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FD's Diary: Plenty to think about
2 April – I should shut this month down. And I will after this entry.
But I’ve got enough to think about now over the weekend to keep me more than busy. I thought it was an innocent little question I posed and it seems others are right there on the same wavelength, if a long way ahead of me by the look of it.
So I’ll share some of the thoughts I’ve come up with. These are:
1) I don’t think we can really ditch the accounts; I know we’ll have to still do them
2) I agree though, they don’t tell most people what they want in any meaningful way (after all, anything which includes a number as daft as depreciation has to be a pretty poor basis for decision making, surely?)
3) So any reports I issue should focus on the key variables. I’ve tried to highlight what I see these as, but I think people are saying this is a team effort, and I like that idea. Will they though? Anyone got anything to say?
4) Some key features should be broadcast more often than once a month. I’m pretty obsessed with cash. Cash received each week would be a pretty useful start for a report – and weekly billing would be another. I note the practitioner on this site reckons he usually fails to bill in the first half of the month, and we have that problem too in our service work. With physical products the bill goes out with the goods, but we still get heavy tail end weighting in the month as a result. I reckon just reporting this would help put on pressure to resolve that. Anyone got any experience?
5) And I know I’ve got to look at the quality of forecast cash flow data. I’ll come back to that.
But that’s enough to think about for a weekend. I’m not quite sure what I’m letting myself in for here. I think a decent bottle has to be opened tonight!
* * *
March 31 – It staggers me that we’re a month after the year end already. I have however announced that I have no intention of producing management accounts for March. There are three good reasons. First, I haven’t got time as we continue to prepare for the audit. Second, we all know it’s been a quiet month. Third, very little meaningful data will result.
This is part of my thinking about data, and it’s a slight diversion, but it will also give me a chance to test a hypothesis. That is that most people, most of the time, don’t need management accounts, at least, not as we know them. Sorry to be quite so radical, but I reckon I can deliver most of the value of the accounts for March in much less time than the full management accounts would take by offering a summary report instead. My current feeling is that this will show:
1. sales by division, with comparison to budget and last year to highlight areas requiring attention
2. commentary on unusual purchases that have gone through the accounts this month (one division has bought a lot of stuff in anticipation of a big order to be shipped in May – I think it’s more useful to highlight this fact than provide a lot of data on other patterns which look pretty much normal – if only to highlight the risk in this contract to Ops and everyone else involved in it)
3. labour and salaries cost by division, and by comparison with budget and last year. As we have a quite an issue with labour control in several of our divisions and less on material usage this, anyway, usually says more about GP than anything else, so this should focus attention
4. debtor days
5. problem debtors to ensure they are on stop and action is being taken
6. creditors and any creditor issues
7. confirmation that all tax etc is being paid as expected and on time
8. cash balances and cash flow forecast.
Most of this is fairly easy to do – it’s dumped data form the accounts system without all the bells and whistles added that make up a full set of accounts. But, if I do it well, will it provide a lot of the data to get decisions made (like getting people on the stop list) which is what I really think management accounts is about?
I think this will take me much less time than the full accounts, but it will also be interesting to see reaction (especially from the shareholders) because in some ways this less might give them more than they’re used to.
I’m coming to the opinion that this thinking process might be dangerous!
And whilst I’m about it, thanks to those who have commented on OpenOffice. I’ve downloaded a copy to try at home – and have asked our IT chap to assess it too.
* * *
March 29 – This is not what I’m meant to be thinking about. I said I was meant to be thinking about information needs – but I fear that after the last month or so I’m willing to be distracted by IT, and several comments of late have not helped my focus.
Didn’t I say by the way that I bought the Palm keyboard? If not, my apologies – it is fantastic. It makes a good tool into what is nearly a portable computer. I already love it. If you can get hold of one, do.
And I’m sorry if I misled anyone by my knowledge of PDFs. Actually, I did know about the ability to break into them – Acrobat Reader 6 allows a “save in text” option as standard, so it’s clearly widely available. But I really wanted to issue PDF accounts based on spreadsheets – and that’s a lot harder to crack backwards than text – and for this the idea is still as valid as I said, as far as I can see. And let’s also be honest, most people won’t “undo” your PDF either. So I still think they’re really useful.
What I didn’t know about was OpenOffice – and I’ve looked at this web site with real interest but have yet to download a copy to try – although why anyone who wants cheap computing does not do so is hard to imagine. I know this is Sun being clever to recycle what looked like a dead product – but so what? After all, how many people really use all the features of Microsoft Office but feel compelled to upgrade for no good reason? If there really is an option for a viable, Office compatible alternative here I for one will feel compelled to look at it. If it offers a potential serious saving on IT costs, what FD would not want to investigate that? I think I have to, or ask my people to.
Are there any serious users out there who would comment for my benefit? I want to know more!
And, whilst you’re about it – and whilst I’m distracted, what else is there I should know about (and maybe buy in the next few days?) that is really good, useful, and maybe cheap software that seriously adds to productivity? Again, comments would be welcome.
* * *
March 24 – I’ve begun to give serious attention to what information this business really needs if we are going to make progress in the future. It’s a subject I suspect I will return to again and again.
The reason why this troubles me is that I realise for the first time that I’m really responsible for this show now, along with Ops. That has subtly, but definitely, changed my perception of what information I need. The historical perspective has always dominated my thinking if I’m honest. I was trained in an auditing office. Whether that was wise in retrospect is a good question – but it’s a fact, and that leaves a legacy of appreciation for historic data, whether it be annual or monthly accounts, or the debtors at the end of last week.
And I know I’ve always tried to provide management information such as cash flows and so on. It’s something we do. But that is now beginning to vex me more. I now want to know that the cash flow is right not because of professional pride, but because I want to make sure we’re solvent because it might come down to me in a way it never has before to solve the problem and make the difficult decisions if we’re not. So the future is now seeming as important as the past.
And frankly, that’s worrying. Because our systems, like most, don’t seem to handle this as well as they might now I really look at them. I’m going to have to do some thinking about this.
* * *
March 22 – Sometimes you come across something in IT you think so useful you should share it. I did the other day, and already know it will transform some parts of the way I work.
I downloaded some freeware called FinePrint and PDF Factory from http://www.software-partners.co.uk/ (with whom I have absolutely no connection). I should warn, for the safety conscious, I did this at home.
The software is stunning. FinePrint lets you print 2 or more pages to one of A4 at a time. And PDF Factory lets you build up PDF files from any number of sources (e.g. different bits of Excel files) easily and reliably.
I think the last feature is really powerful. I like being able to send tamper proof documents to people, and this makes it really easy. So easy we bought a group licence for the company to encourage the practice, which takes about 5 minutes to learn. Paying takes a rather irritating advert off what you produce, so it is worth it.
I note Ernst & Young have bought 110,000 copies. Well I’m sure that cost them less per copy than the price we paid, but for about £50 a head I reckon this will pay for itself time and time again. So I’ll share it.
* * *
March 18 – Call me selfish if you will, but I only had one wish of this budget, and that was that it did not severely upset the plan for the shareholders. That, you might recall was dependent upon cutting salaries to a much lower level (given they’re not working much) and paying dividends to make up the difference.
Well, I reckon I got my wish. We don’t (and I hope we will never) be in the 0% tax band, or even in the sub £50,000 margin. So as far as I can see it’s left us just where we were. If I work it out correctly, the new tax charge on dividends doesn’t apply to a company like us.
Which I call a relief. The rest of it I can leave to others. But I can’t leave reviewing the rubbish on our fixed asset register to anyone else. So that’s my task for the day.
* * *
March 17 – St Patrick’s day, but there won’t be much celebrating here. We’d been working on a debt for ages, and had been getting some payments in, but now they’ve gone bust. This already makes my year provision look on the low side. There’d better not be any more.
It’s still the sales side of things that bugs me on accounting. We have a database and we issue debt lists with stop recommendations, but how often are we noticed? Not often enough it seems. We’ve found a worrying trend of sales continuing when we think we’ve said stop, so Ops and I spent some time discussing this as we’d really rather not have the sale than lose on it. We got the sales manager in on this, and it’s clear we’ve neglected this after the first flush of enthusiasm last autumn at about the time #2 left (he’s got a new job by the way – had to write the reference. I stuck rigidly to the facts).
The method of invoicing we introduced then has worked because we eliminated most dual key stroking, and have one contacts database. At least, that’s what I recalled. But having this diary actually reminds me I knew about Goldmine and sales’ departments use of it last October, and I haven’t gone any further with it. And the trouble is, they are still using that as their sales database and none of the rest of us know about it, or look at it, or get reports from it, and they treat our stuff in about the same way.
This is a real problem. We have to now link their database to our Access database and Sage. Or at least we have to link Sage and sales to prevent bad debt if Goldmine can be used to trigger invoicing (which sales are still partly dual key stroking from Goldmine it turns out) and then be able to dump the information from Goldmine into Access for production planning and fulfillment as we know Sage can’t handle all our issues there.
Our IT guy got called in at this stage. Why can’t he be proactive? It’s all well and good keeping the system running, but we want more. So we’ve sent him away to look at this. Ops and I have agreed to think about what reports he wants and anyone who has anything to comment on Sage and Goldmine – please speak up now.
And I can’t moan about the IT guy too much – he set up my PDA for me as he felt sorry for me yesterday. I admit I like it, and the integration is a doddle. So is the keyboard. I suppose that’s one bonus for the day.
* * *
March 15 – Not a good weekend. My father in law died on Saturday. It wasn’t unexpected, he had cancer. And he slipped away peacefully, which was a relief. But such occasions make you realise what is important in life.
I was fond of Jim. He’d been good to me, and us. My wife had put a lot of effort into caring for him over the last few months. She was pleased to have had that chance. But now you think about funerals and things. And we realised that there is no one from his work life who will probably be there. OK, he’d been retired for 15 years. But even so, isn’t that telling? And he worked hard for one company for many years and put in the hours (which is why he retired slightly early after triple heart by pass surgery).
Jim realised his true potential in retirement. He became an excellent bowler. In that he achieved a pleasure and true success he probably never found at work.
In the last few months apart from work and dealing with family duties I (we) have done little else. It makes me realise that the work life balance is important and has to be built into the equation now that the shareholder issue might settle down.
I won’t worry if no one from works comes to my funeral one day. But it would certainly upset me if no else did either. And that's a risk if life is al work and no play. Sorry to share such a sobering thought.
* * *
March 11 – I note someone commented that this diary was just too smug. And that everything seemed always to work for me. How wrong can you be!
Sacking shareholders, that’s a doddle. You just sail by the seat of your pants, hope for the best, accept a P45 is a possible outcome, and Bob’s your uncle. But ask people to put their name on their work? You’ve got to be kidding. I’ve had three Excel sheets for the year end file today from different members of staff. Not one had followed all my requests. One had followed none. And not a single one had the name of the person who created it anywhere in sight. This is going to be a struggle. As Ops said when I moaned to him about it over a coffee, “What did you expect? Put their name on it and they accept responsibility. That’s what you’re paid for”. Think again team. I’m not giving in on this one, but it might be a struggle.
Oh, and someone else asked about the PDA. I have done something about that at last! I’ve ordered a Tungsten T2 and a Nokia Bluetooth phone (don’t ask me the number – they said it does the job). I also threw in a Palm keyboard. All three are small, light and seem functional. And the idea of having a keyboard virtually in my pocket appeals a lot – but there’s no way they built in ones on some PDAs meet my needs for producing things like this.
So, all it has to do now is turn up in the post. Then I’ll let you know if I’m more pleased with it than I am with my staff.
* * *
March 10 – I actually think things are returning to normal, just for the moment.
It’s been good to concentrate on such boring things as the year end. I’m a bit of a fetishist about my year end file. I hate to think the auditor’s will get one up on me so I always try to present as much information as I can in support of figures and so get away with no adjustments. You might think that boring, but I happen to think it’s part of the sport of the job.
So in the last couple of days each member of staff in the department has been given a series of tasks want them to work on and an indication of how I want them to present things. This has also given me a chance to tackle some of the things that have been nagging me for ages and which I’ll now introduce as a matter of discipline. For example, I hate spreadsheets that do not say which company we are, or what division it deals with, or what it is about, or who created it, and on what date. But I’m given them all the time and it drives me nuts.
So, no more. With the year end I have an excuse for saying we need to have all this data on the schedules so that the auditors will be able to follow it through. And I’m going to persist with it after that.
* * *
March 8 - How is that you take a few days off and there seems to be a pile of paper on your desk almost a mile high on your return – let alone a couple of hundred e-mails.
Still, we got out the news about the changes today, and that’s what really took up the time. Staff, of course, knew it all already (why is nothing secret?) but they still showed signs of pleasure. This has been an unsettling time for them too. After all, if the owners clear off it might suggest they don’t care about you. They seem to have accepted our reassurance that they do, but they just don’t care for each other.
Ops had done some work with an HR person to refine all those e-mail policy ideas as well and so we issued that as well. #4 seems to approve, and feedback in general from my department was good.
Now, can we get on with some real work please?
* * *
"What a month February has been. I’m hoping for a slightly quieter time for a little bit. Indeed, once I’ve made sure the stock takes are done, I even plan a couple of days off next week."
Follow the FD's remarkable saga through the preceding months:
January
December
November
October.
Number of comments: 48
AccountingWEB.co.uk 2-Apr-2004
Categories:
Times read: 21596
Mat referred to USD receipts - but made no mention of hedging or whether his company trades directly with foreign customers/buyers so this is more of a general comment.
Given the new IAS regime, I'd be surprised if his systems could cope with the various requirements coming down the pipe which have an impact NOW because of the comparatives issue.
IAS reporting, which is currently voluntary for non-listed companies, may well impact those that don't fall under it immediately. There are talks about a non-listed version. Bags of issues here not directly related to the accounts per se but to the underlying transactions. I know what Sun are proposing but I'm not convinced it is enough to have strong and detailed reporting. This applies to other vendors as well.
If you trawl through the main accounting software vendor web sites, you'll find surprisingly little on how they propose dealing with IAS issues. There are some exceptions.
IAS creates people and processs issues that span the business. That's the most important problem. Account codes will need changing, but that's a mechanical issue, provided you have a unified ledger.
Most of 'us' who comment on this stuff believe that some systems overhaul will be required, the precise extent and degree is a matter of review in conjunction with audit discussions.
Dennis
"Given the system you're using was installed in 1996, I'm surprised it's still compliant with current regulatory requirements...millenium bug aside."
I have a number of SunSystems clients who were installed before 1996 and who have only take the usual maintenance upgrades since then. As long as they have re-written the odd report here and there they are still covered for all regulatory requirements, and will be able to cope with the new reporting rules in 2005 (or is it 2006?) the same way.
I do have a link to SunSystems in that one way or another I have earned my living off it for the last 14 years.
Mat
You have my sympathy, as your situation sounds even worse than mine back in 1979 when I took on a 1/2 million turnover company with hand written books and a TB that didn't balance.
Anyway, point by point.
1. A £600k accounting system could run a pretty massive business. The bigest system I have been involved in had over 125 concurrent users, and did not cost that much.
Although the accounting system I work with (SunSystems by Systems Union plc - Sun for short) is not the worlds best for manufacturing, for Under £150k I could either provide you with a complete new 16 user system, or integrate the Accounting modules of Sun (which are, in my opinion, about as good as it gets) with your manufacturing system - assuming that your business has MS SQL 7 or better somewhere on its servers.
2. Well Sun doesn't have a separate cashbook module either, but as it is fully integrated system, it doesn't need one.
3. This one I have dealt with in the past by using the banks dial-up/on-line systems to download daily statements and use the bank reconciliation funtionality to a)reconcile cheques etc., and b)semi-automatically create any items not already entered into the system.
4. Currency revaluations can take up to an hour on big systems, commodity revaluations also take about an hour, but can be run at the same time.
5. I'd have to check on prices, but a payroll system that integrates with Sun and with clock systems is not expensive, or an iterface could be built between the existing system and Sun in a day or 2.
6. If the accounting system is kept up to date, with realistic automatically generated due dates on Debtor and Creditor outstandings, this should not be a major task - even if there are currency hedges to take into account.
7. The only way I can speed that up is by highlighting items that are outside pre-set boundaries, e.g. budgets, forecasts, % of turnover etc. But I could set Sun up to do that as they happen!
8. Pre-payments I have always done by spread journals - in other words I post all of the transactions relating to a pre-payment invoice as soon as I get it, so a 12 month insurance bill or maintenance contract gets posted into pre-payments and 1/12th posted to P&L per month as soon as the invoice is entered. Accruals should in the main come from the purchase order system.
I'm not saying that your current system is not a pain and I not saying that managements accounts are not a pain for many people, but that most of the pain can be taken away by appropriate use of the hardware and software often already owned.
David & Helen
You are correct in stating that the client I mentioned is in a service environment, but I used to do monthly and year end accounts in a week for a manufacturing company 15 years ago, with only a terminal to a mainframe located 200 miles away with overnight printouts.
The way that I achived this, and the way in which my current clients in manufacturing and wholesale environments still achieve it is to not wait for invoices, but to use the figures on outstanding orders, adjusted for/by goods recieved.
When these figures are later compared to invoices, the only time that there is a significant difference is if the order was in sterling while the invoice is in another currency. I soon learned to order in the currency the supplier would invoice in.
Helen
"The fact that you have "clients" gives you away sir - you are obviously in practice, not here at the sharp end!"
No I'm not in practice, but have not been full time at the sharp end for about 14 years. During that time I have been an accounting systems consultant, and have had to deliver what I preach.
"I can assure you that historical P&L's are not the most relevant information"
They have their uses in controlling budget holders, but are usually too late to be acted upon for day to day management.
"Orderbooks, cash, % of non productive hours, job costings, price increases on raw materials"
The raw data for which should be in your system and able to be reported on, monthly, weekly or daily. Unless you have the situation described by Mat Harrison who I will answer separately
Blimey Mat - someone's pulling your proverbial chain. £600K for a finance system given your requirements?
I've done a lot of enterprise level accounting application reviews and customer case studies. Unless I've totally misunderstood you, I'd want it gold plated at that price.
Unless of course, I was offered all singing and dancing automated data input regardless of source (web, fax, email, photocopy, toilet roll etc etc), auto , auto-reversing and generating journals, integration to the bank records, automatic report generation and distribution and a lot more besides. Believe me. You DON'T haved to pay that kind of sum AND can get all those features. Given the system you're using was installed in 1996, I'm surprised it's still compliant with current regulatory requirements...millenium bug aside.
BTW - I have NO direct affiliation with any software vendor.
Where do I start...
1. A system implemented in '96, before my time, has all the manufacturing environment needs, but lacks accounts functionality. A new system will cost £600k+ and is not in the pipeline.
2. The system has no cashbook module, this is prepared on Excel and monthly journals done.
3. Like most people, we leave the office at about 5pm on a Friday. On Monday we get a load of faxes sent by the bank relating to USD receipts. Cashbooks need to be updated and jnls entered to bring these in to the accounts.
4. Precious metal stocks, wip, finished goods, debtors, creditors and bank balances may need revaluation due to currency/market rate fluctuations.
5. Weekly wages/monthly salaries/accrued holiday info needs to be journalled from the (disjointed) payroll system.
6. The cash forecast needs updating.
7. P&L analysis needs to be done.
8. Accruals and prepayments need preparing.
9. Sundry adjustments followed by 101 other things not mentioned have to be completed.
Most of this because the directors expressly require it. In fairness to them, they both really have their fingers on the pulse of the company.
That's why management accounts are a pain.
With respect Mr Taylor - are you saying that your client's year end was 31st March, and you produced stats on 1st April? They must surely deal all in cash, as anyone with a purchase ledger knows that you won't have received all your invoices before then! The fact that you have "clients" gives you away sir - you are obviously in practice, not here at the sharp end! Seriously - I can't imagine anyone in this debate is suggesting that we don't DO monthly/quarterly etc accounts, surely what we are discussing is what information is most relevant to the decision makers. As Mgt accountant AND an decision maker I can assure you that historical P&L's are not the most relevant information. Orderbooks, cash, % of non productive hours, job costings, price increases on raw materials etc give you faster feedback than P&Ls.
Steve,
It sounds like your major client is operating a very simple business, perhaps providing a service rather than trading in goods?
For many businesses a closure this quick is just not possible. In all of the companies that I prepare accounts for there is one aspect that would extend this cut-off by at least two weeks: the purchase ledger! Even two weeks may not be long enough for suppliers to send their invoices to us for processing!
You are very lucky that you can close your period so quickly without having to adjust for a vast amount of later entries.
Surely everybody contributing here is using computer for their accounts?
If so the figures for Management Accounts, be they quarterly, monthly weekly or whatever should be produced in a matter of minutes from the accounting system (unless all concerned insist on 30 page hard copy packs)
Last week one of my major clients finished their finacial year. The first draft management/statutary accounts were completed by 4pm on 1st April and I do not expect many changes.
The commentary was completed today. That is for the published accounts.
If you are producing the same figures every week/month or whatever, they should be automated (with exceptional items being highlighted automatically), then all you have to do is comment on the highlighted items.
Where's the problem?
Some interesting thoughts here .... and, I suspect, one or two trying to be deliberately provocative ...?
Monthly accounts are no different to any other bit of management information - they're as useful as you want them to be - and as you make them. It's all very well concentrating on looking forward, but what use is that if you never stop, draw breath, and assess what's actually happened against what you thought would happen?
Ditto KPI's. I've worked in businesses with rafts of the wretched things, covering every conceivable aspect of performance .... which took three times as long as the accounts to produce, and which no-one ever looked at.
As for ABC .... well, if you've really got nothing better to do with your time, then you're welcome to it.
The key, for me, with whatever you produce, is that it should be as concise as possible ... should concentrate on the unusual, rather than the run-of-the-mill .... should avoid stating the obvious .... and should be regularly "culled" for anything that's outdated. How many of you are still producing "ad-hoc" reports driven by the fact that a non-Exec asked a question about something at a Board meeting 3 years ago ....?
Depreciation charges are a useful reminder that there is really no such thing as 'capital' expenditure that somehow doesn't count when calculating profit. Equipment is just another direct or indirect cost, except that it's spread over a longer period than other costs. (Depreciation on buildings may be an exception). If the depreciation figure is daft it must have been calculated on a daft basis.
The important factors with management information are to produce numbers that:
1. Are easy to produce;
2. Are impossible to question;
3. Put other people on the spot; and
4. Give the bosses the feeling that are making big-boss decisions.
Some of the best daily info prepared by us is billing, orders on hand, orders delinquent and cash balances. All other info merely assists line managers to do their jobs but the above is great for the decision makers.
Can't really comment on usefulness of accounts, every company has their own ways of reporting. I, for example, have to prepare monthly accounts for consolidation to our US NYSE listed parent. Not a great deal of meaningful info goes in but it's a necessary evil. We also go on for hours about various things in the monthly brief but unless deliquency is under control the directors are not happy bunnies. I'm lucky because cash has always taken care of itself, as it should do in a well-run business.
I'd be interested to know which kpi's you consider are the most meaningful. Good luck.
The moon has 13 cycles a year and that is about the only justification for MONTHLY accounts.
I have worked in contract engineering where contracts moved at a snails pace and quarterly accounts were of little use as opposed to market reports.
Alternatively I worked in the bus industry where daily reports were vital to appreciate the results of route and schedule changes on income.
In both industries I had to produce monthly accounts. In both industries they did nothing but waste my valuable time and provide an opportunity for non-executive directors to conribute fatuous comments on the business.
Get real
Jim Miler FCCA ACMA (retired thank God!)
I agree that much included in Management accounts merely distracts from the important issues.However Management Accounts should surely be about reporting the exceptions rather than the rule and in this respect should be confined to major variances from budgets together with explanations if necessary by Division or other suitable cost centre base.As for Balance Sheet items, showing Debtors,Creditors etc at a point in time gives the recipients little or no idea of performance.Better to include for example debtor trends in relation to sales or debtor days over a representative period of time .Stock turnover trends, creditor days trends are others of the many examples which could be given and which if varying in any meaningful way from targets or forecasts should be reported upon.Management accounts after all should be about management performance.And Management should not be the only ones to have access to such information. I am constantly amazed that shareholders in companies are not privy to major performance measures or indicators which has resulted in significant variances from budgets.These could conceivably be included in the Stautory Accounts.Companies need to be more transparent.Management accounts are a means of achieving this and it should not be difficult to decide which performance measures to include for the benefit of shareholders and which Divisions/ Cost Centres have failed to achieve targets or conversely have surpassed their expected performance levels.
Couldn't help noticing the references to Linux and oOo. I recently installed Xandros (a version of Linux- www.xandros.com)it communicates with Windows just fine, so file sharing is a dream. OpenOffice is included as standard and so is a thing called Crossover Office which allows the installation of Microsoft Office on Linux. So far my old MS Office files load to and save from Crossover. Brilliant. The cost? £100 all-in. Try it. It's great.
Group Accountant, The Imaginative Traveller Ltd
What a refreshing thread. To see so many keepers of the corporate purse come out of the closet and trash the thinking behind the monthly management accounting pack is music to me ears. As a profession we're frequently accused of being stuck in our ivory towers, leaning on the structured manner in which monthly P&LK's appear. The contributors to this thread seem to dispel that myth! So next I suppose we'll be distributing pie charts with an email headed 'Drill this...if you want.'
I too have ditched the traditional management accounts if they have used traditional budgets and do not deliver what the 'customer'/stakeholder wants to use!
Company's need to be agile,responding quickly to market trends and deliver 'meaningful' operational measures that managers can respond to quickly and deliver not just answers as to why,how variances are occurring but what action plans are in place NOW to correct the situation at the earliest opportunity.
Company's need to turn to a) Rolling forecasts and b) Activity based management (embracing ABC) to deliver clear/concise results that ensures the balance sheet is robust that NET PROFIT is being delivered and that cash is being collected per contractual obligations (if not earlier!)
The management accounts should be driven out and opertaional measures put in place that are continuously updated by 'owners' who are not the finace function and which are reviewed regularly by management.
Please see www.pharosinformatics.co.uk for more information.
Using Management accounts produced some time after the month end is about as useful as driving your car using the rear view mirror. As a competent FD I assume you tackle and resolve the problems as they arise so the information you are trying to communicate has to help your colleagues understand what is ahead of them. In my consulting I help managers focus on the business drivers and how that effort comes down the pipeline to create sales and thus what the cashflow is going to look like 6 months hence. I can recommend a book by Brian Warnes - the Genghis Khan guide to business (Osmosis Publications) - it confirmed my view of what management accounting should be about.
More useful impact from less work. Don't worry about radical thinking. Keep going. You are just scratching the surface and this could take you a long way.
Can you say more about the future?
Can you do better than comparisons with budget and last year?
As an Senior Analyst for a Credit Insurer our access to the latest information whether by face to face contact, or a supply of the latest management information, as a picture that we may be tracking,is of the highest importance to us.
Don't foget that the Credit Insurers are substantail funders to many businesses these days, oftern supporting more than secured lenders.
You can then see the importance of the accuracy and timliness of the information provided.
A good summary would always suffice until the real article could be provided though!
I had a company just like you describe Chris - some years ago now. When I was accountant there I was obsessed with waste and no one at Group understood why, but to me it was the only relevant issue. Almost all we sold was inter group, and our purchasing was pretty predictable, so waste determined most of any variance we could control.
Thanks for reminding me.
20 years experience in industry leads me to believe that individual managers need to be constantly aware of the key variables that they can control, everything else is distraction.
Thus when I worked in a fruit juice packing facory the only thing we could influence was wastage, which we monitored hourly and summarised weekly. Purchases and Sales prices were on long term contracts and thus management accounts were of no relevance to the factory as they only reflected how good we were at keeping juice wastage down.
At group other info was relevant
How about being completely radical, and getting rid of a P&L all together.....let's be honest, it's not hard to make them give whatever result you want them to. Just report a cashflow and for yourself a reconciled balance sheet. When push comes to shove and the bank manager is at your door....he couldn't care less what your P&L says...it's all about your cashflow and assets. It's cash that pays your wages and bills.
Sorry to respond to another poster in this way but I wasn't sure how else to reply to them. I use linux at home for personal use. I use Gnucash for private accounts. For Accounts packages on linux I am not sure of any SME type packages that are ready. I found a couple in beta but as such I would not trust business accounts on them as a result. I beleive things are improving for the large accounts packages so over time cross platform account packages should filter down.
For the work pc I am stuck with windows as I use quickbooks (I said it was a small business I am running). As soon as I can find an accounts package suitable for small businesses that runs on linux and is as easy as quickbooks is (for the admin assistant that helps us) then I will switch to linux. Let me know if you find anything ;).
Aha! I too am going down this train of thought. There is no point producing voluminous Management Accounts just because you can. Obviously we have to still have to go through the same processes to be able to produce abbreviated versions, but in my experience short, to the point, relevant management information gets the message home to shareholders. I await your conclusions with interest.
I would just like to add myself to the list of openoffice fans. Excellent product that I have been using for a couple of years now.
The only thing I ever had problems with was the formating of a powerpoint presentation that I was sent some time ago - but given that M$ office users also reported problems I am not going to let that count against it.
OpenOffice 1.1.1 has just recently been released so it will be cropping up on the free cd's on the covers of magazines like pcw or pcplus - saves a lengthy download.
Jamie, if you are using Linux on the desktop what do you use for accounts ? Im not aware of any small company accounting products - I know I can get Oracle Financials etc, but thats a bit overkill for my needs.
As a user of OpenOffice I can add that it certainly works. It may not do everything that MS Office does, but there are other things that it does better than MS Office, plus it does things that MS Office doesn't.
A few comments for the record, though...:
It's not a 'recycled' version of StarOffice. Sun still develop and support StarOffice, but have also published the source code as 'open source'. OpenOffice is the product of this open source release. For most people the fact that you can see the source code is of very minimal use. But any user with programming skills can add his own features to such open source software. When they release these enhancements back to the project, it can be incorporated into the next version of the software.
The result of this is that open source software contains large amounts of features that the users of those product really want. Compare that to commercial software, where features to be added get decided by the marketing department of some large company far far away, just because they feel that they can make people want these features so that more upgrades are sold.
The most important thing about open source software such as OpenOffice, is that it's free, as in 'liberated': You can do with it what you like, from running it on as many computers as you like, to giving a copy to a friend, to changing the actual software. This all together makes open source software often better than most commercial software. Oh, and it's also free as in 'no charge', which comes in handy as well.
Liberate yourself, and go for Open Source!
There is a piece of software available called PDF4FREE, it is a 628k downloadable exe file which allows you to PRINT to a PDF file.
You can do this in excel and any application.
Whilst you are using the FREE licence it puts a "banner at the bottom of the file" which you can get rid of by buying a licence.
I feel that for a freebie it is a good tool and the banner doesn't get on your nerves too much.
go to
http://www.pdfpdf.com/pdf4free.html?rf=sharewaretree
to get your copy
Glad you liked the link to OpenOffice(referred to as OO). As background one of my personal interests is computing and specifically the linux operating system. This is where I was introduced to OO as one of the final pieces of the jigsaw which completes linux as a viable operating system. In this capacity I had only toyed with OO but thought it presented an interesting alternative to MS Office.
Recently, however, I have taken over a small business and reinventing a lot of the image and paperwork of this business. I started off using MS Office (mainly because my wife, also involved in this venture, is 'used' to MS Office). I eventually became frustrated with the quirks of MS Office and started doing some forms and documents in OO. This was less of a risk because of OO being able to open and save word and excel files.
I can now say that around 90% of new files are created and edited using OO (even by my wife)and that I have found OO to be as powerful as MS Office in a lot of features. In some areas OO is more flexible than MS Office, we have produced a prospectus from OO which we can export as pdf file ready for printing and publishing on the web. Using OO we can also print this as a brochure and it paginates according with opposing pages printed in the correct order (good for small runs). Another bonus is I can share OO with e/ees without infringing copyright.
I would consider myself an average Office user and have created macros and VB scripts in the past, this is one area I have not yet looked at in OO but I beleive it has a version of Basic so it should be quite flexible there as well (there are websites dedicated to macros for OO).
The other good thing with OO is it is cross platform, mac, linux, windows will all run OO and be able to use the native file formats of OO as well as the other formats OO supports (MS Office).
I would definately recommend you download OO to try out and if you think it will fit then maybe as an SME company pitch for Staroffice for the support and added extra's, it is still a lot cheaper than MS Office.
For tips of other things out there, then you could take a look at Sun's new Java Desktop (NHS are currently looking at this to curb IT costs) or other business orientated linux desktop distributions (SuSE). Some may feel linux is too technical but from someone who has linux on their home PC I feel linux would be ideal in the business arena. The desktops should all be pretty standard with a relatively stable set requirement for apps (approx 60% would be met by OO).
Any way sorry for going on, but I hope some of you find these comments usefull.
As Mark states don't be fooled into thinking the PDF's are 100% edit proof. The text tool within acrobat can only be used if the person who published the pdf has not blocked it as an option. I believe you can prevent printing as well. But these safegaurds only work in acrobat and I believe they are circumvented using othe pdf readers. In addition it is possible to convert the pdf file to a postscript file and strip out the text from the pictures.
With this in mind it is still a usefull file format to ensure the document is published they way it was intended regardless of PC it is viewed/printed on and offers a reasonable amount of protection from editing.
I was intrigued by the idea that PDF documents are "tamper proof". Apart from the fact that there is a Text Tool in Adobe Acrobat Writer which allows you to do a modicum of editing, you can acquire software for about £40.00 from www.scansoft.co.uk which will convert a PDF document into a Word document. You can therefore tamper till your heart's content, and then convert back to PDF using Adobe Acrobat Writer.
FD
I have thoroughly enjoyed your diary over the past months and it reminds me very much of a company I worked in!
Anyway once you have made the move to the Dark Side, the evil empire of commerce, the most important three things in my opinion are Cash, Cash and Cash.
If you can pay when you say you will, you are halfway there.
It allows you the time to do the strategic stuff which otherwise will not be done as you try to fend off a range of angry suppliers or worse the Revenue (Trust me here you really never want to annoy them!).
Keep up the Diary and Good Luck!
I beleive this is the same for Linux systems using KDE desktop, I just wanted to plug the OpenOffice.org suite (which is available on Mac OS X as well;)) and didn't want to get into OS discussions.
If you use a Mac with OSX operating system, printing as PDF is a standard feature
Hi,
Just like to post in agreement with FD on generating PDF's. You don't realise the full applications and usefullness of this until you can produce them. Just a point if anyone is interested in producing pdf's then you can do it using OpenOffice http://www.openoffice.org. This is an open source (free as in beer and speech) office suite. This application is as powerfull as MS Office with wordprocessor, spreadsheet, presentation, drawing applications all within the one suite.
It has the ability to read and write most MS Office files (approx 98% compatability) as well as a variety of other formats and it's own open source format. The native file format is not binary which means you are not tied to an application or it's upgrade cycle.
It has some great additional features (brochure printing, Master Documents etc) one of which is the ability to export pdf files with no additional software.
Did I mention this was a free office suite for windows and linux which can be downloaded from the above link.
If you are uneasy about open source software or lack of formal support and prefer to pay for software ;) then sun sell StarOffice (Open Office base package comes from star office). The two office suites are developed in parallel and Sun add a couple of extra's such as in built database support instead of odbc links. This is for retail at a much lower price than some other office suites, check out http://www.staroffice.com.
Sorry for the long post but I have just started getting into Open Office and think it's the best Office Suite I never paid for (legally).
Great decision on getting the Palm T2. A great addition to is is the ultra thin keyboard. I know, it's another thing to carry around, But they really do make a big impression at meetings.
Wait until all are seated and not dictracted, then pull out the palm, then the keyboard, a quick click and it unfolds to a full size keyboard, click on the palm T2, and your up and running with your "James Bond" type toys.
The terms "rubbish" and "fixed asset register" are all too familiar with me! I wish the review of mine (still not finished, started mid-2003) had only taken a day!!
It seems I am unable to communicate the importance of recording transactions even at £nil value, such as disposal of fixed assets for no consideration (scrapped is the term I guess) - why can't people see we need to write the asset out of the register? Similarly, where one asset is replaced by another, I accept they may be identical (except the replacement should work and the old asset probably didn't) but they are still different assets and we paid for the new one and realised nothing on disposing of the old.
Any suggestions for getting these messages across would be gratefully received (as long as the FD doesn't mind us hijacking part of the diary!)
You can "Custom" the header and/or footer and type in whatever name etc you want to appear irrespective of who is logged into the PC as well as changing the position, size, font.....
Thanks to all who commented on Excel
The template idea is OK – although I have to say I hate Excel headers and footers, just as much as I like them in Word. Don’t ask me why – they just always offend my aesthetic.
And, if a person prepares a schedule on someone else’s machine (it happens here for all sorts of reasons) how do you get the right name on it? (and they can’t be guaranteed to log on under their own name – I know that’s odd – just take my word for it – it happens if the machine is already logged on and they’re not expecting to deal with mails).
I’m not sure technology solves this one. I’m still banking on discipline and getting the layout I want.
Thanks to those who have offered condolences. I've passed them on to my wife and her mother.
To you & your family.
To your loss.
My condolences on your loss
Hurrah!!! I'm not going mad, there is someone else who also likes titles, company names, dates and names of creators. I was beginning to believe, by the reaction of eveyone I try to get to do it, that I was alone in the world!
FD,
I think Helen's right, they might need some Excel training!! :)
...for all your training needs, visit www.vlplc.com or you can contact me directly on 0161 745 8070 or mailto:andrew.hughes@vlplc.com
I too like name of company, person who did the work, date, time (helps check for latest printout) etc.
I use the default template, and also have a macro, with a button on the toolbar (one for each group company) for other peoples spreadsheets which I then modify.
The only thing left to enter is the heading.
This gives a consitent look to all spreadsheets, in addition to name etc it can set margin widths, gridlines or not (anything on page setup.
Maybe they don't know how to create a footer showing who prepared the document and when......
How about the PDA?
