Financial Management for Entrepreneurs ~ Simplified

Financial Management for Entrepreneurs,[object Object]

Our AGENDA,[object Object],Accounting & Finance ,[object Object],Budgeting,[object Object],Collecting Account Receivable ,[object Object],Risk Management,[object Object]

Financial Management,[object Object],Let’s Find Out More…,[object Object]

Operating a Business,[object Object],Financial Management,[object Object],Legal Management,[object Object],Business Management,[object Object],Marketing,[object Object],Office Management,[object Object],Production,[object Object]

Financial Management Defined,[object Object],[object Object],Accounting & Financial Reporting,[object Object],Budgeting,[object Object],Collecting Accounts Receivable ,[object Object],Risk Management,[object Object]

Financial Management Defined,[object Object],For small business,[object Object],How you raise your capital,[object Object],How you manage your money,[object Object]

Accounting & Financial Reporting,[object Object],[object Object]

Financial Reporting,[object Object],alternative ways you can handle this. ,[object Object],Manage everything yourself,[object Object],Hire an employee who manages it for you,[object Object],Keep your records in-house, but have an accountant prepare specialized reporting such as tax returns; ,[object Object],Have an external bookkeeping service that manages financial transactions and an accountant that handles formal reporting functions. ,[object Object],Use soft wares,[object Object]

Accounting vs. Bookkeeping ,[object Object],Accounting System ,[object Object],income, expenses, assets, liabilities ,[object Object],an organized system for keeping track of ,[object Object],how the money flows through your business,[object Object],where it is supposed to go,[object Object],Bookkeeping system ,[object Object],keeps track of the nuts and bolts -- the actual transactions that take place. ,[object Object],provides the numbers for the accounting system.,[object Object],Both accounting and bookkeeping can be contracted out to external firms,[object Object]

Accounting,[object Object],Accounting is the big picture,[object Object],the system that keeps track of ,[object Object],data (including people),[object Object],records your transaction history, gives you reports ,[object Object],It also encompasses ,[object Object],payroll ,[object Object],tax status,[object Object]

Bookkeeping,[object Object],Bookkeeping is the tedious part ,[object Object],the systematic recording of ,[object Object],amounts, dates, and sources of every revenue and expense generated. ,[object Object]

Accounting + Bookkeeping,[object Object],Accounting = giant sifter ,[object Object],Bookkeeping = the process of pouring stuff into it. ,[object Object],Accounting + Bookkeeping = information needed to run your business,[object Object]

Outsourcing Accounting,[object Object],Still need ,[object Object],some type of Recordkeeping System to manage the day-to-day operations of your business ,[object Object],Financial plan and budget to make certain you have thought through where you are headed in your business finances. ,[object Object]

Hiring Certified Public Accountant,[object Object],Set up accounting system,[object Object],Consulting and tax preparation,[object Object],Helps generate reports & financial statements,[object Object],Updates with tax laws and reduce tax liabilities,[object Object],Compile financial statements,[object Object],Review statements,[object Object],Perform an annual audit,[object Object]

Software vs. Shoebox,[object Object],A system to monitor your business,[object Object],Collections,[object Object],Products / services,[object Object],Invoices,[object Object],Better BOOKKEEPING ~ avoid double entries,[object Object]

More on Accounting,[object Object],It’s not just about numbers,[object Object],Database ~ essential for future planning,[object Object],Customers ,[object Object],Vendors,[object Object],Employees,[object Object],Establish a sound accounting system,[object Object],Input of data,[object Object],Record transactions = bookkeeping,[object Object],Regularly done,[object Object]

Budgeting,[object Object],[object Object]

Budgeting,[object Object],Estimating and matching expenses to revenue (real or anticipated) ,[object Object],Important for decision making,[object Object],fund operations, expand the business and generate income ,[object Object],Without a budget or a plan, a business runs the RISKof spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete. ,[object Object]

Budgeting,[object Object],Operating Budget,[object Object],to provide a blueprint for how the business is going to operate in the coming year.,[object Object],information from functional areas such as design, production, marketing, distribution, and customer service. ,[object Object],the end result is a budgeted income statement that shows how much profit the business expects to make at the end of the year. ,[object Object]

Budgeting,[object Object],Cash Budget,[object Object],strictly financial,[object Object],a vital purpose: to ensure that the business has enough cash to fund its activities throughout the current period. ,[object Object],the goal of the cash budget is to ensure that you don't run out of cash. ,[object Object]

Other purposes of Budgeting,[object Object],Check industry standard,[object Object],Make a spreadsheet,[object Object],Factor in some miscellaneous,[object Object],Look for ways to cut costs,[object Object],Review periodically,[object Object],Look around for services / suppliers,[object Object]

Collecting Accounts Receivable,[object Object],[object Object],[object Object]

Collecting Accounts Receivable ,[object Object],The time period and the terms of every receivable should be specified clearly. Terms can be stated in various ways, such as:,[object Object],Net 30 days from invoice,[object Object],Net 15 days from shipment,[object Object],1% 10 days, net 45 days from invoice,[object Object],Other options ,[object Object],deposit upon confirmation, balance upon delivery,[object Object]

Collecting Accounts Receivable ,[object Object],One simple method of assessing the quality of your receivables is to compare the actual collection period, known as days receivable, to the stated payment terms. ,[object Object],If the days receivable are significantly more than the sales terms, consider developing a receivables aging schedule to monitor who owes you money, when the debt was incurred and how long it has been unpaid.,[object Object]

Collecting Accounts Receivable ,[object Object],Most receivables aging schedules are broken into 30-, 60- and 90-plus-day increments. ,[object Object],Under each of these categories, total the amount due from each of your customers. ,[object Object],This allows you to identify the problem customers and focus your collection efforts accordingly.,[object Object],An aging schedule also enables you to manage your credit policies according to the standards of your particular industry. ,[object Object],Many software programs provide aging receivables templates and/or formulas that are handy for small and mid-size enterprises.,[object Object]

Collecting TIPS ,[object Object],Be Prompt: If a payment was due in 30 days, follow up with the customer on day 31.,[object Object],Be Consistent: Send regular statements to customers who are behind in their payments.,[object Object],Offer Incentives: Consider offering a bonus or cash price discount for early payment.,[object Object]

Collecting TIPS ,[object Object],Be Specific: Spell out any late-payment fees and penalties prior to granting terms.,[object Object],Follow Up: Be aware of your customers’ payments and debts. Send acknowledgments when accounts are paid.,[object Object],Be Realistic: In the final analysis, an AR aging schedule may indicate that it’s time to sever your relationship with a customer or resort to some other type of collection method.,[object Object]

Risk Management,[object Object]

Risk management,[object Object],Any good system should minimize the risks in your business. ,[object Object],INSURANCE needs to be considered not only for your property, office, equipment, and employees, but also for loss of critical employees. Even in businesses that have a well set up system, cash flow can be a problem. ,[object Object],Others ~ cash flow problems, debt obligations,[object Object]

Risk management,[object Object], The three elements of risk assessment are: ,[object Object],Risk Identification ,[object Object],Determining what is at risk and from what sources. ,[object Object],Risk Measurement,[object Object],Determining the consequences of the risk (and to a lesser extent, the likelihood of its occurrence). ,[object Object],Risk Prioritization,[object Object],Determining the appropriate resources to manage the risk. ,[object Object]

Risk Management,[object Object],Risk assessment is a decision-making tool that helps managers sort through a number of possibilities and then chose those with the greatest payoff. ,[object Object]

Financial Management for Entrepreneurs ~ Simplified

Financial Management for Entrepreneurs ~ Simplified

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Financial Management for Entrepreneurs ~ Simplified