Accounts, Budgets & Strategy
Accounts, Budgets & Strategy
Introduction
What is Management Accounts?
Management Accounts are a set of Financial Reports, comprised of Balance Sheet, Profit & Loss Account and Cash-flow Statement. Sometimes referred to as cost and management accounting or managerial accounting for managers, they are usually produced monthly or quarterly and provide insight into the financial health of a business by tracking key performance indicators. Without this information, a company is floating and may not know where it is coming from or the direction it is going.
Who are Management Accounts useful for?
All business owners need managements accounts & the board of directors will also look for management accounting. Some companies may not have an in-house accountant and only collate reports at the end of the financial year. An accountant will look at the historical information and prepare the financial statements. At this point, it may be too late to change direction or take action, as time has passed. To make logical decisions and control your company, this information should be prepared real-time and presented monthly. It is essential to analyse the historical data in detail to project to the future, and I will look at this in detail also in the Budget section. Accounting and business management hence go hand-in-hand.
What’s in it for you?
Looking at the management accounts helps you think of finance, but you are looking at all areas of your business. With my help, you will spend less to achieve more, taking into account sales, trends, comparison to previous years, changes in volumes, product mix, cost control, compliance, HR, IT and connecting the dots. Well presented and up-to-date management accounts can also help you reduce your year-end accounting costs as issues are dealt with as they arise. I am not afraid to ask questions and have excellent facilitation skills across all areas of the business. If something can/can’t happen, I investigate and present reasons why to management, and I point out things to discuss, to avoid pitfalls down the line. When trends are identified, you will have better information when planning for growth, diversification and expansion. Your decisions will be based on reliable data and not gut-feeling. I will ensure that you think of all elements of your business and inspire big picture thinking.
Who are Management Accounts useful for?
All business owners need managements accounts & the board of directors will also look for management accounting. Some companies may not have an in-house accountant and only collate reports at the end of the financial year. An accountant will look at the historical information and prepare the financial statements. At this point, it may be too late to change direction or take action, as time has passed. To make logical decisions and control your company, this information should be prepared real-time and presented monthly. It is essential to analyse the historical data in detail to project to the future, and I will look at this in detail also in the Budget section. Accounting and business management hence go hand-in-hand.
What’s in it for you?
Looking at the management accounts helps you think of finance, but you are looking at all areas of your business. With my help, you will spend less to achieve more, taking into account sales, trends, comparison to previous years, changes in volumes, product mix, cost control, compliance, HR, IT and connecting the dots. Well presented and up-to-date management accounts can also help you reduce your year-end accounting costs as issues are dealt with as they arise. I am not afraid to ask questions and have excellent facilitation skills across all areas of the business. If something can/can’t happen, I investigate and present reasons why to management, and I point out things to discuss, to avoid pitfalls down the line. When trends are identified, you will have better information when planning for growth, diversification and expansion. Your decisions will be based on reliable data and not gut-feeling. I will ensure that you think of all elements of your business and inspire big picture thinking.
Balance Sheet Tip
Tell-tale signs a balance sheet is going in the wrong direction…
and things you can do to set it right
Fixed Assets:
Increase in Stock Balance:
Why? Is there old stock? Can this be shifted or does this need to be written off?
Increase in Receivables (monies not collected)
Why? Is this a sign of bad debt or a reflection on lax accounting dept?
A decrease in Receivables
I.e. no money to come in? What jobs are on the go? Are there stage payments? Are invoices sent to clients?
Increase in Supplier Balances:
Why are they not paid? This could lead to loss of reputation or the supplier may not deliver the next order? Delay could affect production, reduction in bank balance, is there a cash flow problem? Who can help with this?
Accruals:
Are there operating expenses in this period not yet invoiced?
Prepayments:
Operating expense for a future period.
Bank Balance:
How healthy is the bank account? Is cashflow investigated weekly/monthly? Are funding opportunities available?
Overdraft:
Are we using our Overdraft facility, what is this costing us?
Loans:
Balance on loans, interest on repayments. What loans are listed? Talk to the bank, should loans be collated, or some paid off if possible. What security is against these loans?
Introduction
What is the Budget Process
Analysis of historical data, trends, seasonality.
Product Mix – Department, Product and Category
Should you discontinue products or add new lines?
How can you increase the customer base and increase sales?
Analysis of costs and margins to increase Margin %
Where is the breakeven point?
Can we look at Multi-Buy? Paired Products?
Is this a bargain? Is it creating more time for our employees?
Sometimes revenue can be increased, but the company is worse off, where is the balance?
Who uses Budget Processing?
The budget process could be vital for your company if you want to strive for growth, project realistic behaviour, learn from mistakes and track trends and seasonality. Some companies collate budgets with MD and Finance only, which is not enough. The management team of each department are usually not involved, telling the team what to do or what is required of them. Involvement of the management team from the early stages of budget development, you can discuss other issues as well. Your managers are the experts in their areas, so they should be involved; involvement leads to improved morale, accountability and ownership.
What’s in it for you?
With my experience, I work with the management team & talk them through their historical data and give them a better understanding of what is going on in their department, by category and product. You can point out the effects of their decision, both good & bad, to allow them better decision making and avoid the pitfalls. When they understand the historical data, they can look to the future and more easily understand the reasons for Budgets. It’s not just a figure plucked from the sky, but there are reliable statistics behind it. Consider all topics when discussing the budget, e.g., products dropping off, new products on the horizon, trends in the market place, seasonality, new countries to consider, new team member, skills on hand, training requirements, key personnel. This involvement leads to increased morale as they better understand their role & how it fits into the overall goal of the company. In my experience, managers work better with a budget when they have created it. They take ownership, are not afraid to speak up, they will know early on, if the budget is not feasible, and this can lead to new decisions, forecasts and create conversations that may otherwise be ignored or afraid to discuss. Monthly comparison Budget to Actual data is a must in quick, accurate decision making.
Define goals & gather data
Form expectations: reconcile goals & data
Create budget
Monitor outcomes
Adjust budget, expectations or goals
Introduction
What is Strategic Planning?
Strategic Business Planning pulls together the historical data to document and plan the direction of your company. It’s a detailed financial projection using the historical accounting figures for maybe three years and using the strategic goals to pull together five years of future financial projections. The strategic plan is usually done by month for the following 12 months and relying on estimated figures for the next five years, but it shows trends based on hard facts and historical trends. Long term strategic planning may be projected ten years into the future.
Is Strategic Planning for You?
If you are leading a company and want to succeed, strategic planning will be essential for you. Your company should be looking out 5 or 10 years to where it would like to be, and then reassess annually after that. Everyone needs to be involved and fully committed to this plan for the goals and objectives to be realistic. Every business wants to grow, but it needs to manage the growth expectation and avoid unrealistic targets. If too ambitious, owners and employees could become discouraged and frustrated. I will show you how this plan has to be looked at regularly, as it forms the foundation of your business; owners and employees cannot lose sight of the direction and goals of the company.
What’s in it for you?
I can assist in collating a detailed, strategic, long-term business plan. Business planning focuses on every aspect of your business: products, breakeven, markets, margins, employees, customers, trends specific to the industry, compliance, H&S, training needs, shifts, hours of work, insurance, maintenance of the site, CapEx (capital expenditure), supplier costings/contracts, hedges, rates of exchange, revenue price increases and so on. I can discuss all of the above with your team and guide you in your business growth.
Gather Facts
From all stakeholder
Customer Analysis
Industry Analysis
Environmental
Company Performance
Company Strategies
SWOT Analysis
External Analysis
Opportunities
Threats
Internal Analysis
Strengths
Weaknesses
Strategic Questions
Strategic Issues
Review Inputs
All Stakeholders
Review Inputs
Review SWOT Analysis
Define 3-4 Key Statements
Strategic Matrix
All stakeholders
Define Strategies to address SWOT combinations
Opportunities vs. Strengths
Opportunities vs. Weaknesses
Threats vs. Strengths
Threats vs. Weaknesses
Define Strategies
Objectives
Key Strategies
Short- & Longterm Goals
Operational Plans
Final Reviews
All Stakeholders
Review Strategies
Review Goals
Review Plans
Adjust as necessary
Financial Impact Perspective
Is there anything you, as a leader should think about from a financial impact perspective?
Foreign Exchange
Insurance
Taxes
Growth – Funding opportunities
Staff Turnover
Recruitment
Key Personnel – Succession planning
Compliance
Government costs
Preventative Vs Maintenance costs of the physical site
Business reputation
Business Continuity Planning
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