Forecasting and Budgeting is absent in many small and medium enterprises (SME). A lot of SMEs understand the need to do this and its absence makes them anxious; but they do not know how to set about doing this. The first place to start is in understanding cash flow. I say this, because many times…
DetailsWhen is the last time you looked at your business and assessed it for business risk? Insurance vendors will talk to you about the need to insure all sorts of risks. HR vendors will talk to you about legal exposure related to work and employee practices. CPAs will talk to you about tax implications and…
DetailsPeriodically, every 6 months or so, do a couple of things that will detect or prevent theft and fraud in your business. From you accounting and Payroll software run a report of employee addresses and Vendor addresses. Compare them. Do any of them look the same or are street numbers close by? Go into it deeper,…
DetailsData entry – that entails entering business transactions into accounting software usually takes up a lot of time. Mainly, these are from Payroll, Credit cards – in and out, Banking and checks , all of which generate numerous transactions. As a business grows, this work grows, and the accounting staff are unable to be analytical…
DetailsTraditionally, large businesses are used to a cycle of daily, weekly, monthly , quarterly and annual financial reports which are reviewed by senior management and also the Board. This process is quite formal in large businesses whether public or private with closing timetables, routines and deadlines. In medium to small businesses this process gets emasculated…
DetailsI tell business owners that there are two ways of making money; and they usually only know one! The first is the difference between Sales and Costs; the profit margin. This is where most of the energy and focus is – cutting costs, increasing prices ( if you can) and it is a linear approach…
DetailsMost businesses I deal with either desire or have a Bank Loan. Let me start with the desire part first. You must be clear why you desire a Bank Loan. If it is because you are getting regularly being paid late by your customers, expenses are increasing and you have Payables to meet now, be…
DetailsBusinesses that have borrowings from Banks – Line of Credit, Equipment lines, have to conform to Loan covenants (or ratios) that will track the business’s performance It is important to agree only to appropriate loan covenants and subsequent monitoring when obtaining and utilizing Bank credit. Do this proactively by;- During negotiations test the relevant covenants…
DetailsCash flow Pricing and Gross margin Expense review Reports Forecasting & Budgeting Employee training Let’s look at each:- Understanding and managing inflows and outflows of cash, actively is a key necessity. Where does your money come from and how is it spent? Do not confuse this understanding with the Profit (or loss) of your business…
DetailsWe recently introduced a set of monthly management reports to several of my clients. The objective was to answer the question – what action should we take to improve? Results were summarized in the first page and it had a “talking points” section to highlight problems and issues that needed attention. Looking at this page…
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