At some point in a bankruptcy process, the Bankruptcy Attorney will advise procuring a Bankruptcy Equipment Appraisal Report. While this may seem like just one more expense, a USPAP equipment appraisal is critical to your bankruptcy process, whether you own an agricultural business, a manufacturing plant, factory, construction or excavating business, or a specialty production shop. What many folks don't realize it that they can save money on equipment appraisal costs by following 5 simple steps:
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Creating a thorough asset inventory spreadsheet Providing complete equipment information Taking useful equipment photographs Planning for maximum inspection efficiency Working with an experienced, qualified appraiser
Let's start with two very important pre-appraisal steps that should be a part of every single equipment appraisal - whatever the reason for the appraisal!
Prepare an Asset Spreadsheet
First and foremost, prepare an asset list - a spreadsheet of all the equipment and machinery, including business assets such as computer and phone systems and company vehicles. Your spreadsheet should include such information as manufacturer, model, make & year, as well as VIN for vehicles and any meter readings, such as miles or hours the equipment has been used. Each category of information should have its own column and information must be consistently categorized. Any equipment built in-house will need notes on year of manufacture; machinery bought used should have the year of purchase noted. Your equipment appraiser should be able to provide you with a complete list of the information that should be provided in this spreadsheet.
Be sure that the asset inventory can be easily used by your equipment appraiser. An inventory done in a spreadsheet program such as Excel will be of much more value than a handwritten list on a legal pad, or even one typed up in a word processing document. The point of this spreadsheet is to provide your equipment appraiser with an electronic inventory so that he doesn't have to re-type it, billing you an hourly rate for something you could do yourself.
Provide Equipment Information
If you have previous appraisal reports, whether for collateral loan purposes, insurance coverage, business moves, or family law matters such as estate tax, round 'em up. These reports can often provide your equipment appraiser with important information and thus shorten the time needed for research on the bankruptcy appraisal. If the equipment appraiser with whom you are working doesn't ask for these, volunteer them, asking if they would be useful. You may reap the benefits when the final invoice arrives. If you have specialty equipment, be sure to have ready the "cost" information your equipment appraiser will need such as invoices, receipts, time & cost statements, and/or reports from the manufacturer or experts in the field disclosing what such a piece of machinery or equipment would cost to produce. On the day of the inspection, be sure to have someone available who's familiar with the equipment so that the appraiser can get an accurate report of working condition and maintenance of items as needed. Have maintenance records available in case they need to be looked at.
Submit Equipment Photographs
Providing good photographs can also decrease the cost of your bankruptcy equipment appraisal. If you decide to take your own photographs, create a column in the inventory spreadsheet for photo numbers. It's important that the appraiser know which piece of equipment he's looking at when he reviews your photographs. Be sure that any photographs you provide are of high enough quality that model numbers can be read where appropriate. Remember that these are informational photos, not beauty contest submissions! Clarity counts more than composition, although a clean machine does show detail better. These photographs, like spreadsheets, should be digital for ease of transfer. Send your photos and your inventory spreadsheet before the inspection for maximum value.
Maximize Inspection Efficiency
Equipment inspections involve both timing and location. Since machinery and equipment are often portable, it's worth considering where all your equipment will be when the equipment appraiser shows up with his clipboard and camera! It may seem obvious that you'll want to have all your equipment in one place, as much as possible, but some folks don't think of that.
I once did an equipment appraisal for a large farming operation in the San Joaquin Valley. The inspection took twice as long as we had estimated because much of the agricultural equipment was already out in the fields, forcing us to drive from field to field. When this is unavoidable, as in a recent inspection I did in Salinas, where the farmer owned multiple properties, be sure to let your appraiser know so the drive time can be included in his proposal. In another instance, a construction company scheduled our on-site inspection for a time when many of the trucks, bulldozers, graders and excavators were out on construction sites throughout the Sacramento area, not realizing I would actually need to see and verify all the equipment on the asset inventory list. To complete the inspection, I made another trip, early in the morning before the machinery was sent out to work sites.
Believe me, while I'm willing to make as many trips as you need for an appraisal, I'm also happy to come out early in the morning or late in the evening -- even on weekends -- rather than make unnecessary multiple trips to complete an inspection of your equipment! Remember that a good equipment appraiser is always happy to work with you to make sure your inspection is as effective and efficient as possible. In a situation like this, time really is money; it's important to arrange the inspection visit to be efficient. Talk with your equipment appraiser if you have questions about the particulars of your situation.
Get It Right the First Time
We've said it before and we'll say it again - Work with a qualified, experienced equipment appraiser. Don't try to save money by getting an appraisal from an equipment dealer or an auctioneer. And don't make the mistake of attempting to put together an appraisal report on your own. Working with a qualified, certified, accredited equipment appraiser ensures that your appraisal report will be accurate and will hold up in court should that be necessary. As you know, a "do-over" can only add frustration and cost to bankruptcy proceedings. You'll save time and money by doing it right the first time.
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