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Alright, let's have a look at your management reports for August'18," this was the start of a conversation which provoked us to write the post. Blank stares across the room, and the too inevitable answer , "Yes, our Accountants produce them every year", so the last one they had on hand was for Dec 2017. 8 months into 2018, that information is redundant. We know their Accountants and they are brilliant, they take care of their function extremely well. In fact, we could recommend a few guys over to them for year-end formalities without a second thought. More often than not, small businesses confuse the concept of management accounting with producing year-end accounts. A good financial process is a lot like going to the gym, you need to be consistent to be effective. 1. Get into a habit where you catch up transactions weekly. Think bank feeds, expense claims 2. Produce a set of cash flow statements each month. That’s the absolute minimum. If your cash situation looks good, rest assured you're headed in the right direction. 3. Produce a variance profit and loss account. Simply budgets vs actuals on your P&L. Again, if you have a reasonably good accounting software, it should produce this effortlessly. We are used to Xero and it does a pretty good "budgets Vs actuals" which you can run any-time. 4. Have a management meeting once every month. Even if it’s with yourself. Make sure it does not run for more than 45 mins if it’s internal. If you have an outside consultant like an #outsourcedcfo, use the opportunity to plan ahead. 5. If you have the ability to use dashboards, try them out. If you are on Xero and use Barclays for business banking, by all means set up the Barclays business dashboards. Even at a very early stage, it can produce easy insights. If you use more mobiles, apps like Ikooloo can be helpful without breaking your bank. Every company is different and so are it’s needs. There’s no point forcing this process, because it's only a matter of time before it folds - remember that gym analogy! Determine how important this is to scale and run a more valuable organisation, set time frames and commit to them. #outsourcedCFO #CFOonhire #cashflow #cashflowforecasts #managementaccounting #reporting #article #dashboardanalysis #Barclaysbusinessdashboard

"Why does my cash flows show a monthly spend of $3468 when I know our monthly expenses are capped at $2800?" At the heart of this question lies the most important fact pertaining to good financial management. Why is cash flows more important that profits in your business? The fundamental difference is this - your profit and loss is a log of all income you are supposed to receive (all invoiced items) and all expenses you have to pay (all supplier bills for a period). What is left is profit. Your cash flow statement shows the trail of all money received and all money spend during the same period. A kind of "traditional" MONZO account. Has this happened to you? You actually have only $2800 in actual expenses for the period, whereas the company "has spend" $3500 odd. Why is there a difference from targeted spending? The most common reason for this is "off profit and loss items" such as money withdrawn by the business owner, perhaps the purchase of a capital asset (like a new laptop) or putting money into another bank account to save up for corporate taxes. These things won't feature in a profit and loss account as they are not "revenue" or "everyday" in nature to explain plainly. Businesses can log a profit and still go bust if cash flows are erratic. This is the primary reason why accounting experts always harp on cash flows over profits. Cash-flow forecasts Forecasting business spend is a must for all businesses, particularly small businesses in the very early stages of your life cycle. Every penny is precious, so have a plan in place to spend it where it brings maximum benefits. Our tip here - don't cut back on marketing spend, insurance and smart online tools. By preparing and maintaining a cash flow forecast that you update regularly (cash flow is an ever-changing situation) you are able to get an idea of the financial outlook of your business for the next six months or so. This cash flow forecast will demonstrate to your would-be investors that you are giving this area attention. Get expert help at this stage if you think you are unable to manage this alone. Even on a consulting/out-sourced financial advice basis, there are scores of professionals/mentors that can help you understand which areas need attention and how to best manage them with limited resources. Check this helpful guide from Float of you don't know where to start. Meticulously managing expenses and going minute Knowing where you spend your money is really important. Go minute, there are no 2 ways to this aspect of things. Unless you know which of your expenses are causing cash to run out fast, there is no way you can make smart decisions around it. You might think, I know marketing is my biggest expense, but unless you have that in black and white, there is no quantifying that. You would know what % of your incoming funds (whether from sales or investment) is going into marketing when you have that recorded to the last dime. A dime in the bank is worth a couple in the pipeline Once sales kick in, get on top of collections. Follow industry best practices when in comes to collections. Use tools like GoCardless to get on top of debts early on. Make sure you measure lead time accurately. By this, we mean that as a founder-CEO/main sales guy, you should know how much time it takes between when you start talking to a client and when the money hits the bank. These can be further broken down into stages. Knowing this makes a world of difference when it comes to planning marketing campaigns and saving up for a rainy day/month. Starting a company and continuing it requires attention in a lot of areas and financials are an area where most entrepreneurs rely on a year-end accounting round up and tax filing to keep the tax man happy. Your numbers though, as many of us rightly realise, needs attention from day 1. If not anything, it tells you the real success or failure of your venture - on which you can then base any decisions regarding your business. Feel free to drop us an email or reach me at Neethu Stephen if you have any queries. #article #cashmanagement #cashflows #cashflowforecasts #forecasting #budgeting #financialcontrol #outsourcedCFO

In the world of accounting, it's not a word we use often - Design! But when you delve into the idea of design, it becomes apparent that it's very much a fabric of our lives. Every great product of our times is seeped in good design. Finance is not an exception in this regard. As management accountants, one of the jobs we are constantly involved in is the creation of cloud-based finance departments . We focus on three core areas as a part of the agenda, 1. People 2. Process and 3. Technology, People We build things for people. Naturally, people are central to creating any finance function. At the end of the day an intelligent financial design is enhanced and powered by real world users who use it to drive business decisions. The more your numbers are alienated from everyday use, the more impractical your financial design is. Understanding the users needs or problems, like in any other industry is central to creating a finance department that would stand the test of time. Many SMEs, do not need a full-time finance person - be it a bookkeeper, a controller or a CFO. This is manifest in the myriad virtual products and services that are on offer. As a direct result, we find that cloud -based finance departments are very much in vogue. Where we have software such as Xero along with function specific add-ons, fashioning something that closely replicates the functionalities of an end to end finance department is possible. But good financial design is not about throwing a set of cloud-tools together. A clear understanding of the users issues and the most preferable outcome is fundamental for achieving the man-machine synergy. We love this quote from Ryan England, CTO of Many Limited, that sums it up, “Design, when it’s done right, is invisible. It’s the intersection between form and function, quietly and elegantly allowing the user to do exactly what they need to do, exactly how you want them to do it.” Process “Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it's worth it in the end, because once you get there, you can move mountains.” Ken Segall - Insanely Simple: The Obsession That Drives Apple's Success An intelligent financial design is impossible without a set of underlying processes that support its successful implementation and more importantly, a post-implementation run. When we say "process" people often associate it mentally with flowcharts and smart-art. A workable SOP is simple, practical and above everything else promotes a "common-sense" approach. We define a process in this context as a set of support steps that causes good financial design to sustain with reduced human interference. For instance, sales is a function, and prospecting and invoicing are integral parts of this function. Imagine you run an e-com store. People come to your website and purchase things. They pay for the purchase and receive a proof of purchase - an invoice. There are processes at each stage of this event that has a financial impact. The buying, the reduction of inventory, the issue of an invoice and the money reaching the bank. It's one cycle of events that are intricately connected to each other. If the process that supports such a function is unclear and fragmented, the design that supports it would be dysfunctional. Technology Technology is deceptive. Many a times, when companies want to adopt tech for their finance function, they fail to realise that tech is not a magic wand. No - you simply cannot adopt a set of popular software solutions and throw them together to create the finance function you so need and crave. There has to deliberate thought and preferably documented reasons on the "people" and the "process" aspects before you go anywhere near tech. This is where the concept we most love and adapt to every possible build we do - integrated automation. The power of using the right tools is manifest if the slip and grip between tools is minimal - you spend very little or ideally no time transferring data from one solution to another to create a complete picture of your numbers. So having software that allows for add-ons that would then feed off that data is important. Our take - pick a master software and build utilities around it. We do this with Xero. Having said that, we make allowances for individual idiosyncrasies and tastes when collating tech tools - such as a user's fondness for using smartphones over laptops. Does it meet the needs? No amount of tech can create a good finance function, unless the information you need for quick decision making is accessible to the user. Make the process practical, likable, then throw in the tech for the home run. Creating a series of smart tools is a great starting point. Sustaining them to get the results you need can be tricky. You need user buy-in. If we are building things for people, make sure they love it, embrace it and use is - constantly! This is Part I of a four part series - in Part II, we will discuss the People aspect of financial design Attributions 1. Design picture - https://www.pexels.com/photo/black-pencils-and-sign-word-6445/ Source - kaboompics.com #financialdesign #article #managementaccounting #XeroPartner #XEROMIgrationcertified #CFO

Virtually every sector of the world economy is now moving towards cloud operations. The traditional mode of operations present several problems to professionals but more so to accountants. Even though there has been an increase in cloud accounting demand in Norway, it has been pointed out in the EY-Norwegian-Cloud-Maturity-Survey-2018, that the adoption of cloud technologies across IT functions among Norwegian companies is still relatively low. We concentrate on what are the relative benefits that Norwegian companies would achieve if they adopted cloud accounting. We rely on specific functions and examples from Xero to speak about the advantages of adopting cloud for your business. Why the cloud? Reduced cost of operations Norway's corporate tax rate stands at 24% currently- with the incidence of higher taxes, you want to spend money where your operations are streamlined with the best end results. This is why we feel Norwegian businesses would benefit very much from cloud accounting softwares such as Xero. Xero is completely cloud-based, you wouldn’t need expensive computer equipment and servers to be installed in the office. It also creates cost efficiencies in areas like hardware, software and energy. Automatic Update of Data and Softwares Another problem that businesses face with the use of traditional accounting software is that the software requires updtes. Xero automatically eliminates that problem for business owners. The automatic updates reduces expenses involved in manually upgrading the software. Comparative Software Visma is the leading cloud accounting software in Norway at the moment. Xero does not have a country version of the software available presently, but the full features global version of the software is priced at 32 Euros, (USD 40/month). It supports unlimited users for this price. Xero currently integrates with over 600 specialist apps through it's disruptive app marketplace which allows users to pick and choose the right tool to create that all inclusive virtual finance department. Xero also has a huge global presence with over 1 million users currently, which allows Norwegian companies to easily replicate their finance function in another jurisdiction when they expand operations. What is stopping Norwegian business from harnessing cloud technology? We observe that one of the major reasons why SMEs are reluctant to move to the cloud is the relative difficulty of migrating from their legacy systems. Here is where we feel the reliance on established practitioners for setting up your system really plays a big role. With the right cloud migration partners, the process need not be daunting for small business owners. At eVALUA8, we rely on tried and tested internal processes, to make sure we understand what you want to achieve from putting your numbers on the cloud. We are certified Xero Migration Specialists and Advisors and have more than 300 conversions to our credit, and more than 75% of our experience comes from working with companies that are in multiple locations. Please feel free to write directly to us at neethustephen@evalua8.com if you'd like to chat about your cloud accounting queries. Notes and Credits - We are GDPR compliant and do not sent promotional material without prior permission of the user. - Picture of Norway - https://pixabay.com/en/norway-mountain-sky-blue-water-772991/ #cloudaccounting #xero #XEROMIgrationcertified #Norway #SMENorway #NorwayBusiness

It is not considered unusual if you picked up an everyday article or a children’s book in the UK or the US, turn it around and see a “Manufactured/Printed in China” stamp on it. This though, was how China was known a decade ago. With the amount of FDI flowing into the region, the country is now a top contender for overseas investors wanting to take advantage of the support system and lower cost efficiencies. The stories we hear from US or British founders setting shop in China and working closely with suppliers to produce world class services and goods are more common today. They often share common traits – the ability to speak Mandarin, years spent in China as a resident, memberships in common business groups. A lot of them also share a common frustration – the difficulty in understanding the overall business finance position from a collation of the Fapiao; the Chinese system of invoicing. The Fapiao – know more The fapiao is a legal receipt that acts as proof that a customer has purchased either goods or services. The system is very sophisticated and it an essential part of their tax law and is mandatory. Currently, there are two major types of fapiao being used. The general fapiao and the special value-added tax (VAT) fapiao. The two systems are similar except that special VAT fapiao has an extra function of tax deduction while the general fapiao doesn’t. The VAT fapiao contains more information than the general one and such information includes a trader’s tax code, address, telephone number, and bank account information. When a purchase is made and the VAT fapiao is used, the amount is divided into taxable and non-taxable components. On the other hand, the general fapiao only shows tax-inclusive figures. Usually, general VAT fapiao can only be used if the special VAT isn’t available. Does Chinese SMEs use cloud accounting technology? The penetration of cloud accounting into China is still at a nascent stage. The larger players like Xero and Quickbooks do not have a country version available and it is not on their immediate plans to roll our specific versions for China. MEGI is a local cloud accounting software that has now emerged in China and offers online facilities. There are accounting firms now changing the way bookkeeping is being handled by using some of the core features offered by this software. A shift, we believe, has been brought about by the way small businesses around the world demand for real-time actionable data on their companies. Xero’s global version is used by many businesses around SEA, most commonly in regions such as Singapore – evidenced by the many Xero partners and an Asian HQ, the company now has in the red dot. Many of the features used by other online software were originally noticed on Xero – such as cash coding that allows bank accounts to be reconciled with considerably less effort. Xero for China? As long as there is a physical requirement to maintain vouchers, there is no way an SME can completely adopt the cloud. The working system in mainland China functions also on the back of the ability to conduct day to day business in Mandarin. So, you do need your local Accountant / bookkeeper to keep things in check. Having established that, with a bit of ingenuity, a host of day to day activities can be replicated on Xero to provide a more functional “online finance asset” for top management. Such as, Bank reconciliations for Chinese banks would work much the same way as for any location where direct bank feeds are not available. The process is simply to import all the banking transactions via an excel format into your Xero account and reconcile them against receipts and payments. We notice that Megi’s direct bank feed feature work much the same way. While there is an argument that it would be repetitive and time consuming to re-create customer invoices and purchase bills on Xero, there is a greater advantage for having these recorded on a secure online portal – they remain there for a good amount of time with a very clear audit trail. For founders from other parts of the world such as the UK, US or Australia, there is an advantage in keeping transactions on a common platform that might be used by their associated companies.There is a distinctive advantage in having the same Chart of Accounts for example, across all your group companies. We have noticed this to be one of the main reasons why Chinese companies with overseas founders have an inclination to go the extra mile to capture transactions on Xero. Imagine all your group organisations on the same platform, all your management reports would look exactly the same albeit with varying numbers. Capturing details for group reporting, consolidations and valuations becomes less catastrophic. Xero works currently with more than 500 industry and function specific add-on solutions. It is almost impossible for regional software providers to compete with that scale. So, the tools you use across your business – be it CRM, time tracking systems, project management tools or business intelligence add-ons, are uniform across the group. The possibility of creating a centralized, virtual finance department on the cloud is very real and very achievable. The Takeaway Ultimately, it all boils down to how innovative do you want to get with your internal processes. What’s the most important thing from a long-term perspective? If there is a global outreach for the business, then by all means having a common base to record financial transactions is the way to go and we feel “Xero for China” is a winner. Pic credits - Flickr.com The picture of the Fapaio shown is from a client of Evalua8 Corp, it cannot be reused without permissions from Evalua8 and their client. #article #xeroforchina #china #SEA #entrepreneur #cloudaccounting #cloudcomputing

Type “Multi currency” on Google the first search results that come up have to do with banking products. This is perhaps a very realistic vision of how the world is a global village and how easily we purchase products and services online and deal with multitudinous money transactions. For a modern business, fulfilling strategies often mean finding economic efficiencies in the way you run your business. We buy services where they give maximum value for the money you spent. Consumption of services and products not hosted within your home nation is normal and BAU. From a company perspective, it brings with it a host of complexities due to sophisticated compliance requirements for FOREX transactions. And cross-border transactions are not just for large corporates, often the smaller organizations have more of these transactions that reflects their budgets for service levels required from a supplier. And, there is hardly any organization left in the world that does not serve a global clientele. Says Guido Schulz, Global Head of Strategic Management at Los Angeles-based AFEX, a foreign-exchange consultancy, in an article with Entrepreneur.com “Large international conglomerates have entire “forex” teams dedicated to managing finances across multiple currencies. As a small-business owner, you should not be trying to keep up with the second-by-second changes on your own”. The Multi Currency transaction levels are many, Customer Invoicing Supplier Bills Asset purchases Funding Rounds (Equity) Inter-company or overseas loan arrangements (debt) So what should you be doing as a small business owner? Does it make sense to invest money on an accounting platform that takes care of the basics? Here’s how Xero manages your value chain dispersed in different geographies. Buy and Sell With the advent of Xero, creating customer invoices and processing vendor bills in multiple currencies is not complicated. The multi-currency facility is only available with Xero’s large subscription plan, costing approximately £40 for UK based clients. This is a small price to pay in comparison to the headache you save for annual compliance formalities. During set-up, Xero will allow you to choose your default currency. Ongoingly, the rates that are used by Xero is provided by XE.com, however, you are allowed to change it to override that with your own. Issue customer invoices in the currency of choice and Xero will translate that into home currency equivalent at current rates. When you receive payments for the same into your home currency bank account, there is a conversion rate attributed by your bank. This gets captured in Xero when the transaction hits the books via bank feeds. Xero supports bank feeds from most major banks in the UK – HSBC, Barclays, Lloyds, Santander among some If you use an automation software (and you should) such as Datamolino or Receipt Bank, to process supplier bills, you would be glad to know they support multi-currency too. You simply upload your bills into the software interface and allow it to convert them into neat Accounts payable in your Xero account. Funding rounds Fund flows across the world are an everyday thing – as an SME you can and mostly likely have overseas investors. While you would have a common currency to negotiate, you may end up receiving the funds in another currency. For practical purposes, when a share issue is conducted on Companies House (or its equivalent in the country of incorporation), it’s usually done in the host country currency. What should then happen to the money received Vs money shown on the transaction? The background conversion is dealt the same way as we explained above. At the financial year-end, this has to be restated at the closing FOREX rate as per IAS 21 - The Effects of Changes in Foreign Exchange Rates. Again, Xero being the smart software it is, this conversion is automated. So, there is no lengthy process of year end conversions. A recommended step is to compare Xero’s conversions for year-end against the closing currency rates designated by national monetary authorities/agencies Apart from these, there could also be debt transactions -loans from an overseas parent, borrowings from financial institutions abroad and the like. Storing the details of these transactions on Xero are simple. But the compliance requirements under specific national tax rules are a different matter. Thinking through the issues are a starting point in ensuring that your structure these transactions appropriately, recording them on your multi-currency cloud tool should be the easier step. Here is a summary of the best multi-currency features we like on Xero, Track your profit or loss: Due to currency exchange, you are bound to either gain or lose. You can easily check this through your profit or loss account. Assign currencies to your business partners: You do not have to try hard and remember which currency your clients or customers are using all the time - Xero can assign each contact its appropriate currency. Create an invoice for one customer in multiple currencies: The ability to invoice a customer in more than one currency without needing to set up a new customer is handy The technical bit - Xero uses three gain/loss type accounts to give a more detailed picture of a company’s financial standing. The 3 system accounts associated with currencies are; the bank revaluation account (used to calculate the gain/loss on bank balances) Unrealized Currency Gains Account, and Realized Currency Gains Account (which are used to calculate the gain/loss on customer invoices/vendor bills- (Unrealized is used before they’re paid – Realized is used after they’re paid) For more about multi-currency cloud check our dedicated service page. #forex #article #managementaccounting #CFO #investor #multicurrency #xero #IAS21

A “CFO on Hire” or an outsourced CFO is an increasingly popular option nowadays for firms wanting to engage a professional without burning their pockets and parting with stock options. But knowing what they should be doing for you and setting some standards to achieve is crucial before you start such an engagement. As we know, a CFO is responsible for the financial activities of an organization end to end. It covers both short-term and long-term needs that helps the company scale. The short-term activities could include establishing performance measures and understanding the drivers of cash flow while assessing financial risks and strategizing for the next big move for the company are crucial long-term objectives. What should your CFO do for you? Broadly the CFO has two main sub-roles other than being the Grand-poobah of all things “numbers” in your company. Controllership Controllership duties infer that the CFO will be responsible for collecting, analyzing and presenting a company’s financial records and information ideally on real time. This creates a relationship where she has a duty to board members, shareholders, creditors and any other associates that need such information. A very critical and perhaps the most important facet of being CFO to a small business. Treasury A treasury role handles the fund-raising aspect of a CFO’s duty. There is nobody that should know a company’s financial stance more than the CFO and it is for this reason that he/she is the key person to engage in-depth for decisions regarding investment, taking into consideration the risks involved. Apart from these traditionally assigned roles, the CFO of today has to be deeply involved in strategically guiding the Company through its next major phase – be it an exit, a larger funding round or expansion plans. Growth Catalyst The CFO can accelerate or stimulate the timely execution of fundamental changes in the company. Some examples are improving a company’s digital ecosystem and creating a digital asset for the future, managing contractual risks (from a financial perspective) etc. These are not usually listed as every day, but an experienced finance person, whether in-house or outsourced is able to lend a hand where its’ most crucial for a small business. Leadership Today, the CFO has a very strategic role in being available for the inner circle of key decision makers, including but not limited to the C-Suite executives and shareholders. With the disruptions happening on the digital side of “doing business”, the pressures on a modern finance guy is immense. Adapting and adding value to a challenging leadership scene has become a primary goal for any CFO who wants to make a difference. To do or not to do In a lot of ways, having someone look at your organization independently – numbers, plans and the strategic direction, is immensely valuable. With an outsourced CFO, you don’t run the risk of “keeping them on” if they don’t bring value to the table. A lot of small to medium sized enterprises, now bring on exceptional individuals on a project basis to guide them through a major business face – such as an exit. To sum up, here is a quote from Simon Kelly, Outgoing CFO and COO, Nine Entertainment Co as shared with Ernst & Young on their CFO Stories Segment, “The traditional CFO part of the role takes up approximately a quarter of my time today and has done for the last few years. The other 75% of my time is really working very closely with the CEO, the senior executive team and with the board to dynamically craft, develop, and challenge the company’s strategy and to oversee the execution of key strategic initiatives. You need to be very agile. I think the core CFO expertise is the ideal foundation for somebody to take a leadership position in the business." Sources and references http://focuscfo.com/services/what-does-a-cfo-do/ http://www.investopedia.com/ask/answers/04/042204.asp https://strategiccfo.com/the-role-of-the-cfo-chief-financial-officer/ https://www.accountingtools.com/articles/2017/5/14/chief-financial-officer-cfo-job-description https://www2.deloitte.com/us/en/pages/finance/articles/gx-cfo-role-responsibilities-organization-steward-operator-catalyst-strategist.html http://www.ey.com/gl/en/issues/managing-finance/ey-cfo-program-dna-of-the-cfo-embracing-disruption#the-corporate-athlete

In our opinion, companies leak efficiency and consequently cash due to two main issues, Zero or limited automation Lack of business planning In the e-book presented, we discuss how to use integrated automation to your benefit in Part 1 and in Part 2, we explain planning for streamlining business goals to its realities. Integrated Automation and Business Planning Note - The ideas presented in the e-book are proprietary to Wolfe Strategies and Evalua8 Corp, please provide back links to our respective websites for reusing any part of this material. Source links - https://www.evalua8.com/copy-of-xero-for-china #pdf #article #Bournemouthstartups #startups #entrepreneur #Bournemouthbusiness #perfomancemanagement #businessprocess

“There's a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us” - Selina Kyle (Catwoman): The Dark Knight Rises (2012) When you’re building a product, taking it into market and “hustling” to get jobs in, the last thing on your mind is creating controls for your business. Most small business owners tend to think, “Sure, we’ll worry about that when we get big” or we shrug it off as “that’s for them big companies” Fact - it’s not. From day one of forming and running a business, thinking about best control measures is important. We sometimes even habitually put some in place. When organizations grow fast in terms of revenues and team sizes, weak internal controls and lack of processes can be a roadblock to achieving operational efficiencies. In an SME controls have to be seamless and smart. It shouldn’t be an impediment to its ultimate goal – efficiencies for product / service delivery. Who is responsible? When the team is five-members big, every person has the responsibility to ensure that the right controls exist. But without doubt, the buck stops with the CEO. When we study metrics such as COBIT or ITIL, it becomes evident that the person ultimately responsible for digital strategy is the CEO. Applying the same principle to a small business, the founder or the CEO equivalent has the accountability to think through control metrics that should be in place. This has to flow through to the early team members. When the thought process for best controls exist among the first team members, new hires will have a framework to follow and improve upon. Encourage the why It’s easy for small business CEOs to fall into the trap of, I built the business and I know what’s best for it. It’s understandable. When time and resources are scarce, you want to put something in place and move on. That’s also the biggest reason why you should encourage the “why”. This is key to keeping innovation alive. In the enthusiasm to create best controls, we may end up creating too many of them. We live in a world that produces tech at the speed of light. Information dissemination happens at split seconds and we sit on too much data all together. Given this state of affairs, internal controls should be fashioned to solve issues, without creating a new set of processes that only locks in time and resources. Smart solutions that has in-built controls A lot of products in the market are targeted at small businesses. So it is important to look for ones that are thoughtfully designed. We have been working on Xero and its add-ons for six years now and have a background in internal audit. When you look at how this system has been designed, you can see that there is deliberate thought put into solving issues. Features like two-factor authentication, user level accesses, assurance dashboard (a real-time heatmap of user activity), audit trails etc ensures that you are buying into a solution that’s got the basic faculties right. When you look at CRM systems, ticketing solutions or POS, invest time into understanding how they deal with information stored on back-end systems. Read the T&Cs and privacy policies before deciding whether it’s reflective of your risk appetite. In simple words – don’t buy anything that you wouldn’t be comfortable selling yourself. Another product we love is HelloSign - an electronic signature facility that's legally accepted and have strong in-built controls. Man-machine integration We love solutions that eliminates the human effort. the human effort. And we are at that stage where many manual processes are indeed automated. At the same time, there are still processes that need a human interference, and we don’t mean that in a negative way. The solutions used in a business should be well-integrated to the psyche of the people using them. Unless this key element is considered before controls design and implementation, it will most likely fail. Simple instance –we don’t need physical sign offs for purchases as user-level access controls on accounting systems can take care of the approval processes. But if the person who is to approve the bills does not want to spend time logging in and sifting through them, the bills will pile up, thus making a good process redundant. Here is when you have to find work around solutions. Perhaps divide the process as, getting the books updated and creating payments in the bank. As long as payments are approved by the right person via online banking, the end goal is still met. Doubtful payments will not be made and can be flagged as suspicious or needing more input. A framework is necessary Internal controls or processes if viewed as “a waste of time”, will always be an impediment to successful implementation and subsequent adaptation. You simply can’t have processes in a business that suits everyone. But lack of good controls will manifest when delivery becomes awry - small businesses today simply cannot afford this. A proactive control environment goes a long way in creating an operational atmosphere that is well-integrated and have the ability to be legacy solutions. Notes and references 1. All pictures used in the article are allowed for commercial use. Most are from pexels.com 2. About COBIT 5 Business Framework 3. ITIL - Details and references - https://www.itil.org.uk/ 4. COSO and the internal control framework - https://na.theiia.org/standards-guidance/topics/Documents/Executive_Summary.pdf #article #internalcontrol #entrepreneur #Bournemouthstartups #Startups #Bournemouthbusiness #smartcontrols #COBIT #ITIL

I met David and Angela in the summer of 2016 to speak about how to manage the numbers for their portfolio companies. Their investment management company held interests in several entities across the UK, Beijing and Singapore. Their issue – extreme difficulty in understanding financial performance of the group companies. With the companies maintaining their books of accounts in each individual jurisdiction to suit its audit and compliance requirements, there was no centralised system that depicted the whole picture. Beijing was a specific challenge as the ground records were kept in Mandarin (to suit tax and compliance reasons). To have the details extricated and presented in English took time and effort – costs being spend on it was not justified. Their question to me was simple, “Is there a way to streamline this and for us to be able to see what is going on?” My solution – consolidate them on the cloud. And, accounting professionals who work with the cloud will agree to that thought in a heartbeat. The pain point of the story is real. Over the years, I have spoken to VCs, equity firms and even some individual investors, who have similar concerns. There is no one way of doing things – but I believe a combination of man and machine could bring the desired outcomes in terms of visibility. Here are the top reasons why I recommend anyone who manage a portfolio of companies to have their finances consolidated on the cloud. Note – I have cited examples from Xero in this article as it is my software of choice. Other cloud software could offer similar facilities. Data that’s visible and accessible This is a no brainer, and yet: even now, companies are stuck with archaic methods of maintaining accounts. Consolidating data belonging to different companies under one umbrella is a significant step – one that brings the power of the “instant” to financial records. With software like Xero, an investor can access different companies where he has stakes via a single platform. You simply click on the organisation you need to see from a list of companies you have access to, Image Credit – Xero blog - https://www.xero.com/blog/2012/07/sniper-release-little-features-big-impact/ At login, you have a dashboard that summarises key data – bank account balances, cash position, pending invoices, payments to be made etc. You don’t have to wait for your portfolio company to send you the reports you need to see. The interface is easy to use and mostly self-explanatory. It can also be customised to show you the things you need to see on your landing page. Trend Analysis Some amount of effortless data analysis is possible on well-engineered software like Xero. I say effortless since Xero has these clever hacks that’s very visual. Like the blue graph that appears below the cash/ bank accounts – tracing the daily balances over the month. (See image below) Or, the graphical representation of money owed under Sales, David (from the above example) shared an incident when we were going through the numbers once. A former employee needed to book a flight ticket and insisted that the usual spend on the same was in the region of “XXX” dollars. As a frequent traveler, David felt this was excessive, but he had to go through a few bank statements to check the historical spend on travel to satisfy his curiosity. Should I explain why he is a “former employee?” Once we had this data on Xero, the information became available in a consistent format with the relevant details. Better still, it is just a click away. A marked improvement over pouring through bank accounts to trace your spending. For David and Angela, this meant immense peace of mind – that a system is available to check your numbers when you need it. Cost and time save This particular feature is attached with almost all new technology. After all, any new tech that does not save time or cost or both, is useless to modern business. Is cloud accounting a cost saver – Yes. How? There is usually a question of – does it get rid of people who do the j0b? Technically, yes if you like to handle admin, you could replace your bookkeeper. Practically – I would say it doesn’t eliminate the need for a professional who knows the job. It would make life easier and simpler in terms of updated numbers and the same being accessible. Noticeable cost saves include lower set-up and maintenance costs. Nevertheless, a significant save for any business - It takes less time and associated costs to make a decision. We will stretch that thought a bit and think about what should happen during a funding round. As we know, the financials at this stage are crucial. If a company’s numbers are available in a consistent format that can be accessed by the right people, the decision to provide funding could be reached a lot faster, from the financial perspective. From the perspective of a portfolio company, there is a tremendous amount of time and cost saved by eliminating the need for expensive clean-ups just prior to a funding round. This is equally true for early stage investors looking to exit at a Series A or B or larger funding rounds. Engage the investor with the ability to display your numbers in a non-fussy and transparent manner. And, collating the information that’s required by the investor’s finance team is a lot easier with the right cloud tools. Here is a representation of a simple virtual financial due-diligence room. A Virtual Financial Due-diligence room 1. This is a simple representation to show that much of a financial due diligence process can be managed online with the right tools. 2. We have shown different stages / phases in the process and it’s not exhaustive. The process followed by each investor group differs. The sequence shown here is to draw a logical conclusion that the process can be taken from a start to finish stage online. But as we know, many of these activities are inter-related and happen in conjunction with the other. For eg – an NDA will get signed before information is shared under normal circumstances. In the case of known parties and existing documents, this may not even happen. Similarly, communication is active through-out a fund-raising process. 3. To maintain simplicity, we have only mentioned a few pieces of tech. With the type of industry a company belongs to and the processes they follow, there could be more software tools involved. Eg – inventory add-ons or custom reporting / consolidation software etc. The Bottom-line We live in a time where getting information is easy, the internet is full of it. But yet, information that has the power to influence a decision is still elusive. With small-business numbers, the data that is crucial for decision-making can be easily "only a click away". No fuss and minimum hassle, it’s never too late to start this conversation with a portfolio company. As investors, you need to have first have knowledge of a company’s financial performance and not just what is sent over in an excel sheet. With the pressure to perform, installing stable processes often goes on the back burner with a portfolio company - and herein an investor can play a crucial role. It’s never too late to capture the cloud. References 1.http://www.cimaglobal.com/Documents/Thought_leadership_docs/Management%20and%20financial%20accounting/effects-of-cloud-technology-on-management-accounting.pdf 2. The pictogram for the virtual due diligence room is proprietary to Evalua8 Corp. Usage for the same is licensed under Creative Commons - CC BY-NC-ND license type. Read the license legal code / deed here - https://creativecommons.org/licenses/ #article #Xero #Venturecapital #managementaccounting #CFO #UnitedKingdom #UKAccountants #introduction

Small business is getting more complicated by the day and small business owners are aware of it. Increasingly they’re turning to consultants to help handle the complexities. In fact their ability to tap into external resources is becoming critical to their business success. A Xero study found that successful business owners are: 2.4 times more likely to seek outside advice 1.6 times more likely to have an excellent relationship with their financial advisor The trend towards using consultants puts you in a unique situation to partner with clients to grow their businesses, and yours Businesses are asking for more advice Small and medium-sized businesses, and high-growth businesses, now feel the need to have a sounding board – someone they can reach out to before a big business decision is taken. Accountants and legal advisors are becoming that sounding board. They’re consulted on questions like: “How do I grow from a $100,000 a year business to a $1 million a year business?” “Where can I improve internal processes? “Are we ready to hire our next team member?” Even that last question is more complex than it looks. Traditionally we might check the figures to see if the business can afford a new hire – but the issue is probably deeper than that. A modern business owner isn’t necessarily asking if they can afford an employee, they’re asking if they need one. They might want to know how many customers one staff member can handle before they reach tipping point. Where does the work and quality begin to suffer? Business owners are starting to look for sophisticated advice. That’s where you can begin to take on a virtual CFO role for them. Cashflow is often the first conversation Many small and medium-sized business owners don’t have the skills to deal with cashflow issues in an organized manner. When not managed properly, those problems can lead to business failure or, at the very least, stress and distraction. These business owners need a trusted advisor to take on a CFO role and build strong financial foundations, so they don’t dread bills and payday anymore. As a result, it’s probably the first invitation you’ll get to come in and expand your role in their business. You can help them: budget and manage cash more effectively develop better invoicing systems follow-up overdue accounts access invoice financing, if necessary Helping clients improve their cashflow situation will relieve a lot of anxiety and vastly improve their outlook. Use it as a first step to a bigger, wider-ranging advisory role. You don’t have to do it all Most of us understand there’s an opportunity to deliver more accounting services to our clients. But we’re often so snowed under by day-to-day work that we don’t have the time to move to a new paradigm and take on a CFO role. Besides which, we can’t be an expert in all things. That’s why we need to collaborate with peers to deliver the advisory services that we don’t necessarily specialise in. There’s no need to be afraid of referring clients to specialist bookkeepers or accountants. If a client brings you an issue that you can’t help them with, your next best option is to find them someone who can. It allows you to: keep the client in your network of trusted partners attract reciprocal referrals deliver value to your client You’ll still be the person who facilitated a solution for your client’s issue – so you’ve given them value even if you don’t do the work yourself. In your CFO role, you can be a generalist with connections – someone who knows how to make things happen. "Helping clients improve their cash flow situation will relieve a lot of anxiety. Use it as a first step to a bigger role" The CFO role requires deeper client relationships Go through your clients and book time for them to come in and talk about their business. I don’t charge for this. Just listen and gauge how you can add value. Don’t mention anything in this meeting about playing the CFO role for their business, and don’t try to sell them anything. Just take notes and form ideas. The questions I ask to drive the conversation include: “What’s your business culture?”This is to see if they’re seeking aggressive growth or a steady approach. “What’s your biggest concern?” Are they having trouble with people, processes, or cash flow? “What do you want out of this business?” I’m interested to know their hopes for the business, themselves and their employees. CEOs and founders love to answer these questions. They’re great icebreakers before you jump into the minutiae of numbers. I’ve found this can be an emotional experience. As a third party, I’m making them look at their business in black and white. A lot of clients are at a loss to answer questions like “What’s the aim of the business?” or “What does your exit look like?” Without a clear vision for the future, they’ll ultimately lose out to competitors with more cash, better marketing, or more market share. Using the numbers to demonstrate value If the client or prospect has Xero, I might review their latest management reports ahead of the meeting and pencil areas that look out of whack. They might include long-pending debtors or negative working capital. I don’t want to scare them with the data – the idea is to say “You need help and I can help you.” Give them a framework to measure progress If you take on the CFO role, your next step will be to give your clients some concrete steps and tools. You need to create a roadmap. Say, for example, they have a financial goal to get to 20% net profit, month on month. You can do a combination of forecasts to tell them what their numbers should look like to get there, and that’s fine – but it’s just a starting point. To really help a small business owner, you need to provide a complete framework that includes: achievable budgets tools to measure the actions they take analysis of their performance on a month-to-month basis Teach them how to evaluate performance Once you’ve decided on the goals and the key performance indicators (KPIs) that you’ll use to measure them, the next thing is to keep clients engaged. Try setting them up with accounting software that has a dashboard. That will allow them to see bank balances, monitor cash flow, and track those agreed KPIs on their mobile devices, 24/7. The constant feedback on business performance will help keep them focused, but it won’t work without your involvement. There’s simply no substitute for human contact. Check in with them regularly to discuss what the dashboard’s saying. Help them interpret the information. Give them context and perspective. Help them troubleshoot issues and modify goals as they go along. The CFO role can be rewarding I recently had a meeting where I told a client he could afford to give his main developer a bonus. His reaction was very emotional. “Now I can prove this business amounts to more than talk,” he said. When I started the engagement, that was one of his main concerns. He was worried whether he would amount to anything financially and whether his business would become what his employees and clients wanted. With consistent effort and focus, we helped this client reach a goal that was a defining moment for him personally and professionally. For me, that’s satisfaction. And it’s the sort of fulfilment you get from filling a virtual CFO role. Just remember that you don’t have to supply all this expertise yourself. You just need to position yourself as the facilitator. You’re the advisor who’s opening their eyes to new ideas and new opportunities – and helping them get access to the help they need. This post was written originally for the Xero Blog The full article can be found here #Xero #CFO #managementaccounting #clientengagement #cashmanagement

Think Serengeti, Maasai Mara and a length and breadth of land so ancient and mesmerizing - everything about Africa signifies life as a whole. The last thing anyone would imagine is a clothing line created with the heart of Africa in mind. That's exactly what sibling founders George and Ross Okoye created. Presenting "Ages Apparel, African inspired - British Design" in this month's start-up story. Here's what happened, 1. How did it all begin? Stepping back to your roots and bringing that into the place where you are now doesn't come easy. My brother George wanted to start a brand for some time and even dabbled in selling tees to friends but it didn't really go any further than that. I was working as a Manager in a Call Center at the time and whilst on holiday in Egypt, I had a lot of thinking time. I decided that I didn't want to work in this environment any more and decided to help George achieve his dream of having a brand. He has great artistic talent and with a push could create something great. We both had vast customer service experience and I had a logical mindset and management experience too, which all together would make a good mix of skills for a team. Plus, as brothers there is great trust which we believe is important in business, so we teamed up and became partners. Once this was decided we were told about a business start up group called 'Outset' who hold free courses for budding entrepreneurs, so we approached them and took their business start up courses. This helped us find our focus and develop our key ideas more into the business you see today. 2. How do you manage your value chain? Tell us a bit about your business process from raw material to finished product stage Our processes vary depending on the product that we are creating but the t-shirt creation process goes something like this... (highly simplified version of course) Hold a meeting and decide what we want to achieve for the tee and who the target market is. George will draft a number of designs and we meet again to decide which is most suitable. Order and test sample tees to make sure the tee is of a decent quality, ethically sound and a good fit. Finalize the design and send to the screen printers. Attach custom tags. Quality assure all tees and package by hand. Set up a photo-shoot and get the tee online. Promote! 3. The designs you have are really fantastic, I am a happy customer myself! Africa is huge and wonderful - how do you decide what you want to portray with each edition in your collection? Thank you so much! It's always good to know when people are happy customers. The African inspired idea comes from our heritage. We have British, Irish and African heritage and we wanted to explore our African side a lot more. Our initial collections are of a Western view of wild Africa. We chose this as we were brought up with this ingrained on our minds - from seeing nature documentaries we see on TV and the Africa portrayed in books. From that we have the wild African themes you see in our work; the tribal artwork and the great animals such as lions, cheetah, elephants and rhinos. We know this isn't what all of Africa is like and that it is a diverse and wonderful continent with so much to discover - but as a starting point we want to focus on what we know. From there, we know our collections will mature along with our knowledge of Africa. Since we're taking so much from Africa we thought we'd give back to what inspired us in the first place. We give £1 to the 'African Wildlife Foundation' for every tee sold. What's more - it's a great feeling every time we give! 4. What's the biggest challenge you face running your business? Since this is our first business almost everything is a steep learning curve. Honestly, I would say building and growing a business with limited funds is the biggest challenge. We have to think very hard about everything we do and whether we have the money to do it. We both quit our full time jobs to run Ages Apparel and with all the profits we make going back into the business or to charity; it makes earning in the short term rather tricky. Luckily we both still live at home so that does rather help! 5. Last but not the least, what's your big learning as an entrepreneur? I think one of the most striking things about starting a business is how helpful other entrepreneurs are. We have had a lot of help and support from many different people and I'd just like to thank them now, THANK YOU! Many people probably don't realize the time that goes into everything. This is a full time commitment and if we weren't so driven we wouldn't be where we are today. You can find out more about Ages Apparel at - http://www.agesapparel.com #article #entrepreneur #africa #AgesApparel #Fashion #Bournemouthbusiness #Bournemouthstartups #creativedesign