In the challenging economic climate we live in today it can be difficult for business owners to keep focused on the routine mundane task of balancing the books at month end. We in O’KellySutton have seen how a lack of discipline can occur in the financial management area where securing the next order can be all consuming. In trying to maintain a sustainable and viable business it is essential to know where your finances stand every month. The following are basic requirements of any SME;
-Select a financial review date every month and stick to it
-Complete month end management accounts with supporting analysis and commentary
-Update rolling 12 months forecasts and cash flows
With the right training a good bookkeeper can draft up a lot of this.
Typical measurements and checks at month end include:
-Sales, direct costs and overheads comparison to target – were targets achieved?
-Debts older than 30 days – why and what’s the urgent plan to collect?
-Bank reconciled balances – are balance in line with expectations?
-Update forecasts quarterly to reflect impact of projected changes on cashflow – what’s coming down the line that will affect cashflow?
-Update Action Plan Document – acknowledge achievements in the last month and identify key milestones for the next month – every business must have an action plan outlining goals, objectives and actions to continually grow the business and make it more profitable.
Your accountant should be meeting with you at least quarterly to review progress, and carry out sanity checks on the numbers and information being prepared.
Customers management and servicing is even more critical today than ever. See where you can save them money, or deliver a product or service that will benefit their business in some way and in a measureable way. Try putting the customers hat on and really try to see the world from their eyes. Talk to your customers regularly. Funny thing is you just might become more profitable as a result! Patrick Sutton, Managing Partner O’KellySutton Kildare Sutton@okellysuttoncrosby.com