Business Improvement

Archive for April, 2009

Accounts Payable Productivity – Make Best Practice Common Practice

How Does Your Department Measure Up?

Keep the Cash Flowing
The effective management of working capital forms the cornerstone of any finance department in fact it lies at the heart of any organisation. This is where an effective Accounts Payable department can step in and make all the difference. A sluggish approach to oiling the wheels of corporate cash flow will result insupplier dissatisfaction and reduced profits. An efficient department at the peak of its abilities will have a steady cash flow satisfiedsuppliers and a happy MD. Ok so you know this already but what can be done if youre in the first category?

One good place to start is to take a look at the six key areas where a failure in functionality can have dire consequences to the company as a whole:

• Financial controls
• Error rates
• Automation improvements
• Process costs
• Duplicate payments
• Suppliersatisfaction
• Financial controls

Financial Controls
This is one area which is set to become heavily regulated in the future. Whilst this brings with it burdens of responsibility and a decrease in an ability to be reactive it does mean that employees have prescribed working practices to adhere to which inevitably reduces the margin for error. Controls should include a segregation of duties a rolebased security system including levels of authority and a system of best practice guidelines to work towards. All of which will lead to greater efficiencies and will bring relief to anxious compliance officers!

Error rates
Errors can be costly in many ways. Some may be disastrous without ever being apparent such as irreparable damage tosupplier relationships. The most obvious costs are in real terms ie loss of working capital and in wasted staff time. On average around 4 of invoices contain errors. A figure which may seem low at first but if youre working for a billion company the units soon stack up. Best practice can drive the error rates down to less than 1. A thorough investigation of the MasterSupplier File and the implementation of effective 3 way matching techniques go a long way towards addressing this issue.

Automation Improvements
The key here is to find the appropriate tools for your organisation. Its easy to become bogged down in a plethora of different options all supplied by an everincreasing number of providers. The first thing to do is take a long cool look at your organisation and recognise the areas where there is room for improvement and where automation may actually add value. Once youve done this you will need to review the different products on the market. In some cases companies have discovered that productivity actually declined in the immediate aftermath of automation so it is a process which has to be undertaken carefully. However it has also been found that if used correctly tools such as imaging and workflow superior 3 way matching solutions used together with bolton products such as those which unearth duplicate payments can achieve savings of 70 of the cost of processing theirsupplier payments.

Processing Costs
The cost to process an invoice is the most basic of A/P metric and yet can often be the most difficult to assess given the wide disparity between one organisation and another. However it has been calculated that it costs between 2 and 10 to process asupplier payment. Interestingly there seems to be little correlation between the size of the company and the cost per invoice. In top performing organisations the average time it takes to process an invoice is 3 days which compares to 6 days in an averagely performing company. Obviously the adoption of a code of conduct within an A/P department and adherence to best practice advice will push your organisation towards the top performing bracket.

Duplicate Payments
This is an area which is impossible to defeat completely but duplicate payments dont have to remain unclaimed and simply accepted as a normal part of the A/P function. In addition an increase in duplicate payments can imply an organisation with a lack of appropriate controls in place. The purchase of bolt on technology to pinpoint overpayments can overcome these failings.

SupplierSatisfaction
Finally it doesnt matter how hard your Account Managers work or how often you use a suppliers services if you dont pay them on time or if there are consistent errors within your payments you can say goodbye to any long term working partnership. Best practice companies tracksupplier satisfaction in a variety of ways. An increasing number of organisations use Interactive Voice Response and web based selfservice portals to allowsuppliers to check payment status and to get answers to other questions. A solid working relationship withsuppliers makes sound business sense and can impact on many different areas of your organisations functions.

All in all the important thing to remember is dont be content to leave things the way they are tempting as that sometimes is. A shift in attitude and working practices is not merely paying lip service to the powers that be but can actually make a real difference to your working life and to your organisations profitability.

About the writer:  Passionate about providing readers with key information on accounts payable in Accounts Payable News. My background covers many different sectors including housing museums and finance. With experience in all areas of marketing editing and sales I aim to build and promote a not for profit site of practical use to Accounts Payable professionals

7 Common Myths About Franchising Debunked

All Chain Restaurants are Franchises
Whenever people see a chain restaurant from Outback to Olive Garden they always assume it is a franchised unit. However there are two business models that these chains commonly use. The first involves selling franchises and the other involves hiring individual store managers to run corporate owned locations. You might be surprised to learn that the following chains do not franchise: Cheesecake Factory Lone Star Steakhouse O Charleys and Bob Evans.

Buying a Franchise Means Guaranteed Success
Although your odds of success are statistically higher with a franchised business there are no guarantees. Even with a proven business concept no business venture is without risks. Hundreds of franchised businesses close every month. However studies show that the most common reason a franchise fails is because they do not follow the system.

Its Wasteful to Invest in a Franchise Just Open your own Business
All franchises have an initial fee that must be paid to open a location. Some people view this as a waste of money. However studies show that nearly 95 of franchised businesses remain open for at least 5 years and 94 of franchise business owners consider themselves successful. The money you give the franchisor lets you in on a proven business model that will make your business much more likely to succeed.

You need to be Wealthy Already to Invest in a Franchise
Although it can cost tens of thousands of dollars or even hundreds of thousands you do not necessarily need to have that much in your bank account. There are multiple different ways you can finance a franchise. Examples include personal loans selfdirected investments small business administration loans and home equity loans.

Running a Franchise Business is Easy
Although a franchisor will provide the franchisee with training and direction the daytoday operation of the store is your responsibility as the owner. There is no such thing as an easy business opportunity. Even with a proven business plan to be successful you are still going to have trials along the way.

Opening a Franchise Business is Cheaper
Some people assume that opening a franchised business will be cheaper then opening up a traditional business since they will save on marketing costs. Unfortunately even with a very well known franchise you will still need to allocate funds for marketing. Additionally royalties and fees can frequently offset these savings.

Higher Initial Fees Means Better odds of Success
The old saying the more money you invest the more money you make is definitely not true when it comes to franchises. Just because the initial fee is skyhigh does not mean that you will have better odds of success. As we mentioned before all business ventures include risk and there is never a guarantee that you will be successful no matter what franchise fee you pay or what the franchisor tells you.

About the writer:  The Roni Deutch Tax Center is one of the nation’s hottest income tax franchise. For more information on owning a franchise visit RDTCFranchise.com or check out Watch Me Franchise to see what it is really like to run a franchise business.

5 Stupid Things People Do Working From Home

Thanks to technological advancements people have decided to make lifestyle changes and have flocked by their thousands to start home based businesses. Home based businesses is the largest growing segment of small businesses today and unlike previous decades anyone who has a computer and internet connection has the ability to start their own home based business literally overnight.

Home based businesses can afford greater flexibility over our lives and can really give us a sense of freedom. With this sense of freedom there are also pitfalls that many home based business owners make that can really set them back.

Here are 7 stupid things people do working from home that can be disastrous to your new found freedom and financial well being.

1. Taking their new found freedom to literally. Your now the boss you’ve been waiting for this moment. No more boss to report to and no stuffy corporate environment to inhibit and hold you back. Instead of taking this as a chance to stretch yourself you instead take the new freedom to literally and spend countless hours watching day time soaps instead of working. You get distracted by household chores and go on endless errands during work hours because you can. The reality is that just because you have your home business doesn’t mean you can slack off and work when you feel like it. The reality is that unlike in the workplace where you can work to the barest minimum expectation and still get paid here if you don’t work hard you don’t get paid. Eventually your sloppiness is going to catch up and you are going to struggle to pay the bills. So before you get excited you need to realize that you are going to have to work harder than you did for your boss only this time you will reap the rewards.

2. They go overboard with the work. You started a home based business for a reason maybe it was so that you can spend quality time with your family maybe it was to enable you to stay at home with your young children or maybe it was for a better lifestyle choice. So a few months into the new home business you see these very people working twice the hours they used to when they were working only now instead of taking their work home with them they have the work with them at home 24 hours a day. These people can’t seem to switch off from their business because there is always something to do and never seems to be enough time to get them done. Don’t let that be you. Learn to switch off completely from work and set up scheduled times when you will work and when you will spend with your family so that you don’t feel guilty for spending time with your loved ones.

3. They don’t know how to delegate. If you look at your former workplace you weren’t expected to do everything. They had people doing a particular task and others doing another task. The reality is that all good businesses know how to delegate tasks and functions to people who are going to do them best. This isn’t going to be the case with a new startup home based business simply because you may not have the financial resources to delegate everything that you want to. However you can do some simple things to delegate things to people if you realize how much you can save by doing it. For example if it is going to take you 6 hours to get your monthly bookkeeping records up to date but it will cost 3 hours and 600 to delegate to the bookkeeper you can decide can you make better use of your six hours and will you in that period make more than 600 to pay for the bookkeeper. If so then delegate. The more you focus on your core competences and delegate the rest the better off you will be and your business. Not only will you be doing things you enjoy and keep your enthusiasm for your business high you are also giving opportunities to help others do what they are competent at.

4. They buy themselves a job instead of building a business. The point of going into business is so that you can create some sense of financial freedom and to provide a product or service to your target market. However many people who start home based businesses soon realize that it just isn’t economically viable and instead of calling it a day and start a different business with better prospects or go back to the workforce they instead hold onto their dream like it’s the last glamour of hope in their lives. You can spot these people because they keep pumping their savings into a business or they get their loved one who has worked hard for their paycheck to invest into their business. They hold onto the hope that one day the business will grow but it generally never does. If your business isn’t viable then all you have is you have bought yourself a job where you are overworked and for some people they may even be volunteering for the pleasure of owning a business because they can’t even draw an income. Sure during the startup period many businesses owners choose to reinvest the profits back into their business and sure some business takes longer than others to break even but you know after time whether the business is going to work and because you are home based there isn’t any reason why you can’t start again with another venture after all you have now learnt some valuable lessons. Don’t hold onto an empty dream if it isn’t performing.

5. The dream to small and settle. You might have a home based business but that doesn’t mean you have to think small. The greatest shame is seeing home based business owners who only think small because they see themselves as a small business owner. The reality is that many great well known companies started out in dorm rooms in someone’s garage or on the kitchen table. There is no reason to create limitations on yourself if you want to create a large company. Great things can start off small just dream big and take one day at a time.

About the writer:nbsp;nbsp;Stephan Ducharme is dedicated to helping online marketers or opportunity seekers to able to make money online without paying a dime in advertising ! You can get his free audio ebook here:
http://www.freeadguru.com/cgibin/i.pl?c=ai=25767