0 comments on “Do You Perform REGULAR Bank Reconciliation for Your Business?”

Do You Perform REGULAR Bank Reconciliation for Your Business?

Being the most liquid of assets, we recognize the importance of ensuring the accuracy of our cash balance through regular bank reconciliation.  However, most companies put this important process aside and settle with annual reconciliation, usually just to meet year-end audit requirements.

As complicated as it may sound, there are actually basic steps towards accurate cash reporting.

KNOW WHAT YOU NEED. To perform a reconciliation, you will need your (a) cash transactions and balance per books and (2) bank statement as of a specified date.  It is also very important to ensure that the covered period in both records are the same.

CLOSE YOUR BOOKS. Going through the entire reconciliation process only to find out that there were additional cash transactions booked in the period you are covering is inefficient and frustrating.  Make sure that your records are complete and no more cash transactions are booked on or before your covered period.  If unavoidable, be at least informed so you can consider them in your reconciliation accordingly.

ESTABLISH BANK BALANCE FIRST. It is generally easier to get the correct bank balance first since there are only a few (and usually recurring) reconciling items involved.  These transactions do not require you to post adjusting entries.  The most common bank reconciling items are Outstanding Checks, Deposits in Transit, and Bank Errors.

  • Outstanding Checks – These are checks released but not yet cleared with the bank. In your books, these are already considered payments hence, should be deducted from your bank balance.
  • Deposits in Transit – These are collections that are yet to be deposited. In your books, these are correctly recorded as part of your cash hence, should be added to your bank balance.
  • Bank Errors – Although uncommon, banks can commit errors too. In this case, you should inform your bank right away for proper action.  Depending on the transaction, bank errors may be added to or deducted from your bank balance to get to your adjusted amount.

Once you have established your bank balance, you can already compare it with your book balance and assess the magnitude of your book reconciling items.  Book reconciling items should be recorded accordingly to get to your correct book balance.  Book reconciling items include bank charges, direct deposits made by customers, auto-debit transactions (usually for utilities), and book errors.

SAY NO TO MONTHLY MATCHING. The secret to fast month-end reconciliation is by not doing it monthly.  As much as possible, matching book and bank transactions should be performed at least weekly.  A few companies are actually doing it daily!  TIP: If you subscribe to online banking, you can easily download bank balances and transactions as of the day before.

AUTOMATE. Bank reconciliation is already (or can be) embedded in most ERPs today.  Inquire with your software provider.  However, if you’re still comfortable with excel spreadsheets, templates can be developed to simplify the reconciliation process and significantly reduce the time spent manually matching transactions and identifying red flags.

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How we can help? Developing and implementing a solid finance transformation agenda is the hallmark of our ACCOUNTING SERVICES model — we build, operate, and transform fundamental capabilities in people, processes, and technology. Contact us to know more about these services.

0 comments on “How to Effectively Manage Year-end External Audits”

How to Effectively Manage Year-end External Audits

Most companies actually dread year-end audits.  You will find that Finance organizations are usually off-limits during this period as they struggle to make last-minute adjustments, prepare supporting schedules, find source documents, and review a year’s worth of transactions.  Stressed, pressured, and burned-out, risk of errors increase.  Overall — an unpleasant experience.

But year-end audits should not be disruptive.  Nor preparations should be done, well, at year-end.  To ease the stress during this period, below are simple changes and process improvement that your Finance organization can adopt.

PEOPLE

Plan your audit activities & deliverables and discuss with those who will be involved so they know what are expected of them.  A checklist of audit requirements and due dates that everyone, including your external auditors, can refer to is most helpful as it will keep people focused.  Schedule regular update meetings and use the checklist to track progress.

TECHNOLOGY

Leverage on available (and affordable) technology.  Reduce reliance on excel spreadsheets by investing in an accounting system that best fits your organization.  Most systems now come with subsidiary ledgers and customizable reports that will not only reduce time spent on data preparation but will also increase the accuracy of your information.  Documents-scanning technology (within your accounting system or as a separate software altogether) is also helpful when retrieving supporting documents requested by your auditors.

PROCESS

As mentioned, preparations for the year-end audit does not have to be done at year-end.  Embed automation, control, and period-end tasks within your day-to-day activities.  By adopting continuous accounting, you will be “audit-ready” any time of the year.

BONUS TIPS:

Year-end audit process will include review of your quarter one results right after the period under audit.  Make sure you don’t neglect your usual closing activities while attending to the requests of your external auditors.

Most of all, immediately after the conclusion of every year-end audit, take a moment to review, evaluate, and list down learnings and areas for improvement — both within your organization and with your external auditors — for an even more hassle-free year-end audit next time.

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How we can help? Developing and implementing a solid finance transformation agenda is the hallmark of our ACCOUNTING SERVICES model — we build, operate, and transform fundamental capabilities in people, processes, and technology. Contact us to know more about these services.

 

0 comments on “Management Insight: Status Quo is Riskier than Change”

Management Insight: Status Quo is Riskier than Change

Experiences certainly present lots of old and new challenges, and adds more valuable learnings to become better in future dealings.

As can be expected, change will always certainly happen – whether planned or unplanned.  Either because it is internally initiated or externally triggered by events. Impact of changes can either be isolated or widespread, short-lived, or longer-lasting. But when is change good or bad?  When is it too soon or too late? When is it too little, too big, or just right?

People can either welcome or resist change.  People can either choose to be the catalyst and be in the forefront or choose the status quo and risk being left behind.

Whether we like it or not, change will undoubtedly happen – so might as well be open to liking it rather than resisting or fearing!

And in case we fail, we fail early.  And when we fail early, we learn earlier than the many. Remember, we can always stand up… and change again!  Just continue moving forward but not without the learnings!

Here’s an inside story of real happenings in a company who pioneered an industry segment years ago: Visibly a lucrative, profitable business, it quickly attracted other businessmen to enter the market like mushrooms, growing exponentially.  The multitude of entrants grew faster than the pioneer’s own business and consequently reduced its share to merely 35% of the market it dominated during its earlier years.
Although the enterprise was quick enough to implement the growing technology-enabled products, the head office administration, support services, finance and management organization remained traditional.  Instead of propelling the front businesses, these head office services and practices slowed down business expansion thus allowing the rest of the market to grow faster.
Realizing the need to change, they hired executives, managers, and professionals to enable transformation of its central operation and management.
New people in the organization expectedly introduced surgical transformational changes. Expectedly as well, the natural resistance to change of the homegrown people prevented the faster realization of the advantages and benefits. Just as when the initiatives were about to peak further and reach new highs, significant external events triggered tsunami-like waves of challenges risking all the great business creativities.
Suddenly, the entire organization scampered for further and quicker changes.  Many of the postponed actions in consideration of homegrown people’s sensitivities became absolutely urgent and thereby executed swiftly. Only this time, rightly or wrongly, there was no longer regard to human sensitivities as crisis situations require desperate (not necessarily deliberate) counter measures.  What were intended to make the business thrive are now being made to merely survive.

In this story, change initiatives introduced but sidelined in the past turned out to be the most sought life-saving medicines when needed desperately. See, protecting the status quo is riskier because the rest of the world will continue to change anyway. Don’t forget: LIFE HAPPENS!

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How we can help?

Developing and implementing a solid finance transformation agenda is the hallmark of our ACCOUNTING SERVICES model — we build, operate, and transform fundamental capabilities in people, processes, and technology. We go beyond change management! Contact us to know more about these services.

0 comments on “Ways to Manage Seasonality in Small and Medium Businesses (Sales and Inventory)”

Ways to Manage Seasonality in Small and Medium Businesses (Sales and Inventory)

Filipinos are known to celebrate Christmas early. Once September kicks in, you’d hear Jose Mari Chan songs blasting on mall grounds, see Dapitan Arcade stalls abound Christmas decorations for sale, and of course, experience unimaginably worse standstill traffic.

We call it the “-ber months”. Filipino businesses rely on this four-month period for their entire year’s sales.  This may be true and established for some, but many are just following suit and don’t even know when the exact period of their business’ seasonality peaks. In fact, in its recent reader survey, Rappler found that -ber season is a myth – to quote: “Though many retailers begin their Christmas campaigns in September, consumers aren’t making the bulk of their purchases that early.”

Not knowing about this behavior as it relates to your business is dangerous and risky especially in inventory management and cash flow. Obviously, understocking leads to lost opportunities and unserved deliveries, resulting to reputation damage. However, another real danger is in overstocking, because cash is tied up to inventories that you may need to undervalue just to sell.

The only way to outlast seasonality woes is through data-driven planning and analysis. Off-peak seasons are a great time to start this deep-dive thinking process so you are equipped when the next peak season comes.

If you already think this is unnecessary time to spend, better be prepared for the worst because truly, it pays to pay attention.

Here’s how:

  • Historical information is good reference point, especially because you want to understand overall direction in a do-nothing scenario.
    • First things first – know your seasonality! Point-of-sale (POS) solutions are top sources for this key information because seasonality should be drilled down as far as days than just months.
    • Then, find out historical inventory balances (at least monthly). Just note that not all POS can provide this, except when it is integrated with a dynamic analytics tool.
  • Find out patterns and plan accordingly — the devil is in the details!
    • Inventory supply must anticipate the demand highs and lows. Understanding and establishing patterns in sales trends help minimize errors in buying inventory.
    • Thorough review of inventory balances highlights slow or non-moving inventory, allowing you to plan returns, exchanges, or proper markdown strategies to prevent inventory losses.
  • Ensure planning is an ongoing process. Monitor performance, see if plans work, and adjust as necessary.

Don’t succumb to being a bandwagoner especially with running your business. Know MORE so you can WIN in business.

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How can we help? Accelerating your analytics journey is the core objective of RAPID INSIGHTS ZONE — premium analytics professional services, made available to all business types and sizes. We offer PREMIUM but affordable retail management solutions and professional services suitable to your requirements: point-of-sale and analytics. Our services will help you KNOW MORE through analytics, so you have MORE TIME and resources to focus on growth. When you are ready to accelerate your analytics journey and inevitable business transformation, contact us!

0 comments on “Expand Your Business with the Trendy Midorexics”

Expand Your Business with the Trendy Midorexics

While Millennials are indeed a strong force in consumer market, did you know there is another rising consumer group called, Midorexics?

In its Top 10 Global Consumer Trends for 2017 report, Euromonitor International defines Midorexia consumers as follows:

Midorexia is a tongue-in-cheek label for the middle-aged and older consumer who acts younger than their years. However, this label highlights the shifting status and expectations of a demographic whose members are living and working for longer and prioritizing wellness while challenging the typical age-appropriate behaviour of older people. These consumers are transforming what it means to be older in terms of lifestyle and are more demanding in their consumption needs, creating what is increasingly referred to as the “Longevity economy”.

Because Midorexics defy ageing and live their days proving they can keep up with younger generations, they are also tech-savvy, active, and can be influential on social media. Look at the Instagram feeds of Gretchen Barretto, Alice Dixson, and Ina Raymundo (among others) — they all flaunt their youthful skin, fit bodies, healthy choices, and on-trend outfits. Heck, both 20-year-olds and 30-year-olds wish to be like them when they turn 40!

In fact, even retail pharmacies experience this demand shift – the usual maintenance prescriptions availed by this age group has changed to wellness and weight loss supplements like MX3, ATC Squalene, Yaki, etc. Likewise, food and beverage industries have responded as they increase healthier offerings for the conscious Midorexics.

Indeed, Midorexics are a force to reckon with, having the means and willingness to “invest” in youth and wellness. But make no mistake, their experience and wisdom give them confidence to demand the highest standards in delivery and customer service.

Small and medium businesses can expand their business by ensuring they respond quickly and successfully to Midorexics. By knowing who they are, where they are, and how they behave, selling point triggers can be identified and real opportunities are always maximized.

rapid insights zone

How can we help? Accelerating your analytics journey is the core objective of RAPID INSIGHTS ZONE — premium analytics professional services, made available to all business types and sizes. We offer PREMIUM but affordable retail management solutions and professional services suitable to your requirements: point-of-sale and analytics. Our services will help you KNOW MORE through analytics, so you have MORE TIME and resources to focus on growth. When you are ready to accelerate your analytics journey and inevitable business transformation, contact us!