Good management is a matter of paying attention to information at your fingertips

Judy Bell of Beloran, conducts Accounts Management 101, making it easy for you to take control of you own business.


It’s now well past the 14th of the month and one question needs to be asked concerning how you run your business . . . have you had your Monthly Management Meeting yet?

If you responded with a resounding ’Yes, of course!’ knowing you have reviewed your relevant Key Performance Indicators, then well done – perhaps you need read no further. You are entitled to sit back with a well-justified sense of having done the right thing, confident you are on top of your business

If your response was a hesitant ’No’, as I know it will be for many of you, then let me put another question; Did you have one last month . . . or the month before?

If not, will you just do me one favour?

Walk over to your accounts staff and ask for a full (not a single-line report) Debtors Aged Balance Report – often referred to as Debtors Trial Balance and a Trading Report for the 1/7/04 to 30/9/04 in Year to Date Value order. All accounts systems will have these two reports

Then ask the question of your accounts staff; 'Which accounts do you feel I should be concerned about?

You already know which ones YOU are concerned about but your accounts staff may bring others to your attention, with valid reasons – if you ask them.

Now sit quietly for just 10 minutes and do the following

On the Debtors Aged Balance Report

• look at the Average Days to Pay for All Debtors (at the end of the report if you are using Q&P). This is how many days on average you wait for payment from the date your invoices are generated.
• then scan down through each Debtors average pay days – any surprises?
• then compare their average days to pay with their Terms of Trading shown on the report – raise any questions?

I can confidently predict that tomorrow you will have several to be discussed with your staff.

On the Debtors Trading List, based on what you have just asked for the clients that have done the most business with you over the last quarter should be at the top.

what is the year-to-date (YTD) percentage (that is the percentage of the total sales for the quarter) of the top client?

Is that a concern?

Now, think of your worst customer in terms of delays caused with artwork/film but who insists on jobs being done immediately, the one who increases all your staffs stress levels.

What is their YTD percentage and then quickly glance back at their average Days to Pay on the Aged Balance Report. I bet it makes interesting reading.

Now move on to one of your 'great customers.' Not one with the highest sales perhaps, but one you would like to upsell and grow their business with you.

What is their YTD percentage? How easy might it be to increase that?

But I hear you say, ‘Three Months trading is too short a time frame to look at.’

Congratulations!

Tomorrow ask for the Trading Report for the last financial year and spend another 10 minutes perusing that. This report is not one that you would necessarily look at monthly, but you have just learnt the value of reviewing your business through just this one report.

There are many reports/figures/percentages that are helpful to you growing your business. It is just a matter of starting with those that are relevant and are easily obtainable from your system.

This time next month, get together with your sales team and accounts staff for 10 minutes and discuss the Debtors Aged Balance, Days To Pay and Terms of Trade – they will have valuable input.

In future articles we will look at some other useful and easily obtained reports.