budgets and tracking financials 5-13-14

Budgets &

Tracking Financials

David Ellison, Owner of Ellison Management & Training;

Owner of Connections in Ohio

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For Start Up or Small Companies

• Set up a Relationship with a Tax Accountant IMMEDIATELY!! Establish Cash or Accrual

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For Start Up or Small Companies

• Set up a Relationship with a Tax Accountant IMMEDIATELY!! Establish Cash or Accrual

• Accounting Software for Small Companies – Either Quickbooks or Peachtree will work

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For Start Up or Small Companies

• Set up a Relationship with a Tax Accountant IMMEDIATELY!! Establish Cash or Accrual

• Accounting Software for Small Companies – Either Quickbooks or Peachtree will work

• Let the Tax Accountant set up the G/L Categories and Instruct on Routine Entries

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For Start Up or Small Companies

• Set up a Relationship with a Tax Accountant IMMEDIATELY!! Establish Cash or Accrual

• Accounting Software for Small Companies – Either Quickbooks or Peachtree will work

• Let the Tax Accountant set up the G/L Categories and Instruct on Routine Entries

• You do not need an Accountant inside your company when you are small

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MUST HAVE These Reports• Monthly Financial Summary Sheet – by the

7th of the month

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MUST HAVE These Reports• Monthly Financial Summary Sheet – by the

7th of the month• Biweekly Productivity Data – by the 5th day

after the payroll ends

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MUST HAVE These Reports• Monthly Financial Summary Sheet – by the

7th of the month• Biweekly Productivity Data – by the 5th day

after the payroll ends• Simple Budget with very few categories and

then OTHER!! – Only track categories that account for the major costs and/or can be managed by day-to-day managers

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MUST HAVE These Reports• Monthly Financial Summary Sheet – by the

7th of the month• Biweekly Productivity Data – by the 5th day

after the payroll ends• Simple Budget with very few categories and

then OTHER!! – Only track categories that account for the major costs and/or can be managed by day-to-day managers

• Cash Flow Report – I spent a whole webinar on this in March

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Who are Budgets & Financial Reports Really For??

1) 12 Months a Year – Financial Reports and Information are to “manage” the business – So they must be simple and fast

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Who are Budgets & Financial Reports Really For??

1) 12 Months a Year – Financial Reports and Information are to “manage” the business – So they must be simple and fast

2) 1 Day a Year – They are for tax accountants!!

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Who are Budgets & Financial Reports Really For??

1) 12 Months a Year – Financial Reports and Information are to “manage” the business – So they must be simple and fast

2) 1 Day a Year – They are for tax accountants!!3) Whether you are a “cash” or “accrual”

company in your accounting, there is only ONE DAY that the financials are REAL – The last day of the yearly accounting period!!

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If Reports are Late or Do Not Have Useful Information, it tells me:

1) The Financial Person does not understand their role, which is “to get daily managers fast and simple information to make decisions.”

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If Reports are Late or Do Not Have Useful Information, it tells me:

1) The Financial Person does not understand their role, which is “to get daily managers fast and simple information to make decisions.”

2) The Program Managers do not care about financial indicators, OR are too passive to request better information.

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If Reports are Late or Do Not Have Useful Information, it tells me:

1) The Financial Person does not understand their role, which is “to get daily managers fast and simple information to make decisions.”

2) The Program Managers do not care about financial indicators, OR are too passive to request better information.

3) A. C. P. example

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Keep Budgets & Budget Reporting Very Simple

• Account for the big ticket expenses – wages, payroll taxes, benefits, mileage, supplies, telephone, program activities, etc. – In my company, these manageable costs account for 85% of all expenses. The rest I put in OTHER.

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Keep Budgets & Budget Reporting Very Simple

• Account for the big ticket expenses – wages, payroll taxes, benefits, mileage, supplies, telephone, program activities, etc. – In my company, these manageable costs account for 85% of all expenses. The rest I put in OTHER.

• If your company has capital – buildings and vehicles – then these are tracked separately within the budget.

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Keep Budgets & Budget Reporting Very Simple

• Account for the big ticket expenses – wages, payroll taxes, benefits, mileage, supplies, telephone, program activities, etc. – In my company, these manageable costs account for 85% of all expenses. The rest I put in OTHER.

• If your company has capital – buildings and vehicles – then these are tracked separately within the budget.

• Create budget estimators for all major categories – remembering that the WHOLE is more important than the parts – Modify the budget quarterly or at the half year based on performance and the WHOLE

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Keep Budgets & Budget Reporting Very Simple

• Account for the big ticket expenses – wages, payroll taxes, benefits, mileage, supplies, telephone, program activities, etc. – In my company, these manageable costs account for 85% of all expenses. The rest I put in OTHER.

• If your company has capital – buildings and vehicles – then these are tracked separately within the budget.

• Create budget estimators for all major categories – remembering that the WHOLE is more important than the parts – Modify the budget quarterly or at the half year based on performance and the WHOLE

• Simple Budgets and Budget Reports are in the best interest of the Managers, the Board, and the Investors

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Productivity Data Flows Naturally Out of Financial Reporting & Cash Flow Charting

1) Biweekly Outstanding Accounts Receivable Chart – charts back revenue and who is pursuing it

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Productivity Data Flows Naturally Out of Financial Reporting & Cash Flow Charting

1) Biweekly Outstanding Accounts Receivable Chart – charts back revenue and who is pursuing it

2) Biweekly Billability and Overtime Chart by Team – billable, non-billable, and overtime stats - all data to all teams

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Productivity Data Flows Naturally Out of Financial Reporting & Cash Flow Charting

1) Biweekly Outstanding Accounts Receivable Chart – charts back revenue and who is pursuing it

2) Biweekly Billability and Overtime Chart by Team – billable, non-billable, and overtime stats - all data to all teams

3) Monthly Payables Expectation Chart – both monthly and less frequent

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Productivity Data Flows Naturally Out of Financial Reporting & Cash Flow Charting

1) Biweekly Outstanding Accounts Receivable Chart – charts back revenue and who is pursuing it

2) Biweekly Billability and Overtime Chart by Team – billable, non-billable, and overtime stats - all data to all teams

3) Monthly Payables Expectation Chart – both monthly and less frequent

4) Biweekly Projected Revenue Chart – based on biweekly billing

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Bottom Line

1. Keep Budgets & Budget Reporting Simple

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Bottom Line

1. Keep Budgets & Budget Reporting Simple2. Productivity Reports naturally flow out of

budgets and financial reporting – both tracking outstanding receivables and biweekly monitoring and management of expenses

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Bottom Line

1. Keep Budgets & Budget Reporting Simple2. Productivity Reports naturally flow out of

budgets and financial reporting – both tracking outstanding receivables and biweekly monitoring and management of expenses

3. Timely reports allow for solid management and VERY quick modifications in a low margin industry

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Bottom Line1. Keep Budgets & Budget Reporting Simple2. Productivity Reports naturally flow out of budgets

and financial reporting – both tracking outstanding receivables and biweekly monitoring and management of expenses

3. Timely reports allow for solid management and VERY quick modifications in a low margin industry

4. Budgets, Financial Reports, and Productivity Data are the backbone of the front line success of any company – So they need to be SIMPLE, FAST, AND VERY USER FRIENDLY!!!

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Questions or Comments?

• Please contact David Ellison – ellisonmt@columbus.rr.com

• Next Webinar: June 17th P.O.L.C. Planning, Organizing, Leading, and Controlling (The 4

Major Management Functions)• Next Business Development Webinar:

July 8th Communicating Effectively

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