This time last year I sat down and worked out how much I earned per hour for 2007, and wasn't too happy with the figure.
Earnings per hour = total annual sales / 2000 hours
Therefore I made a decision to increase it by 50%, and guess what? I have achieved my target revenue for 2008!
So now I am setting another target for 2009.
What about you?
How did I achieve my target revenue? I consciously have that figure in my mind, & will not take on jobs that pay me lower than that rate. Did it price me out of the market? I don't think so, because I know I provide a much higher value to my clients.
If you have a team of sales people working for you, you can extend this concept to each sales staff and you can work out how much they are worth to you per hour, and you will not want them to spend another minute longer on un-productive work!
Read also my take on Should you wash your own car
Dec 25, 2008
Dec 23, 2008
MYOB : Focus on SMEs
Surviving the Recession : Be prepared.
As a business owner, the current slowdown in the economy is the best time for you to sharpen your saw, put your house in order, and step up the marketing.
Managing the cashflow is one of the main concerns of all businesses, especially so for small and medium enterprises (SMEs). As the economy gets tougher, businesses need to be more efficient in managing their resources - money, people & time.
Knowing your numbers - your break-even sales , your fixed costs, your receivables, your payables, your stock level, your bank balance - will go a long way to help you plan your next move in the business.
And you cannot rely on the old-fashioned way - manual or using Excel spreadsheet to churn you those numbers fast enough. Most of us do not know enough of Excel spreadsheets to be able to produce reports that an accounting software can.
If you are one of those who's guilty of putting the receipts and bills in a shoebox for compilation at the end of the year, it's time you recognise that management tools like MYOB software are built to help you run your operations in a smarter, better and more efficient way.
Only by knowing your real financial health or state of your business, in real time, can you hope to grow and ultimately make more money.
Investing in tools like MYOB Accounting software is exchanging money for time.
And as a business owner, you should be aware of your real cost.
Adopting a management tool cost (lots of) money; while relying on the excel spreadsheets is 'free'. However, remember that every time you request a staff member to prepare a report that could otherwise be printed without any further effort, you are actually expending precious resources (time) which could be use for more productive tasks.
Quotable quotes
If you think education is expensive, try ignorance.
As a business owner, the current slowdown in the economy is the best time for you to sharpen your saw, put your house in order, and step up the marketing.
Managing the cashflow is one of the main concerns of all businesses, especially so for small and medium enterprises (SMEs). As the economy gets tougher, businesses need to be more efficient in managing their resources - money, people & time.
Knowing your numbers - your break-even sales , your fixed costs, your receivables, your payables, your stock level, your bank balance - will go a long way to help you plan your next move in the business.
And you cannot rely on the old-fashioned way - manual or using Excel spreadsheet to churn you those numbers fast enough. Most of us do not know enough of Excel spreadsheets to be able to produce reports that an accounting software can.
If you are one of those who's guilty of putting the receipts and bills in a shoebox for compilation at the end of the year, it's time you recognise that management tools like MYOB software are built to help you run your operations in a smarter, better and more efficient way.
Only by knowing your real financial health or state of your business, in real time, can you hope to grow and ultimately make more money.
Investing in tools like MYOB Accounting software is exchanging money for time.
And as a business owner, you should be aware of your real cost.
Adopting a management tool cost (lots of) money; while relying on the excel spreadsheets is 'free'. However, remember that every time you request a staff member to prepare a report that could otherwise be printed without any further effort, you are actually expending precious resources (time) which could be use for more productive tasks.
Quotable quotes
If you think education is expensive, try ignorance.
Oct 17, 2008
Is being self employed, being in business?
Running a business is not kid's play. When I first started out doing consultancy work, I thought I was in business. How wrong was I. I was merely changing employers.
As an employee, the boss is the paymaster. As a self employed person, I am the paymaster.
And as a paymaster you have to wear many hats and pick up many skills, FAST! You have to learn how to sell (your skills), learn how to manage people (employees, customers, suppliers), learn how to market your products (advertising, the media), learn how to operate the gadgets (and also learn how to fix the gadgets when it fails) and much much more.
Along the way, you pick up 'business skills' or 'entrepreneurial skills'.
Here's some quotes which i find relevant
Rory Laing
It’s serious, business, it’s not a game. And you put your heart and soul into it, otherwise don’t bother at all.
Michael Gerber
If your thinking is sloppy, your business will be sloppy. If you are disorganised, your business will be disorganised. If you are greedy, your employees will be greedy, giving you less and less of themselves and always asking for more.
Tacitus
Not because of any extraordinary talents did he succeed, but because he had a capacity on a level for business and not above it.
Warren Buffett
Many people who are smart, articulate and admired have no real understanding of business. That’s no sin; they may shine elsewhere. But they don’t belong on corporate boards.
Neil McConnelee
If you think you know everything then you probably don't understand much at all.
Peter Rip
There is only one way to grow the bottom line - make the business algebra actually work.
Anon
You’ll always get what you always got if you always do what you always did
Duke of Wellington
Call on a business man at business times only, and on business, transact your business and go about your business, in order to give him time to finish his business.
BC Forbes
The man who has won millions at the cost of his conscience is a failure
As an employee, the boss is the paymaster. As a self employed person, I am the paymaster.
And as a paymaster you have to wear many hats and pick up many skills, FAST! You have to learn how to sell (your skills), learn how to manage people (employees, customers, suppliers), learn how to market your products (advertising, the media), learn how to operate the gadgets (and also learn how to fix the gadgets when it fails) and much much more.
Along the way, you pick up 'business skills' or 'entrepreneurial skills'.
Here's some quotes which i find relevant
Rory Laing
It’s serious, business, it’s not a game. And you put your heart and soul into it, otherwise don’t bother at all.
Michael Gerber
If your thinking is sloppy, your business will be sloppy. If you are disorganised, your business will be disorganised. If you are greedy, your employees will be greedy, giving you less and less of themselves and always asking for more.
Tacitus
Not because of any extraordinary talents did he succeed, but because he had a capacity on a level for business and not above it.
Warren Buffett
Many people who are smart, articulate and admired have no real understanding of business. That’s no sin; they may shine elsewhere. But they don’t belong on corporate boards.
Neil McConnelee
If you think you know everything then you probably don't understand much at all.
Peter Rip
There is only one way to grow the bottom line - make the business algebra actually work.
Anon
You’ll always get what you always got if you always do what you always did
Duke of Wellington
Call on a business man at business times only, and on business, transact your business and go about your business, in order to give him time to finish his business.
BC Forbes
The man who has won millions at the cost of his conscience is a failure
Sep 16, 2008
My Raving Fan
Today I got a call from one MYOB user. He informed me that he is leaving his present employment to join another employer, and he never fails to keep me informed every time he makes an upward career move. This is his 4th move in 10 years. And every time he joins a new company, I get a new sale of MYOB software.
This user and I go back a long time, some 10 years ago. His first employment (an orthodontist) is one of my first few MYOB implementation. And being new to MYOB, I was not so well versed in all the features. And he being fresh from college, was not competent in computers or computerised accounting software. Together we preserved and finally implemented MYOB at the workplace.
The nurses enter the patients details, and prints and the sales receipt from MYOB Accounting software. The doctors get their sales report broken down into types of services, and the accounts department completes the payments to suppliers. I am proud of this implementation because till today, the nurses are still using MYOB system to issue the receipts to patients. The nurses come and go, but they managed to teach each other before they leave employment (that's how easy it is to transfer MYOB knowledge). So if the nurses can use MYOB Accounting in their daily work, there is no stopping others. (no offence meant to the nursing profession, just an example, of how easy it is to use MYOB)
I have many users who are my raving fans. Every time they change employment, they inform me, either to find a replacement for them, or to buy another MYOB software for their new employer. My comprehensive training, amongst others, does the trick, I guess.
This user and I go back a long time, some 10 years ago. His first employment (an orthodontist) is one of my first few MYOB implementation. And being new to MYOB, I was not so well versed in all the features. And he being fresh from college, was not competent in computers or computerised accounting software. Together we preserved and finally implemented MYOB at the workplace.
The nurses enter the patients details, and prints and the sales receipt from MYOB Accounting software. The doctors get their sales report broken down into types of services, and the accounts department completes the payments to suppliers. I am proud of this implementation because till today, the nurses are still using MYOB system to issue the receipts to patients. The nurses come and go, but they managed to teach each other before they leave employment (that's how easy it is to transfer MYOB knowledge). So if the nurses can use MYOB Accounting in their daily work, there is no stopping others. (no offence meant to the nursing profession, just an example, of how easy it is to use MYOB)
I have many users who are my raving fans. Every time they change employment, they inform me, either to find a replacement for them, or to buy another MYOB software for their new employer. My comprehensive training, amongst others, does the trick, I guess.
Aug 10, 2008
MYOB Asia launches latest version of MYOB Accounting software
MYOB Asia (the publisher of MYOB software for Asia) has launched the latest version of MYOB Accounting v18 and MYOB Premier v12. Also included in this latest launch is MYOB Premier Plus v12.
What's new in the latest version, as compared to the previous version? I want to highlight 2 new interesting features.
1. Spelling check.
Something seemingly unrelated to Accounting, but equally important if you want to present a professional image to your customers. MYOB software can now check the spelling in your sales, purchase and item information. It checks for misspelled words, and the user can have a choice to add the word to to the spelling dictionary or to ignore the word. For example, the word 'Petaling Jaya' is considered a misspelled word in the dictionary, but it is a valid spelling of the city I am living in! So I add it to the dictionary, and in future if I spelled it as 'Petalign Jaya' (which I always do), then it will highlight to me my typo error. Cool!
2. Enhanced search feature
There are now more options to sort information in the Cards,Items, Activities and Locations list. Example of search filters for Cards List are : phone number, email address, city and postcode, while for Items list, you can search by Primary supplier and Supplier Item number.
MYOB Premier Plus v12 has a new Payroll feature suitable for Malaysian companies.
Other features was introduced to make working in MYOB a breeze.
To learn more about the new features go to MYOB website
Note : Upgrading your file from an older version can be done in minutes. Try it out
What's new in the latest version, as compared to the previous version? I want to highlight 2 new interesting features.
1. Spelling check.
Something seemingly unrelated to Accounting, but equally important if you want to present a professional image to your customers. MYOB software can now check the spelling in your sales, purchase and item information. It checks for misspelled words, and the user can have a choice to add the word to to the spelling dictionary or to ignore the word. For example, the word 'Petaling Jaya' is considered a misspelled word in the dictionary, but it is a valid spelling of the city I am living in! So I add it to the dictionary, and in future if I spelled it as 'Petalign Jaya' (which I always do), then it will highlight to me my typo error. Cool!
2. Enhanced search feature
There are now more options to sort information in the Cards,Items, Activities and Locations list. Example of search filters for Cards List are : phone number, email address, city and postcode, while for Items list, you can search by Primary supplier and Supplier Item number.
MYOB Premier Plus v12 has a new Payroll feature suitable for Malaysian companies.
Other features was introduced to make working in MYOB a breeze.
To learn more about the new features go to MYOB website
Note : Upgrading your file from an older version can be done in minutes. Try it out
Jul 21, 2008
How to run an efficient restaurant business
The food business is people oriented. Most times good food comes with slow service. Not so with this Chinese restaurant
What makes this restaurant attract the crowd? It boils down to systemising the business. The owner has definitely covered most aspects of the bottlenecks that slows down a restauranter
1. Orderly system for the cooks. Each cook has a preparer assisting him. Thus the food can be cooked much faster and your food order is served at the same time.
2. When you ask for the bill, the waiter comes with the change. You hand him your money, he hands you the change.
3. The table is covered with plastic papers (not fine dining material, I know!), which is used to bundle-wrap the plates, bowls, cutlery and leftover food when the diner leaves. The next layer of plastic that covers the table is clean and is ready to seat the next diner. There is not need for the waiter to clean tables.
The owner clearly knows how to feed the hungry customer well.
What makes this restaurant attract the crowd? It boils down to systemising the business. The owner has definitely covered most aspects of the bottlenecks that slows down a restauranter
1. Orderly system for the cooks. Each cook has a preparer assisting him. Thus the food can be cooked much faster and your food order is served at the same time.
2. When you ask for the bill, the waiter comes with the change. You hand him your money, he hands you the change.
3. The table is covered with plastic papers (not fine dining material, I know!), which is used to bundle-wrap the plates, bowls, cutlery and leftover food when the diner leaves. The next layer of plastic that covers the table is clean and is ready to seat the next diner. There is not need for the waiter to clean tables.
The owner clearly knows how to feed the hungry customer well.
My client bought me this
My client bought me a wrist protection mouse pad because I asked where she got hers. She gave it to me for free, probably in appreciation of the smooth MYOB upgrade that I did for her the other day. Makes my day!
The soft gel provides support for my right wrist, when I use the the mouse.
Is there something to support my left wrist as well when I pounced on the keyboard?
Jun 9, 2008
Does your company name ends with the letter 'A'?
If you own a company whose name ends with the letter 'A', you may become a victim of con job. You should be on the alert for similar tricks.
The local newspaper highlighted 2 cases of business-owners who were duped by a man who seeks employment with companies with names ending with the letter 'A'. At the same time he will register a company with similar name, but with an additional letter 'I' at the end.
He will add the additional letter 'I' to the payee name on the cheque, and he then presents the cheque for clearance into the bank account of his newly registered company.
Thus, 'Kujiwa Corporation', will be altered to read 'Kujiwai corporation', and "Aluta Metal' is modified as 'Alutai Metal'.
How can you, as a business owner, prevent the occurrences of such con cases in your business?
Cheque-writing "Do's' and 'Dont's"
I would like to reproduce the words of caution that's printed on the front of the cheque book; some 'Do's' and 'Dont's' for your protection against forgery, fraud or other un-authorised alterations on cheques :
1. Write the payee name, amount in words, and figures left-justified, without leaving any unused spaces. Don't leave wide spaces for other words or figures to be added.
2. Rule through any un-used space with a pair of parallel lines.
3. Conduct regular reconciliation of cheques paid against bank statement.
4. Don't use laser printer, felt-tip pen, erasable pen or pencil, or other non-impact printing techniques to write cheques.
5. Don't give cheques to strangers, even if they represent themselves as Customer's agent. When in doubt, confirm with the other party.
6. Don't exchange cheques for cash with unknown persons.
7. Don't make alterations on cheques.
8. Don't use window envelope to send cheques by mail as this could reveal the contents when being held against the light. Use opaque or good quality envelopes
Customer management
1. Send regular statements to the customer. All overdue accounts should be closely monitored.
2. Have stricter credit control policies.
3. Make a record (in a 'cheques received' book) of all cheques received through the mail, and ensure that they are banked in immediately. Nowadays, most banks have automated teller machines (ATM) which allows you to bank in cheques during off-peak hours. Select the ATM which has scanning facilities which allows the cheques to be scanned.
4. If you entrust a sales person to collect customer cheques, you may want to cross-check the records of the sales visit with the payment collection records. Follow up with a courtesy call to the customer in cases where you suspect foul play.
Read Con man with 'A' certain penchant. The con-man absconded with a cool Rm 292,000 within 2 months.
The local newspaper highlighted 2 cases of business-owners who were duped by a man who seeks employment with companies with names ending with the letter 'A'. At the same time he will register a company with similar name, but with an additional letter 'I' at the end.
He will add the additional letter 'I' to the payee name on the cheque, and he then presents the cheque for clearance into the bank account of his newly registered company.
Thus, 'Kujiwa Corporation', will be altered to read 'Kujiwai corporation', and "Aluta Metal' is modified as 'Alutai Metal'.
How can you, as a business owner, prevent the occurrences of such con cases in your business?
Cheque-writing "Do's' and 'Dont's"
I would like to reproduce the words of caution that's printed on the front of the cheque book; some 'Do's' and 'Dont's' for your protection against forgery, fraud or other un-authorised alterations on cheques :
1. Write the payee name, amount in words, and figures left-justified, without leaving any unused spaces. Don't leave wide spaces for other words or figures to be added.
2. Rule through any un-used space with a pair of parallel lines.
3. Conduct regular reconciliation of cheques paid against bank statement.
4. Don't use laser printer, felt-tip pen, erasable pen or pencil, or other non-impact printing techniques to write cheques.
5. Don't give cheques to strangers, even if they represent themselves as Customer's agent. When in doubt, confirm with the other party.
6. Don't exchange cheques for cash with unknown persons.
7. Don't make alterations on cheques.
8. Don't use window envelope to send cheques by mail as this could reveal the contents when being held against the light. Use opaque or good quality envelopes
Customer management
1. Send regular statements to the customer. All overdue accounts should be closely monitored.
2. Have stricter credit control policies.
3. Make a record (in a 'cheques received' book) of all cheques received through the mail, and ensure that they are banked in immediately. Nowadays, most banks have automated teller machines (ATM) which allows you to bank in cheques during off-peak hours. Select the ATM which has scanning facilities which allows the cheques to be scanned.
4. If you entrust a sales person to collect customer cheques, you may want to cross-check the records of the sales visit with the payment collection records. Follow up with a courtesy call to the customer in cases where you suspect foul play.
Read Con man with 'A' certain penchant. The con-man absconded with a cool Rm 292,000 within 2 months.
Mar 25, 2008
Round to 5 sen
Effective April 1, 2008, all over the counter payments in Malaysia will have to comply with the rounding mechanism whereby the total amount of a bill will be rounded to the nearest 5 sen, thus eliminating the use of 1 sen coins. The 1 sen coin is still legal tender.
The rounding mechanism applies to the total amount of a bill, and not on individual items.
If the total amount of the bill (including tax) ends with 1,2,6,7, it will be rounded downwards; if the total ends with 3,4, 8,9, then the amount will be rounded upwards to the nearest multiple of 5 sen. For example, a total bill amounting to RM82.01 will be rounded down to RM82.00. If the total bill is RM82.03, it will be rounded up to RM82.05. If the bill is RM82.07, it will be rounded down to RM82.05.
According to the BNM guideline, the rounding mechanism is applicable to all payments, be it cash or non-cash (including payments by cheque and credit card).
The rounding table must be clearly displayed at the point of sale to ensure customers are appropriately informed.
The receipts/ bills / invoices should clearly state the total amount before and after the rounding adjustment.
Visit the Bank Negara Malaysia (BNM) website for a copy of the rounding table.
Amongst the reasons for introducing the rounding mechanism are:
1. reduce handling cost for business and consumer
2. reduce government's cost in producing new 1 sen coins as the demand reduces.
Note :
The 1 sen coin is still legal tender for a maximum of RM 2.00 (ie 200 coins) for other payments.
The rounding mechanism applies to the total amount of a bill, and not on individual items.
If the total amount of the bill (including tax) ends with 1,2,6,7, it will be rounded downwards; if the total ends with 3,4, 8,9, then the amount will be rounded upwards to the nearest multiple of 5 sen. For example, a total bill amounting to RM82.01 will be rounded down to RM82.00. If the total bill is RM82.03, it will be rounded up to RM82.05. If the bill is RM82.07, it will be rounded down to RM82.05.
According to the BNM guideline, the rounding mechanism is applicable to all payments, be it cash or non-cash (including payments by cheque and credit card).
The rounding table must be clearly displayed at the point of sale to ensure customers are appropriately informed.
The receipts/ bills / invoices should clearly state the total amount before and after the rounding adjustment.
Visit the Bank Negara Malaysia (BNM) website for a copy of the rounding table.
Amongst the reasons for introducing the rounding mechanism are:
1. reduce handling cost for business and consumer
2. reduce government's cost in producing new 1 sen coins as the demand reduces.
Note :
The 1 sen coin is still legal tender for a maximum of RM 2.00 (ie 200 coins) for other payments.
Mar 15, 2008
Should you wash your own car? Time is Money
Should you wash your own car, or should you pay someone to wash your car for you?
The lazy me would automatically opt for outsourcing the car wash to others. The thrifty me would want to save the $10 I have to pay someone to wash the car and opt to clean the car myself. The health conscious me would take this opportunity to sweat it out.
How do you decide? Putting aside the health aspect, you may want to ask yourself how much would it cost to wash the car myself? Is it the $10 that is asked for, or does it cost more than that? In other words, what is the worth of an hour to you? Remember that Time is Money.
To calculate how much you are worth per hour, take your yearly gross income, remove the last 3 digits, and divide the number by 2. That will give you an indication of how much you are worth per hour.
Say, you earn $5000 per month. Your yearly income, excluding any bonus is $60,000, and your hourly rate is thus $30 (60,000 /1000 / 2).
In that case, if it takes 1 hour to wash the car, you would have lost the opportunity to make $30 in additional income. It would be better off to pay someone $10 to wash the car, and you spend that 1 hour on productive efforts, like reading a book on business, or take that time to phone your client to build a better client-supplier relationship.
I am reminded of this quote by Brad Sugars, Founder of ActionCoach.
The only difference between YOU now, and YOU in five years will be
... the books YOU read,
... the people YOU associate with, and
... the way YOU implement the knowledge into YOUR business
So, make full use of your Time!
Note :
The simple formula of calculating the hourly rate assumes an average of 2000 working hours per year :
No. of working weeks : 50 (52 - 2 weeks annual leave)
X
No. of working days per week : 5
X
No of working hours per day : 8
= 2000 hours per year
The lazy me would automatically opt for outsourcing the car wash to others. The thrifty me would want to save the $10 I have to pay someone to wash the car and opt to clean the car myself. The health conscious me would take this opportunity to sweat it out.
How do you decide? Putting aside the health aspect, you may want to ask yourself how much would it cost to wash the car myself? Is it the $10 that is asked for, or does it cost more than that? In other words, what is the worth of an hour to you? Remember that Time is Money.
To calculate how much you are worth per hour, take your yearly gross income, remove the last 3 digits, and divide the number by 2. That will give you an indication of how much you are worth per hour.
Say, you earn $5000 per month. Your yearly income, excluding any bonus is $60,000, and your hourly rate is thus $30 (60,000 /1000 / 2).
In that case, if it takes 1 hour to wash the car, you would have lost the opportunity to make $30 in additional income. It would be better off to pay someone $10 to wash the car, and you spend that 1 hour on productive efforts, like reading a book on business, or take that time to phone your client to build a better client-supplier relationship.
I am reminded of this quote by Brad Sugars, Founder of ActionCoach.
The only difference between YOU now, and YOU in five years will be
... the books YOU read,
... the people YOU associate with, and
... the way YOU implement the knowledge into YOUR business
So, make full use of your Time!
Note :
The simple formula of calculating the hourly rate assumes an average of 2000 working hours per year :
No. of working weeks : 50 (52 - 2 weeks annual leave)
X
No. of working days per week : 5
X
No of working hours per day : 8
= 2000 hours per year
Time is greater than Money.
Why put off a decision if it can be made today. You can never buy Time.
Today, I received a call from a prospect who has heard about the goodness of MYOB Accounting from a fellow business owner. However when he found out that the price rebate promotion had ended, he said there is now no urgency to buy the MYOB software. What a shame.
I agree that price is a factor when you are thinking of buying anything, but in this case, Time is a bigger factor that money.
Why do I say that? Where your business is concerned, lost time is lost money. If you can save 10 minutes per day doing something which the computer has been designed to do, you will have saved 41.7 hours per year (10 min x 5 days x 50 working weeks per year). Assume you can earn $100 per hour, then you would have been able to increase your income by $4170. Multiply that by 10 other tasks which the computer can do faster than a human. And compare that to the cost of the software. You can easily decide whether to invest the money in the accounting software or not.
Today, I received a call from a prospect who has heard about the goodness of MYOB Accounting from a fellow business owner. However when he found out that the price rebate promotion had ended, he said there is now no urgency to buy the MYOB software. What a shame.
I agree that price is a factor when you are thinking of buying anything, but in this case, Time is a bigger factor that money.
Why do I say that? Where your business is concerned, lost time is lost money. If you can save 10 minutes per day doing something which the computer has been designed to do, you will have saved 41.7 hours per year (10 min x 5 days x 50 working weeks per year). Assume you can earn $100 per hour, then you would have been able to increase your income by $4170. Multiply that by 10 other tasks which the computer can do faster than a human. And compare that to the cost of the software. You can easily decide whether to invest the money in the accounting software or not.
Feb 15, 2008
Bank reconciliation
Why is it important to reconcile your bank balance in accounting terms?
For a video tutorial of how to perform a bank reconciliation in MYOB Accounting, click Step-by-step tutorial for bank reconcilaition
First of all, we need to define Bank reconciliation.... It is the process of matching and comparing figures from accounting records against those presented on a bank statement.
Bank reconciliation allows companies or individuals to compare their account records to the bank's records in order to uncover any possible discrepancies.
The bank statement sent by the bank is a third party record of the payments and receipts made from the company's account.
The bank statement can flush out payments (or bank credits) which we would otherwise not known, for example, bank charges for outport cheques, stamp duty for issuance of chequebook, and interest for bank overdraft etc.
A bank reconciliation report will show:
1. Cleared Cheques
2. Cleared Deposits
3. Outstanding cheques
4. Uncleared deposits
All uncleared and outstanding entries in the bank reconciliation should be investigated for its authenticity, more so if it dates back more than 2 months.
If cheques remained uncleared for a long length of time, it may be because the cheque never reached the supplier, in which case, you may need to cancel and re-issue a new cheque. More importantly, it also sends out warning bells as to whether the services (expenses) was genuinely incurred or not in the first place.
Uncleared deposits, on the other hand, may mean that the collections were recorded but not banked in on time. If the period between recording and actual bank-in is too long (say, more than 3 days, for local cheques) you need to review your banking process to ensure that receipts are banked on timely manner. You may also want to investigate whether the moneys were received in the first place, because the recording in the books could be a mistake, or a fraudulent entry. And you need to take steps to ensure that the mistake / discrepancy is not repeated.
Another thing to note, the reconciliation procedure should NOT be done by
- the person who has access to the cheque book, or
- the person who signs the cheques,
- or the person who is responsible to deposit the moneys received
Preferably, bank reconciliations should be done by someone who doesnt't have any direct access to the Company's bank accounts.
In one case, the financial controller only found out about a cheque that was issued and cleared without his knowledge, when he was going through the bank statement. This resulted in an investigation and was traced to the work of the owner's son.
In smaller companies, it is not possible to segregate the functions, so it is very important for the business owner to review the reconcilation (bank balance, customer balances, supplier balances) to flush out any discrepancy, between the inter-related amounts.
For a video tutorial of how to perform a bank reconciliation in MYOB Accounting, click Step-by-step tutorial for bank reconcilaition
First of all, we need to define Bank reconciliation.... It is the process of matching and comparing figures from accounting records against those presented on a bank statement.
Bank reconciliation allows companies or individuals to compare their account records to the bank's records in order to uncover any possible discrepancies.
The bank statement sent by the bank is a third party record of the payments and receipts made from the company's account.
The bank statement can flush out payments (or bank credits) which we would otherwise not known, for example, bank charges for outport cheques, stamp duty for issuance of chequebook, and interest for bank overdraft etc.
A bank reconciliation report will show:
1. Cleared Cheques
2. Cleared Deposits
3. Outstanding cheques
4. Uncleared deposits
All uncleared and outstanding entries in the bank reconciliation should be investigated for its authenticity, more so if it dates back more than 2 months.
If cheques remained uncleared for a long length of time, it may be because the cheque never reached the supplier, in which case, you may need to cancel and re-issue a new cheque. More importantly, it also sends out warning bells as to whether the services (expenses) was genuinely incurred or not in the first place.
Uncleared deposits, on the other hand, may mean that the collections were recorded but not banked in on time. If the period between recording and actual bank-in is too long (say, more than 3 days, for local cheques) you need to review your banking process to ensure that receipts are banked on timely manner. You may also want to investigate whether the moneys were received in the first place, because the recording in the books could be a mistake, or a fraudulent entry. And you need to take steps to ensure that the mistake / discrepancy is not repeated.
Another thing to note, the reconciliation procedure should NOT be done by
- the person who has access to the cheque book, or
- the person who signs the cheques,
- or the person who is responsible to deposit the moneys received
Preferably, bank reconciliations should be done by someone who doesnt't have any direct access to the Company's bank accounts.
In one case, the financial controller only found out about a cheque that was issued and cleared without his knowledge, when he was going through the bank statement. This resulted in an investigation and was traced to the work of the owner's son.
In smaller companies, it is not possible to segregate the functions, so it is very important for the business owner to review the reconcilation (bank balance, customer balances, supplier balances) to flush out any discrepancy, between the inter-related amounts.
Setting up IT system - can I do it myself ?
Is it possible to setup an accounting system all by yourself? Yes and No.
Standard progam like MYOB Accounting, can be easy to set up. It takes less than 5 minutes to create a new company in MYOB. And within minutes, you can can print your first sales invoice. If in doubt, you can refer to the user manual which can provide you with a step by step guide to perform the functions that the programmers envision it to be. You could also access the online helpline for assistance.
So, in that context, setting up MYOB Accounting program is possible. However to get the most out of the program, you may want to engage a consultant to speed up the set-up. Consultants know the software inside-out, they have consulted for many similar business, and know the fastest and most efficient way to record a transaction. Consultants provide the support when you have queries or encounter problems with the program /hardware.
Consultancy fees may add to the total cost of acquisition, but it will probably ensure a smoother transition.
If you want to implement any new program yourself (or entirely by your internal staff), you should consider whether it is worthwhile for you/ your staff to take time away from their normal tasks, to learn something new. Also consider that rectifying poor work can be expensve.
A new staff member who states that he has used the same program in a previous employment may not necessary have the expertise to implement for a different entity. Sometimes they may not be aware of certain features which can make their work easier.
Standard progam like MYOB Accounting, can be easy to set up. It takes less than 5 minutes to create a new company in MYOB. And within minutes, you can can print your first sales invoice. If in doubt, you can refer to the user manual which can provide you with a step by step guide to perform the functions that the programmers envision it to be. You could also access the online helpline for assistance.
So, in that context, setting up MYOB Accounting program is possible. However to get the most out of the program, you may want to engage a consultant to speed up the set-up. Consultants know the software inside-out, they have consulted for many similar business, and know the fastest and most efficient way to record a transaction. Consultants provide the support when you have queries or encounter problems with the program /hardware.
Consultancy fees may add to the total cost of acquisition, but it will probably ensure a smoother transition.
If you want to implement any new program yourself (or entirely by your internal staff), you should consider whether it is worthwhile for you/ your staff to take time away from their normal tasks, to learn something new. Also consider that rectifying poor work can be expensve.
A new staff member who states that he has used the same program in a previous employment may not necessary have the expertise to implement for a different entity. Sometimes they may not be aware of certain features which can make their work easier.
Jan 14, 2008
Manager versus Leader
Business owners - are you a manager or a leader?
Knowing whether you are more a leader or more of a manager will help one gain insight and self -confidence in dealing with others and running your own business.
Managers are good at maintaining the status quo and adding stability and order. However they may not be good at instigating change and envisioning the future. Leaders, on the other hand, are good at stirring people's emotions, raising their expectations, and taking them in new directions. Leaders, however , may tend to be self-absorbed and pre-occupied.
As a business owner, you need to develop both sets of skills - leadership and management skills, whether they come naturally or not. Know where the gaps in your skill-sets, and acquire those that you lack.
The definite strengths and weaknesses of both types of individuals - managers and leaders, can be summarised below:
Managers
- emphasis rationality and control
- problem solvers (focus on goals,resources, organisation structure, people)
- persistent, tough-minded, hard working, analytical, tolerant,
- adopt an impersonal & passive attitude toward goals
- decide upon goals based on necessity instead of desire
- tend to be reactive
- views work as enabling process
- establish strategies and make decisions by combining people and ideas
- good at reaching compromises and mediating conflicts
- tolerate practical, mundane work because of strong survival instinct
- risk-averse
- prefers working with others
- focus on how things get done
- may be viewed as inscrutable, detached, and manipulative
- perpetuate and strengthen existing balance of social relations
Leaders
- perceived as brilliant but sometimes lonely
- control themselves before they try to control others
- can visualise a purpose, and generate value in work
- imaginative, passionate, non conforming risk-takers
- shape ideas instead of responding to them
- have personal orientation towards goals
- provide a vision that alters the way people think about what is desirable, possible and necessary
- develop new approaches to long-standing problems
- use their vision to excite people and then only develop choices
- focus people on shared ideals and raise their expectations
- strong dislike of mundane work
- relate to people in intuitive, empathetic way
- create systems where human relations may be turbulent, intense and at times disorganised
- continual struggle to find some sense of order
- do not take things for granted and are not satisfied with the status quo
- seek and support opportunities for change ( technological, political, ideological)
Read the entire article Managing versus leading
Logoworks Small Business & Home Business Newsletter
Knowing whether you are more a leader or more of a manager will help one gain insight and self -confidence in dealing with others and running your own business.
Managers are good at maintaining the status quo and adding stability and order. However they may not be good at instigating change and envisioning the future. Leaders, on the other hand, are good at stirring people's emotions, raising their expectations, and taking them in new directions. Leaders, however , may tend to be self-absorbed and pre-occupied.
As a business owner, you need to develop both sets of skills - leadership and management skills, whether they come naturally or not. Know where the gaps in your skill-sets, and acquire those that you lack.
The definite strengths and weaknesses of both types of individuals - managers and leaders, can be summarised below:
Managers
- emphasis rationality and control
- problem solvers (focus on goals,resources, organisation structure, people)
- persistent, tough-minded, hard working, analytical, tolerant,
- adopt an impersonal & passive attitude toward goals
- decide upon goals based on necessity instead of desire
- tend to be reactive
- views work as enabling process
- establish strategies and make decisions by combining people and ideas
- good at reaching compromises and mediating conflicts
- tolerate practical, mundane work because of strong survival instinct
- risk-averse
- prefers working with others
- focus on how things get done
- may be viewed as inscrutable, detached, and manipulative
- perpetuate and strengthen existing balance of social relations
Leaders
- perceived as brilliant but sometimes lonely
- control themselves before they try to control others
- can visualise a purpose, and generate value in work
- imaginative, passionate, non conforming risk-takers
- shape ideas instead of responding to them
- have personal orientation towards goals
- provide a vision that alters the way people think about what is desirable, possible and necessary
- develop new approaches to long-standing problems
- use their vision to excite people and then only develop choices
- focus people on shared ideals and raise their expectations
- strong dislike of mundane work
- relate to people in intuitive, empathetic way
- create systems where human relations may be turbulent, intense and at times disorganised
- continual struggle to find some sense of order
- do not take things for granted and are not satisfied with the status quo
- seek and support opportunities for change ( technological, political, ideological)
Read the entire article Managing versus leading
Logoworks Small Business & Home Business Newsletter
Jan 11, 2008
Tracking profit centres in MYOB
How to track the performance of each of your profit centres in MYOB.
MYOB uses the terminology 'Jobs' to help you group transactions belonging to various profit centres. You need to setup a 'Job Code' to represent a profit centre. Once you've created the Job Number, you can then allocate the transaction to each Job Number. Subsequently, you can use Job Reports to preview/print a report of the activities of each profit centre.
And in case you suffer from memory lapses once in a while, you can get MYOB software to remind you to allocate the Job Number to a transaction. You can also run an exception report designed to readily identify transactions that have not been allocated a job.
Cool?
Strong proponent of Doing Things Once Only
MYOB uses the terminology 'Jobs' to help you group transactions belonging to various profit centres. You need to setup a 'Job Code' to represent a profit centre. Once you've created the Job Number, you can then allocate the transaction to each Job Number. Subsequently, you can use Job Reports to preview/print a report of the activities of each profit centre.
And in case you suffer from memory lapses once in a while, you can get MYOB software to remind you to allocate the Job Number to a transaction. You can also run an exception report designed to readily identify transactions that have not been allocated a job.
Cool?
Strong proponent of Doing Things Once Only
Jan 10, 2008
When is a good time to computerise my accounting records
If you ask me, I will say, computerise your accounting records as soon as you start your business.
As business owner myself, I am aware that starting a new business is stressful - and it stretches ones' resources - time and money. There is a tendency to put buying a computerised accounting system the last priority.
However, having implemented MYOB Accounting software for more than 300 businesses at different stages of the business life cycle, I have enough evidence to conclude that companies which implement a system right at the start of the business have less stress on the resources than otherwise thought.
Yes, its true there is less invoices and expenses to account for in the beginning, and there is the uncertainty of when the first sale will come. But you started your business not to fail, so the customers will come. And when the customers come, there will be an avalanche, and then you might find there is a bottleneck in invoicing, collection and inventory recording. And the delay in getting the information (for example, amounts owing) will cause an un-necessarily strain in the resources.
One new convert to the MYOB computerised accounting system tells me that his staff takes 6 days to prepare the customer statements for 100 customers. This client delivers perishable stocks to the hotel industry on a daily basis (or at worst once a week). The handwritten delivery note serves as an invoice. The staff enters the details of invoice (invoice number and amount) onto an excel worksheet for every of the 100-odd customers. The spreadsheet is updated whenever the customer makes a payment. The entire process of preparing a customer statement the manual way takes some 6 days (including overtime hours clocked in). On top of that, they are not able to tell how much stock in total have been sold, and at what profit margins.
The other disadvantage of waiting too long before you invest in a computerised software is that you lose valuable historical sales data. This client is only able to spare the staff and time to enter transactions for the new year 2008 onwards. For the past year 2007, they will have to farm it out to an outsourced bookkeeping services to prepare the final accounts. This incurs some more costs, which could be avoided had they invested in the computer program since the beginning.
If you are starting a new business, do set aside some funds for the accounting system. The accounting system is a necessary tool in your business, far greater than any renovation that you intend to put up for the new office. Prioritise your needs and wants.
As business owner myself, I am aware that starting a new business is stressful - and it stretches ones' resources - time and money. There is a tendency to put buying a computerised accounting system the last priority.
However, having implemented MYOB Accounting software for more than 300 businesses at different stages of the business life cycle, I have enough evidence to conclude that companies which implement a system right at the start of the business have less stress on the resources than otherwise thought.
Yes, its true there is less invoices and expenses to account for in the beginning, and there is the uncertainty of when the first sale will come. But you started your business not to fail, so the customers will come. And when the customers come, there will be an avalanche, and then you might find there is a bottleneck in invoicing, collection and inventory recording. And the delay in getting the information (for example, amounts owing) will cause an un-necessarily strain in the resources.
One new convert to the MYOB computerised accounting system tells me that his staff takes 6 days to prepare the customer statements for 100 customers. This client delivers perishable stocks to the hotel industry on a daily basis (or at worst once a week). The handwritten delivery note serves as an invoice. The staff enters the details of invoice (invoice number and amount) onto an excel worksheet for every of the 100-odd customers. The spreadsheet is updated whenever the customer makes a payment. The entire process of preparing a customer statement the manual way takes some 6 days (including overtime hours clocked in). On top of that, they are not able to tell how much stock in total have been sold, and at what profit margins.
The other disadvantage of waiting too long before you invest in a computerised software is that you lose valuable historical sales data. This client is only able to spare the staff and time to enter transactions for the new year 2008 onwards. For the past year 2007, they will have to farm it out to an outsourced bookkeeping services to prepare the final accounts. This incurs some more costs, which could be avoided had they invested in the computer program since the beginning.
If you are starting a new business, do set aside some funds for the accounting system. The accounting system is a necessary tool in your business, far greater than any renovation that you intend to put up for the new office. Prioritise your needs and wants.
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