Do you use your platforms (available resources) effectively? Read this article for support on Supply Chain SMEs

Continuous evolution has become the norm today. Similar to other businesses, Supply Chain Organisations have been through series of challenges and disruptions. The ways of the past century will not position you as a supply chain leader in this century. While there is immense pressure to survive in the supply chain market, with low margins and high competition; it is important understand and exploit these problems to convert them into opportunities. Your business could be facing challenges in one or in multiple areas in the supply chain. However, you have to sustain supply to customers without interruption. It is not the scale of your operation, but the management processes what makes the difference in success of the business.

What does it take to be a future-ready, high yielding supply chain business? Considering resource utilization (platforms) is vital in finding a solution to this.

One of our clients in the supply chain approached us to obtain assistance in improving the speed and cost to improve their bottom line. We analyzed their entire process, and our resultants were able understand and remove non-value add steps, identify and utilize internal resources that were not at full capacity. We improved their bottom line by 20% within two months of implementing these improvements.

Supply chain organization must use their platforms (available resources) to perform well in the industry. This can be categorized under three main areas;

1) Business as a service

2) Communication

3) Technical expertise

1). Business as a service – This mentality helps you to look at the entire spectrum of the business;

Business owners in Supply Chain Organisations should consider that they are in the service industry; this enables you to exploit shift changes in the industry and utilize resources at full potential. This includes shipping containers, vehicles, machinery and storage space. Revisit your storage mechanism to minimize the storage cost. This might require you to redesign certain products and packaging. Evaluate the resources available and their contribution to the delivery process.

SandS can assist you to understand correlation between resourse utilization and service delivery. We can also collaborate with you to implement an effective resource utilization plan

2). Communication and networking – Use your network to manage and expand end to end service delivery;

Communication and networking should be a key component in any business. Specially in the Supply Chain industry, you should have a connection between your customer portfolio, third party suppliers and vendors. This enables the business to stay connected, manage, and act on opportunities swiftly.

SandS resultants can assist you to create powerful communication platform connecting all your stakeholders to create a more profitable end-to-end Supply Chain process.

3). Technical Expertise – A method to leverage on knowledge, cost, time and quality

Outsourcing gives businesses access to technical expertise and operational maturity without requiring investment in capital-intensive assets and fixed overheads. Supply chain processes have many tasks that can be outsourced to improve performance and reduce costs. Finance & accounting activities, customer call centre and vendor coordination are few of the examples. In the next five years, it is expected that the most successful and profitable companies will be those that outsource middle office functions to optimise their supply chains end-to-end.

SandS can assist to identify the processes that qualify for outsourcing skilled taskforces to complete the work.

Written by Nara, ACMA, CGMA (CIMA-UK), MBA (ICFAI University). Nara is a Commercial Accountant at SandS Australia. She has 15 years of experience in business, finance and accounting in senior managerial roles helping analyse, identify, and drive business growth

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Strategic Purchasing can Improve Profits!

An organisation’s purchasing department plays an important role in supply chain management. Purchasing includes activities such as selecting suppliers, negotiating, administering contracts, placing orders, developing & maintaining a supplier base.

Purchasing cost has a direct impact to cost of goods sold and has a significant impact to profitability. At the same time strategic decisions of the organisation, product pricing structure and cost has a direct impact in formulating the purchasing process of the organisation. Hence purchasing has a direct impact with the strategy of the organisation and profitability.

Though many business owners think purchasing is a very direct process and does not need a plan or a strategic approach about it; they tend to revisit procurement only after incurring losses. This document explains suggestions on strategically managing the Purchasing function.

1. Purchasing function should be centralised

Even if you manage a small business let this function to be handled by a specific person or a team. This eliminates wastage and allows obtaining price reductions from the suppliers.

2. Plan Purchasing

Categorise your purchasing requirements based on priority and level of quality of the goods/ materials required. Start building a pool of suppliers which will eliminate dependency on one supplier. Maintain a policy to build relationships with suppliers with a long-term aspect. Arrange daily, weekly, fortnightly, monthly purchasing plans based on your production demand. There has to be rigid structure for approvals when bulk purchasing. It is also required to maintain different authority levels when the purchasing value changes.

3. Consider possibilities of outsourcing

Based on the gravity of the purchasing function in your organisation, you can consider outsourcing a certain percentage of the procurement process. Specialised outsourcing companies in supply chain industry will have more efficient ways of negotiating compared to an individual organisation.

4. Purchasing should be based on real time demand

Purchasing quantity has to be based on real time demand. This will minimise wastage and storage cost. Demand calculation should be well planned and monitored. This can vary from organisation to organisation.

5. Impact on liquidity

Purchasing has an impact on working capital management of an organisation. It is important to ensure that the purchasing strategy does not have an adverse impact on the cash balance of the company. There has to be constant negotiations with suppliers to enjoy maximum credit period / commission.

Written by Nara, ACMA, CGMA (CIMA-UK), MBA (ICFAI University). Nara is a Commercial Accountant at SandS Australia. She has 15 years of experience in business, finance and accounting in senior managerial roles helping analyse, identify, and drive business growth

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Payroll Management tips for SMEs

Payroll management refers to managing employee’s financial records. This would cover salaries, allowances, deductions, and bonuses etc. Payroll management is undoubtedly one of the crucial processes involved in running your business. It directly affects the morale of your employees, so any delays or errors might result in employee dissatisfaction and ultimately you would lose your employees.

As a small business owner you may encounter several issues when managing payroll either manually or with the help of software. You would have to be up to date on changes to regulations failing which you would incur penalties. When payroll is processed manually it ends up taking a lot of time. Manual payroll processing is also more prone to errors.

Outlined below are some payroll management best practices that would ensure the payroll process at your organization is efficiently managed.

1. Consider automating the payroll process

If you are currently maintaining payroll records manually, consider automating the process with the help of payroll management software. Most payroll software options are integrated so you would be able to link it to your other business software such as the time tracking software and accounting applications.

2. Ensure you process the payroll on time

Once you have decided on the pay frequency i.e. weekly, fortnightly, monthly, set up a payroll calendar with the dates you need to complete the various tasks involved. This would involve setting deadlines for collecting time sheets, running the payroll and finally paying your employees. It is important that you keep your employees aware of the pay calendar so that there is no confusion.

3. Protect your payroll related data

Sensitive data such as banking details of your employees need to be protected. Any physical copies of payroll related information need to be securely locked up at all times with access provided to only authorised personnel. If there is any sensitive information that needs to be disposed, it needs to be done in such a manner so that no third party is able to access the sensitive data. For instance uncollected pay slips should be shredded prior to disposing the same.

4. Get professional help if required

As an owner managing a small business, payroll management may not exactly be your strength. It may be worthwhile handing over the reins to an expert in the field which would free up your time, allowing you to focus more on your business strategy.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Managing employee expense reimbursements

It is normal for employees to pay for work related expenses out of their pocket. As an employer you would have to ensure that these expenses are duly reimbursed and hence the need for you to have an employee reimbursement policy at your organisation. This article aims to set out how you can establish an employee reimbursement policy so that you can keep your employees happy and ensure there is no adverse hit to your costs.

Having a policy in place will act as a safeguard from fraud as there is a possibility that employees may claim fictitious expenses, manipulate bills or submit bills relating to personal expenses. Moreover, it would improve overall efficiency as employees would be less likely to submit claims for expenses that are not covered by the policy.

This would reduce the time spent by the employee, approving Manager and Finance Team in relation to processing claims.

Below you would find the recommended tips to better manage employee reimbursement at your organization.

1. Define reimbursable expenses

First identify common expenses that that are claimed for reimbursement at your organization. Review the expenses to identify what would and would not be covered under your reimbursement policy. Some examples of reimbursable expenses would be transportation costs, meal cost, stationery cost and communication cost.

2. Establish limits

To prevent employees from misusing the reimbursement policy ensure that you set clear limits on your expense so that no employee overspends on purpose to exploit this. Where required have a maximum limit for expenditures. For expenses like international travel a per diem can be established.

3. Set out a process

Have a system in place for employee reimbursements and educate your employees on the same. Employees should be informed on how they need to submit their reimbursement claims and who needs to approve it. Also the employees should be notified on how claims will be paid i.e. whether separately or if it will be added to the payroll.

You can consider automating the process with the help of an expense management tool which would reduce manual work involved in this process. The receipts can be viewed digitally any time reducing the need to maintain hard copies.

4. Track expenses

Keep a watchful eye on the claims made and flag down any expenses that do not meet your reimbursement policy. This can be simplified with the help of an expense management tool.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Optimizing your Accounts Receivable

Efficient account receivable management is an integral component of managing the cash flows of any business. Poor invoicing or collection processes can result in lost revenues and liquidity problems. If the liquidity issues prevail, the company may face risk of bankruptcy.

Any business needs to have a defined policy on how accounts receivable will be managed. If a policy is not in place, profitability could be adversely affected as the Company may have to incur additional costs such as collection costs and bad debt losses. Capital costs may rise as they would have to resort to other funding methods to raise cash for their day to day expenses.

We at SandS have listed out the areas that you need to focus on when designing an accounts receivable policy for your organisation,

• Credit checks

• Contracts

• Invoicing

• Collections

1. Credit checks

The customer’s credit worthiness needs to be carefully assessed with the help of information obtained through credit rating agencies. This should be combined with in house business judgement based on past experience.

2. Contracts

Determine and document all terms of the customer agreement in writing upfront, before any goods or services are provided. The terms should include the scope of work, payment method and timing and collections (timing, penalties for late payments). The contract could also cover the process to be followed if the customer were to be dissatisfied with the goods or services provided, to avoid this becoming a collections issue.

3. Invoicing

Bill customers timely and accurately, and make sure the invoices get to the right person. With the help of email or accounting software, invoices can be shared electronically which helps save on postage costs and gives customer quicker access to their bills possibly resulting in faster payment.

4. Collections

Establish a collections policy that works for your business and customers and follow it. This should cover how the outstanding amounts would be collected and when to send reminders.

We at SandS are committed to ensuring our clients are able to collect their dues within the credit period given. We review the ageing reports on a weekly basis and based on the client’s collection policy follow up on any long outstanding dues.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

How to effectively manage your time

Time is undoubtedly the most crucial resource that business owners have. Many owners tend to feel they lack the time to get all their work done as a result of their packed schedule, hence there is a need to understand how time should be effectively managed.

By practicing good time management you can become more focused and productive. The time saving tips outlined below will help you to get more work done and avoid working long hours.

1. Plan ahead

Make sure you have identified the set of tasks that you intend to complete during the week. Failure to do so could lead to inefficiencies and wasted time. The tasks in your daily to do list need to be prioritized based on their importance and urgency. Try to develop a structure you can stick to, such as allocating the mornings to emails and the afternoons to meetings or interviews. Also be prepared to re organize your schedule if priorities suddenly change

2. Learn when to delegate

Don’t hesitate to delegate work that you don’t have time for. This gives you the much needed time to focus on your core business. First step is to identify those tasks that do not require your direct involvement. These activities can be delegated to employees working under you who have the required skills for the task.

Alternatively you could consider outsourcing such back office tasks. It allows you to enlist the help of experts in the field to complete the task thereby yielding better results. We at SandS are happy to help free your time spent on administration tasks. We provide support in functions ranging from accounting and book keeping, payroll, debtor management, reporting, invoice processing and filing of tax returns.

3. Avoid distractions

Distractions could steer you away from fulfilling the tasks in your to do list. As a business owner it is important that you avoid distractions such as phone calls, emails or interruption from your team. Once you lose your concentration after a distraction it may be difficult to regain it so keep your phone on silent mode when attending to important tasks. Close your office door during the time period you don’t want to be disturbed so your employees know that they need to check in with you at a different time.

4. Track your time

You can use a time tracking tool like Toggle to track your time spent. This helps you analyze the activities that waste your time so that you can take measures to cut down your time on such activities. By tracking your time you can also identify those activities that consume a lot of your time, and try to come up with ways of improving your productivity.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

Principles of Risk Management. How to avoid unexpected losses?

Risk management is the process of executing decisions that will minimise/eliminate the adverse impact of risk in an organisation. Risks are situations that detriment profitability, liquidity and continuation of an organisation. Different risk categories impact organisations differently. In a business, risk can be classified as strategic risk, financial risk, operational risk, compliance risk and reputation risk.

Most of the time, SME level organisations raise the question “We do not have resources to invest on Risk Management “. This is not a costly process if you know your business well and the principles of Risk Management. On the contrary failing to have a Risk Management process in your company will lead to irrecoverable damages and losses.

International bodies and authorities have laid down various principles of Risk Management. This article contains a summary on Risk Management Principles to support SME businesses. These areas have been practised and implemented by most of SandS existing clients.

1. Organisational context

Maintain a fair review of macro economical factors impacting your organisation. This means factors such as Political, Social, Legal, and Technological, Societal etc. This won’t cost you much if you have a better understanding on your organisation and how it is connected to the macro environment.

2. Communication

It’s important to maintain transparency. Keeping everyone impacted informed of your decisions will support the risk management process positively. While retaining the authenticity of information, it should be disseminated among all required levels in the organisations.

3. Early warning indicators

Implement KPIs and measurements to flag early warnings. For an example, decide the outstanding debtor value for your organisation ageing 30-60 days. Create a mechanism to flag seniors in responsible areas when the outstanding debtor balance reaches 25% less than the threshold limit.

4. Review and continuous improvement

Ensure to embed a mechanism to review whether your risk mitigation plan is effective. You can analyse how well you have mitigate loss making situations since the time you have implemented this plan. It is also important to add improvements to the plan

We helped one of our client companies from Healthcare industry to set up their risk mitigation plan. One of the factors we considered in this process was the changes in the demand for online purchasing. We helped our client obtaining an analysis with numerical data. We also implemented a mechanism to monitor this to assess the saving. It helped him increasing his revenue only through online platform by 15%.

Written by Nara, ACMA, CGMA (CIMA-UK), MBA (ICFAI University). Nara is a Commercial Accountant at SandS Australia. She has 15 years of experience in business, finance and accounting in senior managerial roles helping analyse, identify, and drive business growth

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

How to prevent fraud at your organisation

Fraud refers to the use of deception to dishonestly make a personal gain for oneself and/or create a loss for another. According to the Association of Certified Fraud Examiners (ACFE), the world’s largest anti fraud organization, it is small and medium sized businesses that are the most susceptible to organizational fraud. They face fraud risks such as misappropriation of assets, check tampering, corruption, payroll fraud and claiming of fake expenses. The ACFE’s 2020 Report to the Nations identified 26% of fraud cases occurred in small businesses with fewer than 100 employees.

The fewer anti fraud controls at small businesses could be a reason for the increased fraud risk that small businesses face. There could be other contributing factors too such as employees performing several functions, staff lacking experience to detect fraud and the absence of formal procedures. Thus it is important that efforts are made to prevent and detect fraud as soon as possible. Elaborated below are some of the steps that you can take to prevent fraud at your organization recommended by SandS consultants.

1. Hire right

Make sure you carry out the necessary screening before recruiting employees to your organization. Review their previous employment records, criminal records and professional references to determine if they would be a right fit to the company. This would be more important if the potential employee is going to be handling inventory or cash.

We at SandS always recommend our clients to have a formal recruitment policy in place to ensure only the right candidates are recruited.

2. Don’t let one employee handle all the work

Divide responsibilities among the team, so no single employee controls the whole process. For instance in the Accounting function, processes like payments, invoicing, bank reconciliation and accounts receivable management should not be allocated to one employee, instead it needs to be allocated among the Finance team.

If your organization lacks the staff to do so, then consider rotating responsibilities every few months. This would serve as a deterrent to fraud as potential perpetrators would know that someone else would carry out their role for a period of time and hence their fraud would have a greater chance of being exposed.

3. Implement internal controls

Make sure a robust set of internal controls are in place. This involves having processes to safeguard your company’s assets, ensure the integrity of its accounting records, and deter and detect fraud and theft. Some examples of internal controls are access controls where only authorized personnel are provided access to financial data and multiple approval levels for payments.

4. Review the business bank accounts

Keep an eye of the bank accounts for any payments made to unknown businesses or individuals and missing checks. When employees know that the banking activities are being monitored they would be less inclined to carry out fraud as they risk being exposed if they do so.

5. Carry out audits

Conduct a surprise audit covering the high risk areas at least annually. The audit should look into cash, inventory management, financial records and any other relevant processes. This serves as a major deterrent to fraudulent activity.

6. Train your employees

It is important that the employees are trained in preventing and identifying fraud. Have a whistle blowing policy in place so that employees can report any fraud that they have identified. This method facilitates anonymous reporting so they won’t face any pressure from their colleagues for reporting the fraud. The company should be committed to treating all disclosures seriously as employees will not make disclosures if they feel no action would be taken.

Written by Zara, ACMA,CGMA, BBA(Accountancy & Finance). Zara is a Finance and Commercial Executive at SandS Australia. She has 4+ years’ experience in Auditing, Finance and Accounting which helps her drive business growth.

Edited by Sam Mansoor. Chartered Management Accountant, CPA, Chartered Global Management Accountant, Dip. Equity Trading. He has over 30 years’ experience helping businesses achieve immediate and long-term success.

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