This Static Spot is open for sponsor

Click Here to Sponsor MCT Eric Post in Full Page

Article Navigation Back To Main Page   Click Here for more articles

Top 7 Strategies for Writing Accounting Procedures by: Chris Anderson You have permission to publish this article free of charge, as long as the resource box is included with the article. If you do run my article, a courtesy reply to sean@bizmanualz.com would be greatly appreciated. This article is 909 words long including the resource box. Thanks for your interest. Part Two of Cash to Cash Cycle Series Part One: http://www.bizmanualz.com/articles/01-05-05_inventory_procedures.html/?ART78 Next Week: Sales We’ve already found $250,000…so let’s find another $250,000… Laying the Foundation Last week, we raised the question: what would your business do with $1,000,000? To lay the foundation we introduced inventory as the first of four areas that will lead toward our million dollar goal. And you saw exactly how to achieve the first $250,000 in cash savings by avoiding delays with an increase in velocity, as well as an increase in discipline and competency. But how exactly? With time – as you saw with inventory and as you’ll see this week. Tackling Accounting Procedures Let’s continue that crucial theme of time with another major source on your balance sheet – specifically, accounts receivable (A/R). If you have $500,000 or more in accounts receivable then STOP! We have found it again. Reducing Average Days Collection Why? Because if we focus on reducing your average days collection by 50%, then your accounts receivable balance will fall to $250,000 and the result will be an extra $250,000 in your bank account. And just like that, we’re halfway to our $1,000,000 goal. So now, let’s see how this actually works in a real-life business scenario. Accounting Procedures Service Business Example A service organization with $700,000 in average A/R balances needed assistance. So we examined their A/R function to understand and quantify the workflow and workload issues. Then we designed and implemented a process to improve the A/R performance. The metrics we developed reduced their “over 60” accounts receivables by 85% and their overall A/R balance by 50% within 90 days of implementing the new procedures. With these new processes and reports, the company now tracks Average Days Collection and past due rather than just Days Sales Outstanding (DSO) as the measure of their collection effectiveness. The result: an extra $350,000 in cash. And, again, we explicitly see the crucial role of time and how an increase in velocity and discipline directly yields an increase in efficiency and cash savings. So how can you use time to your advantage? Methods to Design the New Accounting Process Decrease collection cycle. Examine customer accounts that go beyond your terms. Do not wait until twice the net terms to take action. Tighten credit policy. Examine credit process for slippage. Do you have a credit approval process? Do you perform credit checks? What standards are used to extend credit? Reduce credit terms. Change the credit terms you offer your customers. If you offer terms of net 45, reduce it to net 30. You might offer a discount of 1% if paid within 10 days else net due in 30 days. This is equivalent to 18 % annual interest and most businesses will take those terms. Shorten the invoice process. Bill your customers immediately. This is a big one. Many service organizations wait until the end of the month to tally billable hours and determine customer charges. Do not wait until the end of the month. This could reduce your day’s receivable by as much as 15 days right there. Email or fax your invoices to save another day or two (e.g. QuickBooks accounting software contains this feature). Reduce billing errors. Most customers delay payments because of invoice errors. Customers won’t recognize the invoice until it is corrected and may not even notify you, the vendor, of the error until you call for collection. Again, avoiding this delay in error and time will amount to cash savings. Train Accounts Receivables personnel. Make sure that all personnel involved are training to understand the performance metrics for their jobs. For example, a company will manage $500,000 in monthly A/R balances (that’s $6 Million a year!) using an A/R clerk who makes $30,000. But then the supervisor uses nothing more than On-The-Job (OJT) training for the clerk. Then the CFO thinks that he or she (the CFO) is really managing the money. But, in reality, that’s not the case; the clerk is managing the money day-to-day. So shouldn’t the A/R clerk receive enough training to manage such a significant amount? After all, it only takes a 6% change in A/R in one month to equal the A/R clerk’s entire annual salary. Isn’t the A/R savings worth a little extra time in training? Maximize the Accounting Process. With the Accounts Receivable department you should use each element of the process to gain the most benefit for your business. And with time-saving procedures set in place, you will let your efficiency work for you. Grabbing Your Policy Goal With well-defined processes and procedures in place, you will increase efficiency by reducing your Average Days Collection. And of course a reduction in Average Days Collection means your Accounts Receivable balance will also fall, creating more cash in cash on hand. And just like that we’re halfway to our $1,000,000 goal. All you have to do is grab it. Next week, we will look at finding still another $250,000 in the Sales function – which will give us $750,000 toward our goal of 1 Million in cash savings. So, again, not only do you aim to reap the rewards of extra savings to your bottom line, but also see more cash in the bank - $1,000,000 cash to be exact. About the author: Chris Anderson is currently the managing director of Bizmanualz, Inc. and co-author of policies and procedures manuals, producing the layout, process design and implementation to increase performance. To learn how to increase your business performance, visit: http://www.bizmanualz.com?src=ART79 Circulated by Article Emporium

---

©2005 - All Rights Reserved

This Static Spot is open for sponsor

Read Articles: More eBooks Posts Pages More YouTube Posts Pages More Article Pages Tranlate From English: 1-English -  The Following are Bi Languor 2- Chinese (Simplified) 简体中文  Surprise! Accounting is the Hot New Major  HOW TO STAY FOCUSSED AND BUILD YOUR BUSINESS  Do You Need Accounting Software For Your Small ...  How to Choose the Right Accounting Software for...  After the latest and accurate help in relation ...  Asset and liability basics  7 Things to Consider Before Buying Small Busine...  Accounting Methods – Cash and Accrual  Non-Profit Organizations - What Are They?  Press ReleaseUCLA Alumni Association Retains th...  How to Stop Waste, Fraud and Abuse  Internal Control: A Preventive Maintenance Pr...  What Software Do You Need For Your Small Business  Explode Your Consulting Income  Understanding Depreciation: It May Be More Sim...  3 Essential Tools for Starting and Maintaining ...  Outside The Box  HOW TO STAY FOCUSSED AND BUILD YOUR BUSINESS  mmaterial Values in Business Management  Top 7 Strategies for Writing Accounting Procedures  Taxing Overseas Firms for SOX Compliance  9 things you must do to maximize your chances o...  Starting An Online Business From Home  Why Online Presence Is Essential For Small Busi...  Bottleneck-oriented Business Management  An introduction to point of sale software  10 Amazing Ways To Jump Start Your Sales  Company/Employee Handbook as Organisational Imp...  Resume Writing and Preparation is Free Online   Here is the latest and accurate assistanc...  Is Your Business Profitable?  Small Business 101: Deadly Ignorance  How to Start an Investment Club - Business Model  Resume Outline - Add Structure & Flow to Your R...  Issuing Warrants to Investors  Can You Play the Drums?  Policies and Procedures Used as Management Key  How Nov. 15, 2004 Deadline for Sarbanes Oxley 4...  The Fun Of Starting A New Business  Managing Your Home Based Online Business – 2  Do you think that your workload is hampering yo...   How To Write A Quick & Relatively Painless Busi…  Outsourcing Is Picking Pace  Is It Worth Becoming a Partner?  What it Takes to Succeed in Business!  What’s the difference between successful busine…  Five Reasons to Incorporate a Company Offshore  Is It Necessary To Have a Business Plan?  Recruiters: The Challenges of Executive Head Hu…  Five Leadership Secrets for Challenging Times  Childcare Management & Daycare Software  MORAL ARMOR’S Economic Warning for Americans  Is Incorporating Your Small Business Best For You?  FOUR SIMPLE STEPS TO BETTER RESULTS WITH YOUR R…  Pay Your Children to Work for You with the Bles…  You May Have A Successful Small Business Idea  Thinks You Should Know Before You Bid On A Busi…  Business laws basics  9 Strategies for Writing Accounts Payable Proce…  Choosing A Business Tax Service  Recruiting Excellent Job Candidates:  Networking  How to Quit Your Job  The Top 10 Reasons Your Staff Wants to Quit More Article Pages Tranlate From English: 1-English -  The Following are Bi Languor 2- Chinese (Simplified) 简体中文 More eBooks Posts Pages More YouTube Posts Pages

Sponsor Professnal Advise  by: Sponsor Company Name This Static Spot is open for sponsor Click Here to View Following Sponsor Post in Full Page Sponsor MCT Blogger... or Click Here to View Sponsor Post in Full Page...

JV Blogs Visit