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Protect your Profit: Experts offer help on business problems

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30th Jul 2009
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On Thursday 30 July, AccountingWEB.co.uk and IRIS Exchequer teamed up to host an online business clinic based on the biggest issues facing community members in the recession. John Stokdyk presents a brief summary of the ideas that emerged.

More than 60 AccountingWEB.co.uk members registered for the Question Time-style Protect your Profit seminar, and like the TV show that inspired it, the debate was shaped by the issues put forward by AccountingWEB.co.uk members. These included:

  •     Protecting your bottom line and managing costs
  •     Streamlining business processes
  •     Justifying technology investments, sourcing finance and building the business case

Playing the David Dimbleby role, I put a series of questions to our three panellists:

  • Richard Murphy: Well known to AccountingWEB.co.uk members for his campaigning work with the Tax Justice Network, Richard keeps his hand in as a business adviser and was previously the founding director of the company that brought Trivial Pursuit to Europe. These experiences emerged during the session as Richard lived up to his reputation for putting forward thought-provoking ideas. “Accountants have two roles: one to provide the data; and two to get off the fence and decide what you’re going to do with it,” he said.
  • Paul Sparkes product director of IRIS Accounting and Business Solutions has experience helping hundreds of successful businesses streamline their processes. “More than ever before it’s important to plan,” he said. “If you don’t plan properly then you can’t expect to get the results and improvements people are looking for today.”
  • Genesis Capital managing director Matthew Porton sees his mission as helping companies to find funding to fix problems before they escalate. He urged participants to bear in mind the value that is generated by the costs within the business. “For every cost there is usually a value associated with it. It’s important where you prioritise your cuts to consider the consequences of making those cuts rather than taking a blanket approach,” he said.

With managing costs and protecting the bottom line topping the agenda, Matt Porton fielded the first question on how to avoid the common pitfalls that bring down many otherwise viable businesses.

“The main one is they don’t sell enough. There are certainly a lot of inefficiencies and a lack of control of the controllables,” he answered, explaining that businesses had a tendency to slip into bad habits such as relying too heavily on one market. “A lot of businesses crack a client and go look for more clients in the same market.”

Murphy added that there’s always waste in every business, “from the CEO’s office right down to stupid expenses that are unnecessary”. He continued: “But it also comes down to a more fundamental question - do you understand what you’re selling? Are you charging enough? Not selling enough isn’t just not getting it out of the door it’s not just volume. It’s pricing and accountants are influential on pricing. The accountant’s job is to stand back and see which products add value. Identify where the profits are coming from and cut out the extraneous products and customers that aren’t adding to the bottom line.”

Sparkes recognised the scenario. “Sometimes FDs query the figures our systems produce because the data doesn’t look right. In 99% of time, we alert them that their best customer is their worst customer - they’re giving that stuff away.”

Turning their attention to internal processes, Murphy emphasised that getting information out in a timely manner to influence decisions was essential, backed with commentary and analysis. “The accountant knows the problem - but how to communicate that?”

Automation was a great way to improve the information flow and eliminate waste, Murphy argued. “Have systems you can rely on,” he said.

When it came to waste within the finance function, what really annoyed Murphy was “the number of times people pick up and put down a piece of paper”.

Unlike computers, humans cost money and they prevaricate, he continued. “Normally they look at it far too many times before making a decision. Get the piece of paper into the system as quickly as possible with as few people touching it as possible whilst maintaining control. The faster you take action, the more likely it is you’ll get your money.”

To view the podcast 'Protect your Profit' seminar click here.

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