Business reporting – With great growth comes great complexity

Business reporting – With great growth comes great complexity

Article credit: Sage 

You want to grow your business. Doing so allows you to increase your market presence and profitability. These are likely to be two things you’ve been chasing from the beginning.

However, with great growth comes great complexity and different types of business reporting to deal with.

The bigger your business gets and the more international it becomes, the more you will need to deal with. You’ll move into different markets, offer more product and service categories, and deal with a variety of customer segments and channels.

In turn, complexity can kill growth if it’s not handled well. It could hit areas that originally made your business succeed, such as decision making, productivity, customer service and innovation.

Complexity is a fact of life, with countries, economies and people interconnected more than in any time in history. And connections are increasing all the time.

You need to deal with a variety of conflicting demands from multiple stakeholders – and it’s in finance that there is a demanding responsibility in dealing with business transactions across investors, regulators and the public.

Read this article to find out how business reporting can help you as things get more complex in your growing company.

Complexity in financial business reporting

Financial reporting and analysis are central to modern business. Not only is it likely to be a legal requirement, making use of this data to make better decisions will be necessary as the size of your company grows.

Naturally, financial reporting is an area that gets more complex the larger your business gets. This is because demands will increase when it to comes to declaring:

  • The health of your company – your business and financial condition based on current knowledge and expectations for the future.
  • Accurate reports of your operating results and cash flow.
  • Financial statements to reflect economic and business reality, helping investors make decisions.

Transparency

At a basic level, growing companies need transparency when it comes to reporting – customers will place more loyalty in your business and it’s critical that anybody in a financial leadership position gets this right.

There are a number of ways you can provide this. For transparent reporting in a complex environment, you need the following:

A dedicated team with values

It starts with the people.

If you build a team that is dedicated to making sure the organisation keeps to certain values, you’ll find it easier to press the importance of compliance and keep precise reports of both good and bad financial activity.

It’ll give you and your fellow leaders a complete idea of how complex your business is and where you sit.

You’ll need your team to put financial controls and checks in. Responsibilities should be segregated so records can’t be manipulated.

Different team members should initiate, approve, record and reconcile transactions, while you could put fail-safes in place in areas such as inventory management by adding a third-party review.

Auditing

Complex organisations should undergo regular audits to ensure transparency. It shows you have the confidence to let outsiders review your work for any mistakes, and that you’re looking after the company finances with a keen eye and level temperament.

Auditing is a process that highlights any inefficient processes – an inevitability as you grow and get more complex. Audits will also indicate what you’re doing right and what you must do going forward.

To share your financial information

Even if the business is privately owned and you don’t have to, sharing quarterly and annual statements will provide transparency as your employees and board increases.

Sharing gains and losses will provide stakeholders with trust and a sense of collaboration, particularly if complexity starts to make an impact. Put in place ways to mitigate issues that affect your growing business.

Mitigating complexity with analytics

As your business grows, so does the complexity. You will be presented with multiple data sources and disparate solutions that may well not integrate together, causing poor communication and collaboration.

In the finance function, you may be still working with spreadsheets.

It takes time and energy to pull and summarise this data, and you won’t be able to refresh information in real-time – you’ll generally access information that is out of date and inaccurate.

You won’t be able to develop forecasts and create ‘what-if’ scenarios, which are crucial in understanding the reasons for your success.

It is difficult to change all your systems in one go, so it may well be worth investing in an analytics solution that can improve your ability to gather, organise and analyse your data.

There are a number of capabilities you should be looking at to ease the complexity of your finances. You will want to:

Connect and analyse financial and operational data through automation

With the ability to connect to data and analyse it, you can start building a repeatable and reliable process that leads to automation, increasing the speed and reliability of your analytics.

You can certainly save time here – time that was previously spent on slow, manual and unwieldy processes.

Consolidate multiple entities

You need to establish data imports across multiple entities. This allows you to use up-to-date information that will ensure your forecasting and planning is accurate. This will positively impact internal compliance and customer service,

Create reports and charts in a self-service capacity

Instead of forcing your reporting through IT, it will pay to empower users with business management software that offers strong analytical capabilities, allowing your business to streamline analysis without any reporting delay.

We’re now overloaded with information and bombarded with numerous data points that often conflict with each other.

With all these uncertainties and unknowns, causal relationships have been difficult to track, making it difficult to decide whether a course of action is right or not.

With analytics, you can now get to the data and provide a quality picture of what’s happening in your business. You can cut complexity within your business by understanding the root causes of issues through a single version of the truth.

Conclusion on business reporting and complexity

Do remember that dealing with complexity is not simply about predicting the future or reducing your risk – it’s about continuously adapting and learning at speed to make the most of every worthwhile opportunity.

You need structure and conditions that push adaptability, learning and creative problem solving, and you must encourage an environment where pooled intelligence is allowed to flourish.

That means agility, with an ability to communicate in real-time where expert individuals have the right information when they need it.

About Us
Kiteview Technologies (Pty) Ltd was founded in May 2010 to provide the Sage Evolution Business Management solution to the SME market. The management team of Kiteview have combined +30 years of experience in the delivery of small to mid-market Financial & Business Management solutions. This experience, combined with a sound project implementation methodology has helped in Kiteview’s growth, becoming a Platinum status partner for SAGE Pastel within just 1 year.

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5 Tips To Ensure business Progress In Unprecedented times

5 Tips To Ensure business Progress In Unprecedented times

Article credit: Sage 

This article offers practical advice and support to help you keep your business moving as we all navigate these unprecedented times.

Considering recent events, contingency planning has become a major consideration within businesses worldwide.  

This kind of planning is useful for any unexpected situation, whether it be a global pandemic, inclement weather, or a mass transit strike. Fortunately, you can prepare your business for operational resilience by creating a contingency plan that addresses the impact on your organization, employees, suppliers, and customers.  

Here are 5 tips for how to get started.  

1. Assign an owner

All plans need a single point of contact and a single person who owns the plan and can delegate. This needn’t necessarily be a senior member of staff, but people need to know who it is. This person should ensure the plan makes sense and that nothing has been assumed.

 

2. Invite input from all sources

The granularity of the plan will depend on your needs. You may decide that each function or department within your business needs its own plan, for example. You may even decide that individuals should create their own plans. Keep in mind all the functional/departmental/individual plans should sync-up and be combined into a larger workplace plan.

 

3. Consider your entire ecosystem – from supplier to customer

Your plan might include a list of alternative suppliers for certain key resources to be used if your existing supplier becomes unavailable. It may include specific plans on how to treat individual customers, especially larger and/or more important ones.

 

4. Make this a living document

Don’t create it once and then forget about it. Ensure your plan is reviewed periodically and don’t be afraid to make changes should they be needed.


5. Communicate:

Once the plan is created, ensure it’s available to your entire staff – and that everyone knows what it is, where it can be found and what it means for them.

 

In Conclusion

No one can predict when a crisis will begin or end, but with the right technology and good communication processes, your business can continue to operate effectively even when challenged with incidents out of your control.  

Business Tips

About Us
Kiteview Technologies (Pty) Ltd was founded in May 2010 to provide the Sage Evolution Business Management solution to the SME market. The management team of Kiteview have combined +30 years of experience in the delivery of small to mid-market Financial & Business Management solutions. This experience, combined with a sound project implementation methodology has helped in Kiteview’s growth, becoming a Platinum status partner for SAGE Pastel within just 1 year.

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Keeping The Cash Flowing During Times Of Uncertainty

Keeping The Cash Flowing During Times Of Uncertainty

Article credit: Sage 

The government has initiated relief measures to support small and medium businesses impacted by the effects of the novel coronavirus, but the reality is that many are still struggling to manage cash flow in these trying times.

Cashflow is essential for business survival. A healthy flow of cash into and out of the business means you can pay employees and suppliers as well as rent, rates, taxes and other operating costs on time.

The difficulty even at the best of times is to manage the money coming in (accounts receivable) with the money going out (accounts payable).

Ideally, you should be aiming for a consistent positive cash situation – in other words, more money coming into the business than is being paid out.

So how can you ensure that you manage your finances properly, particularly in this exceptionally difficult trading situation?

1. Create and manage a cash flow forecast

You need to be able to make decisions based on sound forecasting and estimates, so establishing a cash flow forecast is essential.

Start by making a list of assumptions on which to base your forecast. This should include a prediction of price increases for your raw materials and a look at what you’ll, therefore, charge your customers.

There should be a projection of the growth or reduction of your sales, considering issues such as the seasons and the current trading environment.

You’ll also have to factor in rainy day funds such as salary increases and the growth of other costs.

  • Revenue: Once you’ve got a reasonable idea of how your sales are going to do, you’ll need to think about how much revenue this will bring in.

Take into account when you’ll realistically get paid for these sales.

You might, for instance, have a regular customer who gives you a lot of business, but you’ll need to factor into your forecast that they usually take 60 days to pay or that they offer you a down payment.

  • Expenses: Then identify your expenses. These typically include wages and salaries, suppliers’ costs, rent and rates, directors’ remuneration, and the purchase of new assets.

You might need to add interest payments and insurance premiums. Use the last year’s bank statements as a checklist while anticipating any new incomings and outgoings for the next 12 months, based on internal and external factors.

  • A clear view of your finances: This will give you a reasonably accurate view of your opening and closing financial position for a month, six months and 12 months.

It’s often said that a cash flow forecast is never finished – for it to be effective, you should constantly review and update it.

Use what’s currently happening in the business to correct any assumptions and forward views you made when producing the forecast.

It’s also important – but especially so in these uncertain times – to stress test your projections.

If sales suddenly fall by a quarter, for instance, will you still be able to pay your essential bills? What will be the impact if you find that you must repair or buy a new piece of equipment?

2. Review finance options

Reviewing your finance options and sources of extra investment and cash injection is essential.

The government, as well as the corporate sector, has made billions of Rands available to businesses, such as the COVID-19 Debt Relief fund and the Sakuma fund, to assist entities in distress.

Meanwhile, major banks in South Africa are offering various options to assist impacted businesses. Standard Bank, for example, was the first to announce assistance, offering all its business clients with a turnover of less than R20 million a year, a three-month debt holiday until the end of June.

It’s important to talk to your bank and your accountant if you have one, as well as your industry body and others in your sector about accessing this support.

3. Invoice finance and asset-based lending

When looking to manage your cash flow, one option already used by some small and medium-sized enterprises (SMEs) is invoice finance and asset-based lending.

This is especially useful if customers are slow in paying their bills.

Essentially, invoice or accounts receivable financing enables you to use your unpaid invoices as security for a loan. You simply pay a percentage of the invoice amount to the lender as a fee for borrowing the money.

4. Invoice factoring

Then there is invoice factoring. Here, you sell your unpaid invoices rather than waiting for the client to pay, usually for around 70% to 90% of their total value.

Once the client has paid the factoring company the full amount, the factoring company then pays you. They’ll charge you a service fee, which is usually around 1% to 5% of the total invoice.

5. A business line of credit

Another option is a business line of credit, also known as revolving credit. Here, you borrow money either in one lump sum or as several smaller amounts until you reach the agreed limit of credit.

Each drawdown becomes a separate loan to be repaid according to a repayment schedule. As with any loan, you pay interest. In this case, you repay each of the loans with interest.

Unlike an overdraft, you don’t have to go into the red on your bank account to access a line of credit.

6. Importance of financial reporting

As the coronavirus throws so many businesses – including smaller ones where resources are more thinly spread more than most – into confusion, it’s easy to let financial reporting slip.

Reassuring customers, handling suppliers and managing employees working from home while keeping others safe is essential but so is ensuring that your financial reporting is up to date.

You’ll need to do this so you have all the information required to apply for loans and investments.  This will also enable you to continuously keep an eye on the financial health of your business – especially during times of uncertainty and volatility.

Chatbots are becoming popular in accounting as consumers get more comfortable asking computers questions. By simply asking Pegg who still owes them money, for example, businesses can get an instant overview about where they stand with debtors.

Keep an eye, too, on your cash flow statement as this shows your viability in the short term and helps you to manage your bills.

Check that your cash inflow and cash outflow are accurate and up to date.

Similarly, you should pay regular attention to your profit and loss (P&L) account so you can check that you’ve made a decent profit over a set period. Ensure your sales and other income, on the one hand, and your costs, on the other, are both correct.

Alongside these key reports are others such as a stock overview report, an asset register, aged creditor and debtor reports, and VAT reports.

You’ll be able to see who you need to pursue most actively for payment and which of your creditors you’ll need to pay first.

7. Stay on top of inventory management

Ensuring you can meet clients’ needs while also avoiding cash being tied up in stock and paying out for storage is a delicate balance, especially when so much is uncertain in every sector.

Effective inventory management is vital. As with financial management, regular forecasting is useful. This involves frequent communication with customers and suppliers, as well as regular checks on market trends and analysis of past sales. Supermarkets, for instance, are keen weather watchers as they want to know when to stock up on barbecue food and accessories – or hot chocolate and comfort foods.

Inventory management software with up to date analytics is beneficial as is any system that can utilise data to help generate actionable insights. Adopt a ‘first in, first out’ approach to minimise the chances of perishable stock going off or other items losing their seasonal relevance. Keep a closer eye on higher value items than those that have less capital tied up in them. Anticipate reordering requirements even if you’re not placing an order at this point so you can give suppliers some notice for when you do.

Check that your receiving process is fast and efficient. This avoids newly arrived stock getting damaged, going off or being sent to the wrong place for storage. At the other end of the process, as well making sure that orders are dispatched promptly and carefully, ensure you’re ready to dispose of dead stock. This can free up new storage space more quickly and improve the opportunities for maximising any income potential for products that you can’t sell in the usual way.

Final words

Managing cash flow effectively is vital for every business at any time but for SMEs during times of uncertainty and volatility, it’s particularly important.

By scheduling an hour or two each week specifically to focus on forecasts and look at incoming and outgoing cash, assets and liabilities, and by accessing professional help and advice, your business will be well placed to weather the current storm and benefit in the longer term.

About Us
Kiteview Technologies (Pty) Ltd was founded in May 2010 to provide the Sage Evolution Business Management solution to the SME market. The management team of Kiteview have combined +30 years of experience in the delivery of small to mid-market Financial & Business Management solutions. This experience, combined with a sound project implementation methodology has helped in Kiteview’s growth, becoming a Platinum status partner for SAGE Pastel within just 1 year.

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Foreign And Local Customer Or Supplier Currency Balances Not Both Zero When Supposed To Be Fully Paid Up

Foreign And Local Customer Or Supplier Currency Balances Not Both Zero When Supposed To Be Fully Paid Up

Article credit: Sage 

Article Outline Foreign and local customer or supplier currency
balances not both zero when supposed to be fully paid
up.
Knowledge Type Solving an unknown issue
Knowledge Activity Processing
Application Version V7.20.4.000
Application Edition Evolution Standard / Sage 100 Evolution
Evolution Premium / Sage 200 Evolution
Primary Module Foreign-Currency
Secondary Module Foreign-Currency
Knowledge Source Incoming Customer Query

 

Description of the Issue

Users may observe that the foreign customer or supplier currency account outstanding balances are not both zero when the account balance is supposed to be fully paid up.

The expectation should always be that as soon as either the local or foreign currency outstanding balance is zero (0.00) the other currency balance should also be zero.

For example, notice the outstanding local currency balance below, as can be seen at the bottom of the Account Receivable | Transactions | Standard screen.

Diagnosing the Issue

The issue seems to occur randomly and can be replicated in the following scenarios:

  • occurs on all users/workstations/branches on a company database
  • occurs on a different company database in the same environment
  • occurs on the same company database in a different environment
  • occurs on a new company database in a different environment

 

Solution / Details

The following steps explain how to resolve the abovementioned query:

  1. First, note that the above discrepancy may be due to a known rounding issue when
    a payment is allocated to the foreign currency customer/supplier account.
    Although this payment is supposed to clear the customer/supplier account balance,
    the rounding effect may cause one or more cents to remain on the local currency
    account balance.
  2.  If this is for a foreign customer, fix this issue by processing a new AR or AP Journal
    batch, setting the Credit (Incl.) (for suppliers this will be on the Debit (incl.) field)
    value = 0.01 (or the specific outstanding cents balance that needs to be cleared) and
    set the Exchange Rate to 9999999999.
  3. Note that since no actual foreign currency value is generated/calculated in the above
    step, this new transaction cannot be allocated, and the user may still notice on the
    Allocation screen that the local currency Credit value = 0.01 and the Foreign Credit
    value = 0.00
  4. The result of doing the above should now be that both the local and foreign currency
    outstanding balances = zero

Disclaimer: These articles refer to possible solutions and a platform to share information. Each article describes a method that solved a query (knowledge gathered from previous sites) and how Sage Evolution should operate. These articles make reference to a specific Sage Evolution version, however the thought process can be generalised. Please note the information contained in these articles should be treated as guidelines and adapted to accommodate differences in business processes and IT environments. Articles may not be applicable to all environments. If this article did not resolve your query please contact Kiteview Technologies Support Department on:  (+27) 010 005 6678.

About Us
Kiteview Technologies (Pty) Ltd was founded in May 2010 to provide the Sage Evolution Business Management solution to the SME market. The management team of Kiteview have combined +30 years of experience in the delivery of small to mid-market Financial & Business Management solutions. This experience, combined with a sound project implementation methodology has helped in Kiteview’s growth, becoming a Platinum status partner for SAGE Pastel within just 1 year.

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Six tactics for recession-proofing your small business

Six tactics for recession-proofing your small business

Article credit: Sage 

With South Africa officially entering a technical recession in the fourth quarter of 2019, it’s tough out there for small and medium businesses. Add a weak exchange rate, the prospect of Moody’s downgrading our sovereign credit rating to junk, forecasts of more load shedding, and a coronavirus wreaking havoc with the world economy. It’s not going to get easier any time soon.

But as the cliché goes, when the going gets tough, the tough get going. And South Africa’s small and medium businesses are as robust and resilient as you can get. Many of them will emerge from this challenging period stronger than ever. The good news is that there are several steps you can take to ensure your business survives and even grows when economic conditions are poor.

1. Manage cash-flow even more tightly

The key to surviving a recession is to watch your cash flow like a hawk. Run regular cash flow forecasts to estimate how much money your business has coming in and going out. This will help you cut the cloth according to the resources you’ll have at hand. A right accounting solution will help you to forecast cash flow based on when invoices are due to be paid, credit notes are due to be refunded and any recurring income or expenses.

Avoid selling on credit, especially if you’ll be on the hook for VAT or payments to your suppliers before the customer settles your bill. If you’re in an industry where you can’t avoid giving credit – for example, supplying legal services to a corporate – become more assertive about collecting payments by the due date.

2. Cut the frills

If you’re anticipating or experiencing a drop in revenue, cost-cutting can be an effective way to maintain profitability. You could, for example, look at running a more virtual business if you’re in a space like marketing. Rather than spending money on rental and petrol, you can shepherd your team and clients towards using online tools to collaborate.

It’s also wise to review the day-to-day running expenses. When last did you switch insurance providers and are you sure you’re getting a good deal? Can you still afford the Friday morning ritual of cappuccinos and croissants for the team? Do you buy stationery and consumables you don’t need?

Unless you are genuinely overstaffed, downsizing your headcount should be a step of last resort. This is because laying off people can harm morale and customer service, plus, you’ll need to pay retrenchment packages. You’ll also face recruitment and training costs in future when you start growing again and need to hire.

3. Pivot to a recession-proof sector

If your bread-and-butter business is under pressure, you can look at ways that you can use your skills and infrastructure to target more recession-proof markets. For example, if you’re running a supermarket, evaluate getting into the bulk discounted food game. A car dealer can step up focus on repairs and secondhand sales rather than pushing new cars. And if you’re in interior design, an exciting opportunity may beckon in home staging – making houses look their best to facilitate sales during a challenging market.

4. Focus on customer service

During a downturn, your customers are also feeling the pressure. They’ll turn every cent over twice before they spend it. The key to surviving the recession is to retain as many of your good customers as you can. Figure out what is important to them and keep delivering the quality of service that they expect.

As you cut costs, try to do so in a way that doesn’t damage the customer experience. If you do face a trade-off between maintaining your standards and meeting customer’s price expectations, communicate openly about the decisions you are making and how they will affect the customer. For example, if you’re expecting the rand/dollar exchange rate to affect the costs of the hair treatment products you use in your hair salon to rise, let customers know you’re increasing your prices or switching to a cheaper alternative. If possible, offer them a choice or find out which option works best for most of them.

5. Get smart and tactical about sales and marketing

Too many small businesses make the mistake of ending all marketing efforts when a recession hits. But the short-term cost-saving comes at the cost of building a strong pipeline of leads and sales for the future. Plus, maintaining sales and marketing efforts throughout a downturn can help you to grow market share as other companies in your space reduce their spending.

Rather than abandoning all marketing efforts, review your spending to see where you are getting the best return on investment. You might find that it pays off to focus on low-cost digital channels such as search and social rather than print or radio. Tactical executions such as sales, price promotions and discounts can help drive sales in a tight market.

6. Starting a business in a recession

If you are thinking about starting a business, you don’t necessarily need to change your plans because of a pothole in the economy. Some businesses do well in nearly any economy, and that can thrive in a recession:

  • Accounting services
  • Debt counselling
  • Financial advice
  • Training and education
  • Repairs and maintenance
  • Discount retail

For some inspiration, remember that the likes of General Electric, Microsoft, Burger King and many more were founded in painful economic periods. Starting a business in a recession is a baptism of fire, but you’ll run lean, develop good habits and put yourself in a strong position to grow when the economy recovers.

About Us
Kiteview Technologies (Pty) Ltd was founded in May 2010 to provide the Sage Evolution Business Management solution to the SME market. The management team of Kiteview have combined +30 years of experience in the delivery of small to mid-market Financial & Business Management solutions. This experience, combined with a sound project implementation methodology has helped in Kiteview’s growth, becoming a Platinum status partner for SAGE Pastel within just 1 year.

Contact Us

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