Was Your Friday Black This Year?

You would know if your company closed its’ books nightly!

Nightly closing of your accounting books allow for immediate reconciliation, so that you can identify and correct posting errors/miscoded items, generate net revenue/ledger balances, and create daily statistical performance metrics for a more accurate analysis.

Would you like to be able to go into your business unit and have some current gauge of the income statement’s profit position at a time frame when changes could be made to affect the final outcome, or would you rather wait for over two weeks after the month ends to find out that there was a negative bottom-line growth; after you were not able to do anything about it?

Although nightly closing of your business unit’s accounting books may not be as feasible for you as some other industries, the mind-set of it is not. Does your business unit have timely, up to date, and accurate accounting books for management to make critical business decisions when they need the information the most? If not, you need to.

Soft accounting closes are not that challenging. Just make sure that outputted numbers are taken into consideration and everyone is aware that there is some “flex” in the numbers. In my judgment, something of a current financial picture is better than none at all.

If daily conditions, factors, and circumstances are “change agents” that determine a business unit’s cash flow requirements and affect its bottom-line results, then would you not want to get some picture of how those “agents of change” are affecting the accounting statements in quicker time frames than the current ones in place now? Many of today’s accounting software programs can immediately generate some sort of preliminary statements with the push of a button, so why have you not added that to your weekly operational review checklist? Your views on how to use accounting statements must be parallel with the real world views, DAILY, because the change that is driving the supply-and-demand grid around your business unit can be viewed through these statements.

This is ground level thinking for “big picture” successful business building. You can make a difference in your business unit’s financial success by having the mind-set that your books close nightly.


http://theprofitrepairman.com/

Pennies Really Do Add Up In Your Small Business

I remember a story told to me as a young boy. It goes like this: In a far off land, many years ago, there was a very poor man that went in front of a king of a very rich land and offered to work for the king for that day for just one penny, and if the king liked his work, the poor man would continue to work for the king every day after that first day for a total of thirty consecutive days.

The only contingency to this payment plan for the king was that for every day that went by that the poor man worked, the king would have to double the poor man’s previous days wage from the first day’s wage of one cent for thirty consecutive days. After those thirty days, the king would then pay the poor man in full for his thirty days of labor (example, day 1=.01, day 2=.02, day 3=.04, day 4=.08 and so on). Well, the king just knew that he had a sucker in front of him. He thought that he could get the poor man to do a lot of work for him without paying him very much money.

Do you know what happened next? At the end of those thirty days, the poor man made $5,368,709.12 a day and the king owed him $10,737,418.23, due in full at the end of the thirtieth day! The king forgot the exponential factor of the money doubling and never asked about what the poor man was earning daily throughout the month, because to the king, a penny meant very little and could never add up to any real amount of money.

The story ends like this: the king was broke, the poor man rich, and the moral of the story is that a penny really does add up. So focus your attention on each penny within your business unit.

If you save just two widgets a day by training the staff not to waste those widgets, and those widgets cost fifteen cents each, you would save $109.50 a year. This would be just the tip of the iceberg for savings within your business. There is a penny to save here and a penny to save there. Just look around, and when you are done, over time, that penny will multiply to thousands of dollars a year that your business unit can bring down to the bottom line, by simply remembering that “A penny really does add up!”

http://theprofitrepairman.com/