Article credit: Sage 

In order to correctly show the movement and management of cash within a business, accountants use a cash flow statement. This statement will display a business’s money coming in from ‘cash receipts’ and where it has paid money out,’cash paid’. The cash flow statement is a standard financial statement and is frequently used in conjunction with the balance sheet and income statement.

As a result, the cash flow statement plays an important part in the management of finances for the company. In this week’s tip, we share a basic cash flow statement template that you can download, customize and use.

You are welcome to download the workbook here.

Applies to Microsoft  Excel 2010, 2013 and 2016.

1. To enter values for the beginning of the period, enter values in row 6 for their respective months.

2. The cash receipts can be entered in rows 9 to 11.

3. Cash paid out values are entered in rows 16 to 44.

By entering these values for the respective period, your statement will showcase the cash movements, and can, therefore, be better analyzed.

Article credit: Sage 

Most people in business know when things go wrong. They know very well, too, how things should be changed when this happens.

Yet, the actual detail required for improving things can be beyond their control, especially in a busy environment where day-to-day grind eats up time. Sitting down and thinking about how to do things better for hours at a time isn’t a luxury most of us have.

In this article, we provide some starting points. We explain how making smarter business decisions doesn’t have to be difficult. None of the five tips below are especially complicated, and all can be implemented slowly, by taking slightly different approaches while doing the same old tasks. If nothing else you might find they provide inspiration for you to start thinking about how to improve.

Many of the tips focus on making better use of the data generated by your business. Data can create insights that lead to these smarter business decisions. Nowadays any business generates vast amounts of data on a daily basis. Rather than simply ignoring it, making use of this can be revolutionary. It’s what successful corporations credit to their success over recent decades. And the technology needed to harness it has now trickled down to software for even the smallest business via tools like their account package or other business management tools.

1. Create a level playing field 

Know your key performance indicators ( KPIs)–the core goals that define everything you do through the results you hope to achieve.

Establish which analytics and data tools will help you achieve them, and adapt them throughout your company. Often, it’s about selecting the platform your cloud software will operate on, or a particular provider that takes the same approach with all their software packages to ensure compatibility. In doing so, you will keep everyone on the same page. Operational silos can not exist where a department or organization is out-of-bound to the rest of the business and jealously guards its data! Facilitates easy touch. Easy communication will be facilitated.

Using the same platform and tools also helps avoid different teams competing against each other. Instead, everybody will be working together by design, measuring your data in the same way and using the results to keep improving.

For managers, this level of integration creates a level playing field that makes it easy to see at a glance what the state of the business is. They can see where success can be found, and where improvements need to be made – all without having to ask anybody, request reports, or call in outside help. All they need do is look at the dashboard within their application to see the benefits of easy collaboration.

2. Know when to drop the spreadsheet  

Spreadsheets are amazing things. We don’t need to tell you that. But while they have uses, you need to know when to put your spreadsheets to one side and switch to tools that are better suited for the job at hand.  

Don’t get us wrong. We’re not saying get rid of them forever!  

But you might consider switching to using cloud-based software that presents a unified set of data, integrated with all organisational functions so you and your team can rapidly access the information needed to make the decisions that count.  

Here’s an example. Your CRM used by the sales and marketing team can work with your finance tool, to provide the best visibility into what’s happening right now. Decision-makers will get the knowledge they can trust, without the need to take special measures, and this breeds the confidence to make the right decisions. 

How do you break a spreadsheet addiction? Well, it might help to remember that they make it difficult to enact modern data protection regulations. If the spreadsheet contains any personal data it should have security built-in by design, or your organisation could get into very hot water! But aside from applying a password, there’s not much else you can do.  

Is it time to ditch that spreadsheet for something better? 

3. Use the best analytics available 

Financial or accounting tools designed to use your company’s data to provide insights will probably come with ready-made reports, dashboards and other analytics. But you might choose to create customised versions specifically for your needs. You could build a personalised dashboard with the specific metrics for your business health that you can view at any time and from anywhere. 

Most software makes this pretty easy, but you can also hire a third-party to create them for you.  

The difference between a ready-made dashboard or report, and one custom-created for your needs, can be like night and day. The benefits it can bring to you and your business, in terms of instantly knowing the state of play and being able to make decisions instantly rather than based on historical data, can make the difference between your business breaking new ground, or failing. It really is that profound.  

4. Look out for inefficiencies

Consider the processes that run your business. Just as a healthy mind needs a healthy body, executive decisions can only be effective if the organisational structures that underpin them are primed for the times.  

Finance is a case in point. As we’ve mentioned above, antiquated behaviours used by accountants and businesses—desktop spreadsheets and handwritten bookkeeping—get a job done, but not in a way that can compete on the same playing field as more forward-thinking alternatives. 

If you created a business right now, would you make it exactly the same as your current business? Why not? Why are you sticking with processes and tools that aren’t efficient? 

If you visit a new business, you’ll probably notice another thing. They’re usually very agile. They’re prepared to change things quickly, without thinking too much about it, because they’re much closer to the operation of their business. And this is what seeking out inefficiencies can do for you – each inefficiency you remove takes you one step closer to the core of your operations.  

5. Be open, not closed 

If you spend some time with a successful, growing organisation, you’ll probably notice something. People share. They share data, they share ideas, they share methods for doing things, they share tasks. Sharing is second nature of them.  

Make your data available to all who need it, whenever they need it. This isn’t always possible, of course, but always aim to have an open attitude. Even better is to centralise around a single interconnected platform.  

Across the company, silos can be dismantled as employees work seamlessly through a single platform. This negates the need to synchronise and search for various documents hiding in different apps. The right information is always there, ready to share. 

Encourage staff to share too. Build it into their KPIs, or other goals and measures. Ensure they know who to reach out to if they need assistance, and ensure that each request for assistance is not met with resistance but with a pragmatic assessment of how help can be provided.  

Final words

In this article, we’ve discussed methods by which you can begin to make smarter business decisions. Although these are things you can implement right now, what we’ve really been discussing is a philosophical change within the way you and your business approach things. Utilising data effectively brings with it the need to change attitudes and approaches. This should be communicated alongside the fresh approaches discussed above. 

Article credit: Sage 

Suppose you went into a store. You take something from the shelf. But there’s a problem. There’s no price label. Well, okay, maybe that doesn’t matter. You can guess the price and it shouldn’t be too expensive. But there’s then another problem.  

You can’t find the checkout.  

You search up and down the aisles. After a few minutes, you find it buried at the back of the store in a dark corner. There’s nobody manning it but, as you wait and tap your foot, a sullen staff member shuffles over.  

Wouldn’t you know but there’s then another problem! You want to pay using your debit card, you say. The surly staff member slowly shakes his head and points to a sign behind him that you hadn’t seen until now – CASH ONLY.  

You dig around in your pockets. You dash out to the car and grab some loose coins. You’ve just enough. You get back inside and hand over the money. 

The staff member starts shuffling away.  

Hey! What about a receipt? The staff member sighs, walks back, jabs at the cash register, and hands one over.  

Walking out, you realise that if you never stepped foot in that store again it would be too soon. A stop for some groceries turned into a demanding, time-consuming mini-drama.  

But what if your business was making life as hard as this for your customers or clients?  

More than customer care 

Most of us think about customer care only in terms of the selection, buying and support process. As for the invoicing and payment process, well, that’s literally an afterthought. All that matters is getting the money – right?  

Yet making the customer experience here as good as possible is also vital. Your customers will be happy and more likely to use your business again if they can settle their bill quickly and easily. More importantly, you might find you get paid more quickly. This will have obvious benefits for your cash flow. 

Add to this the fact that small business’ payment processes are often full of little, almost invisible, inefficiencies that eat up your time. In fact, generating invoices takes up 14.2% of the average business’ admin time, according to recent research by Sage. Once you factor in the time taken to deliver those invoices, check that they’ve been paid, and follow up on the 45% of invoices that aren’t paid within 30 days, that time adds up further still. 

Here are some tips that may mean both you and your customers are happy when it comes to collecting payments.  

1. Offer your customers different payment methods

When your customers have to pay their invoices in a way that feels unnatural or unfamiliar to them, payment procrastination sets in. They promise themselves that they’ll sit down and sort it all out the second they get a quiet moment… and, all too often, they forget all about your invoice. 

By offering flexible payment options, the right software lets clients pay in the way that’s fastest, easiest, and most convenient for them. That means faster payments, fewer forgotten invoices, and less time following up on missed payments for you. 

Some providers will integrate your invoices directly with your payment system, so that customers can pay on credit or debit card directly from your invoice in a matter of clicks, instead of spending extra time digging out bank details or finding the chequebook.  

Sage’s research shows that, while customers take an average of 35 days to make payments by cash, cheque, or bank transfer, ‘pay now’ buttons on invoices or phone payments take just 20 days. That means more money in the bank for you, and less time making those awkward phone calls to chase payments. 

2. Automate your invoice tracking process

By setting up a system that automatically alerts you when invoices are received and paid, you’ll know exactly which clients you need to chase and avoid wasting time combing through bank statements and comparing invoice numbers. 

This also means that data on how, when and the amount customers pay you is automatically transferred and trackable within your accounting software. 

You are also one step ahead of any excuse the customer might offer. If they say they haven’t received the invoice (which can be a common occurrence!), you can mention how you have information in your accounting software saying the invoice was opened at a certain time and on a particular date.  

You can even pre-empt which customers are likely to pay late and tailor invoices accordingly. Software like Satago can conduct an initial risk assessment of each customer, use that information to decide on a case-by-case basis how much credit you should offer, and then automatically chase late payments when they occur. 

3. Create accurate invoices

There are few things more stressful and time-consuming than debating the accuracy of your invoices with customers – or fixing errors in invoices that understandably arise from manual processing. 

It upsets them. It upsets you. It doesn’t make for good relationships, and nobody enjoys wasting their valuable time on things like this.  

To avoid it, look for a function that switches your customers over from estimate to invoice automatically in your accounting software. If this isn’t possible, try copying and pasting details directly from the estimate to the invoice form. 

Of course, the gold standard here would be for the field staff to convert the estimate to an invoice themselves, avoiding any work for the finance department. This is why thinking open and inclusive in your software choices is always best – if everybody is on the same platform then workflows like this are a cinch to create, and everybody benefits.  

Conclusion 

There’s everything to gain and nothing to lose by considering the entire customer/client journey with your business – including making payments as easy as possible. And thanks to modern software, all this could take as little as just a few hours to put in place.  

Article credit: Sage 

A cost-benefit analysis is a vital part of starting and running any project. It gives you the information you need to frame objectives, calculate estimates of needed resources, and define objectives.

In practice, it is the comparative assessment of benefits along with its associated costs.

Performing a cost-benefit analysis is not difficult, but it is often overlooked. Let’s look at how one works.

The value of everything

The first step of your analysis is to attach a value to every aspect of your project or business.

For some things, this is easy – physical assets have a monetary value, for instance. More difficult is calculating values for things like labour. These values may have to be estimated. Wherever possible, you should express these values in monetary terms.

You should also take note of which costs are recurring and which aren’t. Additionally, you’ll want to consider some potential values:

• The cost of not doing a project,
• The cost of your project or business failing, and
• The opportunity costs, or the potential benefits you may have accrued, had you invested your time elsewhere.

Looking forward

No project happens in one moment, so it’s important to consider the potential costs of your project over time – obviously, noting your recurring costs above facilitates this.

Alongside this, you need to work out how far into the future you expect to accrue benefit from your project, as well as certain assumptions:

• Inflation needs to be considered in your analysis, although you will want to convert all values into current monetary values (real cost).
• Lost return on your investment is the amount you would have made by investing the money you spent on the project.

These two figures give you the net present value of your project.

It’s also worth keeping in mind that the further into the future your estimates go, the less reliable they are, as a changing environment can make them redundant.

Intelligent comparison

Once you have calculated your costs and benefits, you’ll need to compare them quantitatively to determine if the benefits outweigh the costs.

If they do, then you have the rationale needed to go forward with the project, based on the objectives and goals contained therein. If they don’t, you’ll need to go back to the drawing board – review your proposed project to see if adjustments are possible that will allow you to take it forward.

If this is not possible, you may have to face the hard fact that your project should be abandoned.

Article credit: Sage 

According to an SMP Small & Medium Practices Survey, led by the International Federation of Accountants Global, certified public accountants (CPAs) all over the world experience the same opportunities and challenges. These include attracting new clients and staff, remaining up to date with the latest regulations and standards, increasing pressure to lower fees, and retaining current staff.

With technology growing rapidly, accountants are also under pressure to use the latest hardware and software.

These are the four most common challenges facing SME accountants:

• Talent – The hunt for talent is fiercer than ever, complicated by the fact that workforces, in general, feel overwhelmed and unengaged at work.
• Technology – Despite the many benefits technology gives SME accountants – like increased productivity, process transformation, and automation – many accountants report feeling pressure to keep up with technology found both inside and outside their customers’ businesses. 
• Time – As in many industries, time poverty is the most common challenge experienced by accountants. There is simply more that needs to be done than there is time to do it. This prevents CPAs from being proactive and involved with their clients; rather, they’re sinking deeper into the daily grind.
• Transformation – There is the possibility of tremendous growth thanks to new technology and new skills available to CPAs, which can be seen in the prevalence of consulting and advisory services. This can also feel daunting, but the key is to embrace the change rather than fight it.

How to stay ahead of the pack 

Thanks to the growth of technology and globalisation, it’s best to embrace the drastic changes that are already underway, and to lean into the ones we know are coming. Here’s how to become an ‘anticipatory accountant’ and stay ahead of the pack: 

• Don’t wait to change. Rather, spearhead transformation before you have no other option. This is the mark of an exceptional leader. 

• Get with the times. Technology is the biggest driver of transformation. To be as efficient and effective as possible, harness the new.

• Upskill yourself and your team. While most of us know that technical skills need to be developed, often other necessary upskilling opportunities are overlooked. Emphasis should be put on training your team to become future-focused. Anticipation is a skill, even though it’s not often regarded as one.

• Guard your values. Fast-moving change can be unsettling. Make sure your team feels secure by highlighting which elements of the business won’t change.

• Make the most of this wild ride. After all, wouldn’t you rather be the disruptor than the disrupted?