Implementing Business Process Improvements For Finance Departments

Current economic times demand that organizations and small businesses achieve more with less. The concept of business process improvement (BPI) has evolved into an operational strategy that can no longer afford to be overlooked as "optional". In order to remain competitive, a company's internal functions must be reengineered and reassessed to become more efficient. Business owners must evaluate and search for efficiency in their processes, systems and organizational structure. This type of evaluation needs to occur at the departmental level, as well as the overall business level. Within Finance departments, BPI should be assessed in five key areas.

Optimizing Cash Flow - Predictability of cash flow is critical for a small to mid-sized business. Regulating accounts payables and receivables directly impacts cash flow. Anything that is paper driven or a manual process should be evaluated for business process improvement. This avoids inconsistency of processing and allows functions to be performed at the same time each month or via a similar practice.

Improvement in Reporting - Accounting systems should provide reports that reveal key operating information which is pertinent to a specific business or industry. Systems must evolve from just reporting to adding value. They must provide information that enhances accuracy and understanding of information, as well as allow business owners to derive key pieces of operating intelligence about their business. Systems that can offer customized reports which generate key pieces of integral data should be considered in order to reduce "data crunching" thereby replacing it with usable data for analysis.

Budgeting and Forecasting - Access to reliable and timely data is critical to budgeting and forecasting, and accurate budgeting and forecasting is critical to the success of a small to mid-sized business. This process needs to be streamlined and performed on a regular basis. As with optimizing cash flow, this process should be evaluated for automating tasks, such as manual data entry, wherever possible.

Developing and Adhering to Cost Controls - Fluctuations and even small variations in costs can produce vast implications on budgets and cash flow for small to midsized companies. Creating cost controls is a process improvement from which every business can benefit. These controls ensure an alignment between costs and budget and work diligently to mitigate the occurrence of extreme corrective budgeting actions.

Organizational Structure - Personnel functions should be evaluated to ensure that expertise is appropriately leveraged and that manpower is deployed as needed. This may require business owners to reconsider their organizational structure in terms of cross functional teams as opposed to a hierarchical structure, or vice versa.

As a small business owner or entrepreneur, evaluating these five areas of BPI within a finance department allows your business to function more productively. We are currently offering a free analysis of your business processes and accounting system. If you would like to discuss BPI within your finance department and learn more on how Analytix Solutions can help move your business forward, please call me directly at 781.503.9004 or email me at sales@aixsol.com

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Ready, Set, Launch! Checklist for Starting Your Own Business

After months or years of deliberating an idea, you have determined that it is worth pursuing. You are resolved to launch your own business and bring that idea to life. Before taking the plunge, review this short checklist below to ensure sure you have evaluated some key areas.

Understand The Industry You Are Entering

Ideally, you should assess this prior to launching your business. Research the industry well, including current market trends and competitors. Identify your target audience and market demand. This will assist you in gauging the profitability of the venture before you "jump into it". Determine if there's a niche area you can carve out for your business. Understand competitive dynamics you may encounter and how you will confront them.

This will also impact any type of required licensing- Federal, State, or Local. Regulations and permits also vary depending on the industry to which they are applicable.

Draft A Budget

The rule when drafting the initial budget is "Keep it tight". Remember, you don't need a large sum of money to begin. If you think you will start your business only after receiving that large capital investment, then you are incorrect. You need tons of enthusiasm to get your plans off the ground, but you don't need tons of cash. You can start on a small budget with a bit of smart planning.

For example, you don't need to invest initially in expensive infrastructure. Instead, start with a judicious mix of hard work and tapping into facilities that offer shared services or scalable resources. These types of partnerships can be extraordinarily beneficial in assisting to establish your business on solid footing. A good shared service provider will not simply take over your projects. They will also provide you with high quality deliverables which will help you win over and retain clients.

Arrange Financing

After drafting a budget, you need to arrange for financing. Determine whether applying for a business loan is the best approach. The US Small Business Administration can help facilitate the loan process for you. Additionally, the government offers financial support to aid small businesses. Investigate different options and your eligibility for assistance before applying for a loan.

Determine A Legal Structure

Research and determine how you will register your entity- sole proprietorship, partnership, or corporation. Remember, your tax structure is dependent upon the legal structure you select. There are several categories of taxes, including income, excise, employer, and self employment tax. Before you launch your business, make certain you understand the short and long term ramifications of the selected legal structure.

Plan Well- Create A Detailed Business Plan Before You Start

Prepare a business plan inclusive of the items discussed above - the nature of the business, the operational details, competitive analysis, and financing options. A business plan should also contain detailed financial information and projections, including loan information, profit and loss forecasts, etc. Ideally, these financial details should be organized by time period, such as on a monthly or quarterly basis.

Your business plan should also list the documents required to establish your business. Supporting documents can include tax papers, legal documents, licenses, etc. Having these important documents readily at hand will save you time and reduce potential headaches when you finally launch.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Take Your Small Business to the Next Level

You seized the opportunity to start a new venture, dedicated yourself to making it work, and now you're the owner of a successful, small business. But how do you break through that glass ceiling? Here are some suggestions which will help propel your small business to the next level.

Reassess Business Plans
Take a closer look at your business plan. Are you dealing with products or services that require expansion or diversification? It is not unusual to become somewhat complacent once your business is running smoothly and profitably. Checking-in with current customers regarding your products or distribution channel can often provide a fresh perspective and insight into changes that may be required. Perhaps you may need to expand your customer base or introduce new products or services. New offerings frequently add value and promote increased sales.

Leverage Customer Input
Survey your customers regarding quality of services or simply ask for their feedback. This is an excellent way of tapping into changing market dynamics, as well. When you connect with your customers, you discover more about their changing needs and gain publicity that is more valuable than that gained from conventional promotional and advertising efforts. Additionally, customer input can assist you in determining whether or not your business is equipped to manage increased demand in products or services.

Modify your operations
Depending on how much you wish to grow; you may want to expand your operations. If you have a small core team, consider hiring additional resources or investing in technology that will allow you to manage increased business. If you determine that you need a specific, significant function, you may want to outsource it entirely. Outsourcing often provides a cost effective solution to managing non-core functions so that you can focus on areas that require your attention, such as strategy development, marketing plans or budgeting.

Incorporate emerging technologies
Leverage the Internet for promotion and advertising, instead of relying on conventional print and electronic media. Evaluate your target audience and the mediums they most likely use. Consider using social media platforms such as Facebook, Linked In, and blogs. Keep your communication messages targeted and make certain your content is relevant to your audience, as well as the social media platform you are using. If you're addressing a younger audience, craft your content accordingly.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Five Financial Management Tips for Small Businesses

Many small business owners are driven by entrepreneurial inspiration to start their own companies. Small businesses drive new jobs and innovative ideas. However, for all the "pros" which accompany running your own business - the thrill of bringing a new idea to market, fulfilling a goal, flexible schedules - there are also challenges. Owning the business may be the simple part. Running it smoothly and profitably often can prove difficult. Following are five financial management tips that should assist in running your small business more effectively so that you can enjoy all the "pros" that influenced the decision to own a small business in the first place.

1. Develop a Budget- This is critical to the success of any business. A budget that lists your projected revenue and expenses serves as a road map in guiding business decisions and making sure you carefully consider financial decisions with the "big picture" in mind. When you create a budget, you can see the cash inflows and outflows. A budget functions as a financial barometer, allowing you to project accordingly, optimize and manage cash flow, as well as anticipate future financial needs.

2. Stay Abreast of Your Financials- As a small business owner, implement a routine practice of reviewing your financial reports. Staying abreast of your financials also equates to maintaining up-to-date accounting and bookkeeping records, as well as managing your expenses, payables and receivables. Timely and accurate access to updated financials allows you to make informed decisions quickly that could significantly impact your company's profitability.

3. Retain the Expertise You Need- Recognize that running a small company or start-up does not require you to single handedly perform every function associated with that company. Focus your attention and efforts on growing your business. Establish partnerships with companies or contractors who possess expertise in areas at which you are not adept or those to whom you can outsource non-core tasks. This will be more efficient for you in the long run, as well as allow you to avoid costly mistakes that could occur by performing functions at which you have no experience. Leverage partnerships for CFO, CMO, IT or bookkeeping services to provide you with scalable access to expertise when you need it.

4. Invest in Technology- Recognize that investing in technology can significantly impact the infrastructure of a small business making it operationally more efficient. Use technology to automate processes wherever possible to reduce manual functions that take employee focus off of value added services. Accounting systems and software programs that assist with payroll, data entry or time and billing are examples of functions that can be automated with investments in technology.

5. Anticipate Changes- Above all, embrace the ability to be flexible and make pivotal decisions that can positively impact your business. One of the biggest "pros" of running a small business as well partnering with a small business is the ability to change directions quickly when deemed necessary. Anticipate and plan for change to remain competitive in the market.

As a small business owner or entrepreneur, implementing these five steps can assist in making your business run smoother and more effectively. We are currently offering a free analysis of your business processes and accounting system. If you would like to learn more on how Analytix Solutions can help move your business forward, please call me directly at 781.503.9004 or email me at sales@aixsol.com

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Cash vs. Accrual Method: Which is Best for Your Business?

The cash accounting method is a type of accounting that takes into consideration both income and expenses, when payments are made in cash. This payment could consist of either cash received or cash given/paid. In contrast, the accrual accounting method records income as revenue earned while expenses are noted as liabilities. These transactions are noted in the accounting books, without the necessity of cash being paid out or received.

So, which method is best for your business? It depends.

A closer look at the cash method

The cash basis of accounting records the income or expense at the time the cash is exchanged. The cash method is considered an uncomplicated and simpler process. It is also easy to understand and is most often applied to individual or personal finances. Under the cash method, income received is taxable at the time of receipt, while deductions are made at the time of the expense.

This means that a transaction is not recognized until the payments are cleared. If the payment becomes delayed, the process of recording the transaction is also delayed. Thus, the cash method can prove to be an inaccurate measure of the company's accounts.

Although it seems easy to maintain, the cash method could also depict a company's income as being highly inconsistent. For example, if Company A follows the cash method, and it receives a high-value project, the company cannot record any revenue earned until they are paid for the project. This means that if it is a long-term project, the company's income records will not show any revenue as earned until the actual payment is made. This can result in certain periods showing limited income, while others show as high-revenue periods.

Unfortunately, this can lead to an inaccurate depiction of a company's financial status. These discrepancies could have repercussions when preparing tax returns or seeking loans and financing.

A closer look at the accrual method

The accrual method is the opposite of the cash method. Regardless of when the cash exchange occurs, a transaction is recorded in the accounting books. This method accounts for expected revenue, as well as credit payments. As a result, it is a more accurate record of a company's current status.

The accrual method is based on the principle that if a sale or economic transaction has occurred, then cash will exchange hands at some point. Records in the account books thus reflect the point at which the transaction took place. Typically, accrual method entries for income are noted in a column termed as accounts receivable. Regardless of actual cash changing hands, the entry in the account books indicates income received.

The accrual method, in contrast to the cash method, recognizes that long-term financial transactions can reflect upon a company's current financial status. Because of the accuracy required of this method in outlining the financial status of a company, it is more prevalent among larger businesses.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Ratios 101: Key Indicators for any Business

The health of any company depends on several factors. However, a single glance at earnings figures or expenses does not provide enough information to make a firm determination about that company's viability. For example, Company A shows $1 million in sales of computers during Year 1 of operation. In Year 2, this increases to $2 million, twice that of Year 1. So, an increase in sales is always good, right? Not necessarily. In the case of Company A, the business sold fewer units overall, incurred greater expenses, and therefore had overall lower profitability.

A better barometer to gauge the health of any business is the assessment of certain key financial ratios that check various aspects of a company's financial performance.

Debt/Equity:
Dividing a company's total liabilities or debt by the amount of shareholders' equity generates the Debt/Equity ratio of a company. This measures the amount of equity and debt incurred by a company to finance its assets.

A high debt/equity ratio could mean that the company uses a higher percentage of debt to fund operations, as opposed to funding operations through equity. Conversely, if the debt used to fund operations is less than the earnings generated by using it, then it is beneficial to the shareholders.

In addition, if debt financing costs prove to be higher than the cumulative returns, it can lead to an unstable situation for the company and affect future prospects.

Assets/Liabilities:
This is also called the Assets/Debt ratio. The assets/liabilities ratio measures the percentage of assets financed through debt. It is calculated by dividing the total debt or liabilities of a company by its total assets. It is different from the Debt/Equity ratio where debt is divided by the amount of shareholders' equity.

This ratio provides a measure of the company's short-term liquidity. A healthy asset to liability ratio is one where there are twice as many assets as liabilities. A higher proportion of debt indicates poor financial health.

Profit margin (Net Income/Sales):
The profit margin ratio reveals the profitability of a business or the amount of profit earned per dollar of sale. It is calculated by dividing net income by the total revenue, resulting in a percentage. Thus, a profit margin of 16% means that the company made a profit of $0.16 per dollar. In this ratio, net income is defined as the difference between revenue and cost.

This ratio is valuable when conducting comparisons of similar companies. Profit margin shows whether the company's pricing strategy is viable or not. Higher margins indicate better control over pricing. Also, profit margins are a better comparison metric than total earnings, as profit margins take into consideration operating costs and inventory expenses.

Inventory Turnover:
The inventory turnover ratio reveals the speed at which a company moves its inventory. To calculate inventory turnover ratio, divide total sales by figures of average inventory for the period you are evaluating.

A high turnover ratio indicates that the company is moving inventory at a rapid pace, or managing good sales, whereas as a lower ratio could point to inventory not converted to sales, or a poor return on investment. Inventory movement can also be dependent on particular seasons. Hence, average figures are considered when comparing financial health of different companies.

Return on Assets:
The return on assets ratio reveals the profitability of a company's total assets. The ratio proves useful when assessing the viability of using the company's assets in generating revenue. The return on assets is calculated by dividing net income, or revenue earned, by the total amount of assets owned. When evaluating this ratio, it is important to remember that it is dependent upon the industry in which the company operates. Also, if a company incurred a heavy initial investment, it will have a lower return on its assets.

Consistent monitoring of these key ratios should provide you with adequate information to assess whether or not your business is on the right track, financially.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Accurate Bookkeeping System, Reliable Accounting

In a small business, the terms accounting and bookkeeping may be used interchangeably; but each of them has well-defined functions. A well-maintained bookkeeping system is a necessity for the accounting system to function properly, which in turn supports the smooth functioning of the business offerings and its deliverables.

Bookkeeping Functions

The range of functions that falls under bookkeeping is vast. It must be mentioned here that if you're looking for an efficient accounting system, a business must perform certain functions on a daily basis. The foremost among these being recording income and tracking expense. These are entries that the accounting system will build up on, for tracking finances as well as for tax reporting.

An ideal bookkeeping system includes the following tasks:

- Keeping track of all financial transactions of the company such a purchases, sales, payments made, and payments received
- Recording income, cash outflow, and bank transactions of the company
- Reconciling bank accounts, keep track of deposits in the account, writing check, and keeping banking reports updated
- Preparing and maintaining reports such as the income statement and the company's balance sheet

These records, collectively, provide the basis for sound accounting processes in the company. More importantly, the bookkeeper's work allows the accountant to prepare reports for declaring income and filing taxes with the government.

Small business and Bookkeeping

In a small business, resources are limited; it is possible that the business owner or partners themselves function as bookkeepers and accountants as well. A significant disadvantage with this system of accounting and bookkeeping is that because owners and partners are also concerned with managing client deliverables and ensuring sustenance for the business, they may not be able to ensure 100% accuracy in record-keeping at all times.

A viable option for small businesses or companies with limited resources is outsourcing. Locating a trustworthy vendor or accounting and bookkeeping services provider can go a long way in ensuring:

- Accuracy in accounts
- Accurate reports for tax purposes, and
- Less chances of monetary losses as a result of a recording lapse.

Outsourcing saves a huge amount of money that would otherwise go into setting up and maintaining an entire department, complete with infrastructure and manpower. More importantly, depending on your needs, a vendor will ensure high-quality work on time.

Interested in learning more about accounting and bookkeeping outsourcing? Ever outsourced your support functions previously? Share your experience with us, we would love to hear from you.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Financial Reports vs. Operational Reports: Do You Know the Difference?

Critical to the success of any small to mid-sized business is financial stability. As a business owner, you should be able to discern which indicators determine financial stability and which indicators warn of financial challenges ahead. All of this information can be gathered from regular reviews of your financial and operational reports. Both contain key data and information that business owners need to know, but these reports serve different purposes.

Financial reports track how much money your business is making and how you are spending that money, as of a specific period in time. As a business owner, you obviously want to know this information. However, there are additional stakeholders or potential stakeholders that may need to know this information as well, such as investors or creditors. Examples of various financial reports are a balance sheet (which summarizes a company's assets and liabilities), an income statement (which indicates how much profit a company generates), and a cash flow statement (which shows a company's sources and uses of cash). Financial reports show historical data, but they provide insight into how a business spends its profits, whether they are reinvested into the business, and whether the company can sustain future growth.

Operational reports provide business intelligence on how efficiently a company performs. These reports allow companies to evaluate its current and future financial situation. With the correct systems and tools in place, operational data can be tracked real-time so that businesses are able to react and adjust their practices effectively. Business owners should review operational reports daily. These reports can vary by industry. Restaurants may need to track average time per table/meal, whereas hotels may need to track occupancy rates. Actions taken by business owners resulting from this garnered business intelligence can have an immediate, dramatic impact on productivity and ultimately profitability.

As a small or mid-sized business owner, keeping tabs on both your financial and operational reports will help you run your business more effectively. We are currently offering a free analysis of your business processes and accounting system, which could help you to better prepare and understand your financial and operational reports. If you would like to learn more on how Analytix Solutions can help move your business forward, please call me directly at 781.503.9004 or email me at sales@aixsol.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Bookkeeping Options: In-House, Outsourced and Everything In Between

Accurate record keeping at the most basic level provides the financial foundation for running a thriving business. When your financials are not accurate, even the most successful companies become a house of cards built on a faulty premise. Often times, this is not intentional but a result of someone performing a function in which they have little or no expertise and training. There are various options for managing your bookkeeping, but only you can determine which model works best for your company's needs.

1. Manage Bookkeeping in House - This provides you with the most control over your bookkeeping functions, as they are performed by an employee of the company. This option works best for large companies when there is enough work to keep a full-time bookkeeper busy, 100% of the time.

2. Hire a "Freelance" Bookkeeper - This option involves a temporary bookkeeper visiting your company on a regular basis to perform bookkeeping functions. This is more appropriate for small to mid-sized companies that do not have enough work to fund this position full-time.

3. Outsource Accounting and Bookkeeping to Third Party - Under this model, a company relinquishes all accounting and bookkeeping functions to a third party to fully manage. This model works best for smaller companies that do not require a full-time employee but do require skills and expertise in this area. It is also appropriate for companies that need these skills but can't afford to hire a full-time employee.

4. Hybrid Model of Partnering with an Outsourced Bookkeeping Service Provider - This option is most appropriate for those companies that do not want to relinquish complete control over their books but want to outsource non-core tasks. They partner with a bookkeeping service provider and consider them a remote extension of their team.

We are currently offering a free analysis of your accounting system and other business processes. If you would like to learn more on how outsourcing your bookkeeping and accounting can improve your profitability, please call me directly at 781.503.9004 or email me at sales@aixsol.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Bottom Line Benefits to Automating Your Accounting System

Although not always the most exciting aspect of a business, a company's accounting system is its backbone. The accounting system is the engine that drives the machine, providing business owners with key indicators regarding their profitability and the overall state of their business. Companies that have a firm grasp of their financials are positioned to succeed in the market across industries. Essential to that success are timely and accurate accounting figures, as well as the confidence business owners can place in the accuracy of those figures.

More and more frequently, small to mid-sized businesses are recognizing the need to automate their accounting systems given the speed at which they often need to make financial decisions. Manual accounting tasks can be time consuming, mundane, or duplicative tasks, and they can be prone to human error. Fortunately, there are currently numerous dependable accounting programs on the market, such as QuickBooks and Great Plains. Additionally, with the advent of cloud computing, information such as current data and immediate access to financial reports is available online, anytime and anywhere. Business owners can access the data themselves when they need it, without having to work through another department. These programs can greatly assist small to mid-sized companies in automating their systems and tasks such as expense approval and time entry, which in turn increase their profitability.

Benefits to automating your company's accounting system include:

> Eliminating redundancies in manual data entry.
> Reducing risks of errors and duplicate entries.
> Ensuring data integrity through automation.
> Self-service, accessibility to timely financial reports.
> Up-to-date information via cloud computing technology, anytime, anywhere.
> Improved productivity.
> Motivating staff.

Analytix Solutions provides a team of accounting and technology experts with extensive experience in helping companies automate their accounting systems and integrate third party applications with various accounting systems. We can help you to run your business more efficiently by automating key processes and assisting you to select solutions which align with your unique business requirements.

We are currently offering a free analysis of your accounting system and other business processes. If you would like to learn more on how we can increase your bottom line by automating your accounting system or if you know a colleague that can benefit from our services, please call me directly at 781.503.9004 or email me at sales@aixsol.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Take the Temperature of your Company's Financial Health

In any business, a clear understanding of the company's actual financial performance is critical to success. Measurement strategies and tools should be implemented to track and interpret the numbers generated by a business. An effective accounting and financial management system can provide this type of information to business owners, and the system's data can be manipulated and analyzed to provide key insights into the financial health of your company. A versatile accounting and financial management system can also enable you to interpret the status of your business to third parties, like banks and the government. The other advantages that accounting and financial management systems offer include:

Avoiding Assumptions on Financial Health: By maintaining an accounting system, you can make informed decisions about your business. Although there are multiple factors to consider, financial health should be a critical element in your decision making process for moving your business forward. Detailed accounting records and a proper financial management system reflect where the business stands financially. You won't ever need to guess about the financial position of your business.

Accuracy and Consistency in Information: Accounting plays a crucial role by offering you a means of communicating the financial aspect of a business to others. The most important function of any accounting system is to retain and present data so that managers and owners can analyze the decisions they have made. Financial status helps immensely in making profitable decisions for any business.

Aid in Analyzing Business Deficiencies: Professional and quality accounting systems generate reports that will enable you to assess the profitability and performance of your business. Accounting and financial management systems will not only allow you to make decisions, but they can also help you identify areas of your business that require improvement. Once the troubled areas are identified, you can work on those business functions to improve them.

Maintain Comprehensive Audit Trail: If your business requires loans, the lending firm will likely ask for financial reports and other relevant data so that they are able to estimate the net income and actual worth of your business. They may also assess and evaluate your financial statements to monitor your potential repayment of the loan. Availability of such information is almost impossible without any accounting and financial system in place that can provide financial statements.

Well maintained accounting records indicate where your business stands financially. Implement and retain your accounting and financial management system, and your business will find its way to success!

If you would like to discuss how I can help you plan a strategy to keep your company's financial health in the positive, please call me at 781.503.9004 or email at sales@aixsol.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Accounting and Bookkeeping Services for the Small business

Accounting and bookkeeping services function as the backbone for every business. As a small business, it is very essential to ensure you maintain your company's records in a comprehensive manner. Good accounting and bookkeeping practices include thorough record-keeping and ensuring that every bit of expense and revenue is accounted for.

If you're a small business and you're feeling overwhelmed keeping a track of your financial matters, especially your accounting services, you're not alone. Many small businesses start out with small capital. However, it is important to keep track of how this limited pool of funds is used, especially in the period before the business starts to earn revenue for itself.

When do you need help

As accurate record-keeping is vital to accounting services, you must ensure that all transactions, regardless of their size, are noted. However, this can often become a neglected area in daily operations, particularly if the business functions as an enterprise and there is very less manpower resource to spare exclusively towards accounting and bookkeeping department. This also extends to shortage of infrastructure. Most widely available accounting softwares in the market turn out to be an expensive investment. Together with hiring trained manpower resource and maintaining software infrastructure, carrying out integration, and automating systems, the costs of setting up a dedicated accounting unit can be pretty high for the small business.

Determining when you need help can be a tricky aspect, especially when considering accounting services. Even if you started as a small business, once your business starts earning revenue and building a bigger list of clients, your list of accounts payable and receivables will also increase. You may need to consider hiring accountant bookkeeping and accounting service provider.

Outsourced and more reliable

Contrary to what many people may be worried about, outsourcing your work can be a blessing. Accounting and bookkeeping services are a specialized area. If you don't have professional expertise, it is better, and much more profitable to hand over the work to someone who does it dedicatedly. Let's look at a few reasons why outsourcing requirements related to accounting and bookkeeping is a good idea.

Professional expertise: Your accounting & bookkeeping work will be executed by professionals, instead of being hastily put together by yourself after a short online self-teaching session.

A professional will also help you determine what kind of accounting is suited to your business (cash vs. accrual)

Save on costs: It is likely you have a resource in your organization who understands a bit of accounting and bookkeeping. However, it isn't profitable if this resource has to put aside his or her routine work to attend to accounting and bookkeeping tasks.

Superior quality: Accounting and bookkeeping need detail and accuracy. When your accounting work is carried out by a professional, you get reports that are comprehensive and detailed. Superior quality accounting work also helps your tax preparation.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Efficient Record Keeping Strategies to Ensure Smooth Audits

Take any process. You will find that efficiency most often results from investments of time and organization. The same theory applies to accounting functions as well.

Audits are an accounting function where financial statements are examined to verify information. A financial audit determines whether the information contained within financial statements is reliable and accurate.

An audit is significant because it represents the basis of confidence invested in the company by its shareholders. A financial statement is often referenced to assess the 'health' of a company, and an audited statement can significantly enhance an organization's credibility.

How can you ensure greater accuracy in your audits? Below are some ways in which you can improve your record-keeping methods to ensure smoother audits:

Records needed

Maintaining effective records requires that you have a clear understanding of the kind of records you need to keep, and this is dependent upon the type of business that you operate. Some businesses must maintain property and real-estate related records while others must track purchases of other assets, such as machines or vehicles used for your business. In general, the kinds of records needed include:

Gross receipts for income received as a result of your business. Examples include receipt books, credit card slips, invoices, Form 1099-MISC, etc.

Documents supporting purchases you have made for your business, particularly if your business includes procuring or purchasing raw material and converting it into finished goods for your clients.

Records of employment are equally important. As employers, you may need to preserve employment records for four years, as part of good record-keeping practices.

Why keep records?

Records assist in:

Consistent business monitoring

Keep track of triggers that may impact the progress of your business. This can include documents which may indicate areas of potential sales growth.

Accurate financial reporting

The importance of this cannot be overestimated. Make certain to maintain error free income statements and accurate balance sheets. These represent the way in which you manage your business and relationships with your creditors or lending institutions, such as banks.

Maintaining receipts

Compile and organize your receipts carefully. Most businesses receive payments or income from multiple sources. It is critical that you track these sources and segregate your taxable and non-taxable income. Your bank statements should be reconciled regularly, while your investment records should be organized to reflect any taxable income.

Maintaining organized receipts assist in facilitating smooth audits, any they also help you accurately track of expenses and income.

Review reports periodically

Review your accounting and financial statements periodically to check for accuracy. Periodic reviews allow you to note mistakes in their initial stages and avoid having them snowball into larger issues.

Additionally, reviewing reports periodically ensures you are tracking expenses and costs. If at any stage you uncover an expense discrepancy, it can be addressed immediately. Discovering discrepancies which could have been easily resolved at the last minute only points towards poor report management and can create problems during an audit.

Consolidate reports and data

Most accounting data is voluminous and substantial. Instead of manually pouring over multiple, diverse entries and worksheets, which can result in unnoticed errors, consolidate related data in a single place.

A single source will also assist you in knowing exactly where to look for specific information.

Again, consolidation is easier when you review your records regularly. A small unit of data is easier to consolidate than larger chunks, which makes regular review and consolidation more meaningful. Invest in automation, if it helps your financial record-keeping. If executed by the right vendors, automating your accounting systems can help you reduce actual errors while allowing you to process more data in a shorter period of time.

Implementing the above record keeping strategies will help ensure that your business has a smooth audit.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Checklist for Meeting with Your CPA

Inevitably, it's that time of the year again when you need to prepare to meet with your CPA to discuss taxes. You need to take stock of your investments, any financial transactions undertaken, and, most importantly, the paperwork to support these.

Typically, the biggest challenge revolves around locating and compiling the relevant paperwork when it is needed. To make the most out of your meeting, it makes sense to locate these documents and papers before you head out to the CPA.

Following is a short list of some common documents you should have before rushing off to your CPA.

Income Records
-Invoices
-Bank Statements
-Brokerage Statements
-Investment Account Statements
-Schedule K-1

Invoices, Bank Statements and Investment Accounts
As a small business, you need to carefully track your receipts and invoices. Any record of income, such as bank statements and investments need to be provided. The form 1099-INT which reflects your savings and interest is also required by your CPA.

For this reason, it is important to perform timely reconciliations of your bank statements and to keep your income receipts, investment account documents, and brokerage account papers easily accessible.

Schedule K-1
If your business is classified as a partnership or corporation, you are also required to report any income or loss in the form of a Schedule K-1. This form carries details of individual shares of income within a partnership or corporation.

Expenses
Miscellaneous office related expenses
Mileage
Payroll documents
Mortgage interest statements
Rent
Interest expenses
Insurance

Office Expenses:
Your expenses could range from direct office expenses, such as supplies, to more significant expenses, such as travel.

Mileage Expense
If you use your car for business purposes, you can claim it as a deduction or at least miles driven for business purposes as a deduction. Make sure you also track receipts for any tolls incurred while driving for business purposes.

Payroll Expense:
If your company hires employees, then you need to provide documentation of their salary or wages. There is also the Form W-2, W-3, and other state payroll returns such as Form 940 that you will need to keep updated.

In fact, the Social Security website has the capability of online W-2s, where you can create and print up to 20 W-2 forms for your employees. Check this URL: http://www.ssa.gov/bso/bsowelcome.htm to access the service.

Do you have people assigned to specific tasks in your company or hired for a specific expertise or duration? If so, then you need to report their earnings from you via a separate form such as a 1099-MISC which contains details of payments made to agents contracted by you.

You can also claim tax deductions if you are providing retirement plans to your employees. Keep this documentation on hand.

Mortgage Interest:
Many small businesses or enterprises operate out of the owner’s home. If you are using your home for business purposes, you can include documents to support your mortgage interest, insurance, and other maintenance-related expense documents for the purpose of deductions.  If you are self-employed, you may need to use Form 8829 for claiming this deduction.

Office Rent:
If your office premises are rented, you could claim deductions on the rental taxes related to real estate and other utilities.

Interest Expense:
Some small business owners have taken loans for business activities. Any money borrowed for business purposes can be deductible, if you have valid documentation supporting its usage.

Insurance:
Insurance policies taken for the purpose of business coverage can be reported as a tax advantage, so be certain to keep track of these insurance papers.

Use this checklist to prepare for your next tax meeting with your CPA.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Working More Effectively with Your CPA

Hopefully by now, your 2011 taxes are a fading memory (or soon will be!). For many small to mid-sized businesses, the annual, looming tax deadline is a daunting one. As a business owner, the added tasks of compiling tax paperwork amidst a multitude of other daily responsibilities equates to added stress.

Many of our clients are CPA firms, and they have shared with us suggestions on how small businesses can work together with their CPA firm to complete taxes less expensively, earlier and more effectively. With a bit of discipline and a commitment to implementing some organizational strategies, next year's 2012 tax season can be far less stressful. Be proactive by incorporating these CPA recommended strategies into your everyday financial practices:

1. Leverage your existing accounting system.
Whether you have an advanced system or a basic accounting system, maximize its capabilities and use them to their fullest potential. Make a commitment to enter expense data on a regular basis. This can be a challenge for business owners who have other, more pressing issues to address, but making data entry a priority is essential to staying organized and helping you keep your finger on the pulse on your company's finances. Even the most robust systems with numerous reporting capabilities require current data to provide you with accurate financial reports. Keep miscellaneous receipts organized and be diligent about expense tracking all year long- not just before tax season. If you find you cannot remain on top of the data entry, evaluate hiring a bookkeeping service to assist with these tasks. Hiring a bookkeeping service or performing the updates yourself is far less expensive than paying your CPA to complete this. And your CPA will be happy if you leave them to focus on their area of expertise- accounting!

2. Maintain detailed records of your invoices, bank statements and financial reports.
Filing key financial documents in an orderly manner will help you locate the necessary paperwork when tax season arrives. Keep detailed records for financial documents including invoices, bank statements, loan paperwork, and financial reports such as income statements and balance sheets. Work to ensure your accounts payable and accounts receivable records stay current so that you have a clear understanding of cash flow. Keeping these records accurate and current allows your CPA to perform his or her duties more efficiently- and less expensively.

3. Analyze financial records for accuracy.
Financial statements should be reviewed regularly for accuracy, and bank statements should be reconciled systematically to ensure data integrity between your accounting system and your bank. This will eliminate any last minute discrepancies that need to be accounted for prior to tax filings. Regular analysis of financial statements will also allow you to stay on top of issues that may arise and provide you with an accurate sense of profitability so that you aren't shocked with a tax bill in April.

4. Know your filing deadlines
Many small business owners are aware of the April 15th deadline, but there are several other key tax deadlines as well. Payroll taxes, W-2s and 1099 contractor forms all require filing and distribution prior to April 15th. Business owners need to adhere to these filing deadlines, as well, to avoid penalties. If you do not have the time or expertise to manage these additional filing deadlines, consider hiring a tax advisor or payroll service to assist you.

5. Keep an ongoing list of questions for your accountant
You know your business best and how it operates. Throughout the year, maintain an active list of questions for your CPA so that you can gain clarification on questions that may arise about your financial operations and their resulting tax implications. An even better option is to meet quarterly with your accountant to review those questions so that you can implement practices during the current calendar year which can positively impact your company's filings.

As a small or mid-sized business owner, implementing these strategies will allow you to partner with your CPA more effectively and make your 2012 tax filing season far less stressful. We are currently offering a free analysis of your business processes and accounting system, which can help you prepare for tax season. If you would like to learn more on how Analytix Solutions can help move your business forward, please call me directly at 781.503.9004 or email me at snpatel@analytixsolutions.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Optimizing Your Accounting System - Measures to Ensure Your System Functions at its Best

Accounting system optimization involves implementing software to enable quicker turnaround for accounting functions. Specifically, optimization can make for easier, faster, and more accurate accounting, such as processing payroll or resolving accounts payable. Optimizing your accounting systems also reduces the need for manual practices.

Is your accounting system optimized effectively to fully leverage its capabilities?

It's a common practice for accounting firms to rely on software programs to carry out their accounting functions. However, if the programs are not optimized well, the users cannot take full advantage of the system's benefits, resulting in a system that boasts the latest technology but one that is not leveraged.

There are many benefits to an automated accounting system, especially for a small or mid-size business.

• Computerized accounting ensures greater accuracy and speed, resulting in more dependable operations.
• Automated accounting systems save time over manual processes, enabling you to complete more in a shorter time period.
• Automated accounting systems reduce costs associated with establishing a dedicated accounting department, requiring permanent skilled manpower.

Ensuring Optimization

Optimizing your system does not mean completely overhauling your existing system or installing expensive, new software.

However, your first consideration needs to be your company's operational requirements.

Optimization involves professional software knowledge and is best managed by a professional who understands your company in terms of business offerings and client deliverables. This approach considers the importance of customization and offers solutions that are tailored to your unique business needs.

Customized solutions account for your business deliverables and client requirements, ensuring that your system is utilized optimally. These solutions also reduce time and financial expenses, while significantly increasing productivity.

Tips for effectively optimizing your system include:

• Undertaking a comprehensive assessment of your needs and requirements.
• Including non-accounting functions such as time tracking or resource allocation.
• Generating readily accessible reports in an electronic format, thus eliminating the need for paper reports. This can also include interfaces that allow you to access data and accounting information, independent of physical location.
• Reducing the need for human intervention and streamlining processes with adequate security measures in place.

If your accounting system is fully optimized, your business will run more efficiently allowing you to take advantage of significant operational improvements.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Is Payroll Outsourcing Right for Your Business? - 5 reasons Why it May Make Sense

The payroll function is a task every business performs, whether it is a small or a mid-sized company. Smaller firms that maintain a solid, predictable revenue stream, may manage their books internally with assistance from an independent accountant. The accountant is devoted to processing payroll for a limited number of staff members, but is that where your accountant's time is best spent? There are most likely other functions that require accounting level expertise, especially as your company grows.

As you acquire new clients and increase business, a single independent accountant may not be enough to manage your accounting and bookkeeping functions, and you may need to hire additional staff to manage the increased workload.

Outsourcing your payroll function can alleviate some of this increased workload while providing the following benefits:

Cost Savings: A dedicated in-house payroll department can be very expensive for a small business, as it requires skilled, experienced, manpower to process the payroll, maintain accurate records for various withholdings, and manage timely cash disbursements. By outsourcing the payroll function, you eliminate the need to hire a permanent employee to fulfill these duties, while still having access to the expertise required.

Reliability: Payroll errors are taken very seriously by authorities. Irrespective of previous, impressive financial record keeping, payroll errors can escalate into significant issues, creating long term problems for your company. When you outsource your payroll function, this responsibility shifts to the vendor to ensure accurate, error free payroll processing.

Optimized Manpower: By outsourcing the payroll function, your in-house staff is free to focus on other functions which are more critical to your customer relationships and business development. You can also save money on salaries that would have been distributed to hire a permanent employee with payroll expertise or reallocate funds that would have been earmarked for an accountant to perform these tasks to other more meaningful accounting functions.

Timely Payroll: An in-house payroll department is also responsible for tracking staff changes and new employee hires, as well as the associated paperwork. Performing these tasks diminishes in-house staff productivity due to significant administrative follow-up. However, outsourcing the payroll function assigns these duties to the payroll service provider. A payroll provider takes into consideration staff changes and various changes in withholdings as a result, factoring these into planning so that payroll processing occurs on-time.

Increased Security: When payroll is managed in-house, business owners must closely monitor the processing or have complete confidence and assurance that the employee performing this function is trustworthy and incapable of fraud. By outsourcing the payroll, this burden is placed on the payroll processing provider. As a business owner, you save time and financial resources otherwise spent on monitoring employees responsible for this function.

Ask yourself if outsourcing payroll is right for your business.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Profitability Is Not Just "Luck o'The Irish"

In March, even those of non- Irish descent tend to hope for a little St. Patrick's Day luck. After all, who wouldn't want to find that proverbial "pot of gold" at the end of the rainbow? For small to mid-sized businesses, even minor fluctuations in cash flow can have a larger scale impact. That "pot of gold" is easier to come by if you are closely monitoring your operating reports and have a clear understanding of the levers and indicators that impact profitability and cash flow generation. Disciplined analysis of your operating reports will help you determine how well your company accomplishes these things, an important practice for small to mid-sized businesses.

1. Revenue and Sales - Perhaps the most obvious driver of increased profitability is increased revenue or sales. However, almost as important as producing the revenue is monitoring your company's revenue generating trend. Small to mid-sized businesses should have a solid understanding of their daily sales and annual sales-to-date to ensure they are on target with revenue projections and goals. By not paying attention to these indicators, small to mid-sized businesses run the risk of falling short of their goals and finding themselves strapped for cash.

2. Operating Income and EBITDA - Operating income is the profit generated by a company after all operating expenses have been deducted from total revenue. Operating income is an essential metric, as it is a clear indicator of how well a business may be managing expenses as a function of revenue. Another indicator to monitor, which is similar to operating income, is EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). EBITDA is a better measure of cash flow because it accounts for non-cash expenses, such as depreciation and amortization, which may be included on an operating report even though the cash outlay may have occurred several years prior.

3. Cash Flow - Cash flow is the amount of cash available for use by your business at various points in time. It is the manner in which cash flows in and out of your company. As a small to mid-sized business owner, you should have a solid understanding  of at what point cash is flowing into your business (via revenue and receivables), as well as how much and at what point cash is flowing out of your business in the form of monthly and annual expenses. Monitoring and maintaining healthy cash flow makes the difference between launching a business and staying in business.

4. Comparables - Monitoring all of the above indicators is critical to small and mid-sized companies. However, just as important to monitoring these items is comparing them to prior periods as a gauge to determine if your company is headed in the right direction. As a basis point, companies should evaluate these metrics as they compare to the week prior, month prior, and same quarter/ year prior. Are fluctuations in any of this data due to seasonal or economic changes, or are they isolated to your business? Analyze these figures as percentages as opposed to dollars to provide you with a better comparable.

5. Fixed vs. Variable Costs - Small and mid-sized businesses must also carefully consider both their fixed and variable costs. Fixed costs are predictable, set costs per item during a time period. Variable costs are costs that could increase as a result of increased business-cost of goods, increase in volume of materials, etc. If revenue levels remain consistent but variable costs are increasing, profit margins will erode. Although it that appears obvious, this is why business owners must closely monitor these indicators.

As a small business owner, having a clear understanding of each of these categories can help you self-generate your own "pot of gold". We are currently offering a free analysis of your business processes and accounting system. If you would like to learn more on how Analytix Solutions can help you gain a better understanding of how these things can help move your business forward, please call me directly at 781.503.9004 or email me at snpatel@aixsol.com

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Reading Accounting and Bookkeeping Reports

Accounting and bookkeeping functions play a large role in deciding the financial viability of a business.

In the case of the small or mid-size companies, this holds all the more true. When every little decision and operation is determined based on budget, it makes sense to understand whether all your hard-earned money is allocated correctly.

In a typical small-sized business, the focus is concentrated on fulfilling client requirements and meeting deliverables. Manpower is often limited, with one individual managing multiple responsibilities. Opportunities for error in such situations increases, and therefore so does the significance of understanding your finances and correctly reading reports. Financial reports have a significant bearing on the future of your company. The golden rule for all small businesses remains constant: if you are not adept at financial reporting or uncertain about how to read them, hire professionals for conducting accounting-related work instead of trying to do it yourself.

However, if you do choose to review them yourself, there are several key elements that you should evaluate when reading them.

Income Statement

Your income statement will reflect your profits and losses. This is performed via columns on revenue and expenses. A summary of your revenue compared against the expenses incurred will indicate whether your business is performing well or not. The income statement typically reflects the growth or reduction in a company's assets over the accounting period which could be a single month, several months, or one year.

The income statement is also a comparative document for evaluating how your company has fared previously. It contains other factors such as net sales, gross income, operating income, operating expense, taxes, etc. When you read income statements for consecutive years side by side, you can calculate the percentage change in your company’s net sales, operating expenses, and operating income. This helps you establish a budget and to decide where you need to reduce expenses and allocate additional funding.

Balance Sheet

The balance sheet lists the company's assets, liabilities, and owner's equity. The owner's equity is the difference between the assets and the liabilities. The balance sheet is also an indicator of your company's financial health. When you evaluate a balance sheet, you should be able to assess whether your debt is in control.

Elements of a balance sheet include:

Assets: Assets are what the company owns, which may include movable and immovable properties, such as land or machinery equipment. There are two kinds of assets- current and fixed. Current assets are converted into money within a period of one year, while fixed assets refer to property that generates income and are not expected to be sold within a year.

Liabilities: Balance sheets also list liabilities which are debts owned by the company. These are categorized into current liabilities, those that need to be paid off within one year, and long-term liabilities, those that are not bound by the 1-year limit.

Owner's Equity: Once there are funds invested into a business, it is viewed as a sum of assets and liabilities. A business must be funded to make it operational before it can start acquiring assets. The owner's equity is the value that remains in a business after removing the liabilities from the assets.

Statement of Cash Flow

How does your company use its cash? Your cash flow statement will provide you the answer to this question. Cash flow statements assign cash expenses within a specified accounting period to one of three categories-, Operations, Financing, and Investing. These are then added to determine a figure which is further tallied with cash reserves in the beginning of the accounting period. Examples of elements within a statement of cash flow can include cash given to employees (operative expense), cash allocated to purchasing machinery or equipment (investing), and cash provided by owner (financing).

All business owners should have a thorough understanding of what these statements mean in determining the success of their company.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Five Bookkeeping Tips

Irrespective of the size of a business, bookkeeping is one of the most basic responsibilities within a company. It involves tracking expenses and financial transactions that have occurred on a daily basis.

Bookkeeping differs from Accounting in that an accountant is dependent on the bookkeeper's records. The bookkeeper is responsible for making accurate records of sales, purchases, payments made, etc. These entries are recorded in designated ledgers or books that are then balanced to insure that the financial figures match.

A small business may perform its own bookkeeping to defray expenses. However, without a trained bookkeeper performing this function in-house may turn out to be a very expensive decision.

Bookkeeping is often confused with accounting work. They are different in that bookkeeping involves maintaining records of financial transactions that have taken place. Different records are maintained in different, designated books. Thus, there are separate sales ledgers, ledgers for payments receivables, and record books for functions such as sales and purchases made, as well as records of issued bank checks.

These books further contain multiple columns to indicate payments due or made, together with the balance noted at the time of the transaction.

All of these functions define a bookkeeper's areas of responsibility.

Because the bookkeeper deals with matters that reflect the financial health of the company, there is very little room for error. Finally, the company's accountant depends on the bookkeeper's work to prepare financial records and communication.

As with other business functions, there are several bookkeeping "best practices", which when implemented can significantly impact a company's overall productivity and efficiency.

1. Maintain records diligently.
It helps to maintain different records for different transactions in a timely and exact manner. When you have multiple daily transactions, it is essential that they are all recorded. The bookkeeper's work determine show easily an accountant can file the related income statements and communicate expenses to the company's shareholders.

2. Hire a trained bookkeeper.
Performing this function by assigning it to another staff member or having the business owner perform the bookkeeping may work in the beginning when your business is small. However, as your client base increases, this can become unwieldy to the untrained bookkeeper. Without a knowledge of bookkeeping practices, you run the risk of recording errors which could have long lasting negative implications.

3. Invest in high quality accounting software.
High caliber accounting software is essential to your company's financial infrastructure. Poor bookkeeping can lead directly to loss in earnings and worst cases loss of clients. For small businesses, this domino effect can be fatal. Although several off-the-shelf accounting software solutions exist, if you cannot afford to make this type of investment for your business, tap into a provider who offers you high quality bookkeeping services.

4. Keep your forms and records handy.
Make sure you are audit-ready and not remiss in filing important forms etc. When you are ready with the essentials, your bookkeeping will be better organized.

5. Back up all your data.
This is one of the most important rules. As a small business, if you are finding it difficult to maintain safe and dependable back-ups, then you should consider choosing a vendor who can manage your bookkeeping functions. Ensuring data security in times of crisis or accidents is an important factor for both your business and your clients' businesses.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Heads Above the Rest - Are You a Good Leader?

This month we celebrate the President’s Day Holiday, a holiday which recognizes the birthdays of two of our country’s great Presidents. However, it is also a reminder about the historical leadership from which this country has benefited. So, what defines a leader and what leadership skills can small business owners practice to help their company achieve success?

1. Establish a Clear Vision and Goals- In today’s rapidly changing business climate, it is easy to become easily distracted by the “next best thing” or new way of thinking. Having an established vision for your company as well as predetermined goals helps small business owners and presidents remain focused on where they are going. For example, an established revenue goal provides the barometer for you to evaluate if performing a certain function is in line with accomplishing that pre-established goal.

2. Take Holistic View of Your Company- Recognize that corporate success is not determined by a single business aspect. Revenue and profitability figures alone do not tell the complete story of whether a company is on the right track. View financial metrics in conjunction with other cross departmental metrics, key product offerings and customer satisfaction.

3. Build Strong Teams- Successful leaders have the support of strong teams. They recognize their own strengths and weaknesses and build complementary teams of individuals who can provide specific areas of expertise to help move their business forward. A small business owner may possess creativity for developing new product ideas but may need to surround themselves with colleagues that have financial expertise to execute those business plans or market those products.

4. Empower Your Employees- Empathize with your employees (and customers!) and put yourself in their shoes. Acknowledge challenges they may face and be open to suggestions on a better way to perform certain functions. You will establish trust within your organization and be able to get the most from your employees, in a positive way. Empowering employees to offer recommendations, suggestions and decisions will create internal buy-in within your organization thereby fostering realization of a single common goal.

5. Recognize and Embrace Change- Today’s business environment is constantly changing. New technologies for enhancing productivity are consistently introduced. Recognize these technological improvements and use them to your advantage to promote productivity in your workplace. Technological improvements do not replace human capital and ideas; rather, they often streamline operations and allow you to better leverage employee resources and intelligence.

As a small business, our team is striving towards implementing these same practices. We are currently offering a free analysis of your business processes and accounting system. If you would like to learn more on how Analytix Solutions can enhance your business processes in 2012, please call me directly at 781.503.9004 or email me at snpatel@aixsol.com

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Automating Accounts for Profitability

As we acclimate into a world where speed is essential and computerized work has become the industry standard, automating accounts is now a necessity, not an option.

While automating your accounts results in immense time savings and cost reductions, did you realize its direct, positive impact on profitability?

Accounting and bookkeeping functions are often considered to be heavily dependent on manpower and paperwork. This subjects those tasks to human error, and they are often time consuming, especially when details may require validation or rechecking.

Compare this with the business movement towards e-transactions, where payments become faster and gaps between payments due and payments made are reduced.

Simplify, Streamline, and Cut Costs

When you automate, you receive the benefit of integrating data and information across your accounts. This integration optimizes resources, which means that automating your accounts can simplify your workload.

Unlike traditional accounting where different books are used for different entries, accounting software allows users to create entries in a single field. After this, depending upon its configuration, the software will connect the entry to other similar transactions and add it to the consolidated report. Accounting software can also be linked to credit card or bank accounts. This allows payments from the card or bank account to be dispatched or received, while also getting recorded against the respective accounts. These features not only simplify the process, they free up the cash flow, making money available for operational expenses.

Automating helps reduce the time required to balance your accounts and thus closes a single cycle from payment due to payment paid faster. This translates into increased cash in a shorter period of time. The process of automation helps close the gap between the time incurred to identify human errors and take corrective action, thus accelerating closure.

Do-it-Yourself or Enlist a Vendor?

There are other factors that can help make automating accounts a profitable endeavor; for example, selecting the right vendor. When you choose a vendor, carefully evaluate the deliverables that they promise. Check that the vendor thoroughly understands your business, client deliverables, and any of your requirements. Any recommended solutions for implementation should be directly relevant to your business.

Ideally, the vendor who is entrusted with automating your accounts department should have experience handling and managing the requirements of a small business or a startup. The vendor should also be able to manage the process end-to-end, including providing support and maintenance help after installation.

The idea of automating your accounts is basically to enable you to focus on your core deliverables without losing track of your cash flow and revenue management. In case you plan to undertake the automation yourself, keep in mind that certain areas such as troubleshooting and timely review of the system are necessary.

This means you need experts on standby to conduct regular repairs and troubleshooting when needed. If you plan to implement the automation yourself, you might also need to source IT infrastructure and recruit and retain a team of IT professionals to manage your automated accounts system.

For automating small business accounts, ideally, you need solutions that allow you the convenience and cost benefits of scalability. Scalability refers to paying for only those services that you utilize and not the entire solution. Seamless integration and error-free accounting are key to your time and costs savings.

If a vendor can promise you all this, combined with IT support and scalability, it makes sense to enlist their assistance while you focus on your clients. The more time you free up, the more you can increase your profits by managing more projects or adding value to your client deliverables.

Thus, automating accounts can only add to your profitability.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

CFO Services to Improve Bottom Line

For any company, solid financial management practices are necessary to ensure profitability. As a business owner, where should you focus your efforts- on client deliverables, or on managing your revenue well? CFO services could be a solution to that issue.

Management of Funds

CFO services involve a careful scrutiny of your accounts, including profits and losses. Although this may sound obvious, it is easy to neglect regular account-keeping especially when your focus may be on meeting client requirements. Managing funds is an indispensable part of generating profits. Profitability does not come only from your customers. Practices such as managing costs, reducing unnecessary expenses, and enhancing productivity also play an active role in increasing your profits.

CFO services provide a detailed scrutiny of your revenue sources, revenue generation methods, and costs associated with revenue generation to determine areas that may be leading to decreased profitability. At a minimum, you should be able to answer the following questions about your finances:

• Are your account sheets updated and accurate?
• Do they reflect profits and losses accurately?
• Are you able to identify your overhead expenses correctly?
• Are there overhead costs that could be curtailed?

Managing Overheads

It is important to note that while overhead is necessary for a business to function, it may not be directly involved in revenue or profit generation. Thus, your travel expenses, phone bills, and client entertainment could all be categorized as overhead expenses. However, controlling overhead is not the only way to reduce costs; in fact, cutting too much overhead could negatively impact your revenue stream. For example, if your business offering is such that it requires significant client interaction, then reducing client entertainment overhead expenses may not be the best option for you. Professional CFO services can help you decide if your overhead requires curtailing or not; and if it does, you have access to the expertise to advise you in deciding on how much you need to reduce your expenses.

Managing Debtors

Each time you present a client with an invoice for services rendered, it means your customer is yet to pay you. Unless there is a very strict policy for Cash on Delivery, it is highly likely that a business incurs several invoices per day, amounting to a significant number per month. Each invoice represents customers who are debtors of your company. A collection of these invoices, or a list of your debtors, can be termed as a statement. A statement also contains other details, such as amount owed, date, and amount paid. Debtor aging is an important aspect of this statement. Age here refers to the amount of time a debt has remained unpaid.

When you hire professional CFO services, you are better informed about the state of your company's finances, and hence better prepared to reclaim the money. When debtor age goes beyond a limit that you fix, 30 days for example, you can contact your debtors and follow up on payment.

General Expenses Management

How do you decide whether your business is utilizing resources optimally? Or that the rates you have established for your services are competitive? When you hire professional CFO services, you are provided with informed advice on these types of questions. The CFO researches your accounts thoroughly and undertakes a detailed analysis around the general expenses incurred by your business. The professional CFO is well-positioned to guide you in managing your company's general expenses, including taking corrective action when needed.

Outsourcing the CFO

If you are a start-up or a small to mid-size business, you do not need to hire a full time CFO. Instead, consider outsourcing this function. Ideally, investigate providers with experience managing requirements of businesses similar to yours. This will give you added leverage in the form of their experience and expertise.

Shop around before you finalize your decision on a part-time CFO services provider. Some providers also offer scalability – a big benefit for small to medium-sized businesses and startups. Scalability allows you to tap into industry-standard services and infrastructure while paying only for the services you actually use. Thus, it produces immense savings on investing in infrastructure costs and costs associated with hiring and retaining trained employees.

When you outsource your CFO requirements, you receive the dual benefit of direct profitability through smart financial management combined with savings on investment costs otherwise spent on funding a dedicated CFO position in your company.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.