Business Year-End Wrap-Up and Goals for 2016, Part Two

Let's talk about your goals for 2016

What would be some fantastic goals to set for the new year?

Are you considering new software? Do you work under a “corporate” umbrella which means that your month-end close just got reduced to five (5) days total? Are you a privately-owned company, but want to put procedures and policies in place to ensure the assets are safe-guarded and to minimize the opportunities for “bad behavior”? Are you finally becoming a public company and will fall under the scrutiny of outside auditors and all that an audit entails?

Let's face it — some of these questions are not goals but simply “life events” that have happened to your organization, and now you have to dig in and get the job done!

This is your peace-of-mind "moment of zen" as you face the new year and the challenges to come

1. New Software — Sooner or later this comes up as a possibility with every organization. Will it save time and money and reduce manual work, or will it be your worst nightmare? The answer depends upon a few things — your current business software provder, your potential one, and the real and true problems you are experiencing with your business management tools. For example, if you are a company that has quadrupled in volume of transactions such as sales, employees, or purchases, then an upgrade or change in software may be warranted. Some of the less-than-enterprise-level software programs are just not built for high volume, and where there is volume, speed is essential. So what do you need to do before you invite vendors into your organization to fully understand what your needs are for software? Here is my short Software Assessment Check List to help out.
1. Speak with ALL USERS of your business management software. No offense meant to the Executive Team, but they have no idea about what the in-and-out user goes through on a daily basis with the software. Everyone, in every department, needs to chime in with the “wants and needs” list to help them perform their jobs better.
2. If you feel that your current reseller is not meeting your company’s needs, then look for another one. You are not tied to that software provider, or the technologist you've been working with. If they do not have the technical skills or knowledge that you need to make your company more efficient, make the call and start the search for another specialist within the software company, or a new software company. It is not a “one-size-fits-all” group.
3. If you change resellers and stay with the current software, OR if you get a completely new reseller with a completely new software, here are some things YOU need to make sure they do before YOU sign on that dotted line. If your reseller did not do the following three (3) things before even talking about new software, thank them for their time, and move on. They are promising you the world without having a clue about your business, and they will promise you the moon and the stars. And when it comes time to deliver that moon and stars, you will pay handsomely for it.
1. Did the reseller perform a site visit first and really understand the ins-and-outs of your organization?
2. Did the reseller meet with ALL users of the current software to get the “wants and needs” list and to really see true examples of current problems and issues?
3. Did the reseller discuss the company’s overall needs with the software and determine where they are really headed in the future for growth, acquisitions, etc.?
4. Finally, make sure there is not a better version or next-step version of your current software available that might meet all of your needs before buying something brand new and shiny. I know that as I type this, there are resellers all over the world sticking pins in their voo-doo doll versions of me but this is the truth. I have a real life example to provide. A customer was on one version of a software I am very familiar with and switched to another. After all was said and done, they found me, had lots of questions, and long story short, we started working together. Now, if that company had approached me before buying the shiny new software, I would have recommended that they upgrade to the next-step version of their current software which would have solved all of their problems, and then some. Instead they bought new software, encountered many problems and spend 5-figures more working on fixing those problems. Shiny and new is nice if it truly can function and perform out-of-the-box for your organization. If you have to do TONS of customization in the early stages of the new software, then that is a red flag. Do not trade one software for another just "because!"
    
2. The 5-Day Close — For many accountants, the thought of pulling this off is a nightmare. But it is actually easier than you think. Yes, it will require more of you really in the first 3 days of the 5, but it is better to knock it out early than drag it out longer. If you have module-based software, then you should close the first 4-5 modules out on the morning of Day 1, or the night before if possible. AND there is an order to closing out the modules — Purchases First, Sales Order Second, Inventory Third, Accounts Receivable Fourth, Bank Statements Fifth. Before closing each one, make sure that the module reports BALANCE to the General Ledger Balance. For example, the Accounts Receivable Aged Trial Balance Report should equal to the penny the balance on your General Ledger. There might be other modules in-between but the last ones you will close, usually by day 3 will be Accounts Payable and then the very last will be the General Ledger. This is totally doable and once you get into the groove, it will become easier. But you must start. The time of 2-week month-end closes is SO OVER!!
    
3. SOX Compliance — You might be a “family” organization, but even the family protects itself. Here are some examples of fairly easy fixes to help “protect the family.” 
1. All cash should be going to a lockbox. No cash/checks should be handled in the office, dependent upon someone to go to the bank and make a deposit, either during work or after hours. AND with using a lockbox, you can have your software developer write a simple program to download the .CSV file from your bank with the deposit information and upload into your Accounts Receivable module, so you do not have to do all of that data entry.
2. Purchasing and Receiving should NEVER be done by the same people. You need to have ONE person designated in your company as the Purchasing Agent. They do all of the negotiating with vendors, shopping for best prices, and all of the purchasing. Now, everyone in the company can write up the specs and provide the information to the Purchasing Agent to buy, but that is all they can do. Second, set up a receiving area within your company and designate one or two people that are not the Purchasing Agent to receive the goods; they check the documents against items received, go into the purchase order and receive those items, and then give all of the paperwork to the Purchasing Agent.
3. Cycle count your inventory monthly. It will make management of inventory, especially if you have a lot of skus, easier and the ability to find errors and make corrections quicker than waiting until the end of the year. You can set up something simple like the A, B, C, D system, where A are the items with the highest volume of both sales and items sold and all of the A items are counted monthly; B items counted every other month, C items every 3^rd month, D items every 4^th month, and again, all of this is based on highest volume of both sales and items sold in descending order.
    
4. Audits & Auditors — A lot of you feel that both audits and auditors are the spawn of the devil and while it may feel that way, they have a job to do, and it is to make sure YOU, as a company, are doing everything possible to safeguard the company’s assets and expose vulnerabilities. They are an unbiased third party that is there to understand how your business performs and then to check and see if the paperwork matches the numbers. If they start making recommendations and get involved in changes, then they should not be your auditors anymore, BECAUSE they just became consultants when making recommendations and helping with those process implementations. Auditors just observe, review and present their findings. It is up to the company to implement those findings if they so choose, but the auditors cannot be involved in that process if they truly are going to stay INDEPENDENT. Also, when closing out your modules for year-end, make an Excel copy of the reports, like your Accounts Receivable Aged Trial Balance, General Ledger Trial Balance, etc., and save in Excel. PDF, hard copies are fine, but they have software that helps them select random samples of data, and Excel is what they use to help them do that, so save yourself a few trees, and just save an Excel version.

I hope this has helped shed some light on areas where they may have been fear or ridiculous expectations. All of these are manageable and once in place, are pretty easy to keep up going forward. Just keep an open mind, be observant and really do strong evaluations before leaping forward. Here is to a Spectacular 2016!!

Here is  your Business Year-End Wrap-Up To Do Checklist from Part One.

Photo credit: Photo credit: Pittaya Sroilong on Flickr, Zen store at Centralworld plaza, Bangkok