At a Glance
Client: MK Industries
Industry: HVAC Systems Design & Implementation and Electrical Services
Location: Vernon Hills, IL
Owners: Rick Deluga and Glenn Smith
Services: Client Accounting and Advisory Services (CAAS), cash flow management, tax planning for business and owners, ongoing business advisory services and owner consulting
ROI: Streamlined time and billing, accounting and payroll systems avoid lagging accounts receivables and surprise tax issues; clearer job costing and profit center projections; identified market opportunities leading to expanded service offerings while mitigating thousands in debt financing and tax impacts.
When new owners take over a business, the existing CPA relationship doesn’t always survive the transition. In 2013, Rick DeLuga and Glenn Smith purchased MK Industries from the original owners and KRD has continued to advise them.
As designers and installers of HVAC systems for commercial and industrial buildings across the country, the company embodies a culture of specialization and finding the best talent for the job. Glenn, a 35+ year veteran of the company, witnessed this evolution while working his way from truck driver to owner. He and Rick agreed that when things aren’t broken, you don’t need to fix them.
“KRD is conservative by nature like we are, and since they had been with the business so long, they knew who we are and how we operate,” Glenn said. “Plus, we don’t look good in stripes or orange, and they help us understand the pitfalls as owners of a business operating in multiple states.”
In fact, KRD supported the company through every growing pain and the transition of its three original owners, two of whom were brothers. As president of the company, Rick preferred an independent controller relationship to oversee in-house staff and to be an extension of the executive team for consistent communication.
“We have about seven internal accounting staff, and it’s nice to have those checks and balances on our books and payroll every month with Joann,” Rick said. “It’s making our year-end review very, very simple.”
Tried and Tested
Joann Bellos, CPA, Director at KRD, comes to MK Industries each month to close the books and to support any technical accounting issues and staff questions. When the company needed a new accounting solution to centralize their time and billing and job costing, KRD made recommendations and Joann oversaw the implementation. Now the field techs can input their time and costs on tablets in real time, avoiding paper tickets and inefficiency.
“Joann makes sure all the data and processes are operating as they should. Once it’s set up, our internal staff are very good at making sure it stays organized,” Rick said. “It’s great to see the 10,000-foot view and performance and costs by department. Every month, we know if anything is going wrong and can make the adjustments.”
In addition to Joann, MK Industries has the guidance and oversight of an entire CPA firm. Partner Mitch Knopoff, CPA guided the company through its transition from C Corp to S Corp, and he regularly answers questions about larger business decisions. Interacting with the company’s banker and attorney, Mitch and the team have built trust for delivering sound financial projections and ongoing guidance.
When the company was audited by the IRS for the first time, KRD also handled the process and worked directly with the auditor as the company’s representative.
“Joann gave us regular updates and in the end the IRS didn’t find anything,” Glenn said. “They do a phenomenal job.”
Industry Focus ROI
The construction industry is complex with licensing and bonding requirements as well as pre-qualification reviews for subcontractors and complicated payroll and taxes. Rick and Glenn rely on KRD to keep their pre-qualification forms updated with their general contractors so they can focus on attracting new business. Joann also works directly with payroll for the company to manage complex payroll tax and state tax issues as their crews deploy across the country.
Rick trusts Mitch, Joann and their team to steer the company toward the best opportunities while avoiding costly borrowing as they expand. “I’ve seen a lot of companies in this industry do that, with more loans and less cash flow. I’m comfortable with managed growth so that we can deploy on the best opportunities that a competitor can’t,” he said.
KRD also watches out for Rick and Glenn with their personal taxes, advising them on income, expenses and reinvestment back into the business as well as year-end tax planning and filing returns.
“We are not a $500 million company, and every dollar counts to us,” said Glenn, who is the company’s secretary/treasurer. “They treat us with respect. Mitch stops by to check in. Joann has been here for many birthday parties with our crew. We look forward to many more.”
