did the CPA firm fail to complete the taxes on time, but the tax returns contained costly mistakes. Hodge Tool Company wasn’t getting the attention they needed, and they couldn’t trust the services they received from that firm.
Hodge Tool Company Needs and Goals
The manufacturing industry hinges on change, and Hodge Tool Company was adapting quickly to the fluxes of the marketplace. The business was growing by leaps and bounds, and by 2011 they left their old CPA firm in search of one that could support rapid growth in the manufacturing industry.
They required a firm with the following requirements to continue on their current trajectory:
- A firm that understands the tax filing requirements for US rules in handling a foreign affiliate in China
- A firm that could complete tax filings correctly and on time
- A firm with good customer service
- A firm with competitive pricing
- A firm prepared to support aggressive growth
International Compliance and Year End Taxes
Ed first heard of the Walz Group when his bank recommended he consider the Lancaster County firm.
“They were recommended by our bank,” Ed explained. “Then my wife and I did a little research, and agreed to interview them. We felt very comfortable with them.”
The Walz Group was well prepared to manage Hodge Tool Company’s needs. With over 35 years of experience in the manufacturing industry, they had the tools and people in place to provide Ed with as much or as little support as he wanted.
Year-end tax preparations became an effortless process for Ed. Eric Peterson is Ed’s primary contact, along with the team at the Walz Group, who ensures all the compliance details are handled, so Ed can focus on his business. The Walz Group provided financial statement reviews, corporate tax returns, international filings and strategic advice.
Ed reported, “It’s a whole different experience from the other company. Every year, I had to extend my tax returns because they weren’t done on time. Eric gets things done way ahead of time. It’s at least a month early, and we’ll be ready to go.” Even considering the tax filing and currency complications added with a subsidiary in China, the Walz Group’s expertise meant taxes are filed easily, early and correctly.
Customer Service and Cash Flow
The Walz Group also proactively tackles the needs of the growing business. Eric schedules regular calls to offer assistance with projections and tax planning services. The Walz Group’s strong reputation with Hodge Tool Company’s bank also means they had the foundation in place to easily ensure they’re meeting the requirements of the banking industry, such as those regarding cash flow.
Ed relates that with the regular check-ins and proper tax planning, they’re ensured they have “the best plan put in place for the best cash available to support growth.” The Walz Group considers the whole picture, including bonus depreciation on the equipment Hodge Tool Company buys for their product. Eric works at length with Ed to look at the accelerated depreciation, as well as bonus depreciation with stimulus packages, on the equipment so they strategize the best way to regulate the cash flow. Eric evaluates the value for the current year, and what effect it will have on the next year, to ensure Hodge Tool Company claims it appropriately for the years they need the most growth.
The Walz Group also offers new ideas for Hodge Tool Company to save on taxes through tax credits. Thanks to their depth of expertise in tax law, the Walz Group was able to recommend application for research and development credits, which contributed to significant tax savings, according to Ed. He went on to say, “Basically, from a tax planning standpoint, they make sure we have the cash, and they make sure we have the best plan put in place for the best cash available to support the growth.”
Even with going above and beyond in tax and support services, the Walz Group’s level of service made an impact on Ed. “The main thing I like about their firm is their responsiveness,” Ed related. When Ed partnered with the Walz Group, he didn’t get a single accountant assigned to his company, but the full team. Ed joked, “There’s a person that actually does the work, Cheri. Eric reviews everything, but Cheri does the day-to-day work. Whenever I get a technical question, it goes to Eric. Whenever I’m sending in work to get done, it goes to Cheri.
Would You Do It Again?
When Hodge Tool Company needed an accounting firm that could act as a partner who understood the manufacturing industry and tailor their services to support their aggressive growth, they chose the Walz Group.
Ed stated he’d recommend the Walz Group to another company in the manufacturing industry, saying, “They are extremely responsive. They have enough experience to handle anything you’re going to give them… Their rates are very competitive.”
The Walz Group has the depth of bench to tackle any issue, and to provide a strategic plan to position companies for rapid growth and development.