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

Torturous Training

This week at Axsapt, we threw out our perfectly good SAP Business One Accounting System and replaced it with Sage Accpac ERP and Sage CRM.

We've been using SAP B1 for 4 years successfully and it was time, yet again, to put the A-Team through the torturous process of kicking over to another system.

Over many years we've used a variety of accounting systems including Attache, Arrow, Nexus, Sybiz, Advanced Business Manager, SAP and now Sage. All good systems with their specific strengths and weaknesses that are not obvious until you have used them for a while.

Our journey with Sage started just over 12 months ago, during which time we have been steadily learning this comprehensive Enterprise Resource System. Although we have learned well from the excellent training resources available, we've found that the deep knowledge that we require as Business Consultants, can only be achieved by first hand experience.

This knowledge stands us in good stead with any business wanting an appraisal of their current business systems.

More information: Axsapt

Marketing your business - What works these days?

My involvement with running a "business" goes back to 1978 when I was selling Cycling Helmets whilst studying at the University of New South Wales. I placed a small strip ad in the Student Newspaper "Tharunka" and was thrilled to see over 100 orders stuffed in my post box.

Magazine ads also served me well from 1984 when I launched a new business publishing and distributing the DeSmet C compiler for the PC and Mac. Many of my ideas for marketing during this time came from John Caples book, "Tested Advertising Methods", where I learned of the importance of measuring the results of each ad placed. My advertising budget was quite low and I found that after a number of years the return on investment of the ads was diminishing so I tried direct mail for a while with very little profit.

My first attempt at fax marketing was in 1992 when Microsoft Access 1.0 was released. The faxes were personalised and targeted at C programmers and resulted in over 150 orders. Fax marketing worked well for a few more years but then the profit return started to drop and frustration from unwanted faxes was growing.

I gave email marketing a go for a while, but never experienced the good results of the early magazine ads and personalised faxes. Since 2004 with Axsapt, our focus has changed from selling product to providing business consulting services and we tried seminars, trade shows, direct mail and telemarketing all with very limited success.

We continue to send out infrequent email newsletters primarily to keep our customers informed of important software patches and new releases. The difficulty is that everyone is swamped with "spam" and very few people have the time to read emails these days.

Until about 2006, most of our new business was sourced through leads received from our suppliers and referrals from our existing Customers, Accountants and Business Coaches. In recent years however, we've noticed a substantial drop of leads from suppliers so we experimented with a 3 month campaign with Google Adwords through Reachlocal. Although impressed with the professionalism of ReachLocal and the Adword mechanism of measuring results, we felt it didn't suit a service based business like ours.

Referrals have always impressed us as the most effective source of business primarily because of the low cost and minimal effort to progress the sale due to the "trust" factor. And so, we decided 3 years ago to try Business Network International ("BNI") to improve our referral rate. So far our experience has been quite positive in more ways than just increased sales. We've used the trusted services of fellow BNI members to improve our own business and have referred quite a bit of business to other members along the way.

This morning, I attended the BNI Conference in Townsville and the keynote speaker, Dr Ian Misner, the expert on referral marketing and BNI Founder, reminded us that building a referral network such as the BNI model takes a significant amount of effort. The secret, the "Givers Gain" philosophy, is to focus on helping other BNI members, and in time, you will receive referrals once your credibility grows. I have to agree as it took almost 2 years to receive our first sale, but now I notice we're receiving good quality, substantial leads and the future is looking very promising for our investment in BNI.

Growing any business is a rewarding journey and so far I've learned that you need to adapt to changing circumstances in order to thrive. Marketing is certainly an important aspect of most businesses and especially for service based businesses, I can highly recommend you consider BNI.

I'd be interested to learn about your experiences in growing your business. Please let me know if you agree or disagree with me. Is there another form of marketing that works for you? Click on this link to let me know.

Rick Polito

Axsapt Pty Ltd

Managing the Production of Food

Some of Axsapt's customers are well known Australian manufacturers of mass produced food products such as Cakes, Pickles and Chocolates.

What are the special needs of these sorts of industries?

• The most important from a health point of view is traceability of all products produced from a single production run or batch. If a product recall becomes necessary, it's important to identify all customers who have purchased the faulty product. This extends right down to the components used in the recipe as well.
• Raising purchase orders to suppliers to ensure that raw material components arrive just before needed so they are in peak condition. Perishability and Local availability are the key factors that determine the lead time of delivery.
• Shelf life/Use-by Dates needs to be recorded on both raw materials and the finished product. This will help the warehouse pick the oldest products first to minimise the likelihood of stocking expired products.
• Keeping stock levels at optimum levels by predicting factory production based on seasonal sales forecasts, actual orders received, current stock in the warehouse and the practical production capacity of the machinery and labour force.

Selecting a good Manufacturing System can be quite onerous as you must map the production process including all the stages of manufacture. You need to consider stock locations, outsourced manufacture, phantom bills (such as bread dough) which exists only as a temporary component in the process, resource capacity, wastage, the production of by-products etc.

More information: Axsapt

Profitably Managing your Services

If you're in the business of selling services (with or without materials) over an extended period of time, you'll be faced with the following challenges:

• estimating the job accurately based on expected costs and margins
• keeping track of your staff and sub-contractors and managing cost blow-outs
• ordering materials for direct delivery to a project
• progressive billing based on the percentage or stage of completion (work in progress)
• managing warranty retentions, including automatically invoicing retentions when they are due
• calculating the profit or loss on a job

A good Job Costing system will be seamlessly integrated into your Payroll System so that staff time booked on projects are also used to process the payroll payments. Inventory should also be linked so that estimates can be quickly prepared, accurate purchase orders raised where there is insufficient stock on hand for the job or where materials are always dropped shipped to the site.

Many businesses would benefit from a powerful Job Costing system, including Construction Companies, Airconditioning manufacturers and many Service companies (such as Software Developers).

More information: Axsapt

Cebit Sydney Surprises

Cebit this week wasn't as impressive as last year's pre-recession event. Gone were the giants of small business accounting: MYOB and Quickbooks. Other notable "no shows" were Microsoft, SAP and Sage whose stands last year probably cost as much as a small house.

Surprisingly I discovered some gems including an Australian web based fully featured Accounting and Payroll solution priced from less than $45 per month for an unlimited number of users. My first impression is this system is more capable than the hyped up Xero from New Zealand.

Another stand out was a powerful web based work flow engine from the USA for only $50 per month per user. I've seen clumsy and less capable systems for 30 times that!

Also from the USA was a powerful low cost document management system with no compromise top-level security access and a portable storage model with seamless integration into any accounting system. This is the first such system I've come across that will make document management a reality for small to medium businesses.

Over the next few weeks we'll investigate these products in detail so we can see if the "show hype" holds up and they really are of benefit to Axsapt's customers.