FD's Diary: Stock take surprises
The FD's Diary is sponsored by Exchequer Software
February 28 ' After 3½ days in bed, I dragged myself back in today. It's year end stock take day! Who would want to miss that?
Well, I would if I could, but really felt that wasn't on. We look like we're fairly well prepared. We're never an untidy company but on a quick walk through this morning it looks like Ops has everything really spick and span, which will help when we get going this afternoon and evening.
#3 and 1 are supervising. AJ's got a different task. The auditors agreed with us that stock we are holding at our new UK third party supplier is not material. But they also pointed out after discussion that we have never actually checked their certificates so AJ got the job of going. I thought this a good idea since, as I told her, it would be good to have someone in the department who could smooth talk them if we ever had problems.
I'm not sure whether this influenced her choice of stock take attire. To wear one of our company's T shirts (albeit a small one) and fleece seems OK. To match it with a denim mini (or is it micro?) skirt less so. There has to be a rule somewhere that says I must not notice a member of staff's hemline when it is near enough at my eye level when she stood by my desk this morning, but if there is, I plead guilty to having breached it. This skirt was even shorter than the one I complained about when she came here for our audit.
A brief word with #3 resulted in this one being delegated. As #3 then reported, her logic was simple; the chance of getting dirt on a skirt that size is less than anything else and the tights could be thrown away.
Well maybe, but we kitted her out with a set of overalls and steel capped boots before she left (smiling, I think, at the mileage claim to follow). But I note she hadn't put the protective garments on, so somewhere in the UK today some warehouse-people are in for what the male component at least will think a pleasant surprise.
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February 24 ' With the best will in the world I'd like to write about the discussions Ops and I have had on the new product range.
But my head is thumping. We seem to have a bug in the office (and not one planted by either of the shareholders).
So it will have to wait. I'm going home.
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22 February ' Had a chance to catch up with Ops today.
He seems in a panic about stock takes for the end of the month. We do spread it around a bit when every van holds some, for starters.
I'm in a panic about getting cash in and I'm also quite keen to stop it flowing out for the next few days. If the CEO likes cash on the balance sheet I'm keen to have some on it at the year end. Which means we in accounts are on the war path of our (now relatively rare) late payers.
And both Ops and I are keen to be rid of the 'troublesome division' before the year end, but I fear my absence has not helped and I can't see how that will happen now. Still, a post balance sheet event note will probably do just as well.
But at least I've got the dividends out to those whom we serve in accordance with the agreed minutes of the last board meeting. And if keeping the shareholders happy is all that running a business is about (as I recall someone once taught me to be the case a very long time ago) then clearly nothing else matters.
I wonder; had the person who thought that ever run a real business? Silly question, I guess. I think they called themselves an economist.
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21 February ' Coming back from holiday has always been a bit of a nightmare but email just seems to have made it so much worse. I didn't bother to check how many there were in the Inbox at the start of the day ' but it was hundreds.
I know some people whose mails I can almost always ignore ' they are the 'cc' addicts. Others I have to take seriously, and maybe it is some indication of the time I spend on mails each day that I spent much of today clearing the backlog in my Inbox, and the replies to the replies etc.
Like most people I think email has a use, but how far can it go before it hinders, rather than helps?
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February 11 ' Someone mentioned the other day that I should bear in mind my new duties to undertake CPD. They did assume I am an ACA in doing so, but that (I confess) is the case and so they are right.
This morning I'm sitting struggling to come to terms with succinct minutes for yesterday in my capacity as company secretary. It makes me wonder. Is this an area on which I should be taking a course?
Mind you, I'm not going to wonder for long. Next week is half term and I'm off (well, officially). Please get no grand ideas. This FD does not do the slopes in February. I'm in charge of the offspring because their Mum is at work, and I've got 1001 things to do on the house.
I've never been wholly convinced that a change is as good as a rest.
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February 10 - If anyone was to be a non executive director here I'm sure they'd earn most of their money for enduring the stress of attending at director's meetings. The best you can say of them is that they don't happen too often.
Today's experience was not good. Mrs CEO had not set eyes on the CEO since "the girlfriend" had arrived in the latter's life. It might be apparent that she hates his guts, but she's still quite capable of being jealous. And it manifested itself by her being present, and pretending to be absent.
She arrived with her accountant in tow, and he promptly said he would speak for her during the meeting. He made clear for her that if she wanted to intervene she would indicate this to him, he would ask for the meeting to adjourn, taker her instruction and would then indicate when we could resume. In the circumstances it was a good job we'd decide to hold this fiasco in a local hotel. The sight of us trooping in and out to her tune would not have been edifying at the office where such maneuverings would have been more than obvious.
The wisdom of tabling as much as possible in advance was apparent. The accounts went through with little more question than that we justify the entertaining budget. Mrs CEO clearly thinks someone is having a good time at her expense. We decided we'd quash this for the future. I suggested we add a schedule to the accounts showing what each director's expenses are. She agreed. And I'm not too unhappy. It should make P11D preparation easier. It might even help the case for getting a dispensation for them!
The budget was harder. The CEO can see we're developing free cash flow. He wants it. And being unambiguous, she wants to prevent him getting it. Her point was simple. They agreed a shareholder agreement with a pattern of payments in it. And she wants to stick to it.
This debate was not easy. We adjourned three times. During each adjournment Ops and I decided it prudent not to be seen to be discussing matters with the CEO or we'd be seen to be in cahoots with him if she or her lackey came out. What a farce.
But we broke the impasse by asking to present the idea for the new business. We suggested that if this worked it would absorb the current additional cash whilst improving long terms earning potential and the value of the business whilst not impairing the agreed level of shareholder reward.
I've got to say Ops and I made a good double act. After adjournment 3 the lackey agreed that we should present a more detailed plan to integrate this proposal with the main budget and show the cash flow impact. The CEO had to agree this made sense. We moved on, and with energy sapped other issues such as approving the budgeted dividend fell into place without further rancour.
We did not adjourn to lunch.
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February 8 ' The board meeting is on Thursday.
Finalising the January accounts today. We don't always get things done this fast ' but it seems pretty important in view of the need to get the budget through, forecast the opening balance sheet and see if there are any other issues to decide upon.
I have another reason. As the year has gone on things have begun to look good. Given that we have had cash flow issues on occasion, the problem with Belgium, the troublesome division and so on, we're still going to do better than budget in most areas.
I still think we have big issues to look at on the margins. Maintenance has been reorganised in part so that some of the old, absurd, working practices have been reformed but I'm sure we can do more. And we're still overstocked as a result of the Belgium issue, but that's heading for correction now.
What we really need though is the chance to break out of the constraints we're in. This is where Ops and I have our new idea. We've decided to bounce it on Thursday if other things go well.
What is it? Well, we've always been at the expensive end of our market. No harm in that in my opinion if the customer is willing to pay. But in practice it wasn't really a marketing decision. It was just a legacy of pricing to cover costs which were themselves too high and, thankfully getting away with it. No one can call that a strategy.
What's happened since we've worked with the British alternative to the Belgian supplier is that we have, with their help, seen better ways of doing some things. For example, some things that we've been visiting regularly to check up on to monitor can in fact be self regulated now, and the kit can, effectively page us to say 'help, I need attention'. Early trials suggest that whilst this isn't perfect (no surprise there) it could still cut the number of required visits substantially. That means we suddenly have the option of offering a cheaper service.
Now, there's no point in destroying a high price market when that's not needed by undercutting ourselves. But with care, we can focus on some markets we just haven't been able to hit before and selectively price for them to win business. We'd give the service a different name, the installation would look different, and the call out times might be different. But basically we'd add volume. And density of customers is key when you have people on the road in vans anyway.
See why we like it?
But will our shareholders?
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February 7 ' Never, ever buy an all female staff cakes when all of them, unbeknownst to you (despite, they say, the matter being regularly discussed in the office) are on a diet.
Unless of course, you want to eat the cakes yourself.
Actually, the last option was quite agreeable, and after accepting some fairly heavy ribbing on the whole issue of weight (of which the least said the better in my case) I think goodwill was restored. Indeed, #3 came to see me to say she wasn't at all sure they had done enough to support me, so I needn't have worried in the first place
So maybe it wasn't such a bad idea, after all.
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February 4 - Friday, and I admit I have the blues.
I'm dead beat. Junior might now be bright and bouncing, playing as if nothing happened just over a fortnight ago. He's even rather proudly showing off his scar to all who want (and maybe don't want) to see it. For some time to come I think it's going to be as good as any war wound ever was. But for the rest of the family it's amazing how tired we all are. It's as if our entire stocks of adrenalin were drained by the experience we went through and there's nothing left to give.
So my fuse is shorter than it should be. AJ was having real problems with a supplier yesterday and I fear I didn't give her the support she deserved, and I was little better with #3 when she raised some stock anomaly issues we'd like to clear on the January management accounts. Even the almost anonymous (as far as this diary is concerned) #5 probably has reason to gripe about me after I muttered under my breath when someone had to raise a payroll query with me rather than her because she (probably fairly) said she could not understand what their problem was.
I think I'd better buy some cakes today.
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February 3 ' Well, I took the bull by the horns and phoned the new auditors about PAYE on line filing.
I have to say I was impressed. They told me I could do it myself. They have no issue with that. They were happy to send me all the stuff. The fee would be nominal.
But they also put a proposal to me. Our year almost exactly coincides with the financial year. Our payroll is material to the audit. They would like to review the overall quality of the payroll process. One way they could do that is by us supplying our year end file to them for review, along with the P11D data which they think is a high risk area (and so do I).
If I want they'll link part of their audit to a review of our file, and then submit it on line through their portal. The cost would be reduced to reflect the dual benefit of the work.
I bought it.
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1 February ' You'd have thought the Revenue would have better things to do than send me a P35 on 31 January. But they managed it all the same.
Which reminds me that the new auditors have been banging on to me about the need to get our act in gear on electronic filing. Given the number of staff we have we have no choice about this ' and I must ensure we are organised in time. Anyone got any experience to offer?
At the same time has anyone got a nice reply for the ex CEO who has, as predicted begun to raise questions about the budget along the lines of 'why are you planning to retain some cash in the business?'. Clearly the new girlfriend is costing a lot.
I guess I'd like to say 'because you won't agree to the bank's overdraft arrangements', and perhaps I should. But I'd just like something a little more subtle than 'because otherwise you'll bleed us dry without a lifeline in sight'.
Hi ex dearly beloved has yet to raise any such question. Indeed, her only response to issues of late has been to ask that we make sure that the foreman taking over the troublesome division is given every chance to make it work (which makes me wonder whether she's just playing Mrs Nice to his Mr Nasty).
Overall I don't regret what I did in getting the shareholders out of here. I'm quite sure I'd have been long gone if I hadn't. But there are days when I wonder how sustainable this arrangement is. And we still have the board meeting to do next week.
In January the FD won the AccountingWEB Personality of the Year Award and then discovered that work is far from being everything in life. But February dawns with his son recovering well from surgery and new problems on his desk.