budgeting & banking for small businesses in israel

Getting a Grip on your Business’ Financial Heath

Shuey Fogel

Shuey FogelPrincipal, Fogel CFO & Management ServicesHusband & Father of 5Lower East Side Jerusalem ElazarPublic Service & NonprofitsIsrael Banking SectorDepartment Mngr, Banking Solutions for

Businesses & NonprofitsNonprofitBanker: Online Resource for Israel’s

Global Nonprofit SectorFormer Chairman & Treasurer of Town Council

Shuey FogelPrincipal, Fogel CFO & Management Services

Outsourced CFO/Controller:• Internal Fiscal Direction & Management• External Financial Communication• Satellite Office Services• Banking & Credit• Consulting Projects• No-Kickback Referrals

Do I need a long term plan? I don’t know the answers.Do I even know the questions?What tools are at my disposal?Whom can I trust?

Our Business’ Health

Uncertainty + Annoyance

AgendaDefine TermsIntroduce Key ConceptsTools & Best PracticesPractical Applications

Defining Terms• Income = Billing = Payments from Clients • Profit = Income - Expenses• Fixed Costs = Constant• Variable Costs = Changing

BUDGET ToolMeans to an End

The What ≠ The HowBe Conservative≠ Reimbursables

BUDGET The Dream

CASH FLOW Reality

Defining Terms• Working Capital = Available Cash

= Net Liquid Assets = Current Liabilities - Assets

CASH FLOW Bank Account

The How ≠ The WhatReimbursablesVAT

Destroyer of Companies & Countries

TIP #5When creating spreadsheets, enter data only once to avoid inconsistency.

Fact of Life:

Owners Get Paid Last

TIP #1Simplify life by consolidating payment dates. Paying by creditcard can help.

TIP #2Choose a credit card payment date that matches client payments. Otherwise, the calendar month.

TIP #3In the early life of a company, cash flow might be more important than saving money.

TIP #4When creating spreadsheets, enter data only once to avoid inconsistency.

ONE WORKSHEET:

Budget BillingCash Flow

Financial Theory of Relativity:

Cash flow problems can become budget problems when:

1. Increased interest expenses related to credit.

2. Greater income needed to cover cash flow issues.

CLIENT ACQUISITION COSTS Time & Money

Increase existing clients

Axiom: “Losing 1 unsatisfied customer = 40 new clients”

FINANCIAL GOAL SETTING Planning

When to change the status quo?

Were original estimates correct?

Defining Terms• Liabilities = Payments for past expenses• Assets = Resource with economic value• Solvent = Assets > Liabilities

LIABILITIES: AM I SOLVENT?LiabilitiesOutstanding checksUpcoming paymentsLoan Payments

AssetsChecks in-handCash Credit LinePayPal/Credit Card

COST OF TIME Client WorkBizDevAdministrationShmoozingEducation & Development

PRICING Your TimeProduct

Top Down (Salary/Time)Bottom Up (Product)

Payment Dates

CLIENT NET WORTHIncomeReferralsAdditional Value• Timely Payments• Reputation• Volume• Quality of your Work

CalculatingClient Net Worth• Analyze both past and present clients• Create common denominators• Convert these commonalities into services, products,

or modules• Assign income and expenses• Map clientele • Divide income according to mapping

FROM THEORY TO PRACTICE:Client Net Worth:Client Mapping

STAFF Two Kinds:1. Salaried2. Outsourced

STAFFSalariedPull in 120%Pay by the 10th Mandatory benefitsAccording to law

OutsourcedPer costAccording to contractVATPer month/contract

Quality & Ownership

CREDIT Do I have a Cash Flow problem or a Budget problem?

CREDIT: LINE OF CREDITCash Flow Challenges

Discrepancy btwn income and expenses

Ongoing, occasionally used

CREDIT: LOANSInvest ≠ Pay YourselfRefinance Credit

Personal or BusinessHome Equity(Protect Yourself)

GROWTH Growing our biz to:• Increase profit• Increase quality of life

Funding growth with:• Surplus• Credit

• Budget• Cash Flow • Client Acquisition

Costs• Financial Goal Setting• Liabilities• Cost of Time

• Pricing• Client Net Worth• Staff• Credit• Growth

Topics Covered

Making Business Banking

in Israel Work for YouShuey Fogel

Israeli Banking Today:• New technology• Rotating managers• Increased regulations• American (IRS) Invasion

Accept the possibility of switching banks every 3 to 5 years.

When it comes to service, there are no good banks,only good branches.

DIGITAL SERVICESCheck Deposits Shekel WiresF/C Conversions“Super” BranchOnline Tellers

Don’t use your brain when navigating bureaucracy.

Just do what they tell you.

ACCOUNT NAMESWill mirror company or charity name.

Individuals can use DBA (Doing Business As) name.

Incoming checks & wires need to match too.

FEE TRACKS The Great Equalizer

FEE TRACKS Basic = בסיסי10 Automatic ישיר1 Clerk פקיד

Expanded = מורחב50 Automatic ישיר10 Clerk

FEE TRACKS Defined as Small Business עסק קטןFirst Year or under 5 million shekels annually

MULTIPLE ACCOUNTSOptional: separate accounts for independent projects.

Banks may not name other accounts as you wish.

INTERNATIONAL TRANSFERS Banks

Exchange BrokersPeer-to-Peer

Peer-to-Peer in Israel is less popular & perhaps not needed

“It's easy to get a loan unless you need it.”-Norman Ralph Augustine

CREDIT Types:LoanLine of Credit Credit Cards(Checks)

CREDIT Loan = הלוואהLower InterestFull amount up front

Line of CreditHigher InterestUse as Needed

CREDIT Banks treat all credit as the same.Approved one amount, broken up as you wish (kind of).

Use/change to your advantage.

CREDIT CARDSMost issued directly from your bank.

Need to provide collateral.

Exception for small amounts.

Choosing the right bank for my business:• Service• Online capabilities• Credit• Not about the money

Thank youShuey FogelOutsourced CFO/ControllerInternal Fiscal Direction/Management & External Financial Communication

shuey@fogelcfo.comfogelCFO.com@fogelCFO/shueyfogel