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Management Reporting

Posted: Tuesday, December 13, 2016 at 3:56:37 PM EST by Anthony Davis

Management Reporting

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For you to effectively manage your business, it is critical that every time a Profit and Loss is prepared, Management (even if it is just you, the owner alone) should take time to review the results.  Even if you know the results are not what you want or what was budgeted, review and analyse any material variances.  If Income and Profit are above budget, it is imperative to ensure that Expenses have been maintained within budget.

Accrual vs Cash

This question often confuses business owners.  From a Management Reporting perspective the only form of Management Reporting should be accrual. This means that you account for the value of the sale when you invoice not when you get paid for it.

Actual to Budget Reporting

In order to gain the most benefit from the budgeting process, refer to the attached Compliance Corner article, a system of comparative reporting on a regular basis must be initiated in your Accounting System. 

In addition to the above, your Accounting System should be programmed to show the following ratios:

      Gross Profit as a percentage of sales;

      Net Profit as a percentage of sales;

      All major expense groups as a percentage of sales.

When reading your financial reports to analyse how your business has performed, you should consider the questions in each of the following areas:

Profit & Loss

Did Revenue grow in comparison to your Budget?

Did Gross Profit Percentage perform to your Budget?

Did Overhead Expenses dramatically increase and, if so, in what areas?.

Did Net Profit Rates hold this year as per your Budget?

Were there any extraordinary gains or losses?

With proper analysis of the monthly financial reports you will quickly identify any emerging problems having a detrimental effect on the performance of your business, enabling remedial action to be swiftly taken.

Balance Sheet

Are Increases in Assets & Liabilities consistent with business growth?

Debtors & Creditors

Debtors:  Aged listing ie Currrent, 30, 60, 90 days and over;

Creditors: Aged listing ie Currrent, 30, 60, 90 days and over.

Cash Position

Cash flow – can the business pay its debts?

To find out more about Management Reporting and for a complete version of this Compliance Corner follow this link (opt-in required).

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If you would like to view previous Compliance Corner articles follow this link

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Good H.R. Practices

Posted: Wednesday, September 14, 2016 at 1:30:12 PM EST by Anthony Davis

Good H.R. Practices

 goodhrpractices

There are only two forms of ‘leverage’ in business … Money and People!  Doing ‘People’ correctly is not easy and yet the rewards are great if you want a business that works for you.

There are many pieces of legislation that impact on your relationship with the people you employ. Remember:

Good H.R. (Human Resource) Management Practices minimises your exposure to

I.R. (Industrial Relations) losses and subsequent costs.

A recent headline read:   

Employer’s termination of latecomer - commendable

“Despite the employee alleging that he had been unfairly dismissed, Fair Work Commissioner said that the evidence warranted his dismissal and described the employer’s processes as ‘measured and considered’ and ‘commendable’.

Employers can be in a position of power to manage employees when their behaviour does not meet expectations.”

The following week another headline reported, “Employer forced to compensate bullied employee $43,900 for forcing him to resign.”  A good example of bad H.R.

Good H.R. you WIN …Bad H.R. you loose!

So what constitutes Good HR?

At the highest level, consider being an ‘employer of choice’.  A place where people love to come to work. 

Your First 5 Steps to Good H.R.

Good Employees start with a good employment process.

  1. Role Descriptions

The clearer you are about the Role they are to play, the better.  Let your employee know what you expect of them in detail.  Include Performance Indicators.  Remember the expression:

“If you tell me how I am to be measured, I will show you how I perform!” 

Role Descriptions are often not done because of the fear of leaving something out.  There is a ‘catch all’ phrase for you to include. See this blog article:  http://www.brightwater.com.au/Blog/business-boost-blog/Post/job-description

  1. Employment Agreements

Written to protect you against breach of contract.  Don’t write them yourself, don’t use someone else’s.  Get professional advice.

Advice can come from your Professional Association and if not, talk to Employsure.  http://www.employsure.com.au  Contact David Reid on 0402 443 852 and quote ERA0805.  They can also assist you with the next three points ...

  1. Induction Procedure

Getting your new employee ‘up to speed’.  In most businesses this is done poorly. It is the most important H.R. process you can have in your business.  Remember the National Employment Standards (NES). Read more at Fair Work Australia. www.fairwork.gov.au

  1. Work, Health and Safety Policies and Procedures

I call this “Your ‘Duty of Care’ to Yourself!”  This is important for all businesses and more so for the higher risk industries such as Construction & Manufacturing.

  1. Basic Human Resource Policies and Procedures

These form part of what you refer to as “The way we do things here at ABC Company”

Your greatest leverage in business comes from the people you engage to grow your business.  Remember ‘With Good H.R. you WIN’.

To find out more about Good H.R. and for a complete version of this Compliance Corner select the download button below

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If you would like to view previous Compliance Corner articles follow this link

 

As always, your feedback on this article is welcome.

 Regards, Anthony Davis

Brightwater Business Coach

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Budgeting Your Business Success

Posted: Thursday, July 14, 2016 at 7:05:37 AM EST by

Budgeting Your Business Success

budgets

Budgeting should be seen as an important part of your business compliance processes.

Have you started budgeting for the next financial year?  If you haven’t created a budget for your business in the past, it is possibly because you don't know why.

Many times the question is asked, “How can I budget for something I don’t even know is going to happen?”  The only response that makes any sense is, “Once you have created your budgets for what you want to happen, you have a very compelling reason to make them happen!”

Budgeting is the process of 'declaring' your intentions to yourself, your team and the universe!

"Once you make a decision the universe conspires to make it happen!" Ralph Waldo Emerson

Budgets are a set of financial projections that the company is targeting for a defined future period.

You budget to reveal the financial aspects of where you are heading ... how much capital do I need? How big an overdraft do I need? When and how much profit will I make? What sort of tax issues will I face?

Budgets provide a benchmark against which your performance can be measured.  Once you have established your budget, actual results can be measured against that budget.  Significant variances can be investigated which then puts you in control of your business.  

Your Budget gives you something at which to aim.  Without one, you will spend the next year aimlessly achieving the same as last year or perhaps even less!  Without a budget you have little reason to regularly check your progress.

The saying to consider here is:

 “What you Measure you Manage ... and What you Manage Improves”.

To help you find out HOW to budget, join us for a 1 hour Webinar. Click here to Register NOW!

 

 

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Credit Policy and Debt Collection

Posted: Thursday, July 14, 2016 at 7:04:50 AM EST by

Credit Policy and Collection

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If Cashflow is an issue in your business, consider how well you do the following:

1.       Credit Policy

‘Credit’, in commercial terms, refers to the approval for delayed payments for purchases.  ‘Policy’ is a course or principle of action adopted by an organisation.

Credit Policy is the time period you allow your Customers to pay for their purchases, the form of payment (cash, credit card, cheque, etc.) and discounts offered for early payment and charges applied for late payment.

Customers need to understand the agreed delay and method by which you expect to have the Credit you have given them to be paid.  It is the lack of a clearly stated Credit Policy that causes the greatest level of Debt Collection issues and poor Cashflow in many businesses.

Be sure you understand why you ‘give credit’.  Just because the rest of your Industry gives Credit, doesn’t mean you have to.  If you build a desired reputation for your business you can set your own Credit Policy.

If you expect to be repaid in a certain time, then create a Policy and ensure that your Customers agree to your Policy before you deal with them.  Remember when you buy retail you pay immediately!

2.       Debt Collection

The best Debt Collection system in a business is one you don’t need to use.  A well implemented Credit Policy will ensure a minimum level of use of your Debt Collection System.

Trying to impose ‘Credit Terms’ after you have provided your Product or Service is like ‘closing the door after the horse has bolted!’

Even with a very strong Credit Policy, there will always be an opportunity to use a Debt Collection System.  There must be an accounting process to know all debts are being paid ‘on time’. 

 The tougher you are at policing and implementing your Debt Collection System, the less likely are your customers to exceed your Credit Policy.   Your System must be well documented and starts the day the Credit Policy is broken.

Your System will include phone scripts, letters, ‘letters of demand’ and if all else fails your use of a Solicitor/Collection Agency.  It should also contain ‘what if’ scenarios and allow for part payment or a regular repayment program.  Another useful tool is to restrict (not stop) continuity of supply until the old debt is repaid.

For a more detailed and complete version of this Compliance Corner click the dowload button below (opt-in required).

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anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Fair Trading and Trade Practices 2

Posted: Thursday, July 14, 2016 at 7:04:39 AM EST by

Fair Trading and Trade Practices 2

fairtradingtradepractices2

The material covered by this topic is far too much to put into one article.  This is the second of two on the topic.

Refusal to supply products or services

As a general rule, suppliers have the right to choose with whom they wish to deal.

There are a few circumstances, where a suppliers' refusal to supply is breaking the law.  If you think that your supplier is illegally withholding supply there are actions you can take.

Exclusive dealing

Exclusive dealing occurs when one person imposes some restrictions on the other’s freedom to choose with whom they deal. Most types of exclusive dealing are against the law only when they substantially lessen competition, although some types are prohibited outright.

As a general guide, the more exclusive the product and the more powerful the supplier, the more likely it is that the competition will be affected.

Setting prices

Businesses are free to set their prices and discount their goods and services as they see fit, but they must set their prices independently of their competitors. Pricing goods below cost can be illegal in certain circumstances.

Areas for consideration are:

  • Price fixing;
  • Imposing minimum prices on retailers;
  • Selling goods below cost.

Price fixing

It is illegal for competitors to work together to fix prices rather than compete against each other.

 Recommended price lists

There is nothing wrong with using a supplier’s recommended resale price (RRP) list so long as it is just that — recommended.

Displaying prices

Prices displayed by a business must be clear, accurate and not misleading to consumers. You should always display the total price of a product or service.

Credit card surcharges

Businesses can choose whether or not to pass on the cost of accepting credit card payments to their customers. However, if you decide to impose a credit card fee, you must ensure your customers are aware - before they enter into the transaction or contract - that a fee will apply and the amount of the fee.

 For a more detailed and complete version of this Compliance Corner click the download button below (opt-in required).

download-blue-pill-24

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

Connect with Anthony  |  Facebook  |  Google Plus | linkedin | color-twitter-128 | color-youtube-128
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