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Added for You - Five Strategies To Strengthen Your Company's Financial Management
In today’s work environment employers standards are rising and rising. The need for education thus increases to meet the demands of current employers. The first step is getting a high school diploma. For those who have not finished high school. A test, called The General Education Degree is also an option. The GED is a standardized test that tests basic skills that one should have learned in High School.In preparation for testing, it is imperative to study. If no preparation is taken, and failure does result, this can bring the confidence level down for you and thus add to more discouragement. To prevent this, it is always important to be as prepared for the standardized test as possible.In searching forums for related GED information, the basic recommendation is to prepare as much as possible and be aware of what type of test that you are taking. Standardized test can be very predictable and some organizations, such as Kaplan, can help with the different areas of math and english that the GED covers.The second most prevalent piece of advice is not to rush. Taking these tests can be nerve racking at first, but once yo
As with receivables and inventory, complete a monthly analysis of your accounts payable and compare to previous periods and industry averages. Any material difference or change should be investigated.
Make sure vendors understand your company in case there is a situation where you need to stretch your payables. You need a plan to deal with those situations where you may have an unexpected spike in your payables.
You should re-evaluate you vendors on a regular basis to make sure you are getting the best value.
4. Budget
It is fundamental, you need to plan for growth and you need to forecast for problems. You need to prepare a budget. Besides completing a budget for expected sales, you should also complete a budget for a disaster situation, like your sales are cut in half. The benefit is very straight forward; it forces you to ask yourself how you will be able to keep the company running in such a situation. It will also point to areas where you may be able to save money right away and free up cash flow. It’s like having a disaster plan; you only have to act on it when disaster strikes, but it is much easier to concentrate when you do not have a crisis at hand.
5. Develop a strong relationship with your Bank
Devote attention to building relationships with your bank. Always keep them up to date on where your company stands. If you hit a difficult patch it is much easier to get your bank on board if they understand your business. Contrary to opinion, banks do not necessarily jump ship as soon as you fall into trouble. They are willing to work with small business through tough ti
A fundamental requirement of a leader is that he or she have a destination in mind for the organization. Armed with a clear vision for what the company will look like at some point in the future, the leader is in a position to encourage and enable other key managers in the organization to do the likewise.An old business friend recently called for my help. Although I have worked closely with several members of his family spanning three generations, our paths have not crossed over the last few years. It was a pleasant experience getting caught up on both his company and his family.Their business community is still supported by a relatively small population base, so sales have not increased substantially over the past several years. Their product mix has not changed much either.The family is divided over the direction the business should take. The father, the oldest and most conservative family member, is content to continue doing the same things he has been doing most of his working life. He is the first one to arrive at the business at around 6:30 a.m. His duties include waiting on customers and doing most of the buyin
The following are five strategies that will help you start to build a strong financial foundation and build value in your company.
1. Set up a financial control system
The first thing you need to start with is a control system so that there is consistency in your process and procedures. A control system is designed to prevent and detect errors in your daily activities. For example, is there is a standard way of processing your receivables, payables and inventory? If there are no standard guidelines to follow, there is probably no control system.
2. Have daily access to your account information
Make sure that you can access your account information every day; it is invaluable to managing your cash effectively. With most banks providing internet access at a reasonable cost, there is no reason not to have instant access to account information.
3. Manage your cash components
Concentrate on managing your three main cash components: accounts receivable, accounts payable and inventory.
Let’s take a look at each component:
Accounts Receivable
Make sure your credit and collection system is working efficiently. Any excess investment in accounts receivable increases the need to borrow more money to avoid a cash flow deficit. That means that if you are carrying excess receivables you are probably carrying excess debt and you have a direct cost of having to carry that extra debt in interest payments. Even if you finance the receivables through internal equity, there is still an indirect cost; the opportunity cost of using that equity elsewhere which could include expanding your inventory to increase sales, reducing debt or earning interest on cash balances.
Your accounts receivable collection period defines the relationship with the cash flow process. Every month you should be calculating your collection period and comparing with previous periods and relating those results to industry averages. Any material differences should be investigated.
Your credit policy can influence your cash flow and earnings. Longer credit terms can increase sales and earnings, but any decision to offer more liberal terms requires an estimate of the trade-off between the cost of the larger investment in accounts receivable and the bottom-line benefits of a higher sales volume. Remember that increasing your credit terms will bring in less credit worthy customers which can increase your bad debt expense. You can, however, use price increases to offset more liberal credit terms.
When you develop a receivable policy, consider the following:
- Check the financial health of customers before offering them credit. Consider obtaining cash on the first order.
- Do not make your invoice terms too generous.
- Charge interest to customers who pay late.
- Give discounts for early payment.
- If you are offering discounts, the terms should be attractive enough to encourage customers to take the discount. This can also serve as an early warning signal; if a customer doesn’t take the discount, or all of a sudden stops taking the discount, then you may want to investigate further before extending credit as it could be a sign of financial trouble.
- Do not wait longer than 30 days for a late payment before you take action; you need to minimize your company’s exposure to bad credit. Put it into dollar terms, if you have a $1,000 bad debt write-off and a 10% profit margin, you need to generate an addition $10,000 in sales just to make it back.
Inventory
First, keep in mind that because of carrying costs such as warehousing and insurance it is more expensive to carry inventory than to carry accounts receivable. That is, reducing an investment in inventory provides you a larger bottom-line benefit than a comparable reduction in accounts receivable because you are also reducing the carrying costs.
As with your receivables, it is important to complete a monthly analysis of average inventory held in days. Compare to previous months and industry averages and investigate any material difference or change.
A periodic inventory count is a fundamental requirement; any items that are overstocked should be investigated.
A sales forecast is vital, without it you lack the necessary management information for inventory control.
Your target inventory investment should equal your normal investment for core sales plus a built in safety stock (for example if a re-order is delayed you want some extra stock on hand) plus some amount for any anticipated growth in sales.
You can use the following equation to determine your economic ordering quantity: SQRT (2SO/CP) where
SQRT = square root
S = anticipated annual unit sales
O = fixed costs per order
C = annual inventory carrying cost, as a % of a products purchase price
P = unit purchase price for product
Note that the above equation attempts to minimize inventory cost by answering the question of how much and how often you should order inventory. It is not perfect; the equation does not take into account volume discounts and assumes that your demand is constant. However it is a tool that can be used to help in your decision making process.
The following are 10 questions you can use to review you inventory process:
- Do you have a sales forecast? Do you compare forecast to actual sales and adjust the next forecast accordingly?
- Do you know which items account for 80% of your sales? These items should be managed closely.
- How fast can you get inventory?
- How do you order inventory?
- How much inventory do you order? Do you order extra just to save a few extra cents?
- Do you know the cost of holding your inventory?
- Do you rely on just one or two suppliers?
- How frequently is inventory analyzed to determine obsolescence and makeup?
- Do you have a policy of determining what is obsolete inventory and how and when to get rid of it?
- Do you have an inventory reporting system to provide the necessary tracking information?
Accounts Payable
Although you want to stretch your payables as long as possible, much like you offer attractive discounts to your buyers you should also take supplier discounts as often as possible if the terms are attractive enough.
Make sure your payables are tracked on a regular basis - such as weekly - and that your payment system runs smoothly.
As with receivables and inventory, complete a monthly analysis of your accounts payable and compare to previous periods and industry averages. Any material difference or change should be investigated.
Make sure vendors understand your company in case there is a situation where you need to stretch your payables. You need a plan to deal with those situations where you may have an unexpected spike in your payables.
You should re-evaluate you vendors on a regular basis to make sure you are getting the best value.
4. Budget
It is fundamental, you need to plan for growth and you need to forecast for problems. You need to prepare a budget. Besides completing a budget for expected sales, you should also complete a budget for a disaster situation, like your sales are cut in half. The benefit is very straight forward; it forces you to ask yourself how you will be able to keep the company running in such a situation. It will also point to areas where you may be able to save money right away and free up cash flow. It’s like having a disaster plan; you only have to act on it when disaster strikes, but it is much easier to concentrate when you do not have a crisis at hand.
5. Develop a strong relationship with your Bank
Devote attention to building relationships with your bank. Always keep them up to date on where your company stands. If you hit a difficult patch it is much easier to get your bank on board if they understand your business. Contrary to opinion, banks do not necessarily jump ship as soon as you fall into trouble. They are willing to work with small business through tough tim
Men cease to interest us when we find their limitations. The sin is limitations. As soon as you once come up to a man’s limitations, it is all over with him.EmersonTo build a successful organization, leaders need to understand the importance of group dynamics and team chemistry. In other words, members in organizations need to respect each other and get along. Yukl, the author of Leadership in Organizations, maintains that a high-exchange relationship contains high mutual influence. Clearly, good chemistry is vital in achieving any level of organizational excellence. Leaders need to build relationships with followers in a constructive manner.King, author of The Moral Manager, explained that some academic scholars suggest that religious principles and values have a significant influence on value formation, development, and performance in an organization. While some philosophers such as Nielson argue the connection between God and morality as an ethic compass, other scholars, such as Lisa Sowle Cahill and Douglas Groothuis, suggest that ethic principles originate from religious and spiritual foundations.ns that if you are carrying excess receivables you are probably carrying excess debt and you have a direct cost of having to carry that extra debt in interest payments. Even if you finance the receivables through internal equity, there is still an indirect cost; the opportunity cost of using that equity elsewhere which could include expanding your inventory to increase sales, reducing debt or earning interest on cash balances.
Your accounts receivable collection period defines the relationship with the cash flow process. Every month you should be calculating your collection period and comparing with previous periods and relating those results to industry averages. Any material differences should be investigated.
Your credit policy can influence your cash flow and earnings. Longer credit terms can increase sales and earnings, but any decision to offer more liberal terms requires an estimate of the trade-off between the cost of the larger investment in accounts receivable and the bottom-line benefits of a higher sales volume. Remember that increasing your credit terms will bring in less credit worthy customers which can increase your bad debt expense. You can, however, use price increases to offset more liberal credit terms.
When you develop a receivable policy, consider the following:
- Check the financial health of customers before offering them credit. Consider obtaining cash on the first order.
- Do not make your invoice terms too generous.
- Charge interest to customers who pay late.
- Give discounts for early payment.
- If you are offering discounts, the terms should be attractive enough to encourage customers to take the discount. This can also serve as an early warning signal; if a customer doesn’t take the discount, or all of a sudden stops taking the discount, then you may want to investigate further before extending credit as it could be a sign of financial trouble.
- Do not wait longer than 30 days for a late payment before you take action; you need to minimize your company’s exposure to bad credit. Put it into dollar terms, if you have a $1,000 bad debt write-off and a 10% profit margin, you need to generate an addition $10,000 in sales just to make it back.
Inventory
First, keep in mind that because of carrying costs such as warehousing and insurance it is more expensive to carry inventory than to carry accounts receivable. That is, reducing an investment in inventory provides you a larger bottom-line benefit than a comparable reduction in accounts receivable because you are also reducing the carrying costs.
As with your receivables, it is important to complete a monthly analysis of average inventory held in days. Compare to previous months and industry averages and investigate any material difference or change.
A periodic inventory count is a fundamental requirement; any items that are overstocked should be investigated.
A sales forecast is vital, without it you lack the necessary management information for inventory control.
Your target inventory investment should equal your normal investment for core sales plus a built in safety stock (for example if a re-order is delayed you want some extra stock on hand) plus some amount for any anticipated growth in sales.
You can use the following equation to determine your economic ordering quantity: SQRT (2SO/CP) where
SQRT = square root
S = anticipated annual unit sales
O = fixed costs per order
C = annual inventory carrying cost, as a % of a products purchase price
P = unit purchase price for product
Note that the above equation attempts to minimize inventory cost by answering the question of how much and how often you should order inventory. It is not perfect; the equation does not take into account volume discounts and assumes that your demand is constant. However it is a tool that can be used to help in your decision making process.
The following are 10 questions you can use to review you inventory process:
- Do you have a sales forecast? Do you compare forecast to actual sales and adjust the next forecast accordingly?
- Do you know which items account for 80% of your sales? These items should be managed closely.
- How fast can you get inventory?
- How do you order inventory?
- How much inventory do you order? Do you order extra just to save a few extra cents?
- Do you know the cost of holding your inventory?
- Do you rely on just one or two suppliers?
- How frequently is inventory analyzed to determine obsolescence and makeup?
- Do you have a policy of determining what is obsolete inventory and how and when to get rid of it?
- Do you have an inventory reporting system to provide the necessary tracking information?
Accounts Payable
Although you want to stretch your payables as long as possible, much like you offer attractive discounts to your buyers you should also take supplier discounts as often as possible if the terms are attractive enough.
Make sure your payables are tracked on a regular basis - such as weekly - and that your payment system runs smoothly.
As with receivables and inventory, complete a monthly analysis of your accounts payable and compare to previous periods and industry averages. Any material difference or change should be investigated.
Make sure vendors understand your company in case there is a situation where you need to stretch your payables. You need a plan to deal with those situations where you may have an unexpected spike in your payables.
You should re-evaluate you vendors on a regular basis to make sure you are getting the best value.
4. Budget
It is fundamental, you need to plan for growth and you need to forecast for problems. You need to prepare a budget. Besides completing a budget for expected sales, you should also complete a budget for a disaster situation, like your sales are cut in half. The benefit is very straight forward; it forces you to ask yourself how you will be able to keep the company running in such a situation. It will also point to areas where you may be able to save money right away and free up cash flow. It’s like having a disaster plan; you only have to act on it when disaster strikes, but it is much easier to concentrate when you do not have a crisis at hand.
5. Develop a strong relationship with your Bank
Devote attention to building relationships with your bank. Always keep them up to date on where your company stands. If you hit a difficult patch it is much easier to get your bank on board if they understand your business. Contrary to opinion, banks do not necessarily jump ship as soon as you fall into trouble. They are willing to work with small business through tough ti
Well this depends on where you are in your career, and really how much time you have on your hands. Have you ever wanted to work the hours you choose, and basically become your own boss, well becoming a virtual assistant is an ideal way to do such.Background InformationIf you are interested in becoming a virtual assistant there are a few key things to know. A virtual assistant may be asked to perform the usual tasks of a secretary as well as run a website, or a project that a business may have. You will have to provide all your own materials, your computer, any software, and perhaps materials you may use for a project. It was like a bomb went off when the internet came to be, and with it many jobs such as a virtual assistant. The want and need for this profession has grown tremendously in the last few years because of businesses need for work but without having to pay a salary so to speak to get it done.How To Become A Virtual AssistantTo become a virtual assistant a program must be completed, but in order to be able to take the program they ask that you have 5 years of administrative experience, some knowl
Inventory
First, keep in mind that because of carrying costs such as warehousing and insurance it is more expensive to carry inventory than to carry accounts receivable. That is, reducing an investment in inventory provides you a larger bottom-line benefit than a comparable reduction in accounts receivable because you are also reducing the carrying costs.
As with your receivables, it is important to complete a monthly analysis of average inventory held in days. Compare to previous months and industry averages and investigate any material difference or change.
A periodic inventory count is a fundamental requirement; any items that are overstocked should be investigated.
A sales forecast is vital, without it you lack the necessary management information for inventory control.
Your target inventory investment should equal your normal investment for core sales plus a built in safety stock (for example if a re-order is delayed you want some extra stock on hand) plus some amount for any anticipated growth in sales.
You can use the following equation to determine your economic ordering quantity: SQRT (2SO/CP) where
SQRT = square root
S = anticipated annual unit sales
O = fixed costs per order
C = annual inventory carrying cost, as a % of a products purchase price
P = unit purchase price for product
Note that the above equation attempts to minimize inventory cost by answering the question of how much and how often you should order inventory. It is not perfect; the equation does not take into account volume discounts and assumes that your demand is constant. However it is a tool that can be used to help in your decision making process.
The following are 10 questions you can use to review you inventory process:
- Do you have a sales forecast? Do you compare forecast to actual sales and adjust the next forecast accordingly?
- Do you know which items account for 80% of your sales? These items should be managed closely.
- How fast can you get inventory?
- How do you order inventory?
- How much inventory do you order? Do you order extra just to save a few extra cents?
- Do you know the cost of holding your inventory?
- Do you rely on just one or two suppliers?
- How frequently is inventory analyzed to determine obsolescence and makeup?
- Do you have a policy of determining what is obsolete inventory and how and when to get rid of it?
- Do you have an inventory reporting system to provide the necessary tracking information?
Accounts Payable
Although you want to stretch your payables as long as possible, much like you offer attractive discounts to your buyers you should also take supplier discounts as often as possible if the terms are attractive enough.
Make sure your payables are tracked on a regular basis - such as weekly - and that your payment system runs smoothly.
As with receivables and inventory, complete a monthly analysis of your accounts payable and compare to previous periods and industry averages. Any material difference or change should be investigated.
Make sure vendors understand your company in case there is a situation where you need to stretch your payables. You need a plan to deal with those situations where you may have an unexpected spike in your payables.
You should re-evaluate you vendors on a regular basis to make sure you are getting the best value.
4. Budget
It is fundamental, you need to plan for growth and you need to forecast for problems. You need to prepare a budget. Besides completing a budget for expected sales, you should also complete a budget for a disaster situation, like your sales are cut in half. The benefit is very straight forward; it forces you to ask yourself how you will be able to keep the company running in such a situation. It will also point to areas where you may be able to save money right away and free up cash flow. It’s like having a disaster plan; you only have to act on it when disaster strikes, but it is much easier to concentrate when you do not have a crisis at hand.
5. Develop a strong relationship with your Bank
Devote attention to building relationships with your bank. Always keep them up to date on where your company stands. If you hit a difficult patch it is much easier to get your bank on board if they understand your business. Contrary to opinion, banks do not necessarily jump ship as soon as you fall into trouble. They are willing to work with small business through tough ti
Most all Franchisors simply cannot stand the waste of money and time it takes to get registered in a Franchise Registration state or the insanity of the process to renew the registration each year. It costs Hundreds of thousands of dollars to comply with all their garbage, annual audits and the franchise attorneys hold them over a barrel with $300.00 per hour fees to help with the red tape of the State Franchise Regulation attorneys. It is a complete rape of franchisors all the way around.Of course when you bring this to their attention the State of Illinois Franchise Regulators say that is the Franchisors Perception? Bulloney, it is the reality. You see it is not Perception based; NO, that is reality. "Perception Arguments" and points of contention are always used in rhetoric debate by lawyers, regulators and Liberals; They always say this. But it is not so, there is nothing perceptive about denying reality.They want you to see their view. Well I was on the AAFD Board of Directors and I have seen the other side and sat in Susan Kezios office there in Chicago and listened to it all. I have run a franchise company from ground
SQRT = square root
S = anticipated annual unit sales
O = fixed costs per order
C = annual inventory carrying cost, as a % of a products purchase price
P = unit purchase price for product
Note that the above equation attempts to minimize inventory cost by answering the question of how much and how often you should order inventory. It is not perfect; the equation does not take into account volume discounts and assumes that your demand is constant. However it is a tool that can be used to help in your decision making process.
The following are 10 questions you can use to review you inventory process:
- Do you have a sales forecast? Do you compare forecast to actual sales and adjust the next forecast accordingly?
- Do you know which items account for 80% of your sales? These items should be managed closely.
- How fast can you get inventory?
- How do you order inventory?
- How much inventory do you order? Do you order extra just to save a few extra cents?
- Do you know the cost of holding your inventory?
- Do you rely on just one or two suppliers?
- How frequently is inventory analyzed to determine obsolescence and makeup?
- Do you have a policy of determining what is obsolete inventory and how and when to get rid of it?
- Do you have an inventory reporting system to provide the necessary tracking information?
Accounts Payable
Although you want to stretch your payables as long as possible, much like you offer attractive discounts to your buyers you should also take supplier discounts as often as possible if the terms are attractive enough.
Make sure your payables are tracked on a regular basis - such as weekly - and that your payment system runs smoothly.
As with receivables and inventory, complete a monthly analysis of your accounts payable and compare to previous periods and industry averages. Any material difference or change should be investigated.
Make sure vendors understand your company in case there is a situation where you need to stretch your payables. You need a plan to deal with those situations where you may have an unexpected spike in your payables.
You should re-evaluate you vendors on a regular basis to make sure you are getting the best value.
4. Budget
It is fundamental, you need to plan for growth and you need to forecast for problems. You need to prepare a budget. Besides completing a budget for expected sales, you should also complete a budget for a disaster situation, like your sales are cut in half. The benefit is very straight forward; it forces you to ask yourself how you will be able to keep the company running in such a situation. It will also point to areas where you may be able to save money right away and free up cash flow. It’s like having a disaster plan; you only have to act on it when disaster strikes, but it is much easier to concentrate when you do not have a crisis at hand.
5. Develop a strong relationship with your Bank
Devote attention to building relationships with your bank. Always keep them up to date on where your company stands. If you hit a difficult patch it is much easier to get your bank on board if they understand your business. Contrary to opinion, banks do not necessarily jump ship as soon as you fall into trouble. They are willing to work with small business through tough ti
The key focus of every business is maintaining a client base that will ensure success and future operations. As such, it is important for businesses to engage in constant self-promotion, to keep the name, products and services on the front of the minds of their clients. There are many marketing strategies that can be employed as a part of successfully promoting your business. One effect way to keep clients talking about your organization is using printed mugs as promotional gifts. Printed mugs are truly the gifts that keep on giving.Unlike advertising marketing literature that a client can read and then, possibly, discard, even the hardest-sell client will hang on to a mug and will likely use it on a regular basis. Whether for coffee, tea or hot cocoa, a mug will be a constant reminder of your organization to both existing and potential clients. Using printed mugs as a promotion strategy for your business requires careful planning; using a printed mug is not as simple as ordering a few and sending them out. By following a few easy pointers, your business can successfully promote itself with a printed mug leading the way.
As with receivables and inventory, complete a monthly analysis of your accounts payable and compare to previous periods and industry averages. Any material difference or change should be investigated.
Make sure vendors understand your company in case there is a situation where you need to stretch your payables. You need a plan to deal with those situations where you may have an unexpected spike in your payables.
You should re-evaluate you vendors on a regular basis to make sure you are getting the best value.
4. Budget
It is fundamental, you need to plan for growth and you need to forecast for problems. You need to prepare a budget. Besides completing a budget for expected sales, you should also complete a budget for a disaster situation, like your sales are cut in half. The benefit is very straight forward; it forces you to ask yourself how you will be able to keep the company running in such a situation. It will also point to areas where you may be able to save money right away and free up cash flow. It’s like having a disaster plan; you only have to act on it when disaster strikes, but it is much easier to concentrate when you do not have a crisis at hand.
5. Develop a strong relationship with your Bank
Devote attention to building relationships with your bank. Always keep them up to date on where your company stands. If you hit a difficult patch it is much easier to get your bank on board if they understand your business. Contrary to opinion, banks do not necessarily jump ship as soon as you fall into trouble. They are willing to work with small business through tough times, and gaining their trust to do so is much easier the more confidence they have in you and your company. They way to accomplish this is to be transparent in your dealings and to give them timely financial information.
Use you bank as a resource for cash management. There are products available that can increase your cash flow, or arrangements that can be put in place to increase your interest returns. But you still need to make sure they are cost effective.
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