Automatic Purchase Orders from Customer Sales Orders

As Business Consultants, we talk to hundreds of business owners each year and although it's not commonly requested, we often identify they could save time and reduce errors by automating tedious business processes.

A typical response is: "I didn't know that could be done!".

We put this down to the "not knowing what you don't know" syndrome. Business Managers and Owners often can't see the forest from the trees and just assume the way they are doing things now is OK and there's probably not much they can do about that.

Usually when our Business Consultants do a walk-through of a business they identify a few key improvements that can be implemented simply; with tangible benefits. These include:

• Higher sales,
• Less errors,
• Reduced costs of operating,
• Happier customers, and
• Happier staff.

To help you understand what's possible, let's explore just one area that can be automated with Axsapt's Back to Back add-on that ticks all of the above benefits. The process of delivering Goods to your Customers involves the following:

• Convert the winning sales quote into a sales order/confirmation (with or without a deposit)
• If there is insufficient stock or raw materials on hand raise one or more purchase order to suppliers considering customers' required delivery date, transport times, outsourcing requirements, etc.
• Where further manufacturing is outsourced, raise additional purchase or job orders to those external suppliers with sufficient instructions.
• Receive the product into stock or arrange for it to be dropped shipped to the customer
• Raise a sales invoice to the customer

Even the process of choosing the most cost effective supplier (based on reliability, time to deliver, minimum order quantities and best purchase price, etc) is tedious and it's easy to make the wrong decision which costs your business money.

For a complimentary discussion about what's possible, please contact Axsapt. Our passion is automating tedious processes bogging down businesses. The benefits to your business are increased accuracy, reduction in processing costs and superior customer service. 

And don't forget your staff will love you as they won't have to do "brain-dead" tedious tasks that makes the day drag on and on.. 

More Information: Axsapt

What KPIs Drive Your Business?

In challenging times it's essential to manage your business operations to thrive. Probably the easiest way to do this is to focus on expanding more profitable aspects of your business whilst containing costs. You can do this by making it easy for your team to focus on your game plan by exposing your Key Performance Indicators (KPIs).

What KPIs do you use to manage your business? Every business is different, but as an example, the following is Axsapt's Dashboard.



Axsapt's Dashboard displayed on an LCD screen in our office

Displayed on a large LCD screen in our office, the Axsapt Dashboard shows a Leaderboard of revenue generated by all Team Members with Targets required to stay profitable. As we are a service based organisation, our help desk issues and performance are tracked so we can focus on improving the time it takes to help customers solve issues. Also measured are future appointments as they help improve customer satisfaction and revenue.

There are a selection of possible measurements that rate the financial fitness of any business and other non-financial KPIs, whilst not as well known, are even more valuable in predicting future cash flow and profitability.

The knee jerk reaction when times are tough is to slash variable costs (wages, marketing, staff amenities etc) and increase short term profits. Financial-based Key Performance Indicators (KPIs) are useful for highlighting the following:

• Cash position (ability to meet wages, rent and other fixed costs)
• Sales
• Gross Margin
• Expenses
• Net Profits
• Unpaid customer invoices exceeding trading terms
• The net value (assets less liabilities) of the business 

Financial KPIs are typically compared to budgets or equivalent periods in the past with the intention of establishing a trend line to highlight potential problems.

Although useful, there is a limit to the overall usefulness of Financial KPIs in managing your business. There are 2 fundamental weaknesses of financial reports:

1. unless you are an accountant, financial metrics are difficult to understand, and 
2. financials provide you with limited guidance in how you can tweak your business to make it better.

Financials are ok at alerting you to potential problems that you can address before it's too late. For example customer outstandings exceeding trading terms pinpoints customers struggling financially. It's important to deal with problems like credit control, but it's even more important to focus on increasing opportunities and improving activities that improve customer satisfaction.

KPIs that track Sales, Outstanding Debtors, Stock on Hand are “lagging” indicators. "Predictive KPIs"* on the other hand are “theories” that predict performance. They work because they focus you and your team on the reason why your business exists in the first place.

What KPIs should you choose to help your business?

It’s difficult to generalise, but the following are fairly common KPIs in helping to catch problems before they can cripple your business:

• Velocity, or how long from the time an order is received to the time you deliver your product or service
• Number of new products taken on each year and on sold to existing and new Customers
• Customer Satisfaction (measured by surveys, product returns, sales activity etc)
• Staff Satisfaction (measured by surveys, staff reviews etc)

Our tip is to focus on no more than 3 KPIs and automate and display them on a big LCD screen in your office for all to see.

More information: Axsapt

*Source: The concept of Predictive Key Predictive Indicators and focusing on opportunities is sourced from the books:  "Implementing Value Pricing" and Mind over Matter, both by Ronald J. Baker

Keeping your finger on the pulse of your business

When running a small to medium sized business, it's a good idea to:

• have just enough stock on hand to deliver customer orders on time
• ensure sales to customers generate sufficient profits to cover all running costs and a reasonal rate of return for your investment
• monitor your cash flow, ensuring customers pay their bills on time, and you don't pay your bills earlier than necessary. You should also be aware of any unusual expenses so they can be investigated

To grow your business, you'll need to:

• identify and focus your marketing on products and services that generate the most return
• increase your capacity to handle the growth of your business without stressing out your team
• take advantage of efficiencies of scale, such as higher volume purchase discounts, reduced administration and distribution expenses

You can start to do this by hiring a good management accountant with the skills to extract this sort of information from your accounting system and present it to you in a meaningful way.

Or you could substantially automate this process by investing in a Business Intelligence Centre, that will extract key performance indicators from your accounting system and present it in a series of easy to understand dashboards and management reports.

More information: Axsapt

Document Management

Why would anyone bother with document management? Quite common in the Legal Industry where multiple documents are associated with each matter and it is important to quickly retrieve information based on key word searches.

Document Management is also growing in popularity where there is a need to quickly retrieve source documents such as proof of purchase and delivery of goods. From an environmental point of view, it makes sense to quickly recycle documents rather than storing them for years in filing cabinets and archival storage.

Many business software systems these days have some inbuilt document management capability. Unfortunately from what we've seen, they tend to fall short on the usability and don't seem to flow seamlessly with the process flow of the host application.

When looking for an appropriate Document Management System, it is important to consider the following factors:

• Multi-level security of the stored documents
• Ease of use including rapid retrieval of documents in the most appropriate and logical flow
• Secure destruction of deleted documents
• Compatibility of working with all common document types

The best document management systems are able to be configured to work so closely with existing business software that it would appear to be part and parcel of the host system. For example, when drilling down on a list of customer sales invoices, you can retrieve the customer's purchase order and your freight consignment note.

More information: Axsapt

Taking Stock of Your Accounts

Most accounting systems can handle general business needs without too much fuss. As long as your business sells straightforward products using a simple pricing model, then it's probably OK to stick with a run of the mill accounting system.

But what if your products have:

• multiple units of measure
• serial and lot tracking with expiry dates
• different costs at each location
• more than one stock keeping bin location in each warehouse
• barcodes for each packaging unit
• the need to track costs by FIFO, Weighted Average Cost and Standard Costs
• more than one dimension such as Colour, Size, Season, Width and Depth and the pricing varies for each of these attributes
  
• Volume Pricing or Discounts by date range for both Sales and Purchases
• Complex cost calculations that include foreign and local freight charges, agent handling fees, duty, warehousing fees, insurance all allocated on the basis of weight, value or cubic volume
  

If you're using a run of the mill accounting system and your business has complex stock requirements, you're probably using spreadsheets and word processing and many error prone manual procedures just to get your invoices out the door.

More information: Axsapt

Are Company Procedures Worth It?

Growing businesses tend to adopt more complex processes over time as the workload is spread among staff to improve throughput.

As more staff come on board they need to be educated quickly on those processes and expectations otherwise mistakes can be made that will affect profits. The bigger the company the more likely that related tasks can be segregated among individuals and teams. The success of projects will ultimately depend on tasks being done correctly and within time constraints.

Many companies adopt formal written Policy and Procedures Manuals, Checklists, Knowledgebases and Flowcharts but to ensure compliance there must be supervision and regular audits and reviews. The success of this approach depends on the clarity and accessibility of these documents and the diligence and personality of the staff entrusted with following step by step procedures.

These days, modern business software systems such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems have configurable workflow that can automate these tedious processes. Workflow helps by breaking down complex tasks and assigning those tasks to staff or teams and encouraging them to perform those procedures in the right order. If a procedure doesn't get actioned in time, Notifications or Alerts are redirected to other team members or supervisors.

The benefits of a Workflow system is that less training and supervision is required and the quality of output should improve as strict standards are enforced and measured against benchmarks.

More information: Axsapt

Examples

How to Grow New Business

The Rio Tinto / Stern Hu bribery trial in China is a reminder of one way of growing a business that may have risky consequences.

A better approach would be the traditional method of ensuring you have great products (or services) at reasonable investment and back them up with responsive customer service.

With the basics covered, increasing sales involves promoting your product and highlighting the benefits of dealing with your business over your rivals.

To grow profitably it's best to focus on your complementary services and product quality and deep knowledge in your chosen field. Building credibility involves contributing to your industry and associates and providing useful advise to your customers and prospective clients.

Seminars, Trade Shows, Newsletters and other useful communications are great ways to educate your marketplace about your expertise in recommending and implementing your time and money saving products or services.

Customer Relationship Marketing (CRM) systems are excellent in managing your promotional activities and measuring the success of each campaign so that you can successful replicate what works well and ditch what doesn't.

More information: Axsapt

Are Your Manual Systems Up To Spec?

Changing over to a new accounting system is often considered a good way to improve cash flow and profitability. For example, tighter stock control and better forecasting will result in lower stock holding costs as just enough stock is held to avoid stock outs and reduce the incidence of stock shrinkage.

Great in principle, but before implementing a new software system, you should ensure there are adequate internal controls in your manual systems to complement the software systems. Examples include:

• Transport registers and security checkpoints at the warehouse gates
• Cheque and cash received registers

Segregation of duties is also important with medium to large organisations. This is where the custody of assets (stock, cash, debtors, fixed assets etc) is a separate function to the authorisation of transactions involving these assets. Examples include:

• sales order takers and stock control
• cash receipts and sales invoice/credit
• cash payments and creditors control
• payroll and human resources

Other areas that will reduce risks include:

• Providing "blind" Stocktake Sheets and Cash Count Sheets i.e. without expected values
• Surprise cash counts of random tils and petty cash
• Random stock counts of specific product lines or location.

Axsapt Business Software Consultants can help you identify the potential risks within your business and recommend appropriate changes to your systems (both manual and computerised) to reduce those risks.

More information: Axsapt

Sybiz Roadmap for 2010

This week, Sybiz Business Partners from around the world attended the Sybiz International Conference at the Seaworld Resort, Gold Coast in Queensland.

Sybiz this year celebrated 35 years in business and showcased 2010 product releases including Advanced Job Invoicing, Genesis BRM (Business Relationship Marketing): a CRM for small to medium businesses and Visipay 10.0 a powerful multiuser Payroll and Human Resource Management System.

The new Vision.Net, Sybiz's next generation release for it's Flagship Vision Accounting System was also announced. The initial core release is expected 2nd quarter 2011.

More information: Axsapt

Business Intelligence

A good Business Accounting System will help you accurately record your business transactions such as revenues and expenses, assets and liabilities. You do this to ensure that all your income is properly invoiced and collected and you maintain control over your expenses.

You also have a statutory responsbility to accurately calculate profits for tax purposes and keep track of withholdings from your employees to remit to the Government.

In the process of running your business and recording all these transactions, wouldn't it be nice to analyse your past activities to alert yourself of potential problems and identify opportunities to improve your business profitability?

A Business Intelligence ("BI") system will help you make sense of your business activities and transactions by:

• Presenting results into easily understood tables and graphs
• Calculating Key Performance Indicators ("KPIs") that highlight inefficiencies with inventory, customers, suppliers and other areas of your business
• Categorising your customers, products and services and comparing the results achieved by sales representatives over time and across similar categories to identify potential opportunities

A good BI tool will work with disparate business systems in your organisation and eliminate the need to rekey information into Spreadsheets.

The ultimate aim of BI is to make more informed business decisions.

More information: Axsapt

Stock Management Reviews

If your business sells products, then it's worthwhile reviewing your stock management systems to see if you can improve your efficiency and reduce your procurement and holding costs.

Areas to consider in your review include:

• sales forecasts
• lead times and quantity buy prices from each supplier
• similar products that can be substituted for out of stock products
• special storage needs (such as temperature control)
• customer preferences (for example: whether partial shipments are allowed)
• efficiency of the warehouse layout

What are the signs of an inefficient system? Lost sales due to stock outs, Cancelled orders due to missed delivery dates, Stock Shrinkage, Damaged and Expired Stock.

Modern stock management systems aim to minimize stock holdings without compromising customers' requirement for on-time stock delivery. They do this by basing the procurement process on current stock holdings, customer reservations, customer orders in the system and sales forecasts, with regard to the lead times from various suppliers and economic order quantities.

The Pick and Pack process can also be improved by printing picking slips based on customer required delivery dates and stock availability. When there are insufficient stock levels to satisfy all orders, a good system will allow you to reallocate orders from lower to higher priority customers.

More information: Axsapt

Can you Personalise your Accounting System?

There's nothing wrong with buying an off the shelf accounting, payroll or CRM system if it meets most of your current needs. If, however you feel your business will grow over the next few years, you should consider the configurability of your business system to avoid the high changeover cost.

There are varying levels of business systems out there from rigid entry level systems like Quickbooks and MYOB to fully customisable packages such as Sage CRM and Sage Accpac ERP.

Typically all small to mid size systems will be relatively quickly to implement provided you accept a best practice template, but as a business evolves, it's needs may result in inefficiencies in processing day to day activities.

For instance, you may need to record aspects of attributes of customers that just won't fit in any of the available fields within your CRM system. Some systems anticipate common expansion requirements by preallocating an number of "unused custom fields". The better systems allow you to define your own fields and map them to screens without much effort. Custom workflow can also be defined that controls when these variables appear and alerts others of required activities when concern conditions are met.

These sorts of systems are often more cost effective than performing manual external processes with spreadsheets for instance or rekeying duplicate information across disparate systems.

More information: Axsapt

Are you suffering from Shop Blindness?

This afternoon, Scott Huston from my office, told me about how in his previous job as a Manager of a Woolworths Liquor Store, he and his team would regularly act as customers and walk the aisles of their stores and stand in front, rather than behind the sales counters.

Why did they do that exercise? To change their perspective and wake up from "Shop Blindness" where you become oblivious to problems in your environment such as signage mistakes and inefficient stock positioning.

Could you be suffering from Shop Blindness in your business? Very likely.

Another way to look at this is to accept that there are aspects of your business you could easily improve but only if you knew there was a problem to fix.

At Axsapt we come across this whenever we run training courses for our customers. We're amazed at the inefficient processes people use in their businesses when their current software can often automate complex processes.

On some occassions our customers ask us to review their systems and without fail we are able to recommend improvements to their processes that can save them money in some cases and nearly always time.

More information: Axsapt

Human Resources

Without any doubt, your most important business asset is your personnel and it goes without saying you should look after your team.

Most businesses use a Payroll System but in our experience very few small to medium businesses use a Human Resources system.

What does a HR system typically record?

• Aspirations
• Credit Cards
• Disciplinary Actions
• Grievances and potential hazards
• Staff Groups such as Profit Sharing, First Aid, Social Club, OH&S Committees
• Medical Details such as Blood Groups, Allegies and Dietary Requirements
• Languages spoken
• Licenses held
• Locations
• Occupational Health and Safety (details of injuries)
• Performance Reviews
• Positions held by each employee since commencement
• Motor vehicles, Notebooks, clothing, phones and other property held
• Qualifications and Skills
• Training Courses available and attended

There are some good dedicated HR systems but the best option is to use one that is fully integrated with the Payroll system to avoid having to re key employee details in twice.

More information: Axsapt

Looking after your assets

Probably the most neglected accounting aspect of small to medium sized businesses is the recording of fixed assets such as Manufacturing Plant, Office Furniture and Equipment, Motor Vehicles, Fixtures and Fittings, Leasehold Improvements and Buildings.

Typically a business relies on their external accountant to maintain their depreciation schedules for them on an annual basis. Not that there is anything wrong with that, except that with minimal investment in a good Fixed Assets system, the business can produce meaningful reports on demand and reduce the risk of losing valuable assets.

A good fixed assets system will link into the base accounting system to minimise rekeying of data, such as monthly depreciation entries and profit and losses arising from disposals/sales of assets. The system should also track both Accounting and Tax depreciation rates and calculations on the basis of Prime Cost or Straight Line and Diminishing Values.

When selecting a fixed assets system, ensure that it supports Asset Pooling, where low value assets are often allowed to be depreciated as a group using the diminishing value method.

Some fixed asset systems go even further and track service history and scheduled maintenance requirements.

More information: Axsapt

Branch and Activity Accounting

One area entry-level accounting systems don't handle particularly well is a segmented General/Nominal Ledger.

Most larger businesses operate over a number of regions, branches or departments and within these are multiple activities. Accounting for these sorts of businesses is usually handled within one legal entity's accounts by segmenting each general ledger account as follows:

CCCCCC-BB-AA

where CCCCCC is the Chart of Accounts, BB is the Branch and AA is the Activity.

The Chart of Accounts represents the standard representation of the summary ledger accounts that form the basis of the company's Profit and Loss and Balance Sheet.

The Branch is typically a distinct business owned by the company with a similar business model as other branches in the group.

Activities are business units within each branch, such as Sales and Marketing, Administration and Finance.

Where there are business expenses incurred that relate to multiple branches and activities, some accounting systems have the automatic capability of allocating these expenses to each branch and activity on the basis of a pre-defined proportion.

Reporting is another area that is handled better by segmented accounting systems. For example, you can usually produce a Profit and Loss Report and Balance Sheet for

• Specific Branches for all Activities
• Specific Branches for Specific Activities
• All Branches for All Activities
• All Branches for Specific Activities

The most common benefit of adopting a segmented accounting system is the production of more meaningful results to enable Management to assess the relative success or failure of individual business units and regions.

More information: Axsapt

Lot Tracking and Shade Matching

One of the challenges faced by ceramic tile and other building products distributors is ensuring each product type supplied has exactly the same colour shade.

Why is this important? Imagine walking into a large hotel foyer and noticing a difference in the shade of floor tiles from one side of the room to the other.

Even though Quality Controls ("QC") processes ensure consistency within and across multiple production runs, there will often be very small variations in the colour dyes used and overall shade due to the variability of clay, sand and other natural components. The QC process ensures products are graded and packaged into similar shades and identified with a batch number for tracking purposes.

To ensure customer orders are supplied with product manufactured from the one production batch (and shade), distributors adopt either manual warehousing records or an accounting system that handles multiple lots/batches across each product.

Some more powerful accounting systems even identify the actual bin location or aisle and level on the pick list to speed the warehouse pick and pack process.

More information: Axsapt

Audited Systems

One key area that distinguishes entry level systems from more capable mid-tier systems is the auditability of the system and in-built system controls to restrict and detect major fraudulent activity.

For instance, it is possible for accounts payable officers to change the BSB and Account Numbers of supplier records, then make a payment run and electronically transfer funds to their own bank accounts. They can then cover their tracks by changing the BSB and Account Numbers back to the original values.

At Axsapt we provide Audit Logging Utilities that record changes to supplier records and trace them to the user and even the workstation they logged on when the change was made. An Audit Report can be produced at any time that lists a change log.

If required, any unauthorised changes can be alerted to key management as soon as they occur.

More information: Axsapt

Middleware - Bridging Disparate Systems

As businesses evolve they tend to adopt more than one software system to manage their varied transaction flows and processes. Examples include:

• Financial Reporting
• Debtors and Creditors
• Inventory
• Manufacturing Systems
• Job Costing
• Time and Billing
• Payroll
• Human Resource Systems
• Point of Sale/Cash Registers
• Debtors Ledgers
• Procurement Systems
• Sales Force Management
• eCommerce and Web Sites

There's nothing inherently wrong with multiple systems, but every so often, it's a worthwhile exercise to review these systems with a view to identifying inefficiences. It may be possible to adopt or develop middleware software that will automate the communication between disparate systems.

Examples include transferring timesheets from Job Costing or Time and Billing Systems directly into the Payroll. Or polling Point of Sale Cash Registers at regular intervals to provide turnover and profitability reports at head office.

There may come a time in the business lifecycle however when the benefits of building additional middleware outweigh the costs of migrating to comprehensive integrated Enterprise Resource Planning ("ERP") Systems.

More information: Axsapt

Who said: "There's no accounting for style?"

When it comes to Accounting for the Fashion Industry, there are very few business systems that really nail the way Business Owners and Managers deal with the unique aspects of their stock in trade.

Many systems are "bolt-on" after-market modules that merely add Colour and Size attributes to each existing inventory items. This method is only useful to retailers that sell single quantities of each garment or shoe.

However, when it comes to wholesalers that sell many quantities of each Style in various combinations of colour and size, only a Matrix type Accounting System like, Axsapt Matrix or Noble Matrix can handle rapid data entry and logical invoices and reports.

In the above image, each Style item is represented in a Matrix or Grid with the Colours along the left hand side and the Sizes along the top. With Axsapt Matrix there are up to 30 sizes and an unlimited number of colours able to be assigned to each product.

When selecting an Accounting System for the Fashion Industry, make sure that all essential sales and stock reports are also represented in the easy to read Style/Colour/Size Matrix. And if you are dealing with Electronic Data Interchange ("EDI") or Retailers that will sell your products through their Point of Sale Systems, ensure your Matrix accounting system allows you to assign a unique barcode to each combination of colour and size.

More information: Axsapt