Blog - ‘Accounting’
Wednesday, July 20th, 2011
In our last post, Get rid of non-integrated, archaic computer systems, we learned how labor costs are affected by the old, inefficient computer systems that host your your office software.
But is it just the owner’s job or the accounting department’s job to make sure the company stays profitable? In small and mid-sized companies every person should play a part.
Every salesperson, service provider, administrator and producer can understand their part in creating a profitable work environment. Cutting costs, measuring costs, being efficient and eliminating waste can be parts of every person’s job description. Every person in a small to mid-sized business contributes to a profitable bottom line.
When everybody pulls together for the bottom line, not only is the company is more profitable, but there is an added bonus: employees feel they’re contributing to the greater good.
Tags: bottom line, profitability
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Tuesday, July 19th, 2011
In our last blog post, Understand Labor Utilization, we talked about the importance of measuring your labor utilization rate, productivity and return on labor investment.
But let’s look at labor and maintenance costs related to the computing resources you use for your office systems.
If your systems are not shaking hands, throw them away. When the labor to run old, stand-alone systems is analyzed, you may have a much greater return on investment with a newer, simpler, integrated computer system. Every software application is not the same and different vendor solutions offer different benefits. But when labor costs are included in analyzing a solution, newer, faster, integrated packages will give you a greater return and provide the bottom line analysis that you so need.
You may know this already and have put it on the back burner. If profit is your primary motive, analyze the effect that labor and maintenance costs of your old, non-integrated systems have on your bottom line. You will want t move very quickly when you hold this information in hand.
Tags: accounting systems, integration, management systems
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Monday, July 18th, 2011
In our last blog post, Create an upscale bookkeeping department, we discussed the need for your bookkeeping department to stay on top of costs, and keep accurate real-time books with advanced controls, as well as to be open to hiring part-time controllers or a CFO.
Our next major “profit boosting” topic is understanding and tracking labor utilization rates.
Measure your labor utilization rate and understand how more clients affect your labor costs, as well as how fewer clients affect your labor costs. Be sure to understand how productivity is measured where labor is concerned. Be cognizant of the return on investment that each labor hour creates.
This is important because labor can sometimes be your greatest cost. So, knowing if you need 3 employees or 5 employees to sustain the “book of business” that you have can drastically affect your bottom line.
Tags: labor utilization
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Friday, July 15th, 2011
In our last post, Maintain a Budget, we stressed the importance of knowing your fixed costs, price shopping, knowing how sales affects the bottom line, and separating the “optional” items from the must-haves.
The importance of having a Bookkeeper/Controller/CFO who is cost-conscious, accurate and values the profit goal that your company has can’t be overstated.
If your bookkeeping department isn’t capable of being cost-conscious, maintaining accuracy and real-time books and instituting advanced controls for your use, perhaps a change is needed. Part-time Controllers and CFOs, even at a higher cost, may be much more cost-effective for your business where profit generation is concerned.
You may have to “change your ways” and adapt to a new office model in order to meet these new goals. But the sooner you do the better. You’re in business to be profitable, and hiring a part-time Controller or CFO is the right thing to do.
Tags: accounting department, bookkeeping
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Friday, July 8th, 2011
In our last post we discussed the importance of keeping creating the controls that show the whole picture of your company’s finances.
This is important not only so you can know what’s going on within your company, but also so you can track your company’s progress against your company’s budget.
Don’t operate blindly. Know your fixed monthly costs for everything and anything. Price shop even when you think it isn’t necessary. Understand how more sales or less sales will affect your budget. Realize what is “optional” and separate these discretionary items from the must-haves. Measure budget to actual numbers on at least a monthly basis.
Key to this is having the right people staffing your bookkeeping department, which is the topic for our next post.
Tags: budgeting
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Wednesday, July 6th, 2011
In our last post, Use a Customer Relationship Management Software, we discussed how a non-accounting software designed to manage the sales process can provide you with valuable information for accounting purposes as well.
All of the information you’ve gathered, including information from your CRM system, Job Costs, labor costs, taken together can help you form a complete picture of your company’s finances.
Some software packages have dashboards that show a recap of sales, purchase orders, payables and profit. Add your own controls to grab the information that matters to you and affects the bottom line. Just be sure that you are looking at a solid, complete view when you analyze the information. It could be a weekly wrap up once all labor, income and costs are entered. The important thing is having the information at your fingertips, and knowing that it is complete.
Having this information within easy reach allows you to compare your actual numbers to your budgetary numbers. We will discuss this next week.
Tags: accounting, reporting
Posted in Accounting, Hot Topics, Tip of the Week | 1 Comment »
Friday, June 24th, 2011
In our last blog post, Use a Time and Billing system for your employed service providers, we emphasized the importance of accounting for the time of production personnel and employed service providers to get an accurate view of labor costs. The idea is to provide you with a more accurate and real time view of your profit and loss situation.
But using a Job Costing system, and using it properly, will help you know the profits on every single job that you do.
Is there any cost of goods in your sales? If so, create purchase orders at the time that you enter your new sale. Automate the profit or loss calculations that each invoice will generate. This is the fastest way to find a problem with your costs, your prices, your overhead and your bottom line. Create the in-house controls that Job Cost systems allow so that you’ll know where you stand on each and every sale you make.
Labor costs. Cost of goods. Tracking these two will give you a more accurate view of your bottom line at any given moment.
Next, we’ll show you how using a Customer Relationship Management system will allow you to view customer acquisition costs, among other things.
Tags: accounting, cost of goods, job costing
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Wednesday, June 22nd, 2011
In our last post, Create a Safe Working Environment, we discussed the importance of being able to access your information from anywhere, at any time, in order to reap the benefits of an in sync, real time system.
By having information “at your fingertips,” you will not have to wait for answers from your accountant about vital information. Financials will be yours for the asking night and day! But do you know how much time your employees that are service providers are spending on their work, and how that affects your cost structure?
Account for time, which so affects your bottom line, and profit problems will show up much faster. Have your employees who are service providers and production personnel utilize time and billing and/or shop floor control systems. Know how your labor costs relate to each job, each invoice and each client.
You have your labor numbers; you pass your stats to a payroll system. Now, incorporate these numbers, “real time” in your bottom line calculation and you will get a much more accurate picture of your costs and bottom line.
Spend a little time to incorporate a Time and Billing system into your accounting software. You’ll be thankful you did.
Next tip: Use a Job Costing system for every AR invoice that you create.
Tags: time and billing, time tracking
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Thursday, June 16th, 2011
In our last blog post “Create and Maintain a Real Time View of your Business” we discussed the importance of keeping all your business processes plugged-in and synchronized so you can have a real time view of your business.
But, having this in sync, real time system won’t help you reap the benefits that you need unless it is accessible anytime, from anywhere.
Make it easy to get the information you need when you want it. Don’t rest on a relationship with a bookkeeper where you need to ask for this and ask for that. Learn to access your own information from afar, knowing that it is complete and accurate. Learn to work within your bank’s bill pay system, the on-line access to your payroll system, your vendor’s sites and your own website.
Technology makes it easy for you to access your systems no matter where you are.
So why are you still relying on your accountant to get you information on your finances? Accountants are great at what they do, but don’t let them be a bottleneck. Learn to access your information by yourself remotely.
Next post: Use a Time and Billing system for your employed service providers
Tags: accountant, accounting system
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Thursday, June 2nd, 2011
Small and mid-sized business owners have the challenge of reaching profitability without the army of high-level financial professionals that larger companies have.
But can a small to mid-sized firm find clever, cost-efficient ways to see their profits or losses quickly and accurately? Are there sure-fire shortcuts that an owner can use when a one-person Accounting Department needs to produce the same quick answers that a multi-member financial team in a larger corporation can produce?
The answer is a resounding yes! You can achieve this if some of the most basic office processes are made real-time and are properly automated.
We’re launching a twelve part series on how to bring your business into the 21st century with real time accounting practices. The following is the first post in the series.
Is your accounting in line with your bank account?
The Internet has transformed banking. If you do your personal banking online (if you don’t, where have you been all this time?), you know that whenever you use your debit card, or perform any transaction, it shows up on your bank balance immediately.
So why does your bookkeeper wait for the end of month bank statement before reconciling your bank balance within your accounting system?
Your bookkeeper needs to create a bank reconciliation ASAP
If your bookkeeper waits for a statement in the mail and doesn’t routinely create the bank reconciliation within the accounting system, change this immediately. You want to know about anything and everything affecting cash flow and the bottom line as soon as possible.
Automatic electronic withdrawals, ATM use, deposits, payments, and every cash occurrence into and out of your company should show up inside your books right away.
In this real time world, you need real time practices
In this fast-paced, competitive business landscape, the last thing you need is to wonder if the check has or hasn’t posted yet. You should never get side-swiped by a surprise mistake at the end of the month.
In this day and age that’s unacceptable. Your accounting practices should be brought into the real time world.
Next week: Creating and Maintaining a Real-Time View of Your Business.
Tags: accounting best practices, banking, real time
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