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9 indicators of an efffective team

AN EFFECTIVE TEAM A team that is mature and effective has been painstakingly built. Problems have been worked through, relationships deepened and roles clarified. When successful teams are examined, we find that they have achieved definite progress in the following distinct areas: Appropriate Leadership The team manager has the skills and intention to develop a team approach and allocates time to team building activities. Management in the team is seen as a shared function. Individuals other than the manager are given the opportunity to exercise leadership when their skills are appropriate to the needs of the team. Suitable Membership Team members are individually qualified and capable of contributing the ‘mix’ of skills and characteristics that provide an appropriate balance. Commitment To The Team Team members feel a sense of individual commitment to the aims and purposes of the team. They are willing to devote personal energy to building the team and supporting other team members. When working outside the team boundaries, the members feel a sense of belonging to and representing the team. Constructive Climate The team has developed a climate in which people feel relaxed, able to be direct and open and prepared to take risk. Concern to Achieve The team is clear about its objectives, which are felt to be worthwhile. It sets targets of performance that are felt to be stretching but achievable. Energy is mainly devoted to the achievement of results, and team performance is reviewed to see where improvements can be made. Clear Corporate Role The team has contributed to corporate planning and has a distinct and productive role within the overall organization. Effective... read more

Month Closing Checklist for Small Businnesses

The goals which are not tracked often remain unmet. Your business growth goals are best tracked with number achieved. A comprehensive month end closing checklist for your small business can greatly help you to ensure that all your critical business information has been entered by your accountant in your accounting software. It is vital to know that only if you have closed your month properly, you can plan for next month based on previous trends. Nothing is more important than data trends of your business. You may compare your last month sales progress with current month or event with the same period previous year. If you have a management dashboard for this comparison, it can save your time a lot. Lets now dig deep into what matters most when it comes to closing you financial month in your accounting software. Checklist for Month End Update Receivables – Ensure that no sales invoice has remain unposted in your accounting system Update Liabilities – Payable, Loans, Taxes. Ensure that no vendor bills are un-recorded If you are using any CRM system, as check of completeness, reconcile your CRM sales figures with your accounting software sales figures Record any accrued expenses e.g Utilities Bills Payable, Rent Payable etc. Post adjustment entries, if any. For example, depreciation entries, amortization of pre-paid expenses etc. Reconcile your bank statement with you bank ledger account Prepare a list of key performance indicators (KPI) and compare them with you month trend. The KPIs may include Total Sales, Gross Profit, Net Profit, Current Ratio, Leverage Ratios, Debtors Ageing etc, Prepare for Next Month After closing the mont, the... read more

Chart of Accounts – Spinal Cord of Your Accounting System

The ultimate purpose of recording the accounting transactions is to get the financial reporting like Balance Sheet and Income Statement. How it would look like if you get only one figure of Sales and one figure of total Expenses? How it will look like if you get only total of Assets and Liabilities in your balance sheet? Indeed it would be meaningless as you can’t find any breakup of your sales or expenses figure. The way we handle this problem in accounting world is to record every transaction in its respective head of account e.g. staff salaries expense, travelling expense or depreciation expense. All these head of accounts are structured in specific section of your accounting software i.e. Chart of Accounts. The Chart of Accounts is the road map that business creates to organize its financial transactions. It is a list of all accounts a business has, nested in a specific manner where each account is classified in any of the following 5 categories: Assets Liabilities Capital/Equity Income Expense There is no accounting entry which falls outside the above 5 broad categories. Every business can have its own unique chart of account with specific title of accounts e.g. to record sales, a lawyer can name the sales account as “Professional Fee Income Account”. Although the title of accounts can be different in every company’s’ chart of account, it would fall under the above 5 categories. Each account created in chart of accounts will either appear in Balance Sheet or Income Statement. You can treat chart of account as a coding scheme that organizes your whole accounting entry and you... read more

Accounting Cycle and Online Accounting

ACCOUNTING CYCLE AND ONLINE ACCOUNTING Accounting is not just working with numbers, its about following guidelines and fundamentals of accounting which needs to be followed by accounting professionals. Accounting software for small businesses offers a number of facilities to accountants and small business owners as to automate their accounting processes. The automation of these accounting processes is guaranteed with ease of using the application and the benefits associated with it. The online accounting software is designed and built in such a way which covers almost every aspect of business and its accounting affairs. There are specific steps that complete accounting process, the accounting cycle starts from a point and revolves through a circle. Each accounting cycle has a length which is variable on the basis of financial reporting of the company. Steps in Accounting Cycle These are basic steps to the accounting cycle: – Source documents Transactions analysis Journal transactions Transaction posting Unadjusted trial balance Adjusting entries Final trial balance Preparation of Financial statements Source Documents/ occurrence The source documents are the receipts, bills, cheques, bank statements, sales invoice, purchase orders which are basically the evidence of transactions at the time of occurrence. Source documents are the main source to determine the nature of transactions. Like an expense receipt is the source document for recording expenses. Transaction analysis In the next step you will analyze the transaction to make sure of the effect of such transaction on the company’s financial affairs. Journal transactions After the transactions are analyzed its time to post them into respective journals through journal entry. When a journal entry is used to record a transaction... read more

Paperless Accounting Software

Paperless Accounting NO MORE PHYSICAL PAPER MOVEMENT Get Your Free Trial NOW  Online Attachments No more physical box files; attach all your receipts online in move2clouds. You can upload the supporing documents for every transaction and can retrieve in anytime.  24x7 Reporting No need to wait for month end to get your Income Statemen or Balance Sheet. Now you can get real time reporting with move2clouds 50+ financial reports.  Mobile Approvals Approve your transactions while you are on the go. You will get email notification for any new transaction which needs your approval. View it online and approve it.  Work Anywhere With move2clouds, you can even do accounting from the comfort of your bed. You just need an internet connected device to get connected with your business and thats it. Many accounting professionals have dealt with the paper accounting era, storing, categorizing, stacking and keeping track of office files was normal routine until accounting made paperless with the help of Paperless Accounting Software / cloud accounting software. Accounting is not just working with numbers it’s about following guidelines and fundamentals of accounting. There are specific steps that complete accounting process, the accounting cycle starts from a point and revolves through a circle. This accounting cycle starts from source document which initiates the process of accounting. Earlier the source document / receipt was stored physically which required spacious office premises and plethora of document storage files to be tagged along with accounting transaction. Each accounting cycle has a length which is variable on the basis of financial reporting of the company. The following are the steps involved... read more

Fifty Shades of Online Accounting Software

FIFTY SHADES OF ONLINE ACCOUNTING SOFTWARE Who thought record keeping and document storage would be paperless? Or there would be Virtual Accountants, Online Accounting Software can be made available anytime and anywhere, not until the cloud revolution which flushed away the old techniques of accounting, bookkeeping, financial analysis. The following Fifty Shades of Online Accounting Software are revolutionary instructive for small businesses: – 1.       ITS NOT DESKTOP ITS IN THE CLOUDS Many of your would’ve been familiar with the desktop accounting applications and their features but online accounting software for small business gives you more than desktop applications. As it is always online, available anywhere and ever upgrading. 2.       DATA SECURITY Normally the first question that can pass through a user’s mind is the security of data linked to online accounting application’s accounting data/information. Well the data is secured either on servers maintained by the company or its on 3rd party’s server, like cloud servers of Microsoft Azure. 3.       DATA BACKUPS – AUTOMATIC Bookkeeping software for small business owners comes with automatic backups on secured servers. The data is replicated in our servers giving assurance to your organization’s endurance. Your data is backed up on daily basis making it safer than ever. 4. MULTI USER ACCESS & SECURITY Unlike other online accounting solutions the best online accounting software for small business offers user access and roles based accounting. You can give access to your employees and accountants while maintaining your control over what information they can view and modify. 5.       SIGN UP IS FREE Almost all the free accounting software for small business is meant to be free for... read more

Excel for Small Business

Recommended vs Not So Recommended Use of Mircrosoft Excel “Microsoft Excel is my office buddy”, “I can’t work without Excel”, “Excel is in our office blood”….These are few common statements that you hear from almost all team members working in any small business. From monthly reporting to daily transaction recording, Excel is widely used by all business segments. The most important work for accountants on excel is budgeting. Any smart business forecasts its future cash inflows and outflows. There is no better and cost effective tool for budgeting other than Microsoft Excel. You can play with it as per your wish. Add as many scenarios as you like and can customize it as per your business requirements. Preparing a Business Plan in Excel Turning your ideas into reality always starts from preparing a Business Plan. Excel is the most widespread tool used for making a robust business plan. You can input your assumptions and feed in your raw figures to get a final shape of your future business projections. You can download a free template of business plan in excel here. This includes an input sheet for assumptions, projected Profit and Loss Account, projected Balance Sheet and projected Cash Flow statement. This is a starting point only; you are free to tailor it to your own needs. Where You Should Not Use Excel Microsoft Excel is an excellent spreadsheet tool, however as your business gain momentum, you should avoid using Excel for maintaining your accounting records. Ease of using excel is far less valuable as compared to the risks involved in using it as your accounting “software”. The main threats... read more

TIPS ON RECEIVABLES MANAGEMENT

TIPS ON RECEIVABLES MANAGEMENT However, in general the following tips will help you master your skills in managing your receivables, have plenty of cash to make new investments and pay your vendors in time: – Record the Sales at the earliest Invoices should be issued promptly after sales to avoid time or money loss. Send an email of the invoice to your customer right away after entering in your accounting software. Payments should be regularly monitored so that reminders for the balance can be sent at appropriate time. On time recording of sales can also reduce or mitigate the risk of conflicts with the customers. Avoid unclear, confusing invoicing Invoices must reflect the actual services rendered or goods delivered. Invoice must meet important criteria like: Sender Name, Address and contact details Date of invoice Invoice Number Net Price and VAT charged (as percentage and amount) Invoice must also mentions the agreed terms and conditions clearly. Payment Policies must be informed and agreed Deadlines for discounts offered on upfront payment must be clearly conveyed. Customers having low credit worthiness should be asked to pay in advance. Credit checks should be mandatory for all new customers. Cash on delivery policy can be a better way to deal with slow-paying customers. Do not hesitate to give “Reminder” Giving a formal and friendly reminder for business payments is a good practice and essential to keep the outstanding payers, alert. Specially important for new business and must not be neglected. For future evidence it is recommended to give written reminders. Maintain complete record of the customers: It plays a foundation role in relation with... read more

[Infographic] Cash Flow Management

The universe is in balance and its steady in all aspects so is your cash flow management is for you and your company’s better health. All you need to do is to ensure all liabilities are paid off in time and you are collecting cash as soon as possible which leave you with excessive cash available for further investments. Once you have mastered the cash cycles, the next step is to prolong the disbursement cycle to a acceptable limit and shorten the receipt cycle and make sure nothing is overdue. The lifeblood of any organization’s growth and sustainability depends upon effective & efficient cash flow management which in result leave you with a lot of cash to invest. By saying effective and efficient means managing customers, disbursement of vendor payments on time, collection of cash on overdue accounts and finally putting cash back into the business to earn more. The following infographic on cash flow management will demonstrate how to manage cash flow efficiently and your small business with plenty of cash to invest further, after all, Cash is the... read more

Approach to Improved Profits

Approach to Improved Profits The small business owners usually fail to understand their businesses financially so they lack to pay attention to financial performance and profitability of their business this Approach to Improved Profits will not only help to bring a loss bearing unit to profit but also make a way for better business results for your business. These guidelines will not only help you understand your business financially but also giving you good news on increased profits and opting for new ventures in future as well. So what is required? What steps to be taken? What are the ingredients to make such recipe? I have summarized these guidelines as below: – Having a Competent System The key to Approach to Improved Profits is your accounting system. If you’re not good at keeping updated accounting records you’re most likely living in dark. There are 2 options only, keep your accounting records yourself or hire some professional accountant or bookkeeper. Well hiring a full time accountant or bookkeeper has always been dealt with delayed decision, so in order to ease your pain read article Accountant Vs. Bookkeeper. The most updated knowledge of your business affairs will enable you to take necessary decision at the right time. Understanding your Financial Statements There are three main components of financial statements which as a small business owner are crucial for you. Balance Sheet, Profit & Loss Account and Cash flow Balance Sheet: Balance sheet gives you a snapshot of your assets, liabilities & equity. If your liabilities exceeds assets then your business may face problems in terms of insolvency. Balance sheet is most... read more

ACCRUALS AND PREPAYMENTS

THE ACCOUNTING OF ACCRUALS AND PREPAYMENTS To understand the accounting of accruals and prepayments, which is vital in financial reporting of an entity, one should have knowledge of accrual system of accounting. The accruals basis of accounting means that to calculate the profit for the period, one must include all the income and expenditure relating to the period, whether or not the cash has been received or paid or an invoice received/ issued. In this system of accounting the profit is calculated as under: – Income Earned                                 xxxxx Expenditure incurred                     (xxxxx) Profit                                                     xxxx WHAT IS AN ACCRUED EXPENDITURE? An accrual arises where expenses of the business, relating to the year, have been but not paid by the company / entity by the year end. In such a scenario, it is necessary to record the expense relevant to the year (or part of year) and the effect of such recording will reflect in statement of financial position liability (balance sheet). The following double entry will be recorded in case of entering accrual expenditure: – Expense Account             (Dr.) Accrued Expenses           (Cr.) Note: Recording an accrual will reduce the profit relevant to that particular accounting period. WHAT IS ACCRUED INCOME? In an accrual system of accounting the accrued income arises where income has been earned in the accounting period but has not yet been received. When the income is accrued and not received such income will be recorded as income in income statement and as asset will be recorded as “Accrued Income” in statement of financial position (balance sheet). The following double entry will be recorded in case of... read more

Bank Reconciliation

Bank Reconciliation The business transactions routed through your bank account (checking account), so these transactions are recorded at the end of the company and the bank as well. The bank records the payments made, receipts, bank charges and other items. Normally at the end of the month the bank send the bank statement or the same is requested from the bank for reconciliation purposes. The bank statement contains the transactions and the balances from day to day banking transactions. Now as an accountant one should know about the bank reconciliation and facts about the bank reconciliation process. These include: – The purpose of bank reconciliation It benefits to the business and; How to prepare bank reconciliation? So when the accountant receives the bank statement from the bank he should verify the transactions with his cash ledger and vice versa. This procedure of matching the transactions is called “Bank Reconciliation” this is also termed as BRS (Bank Reconciliation Statement). THE PURPOSE AND BENEFIT OF BANK RECONCILIATION The reconciliation of bank statement is to know that the transactions in bank statement and bank ledger are in agreement and the difference is in knowledge to the accounting professional for tracking purposes. The difference arises as the companies / organizations issue a lot of checks and receive many deposits (in case of a retailer this can be in thousands), sometimes few transactions are recorded in cash book and they do not appear in the banks statement and vice versa. This happens due to the reason that checks issued and deposits made near the month end may not appear in recent month but appear... read more

Financial Ratio Analysis

Financial Ratio Analysis is one of the most widely used financial statement analysis tool. Ratio is a comparative relationship between two or more financial statement figures.  Ratios make financial statement information more meaningful and user-friendly. The analysis and comparisons allow the users to extract the information in a desired manner through manipulating data. This information can become helpful to a wide variety of users when presented in the form of ratios. Hence, ratio analysis can reveal important relations in finding conditions and trends difficult to detect by inspecting the individual components of financial statement.   In this article we will cover Liquidity Ratios as these are the most critical in gauging the cash worthiness of your company. Liquidity reflects the organization’s ability to meet its short term obligations. Liquidity comprises of liquid assets held by an organization in the form of cash and cash equivalents and includes receivables and inventories which can be converted in to cash with in a period of one year. As most of the liabilities of the company are paid in cash, therefore the test of liquidity depends upon the company’s ability that how assets other than cash and cash equivalents can early be converted in to cash. All of the current assets are not considered part of the liquidity of the company for example inventory held by an organization cannot be converted so rapidly converted into cash as compared to marketable securities, short term investments or debtors. The importance of liquidity rests with the timings when a liability becomes due. If a company unnecessarily keeps assets liquid, it will result in loss of income... read more

Cash FLow Statement

Cash Flow Statement A cash flow statement forms an integral part of Financial Statements. Cash flow statement serves as a supporting schedule to Income Statement and Statement of Financial Position as their transactions can be cross verified and their effect in terms of change in liquidity position can be obtained from cash flow statement. Cash flow statement reflects the movement of cash in three distinct segments called activities i.e. operating, investing and financing activities. This segmentation helps the user to understand the movement of cash within different segments and gives  a year long journey of cash from beginning balances to year end balances reported in Statement of Financial position thus provides a sense of completeness to Financial Statements. Major Components of Cash Flow Statement Cash flow statement comprises of three sections Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash flow from operating activities provides a track of all cash inflows and outflows related to operating activities of business. Under this head, cash flows generated and used through principal activities of business is reported like sales revenue, purchases, operating expenses is reported. The cash flows are arrived after adjusting non-cash expenses, non-operating activities and making working capital adjustments under indirect method of preparation of cash flow statement. Cash flow from investing activities encompasses cash flows through purchase and sale of non-current assets, investments and returns in the form of interest and dividends received. This segment focuses the other income segment through which cash is generated through secondary business activities like investments, treasury operations and disposal and acquisition of non-current assets. Cash flow... read more

How to write a business plan

How to Write Business a Plan? Any successful business that you praise today was once only a plan. Any business whether new or existing requires a plan to move forward. An entrepreneur is faced with decision dilemmas caused by both external and internal factors. Whether it is emerging of new competitors or some technological advancement, suddenly quitting of a key sales person or change of product mix, all such situations require a plan to tackle. However the most critical planning stage is when you want to start a new business. As wise men quote, if you fail to plan, you plan to fail. Only being visionary and forward looking is not enough for an entrepreneur. Your vision should translate into success pathway of your venture. The ideal way to craft this success journey is to start with a business plan. Here I don’t say a perfect business plan as it is always evolving. Most small business owners have plan in their minds but do not always effectively draft it in writing so that it can be shared with their team and monitored effectively. Are You a Good Story Teller? A business plan is your wishful success story. As a story has a beginning, characters, setting of scenes and a meaningful conclusion, the business plan also shares almost the same traits. The beginning is your idea moment, characters include you and your team, setting of scenes is your growth strategy and meaningful conclusion is executing the plan accordingly. Components of a Business Plan Here I am not talking about format of a business plan but its components. A business plan... read more

3 Ways to Avoid Bad Debts

Bad Debts are really bad! These are your sales which you have already recorded with a hope of receiving the cash in future. As every business runs on anticipated cash flow, every single dollar has already been assigned either with an expense or owner’s drawings. When a customer goes bad and does not pay at all, small business often cannot easily digest this hit. But, is there a way to avoid the bad debts? Well, certainly YES. While no business can entirely eliminate the risk of bad debts but few prudent measures can minimize such risks. Let’s look in to the top 3 ways to prevent the bad debts. Always mention Terms of Trade & Payment  Due Date on Sales Invoice The foremost thing while issuing sales invoice is to mention Terms of Trade & Payment Due Date. Terms of trade normally means that whether the customer will be getting any discounts on early payments. This is a good way to entice the customer to pay before time. For example mentioning terms of trade as 210N10 means that customer will get a 2% discount if he pays within 10 days else he needs to pay whole amount within 30 days. The second important thing is highlighting the Payment Due Date. You have to tell the customer that he is supposed to pay by a specific date. Don’t let you receivables be open-ended! Have a Credit Policy for Customer Personas If your main mode of business is selling on credit then you must have a credit policy. The main ingredients of credit policy include the following: – Your buyer personas e.g.... read more

Post Dated Cheque Management

The applications that can be turning-point for all your post dated cheque management worries which may not be big but of considerable importance/ significance on your daily professional life. An effective software/ application should have the following characteristics to be fully functional in terms of post dated cheque management: –

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