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FINANCE |
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Accounting Software Prevents a Host of Problems |
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Use of accounting software has become standard for small companies of all types. Even the solo contractor finds that programs such as QuickBooks simplify and speed up the bookkeeping process. Regardless of your level of accounting expertise, however, data entry mistakes still occur.
Midyear is ideal for an accounting review to ensure that your software is not rendering distorted information. This tactic keeps you on track for producing reliable records that inform you of results and aid in defining goals. It's easier if you have a "partner" to help: your accountant knows how to read and interpret a variety of standardized reports to locate targets for modification.
Your best bet is to give your accountant login access to your online software application. Many accounting tools, like QuickBooks Online, permit file sharing by providing your accountant with a separate login from your own.
Users of some software packages can make an accountant's copy of the file, which allows you to continue making new entries and later import your accountant's changes. An accountant's copy also allows you to pick a dividing date, ensuring you don't overlap your accountant's changes.
Regardless of the accounting software you have, ensure you adhere to the following guideline: Don't modify earlier transactions while your accountant is examining your records for those specific time periods, because your modifications are likely to negate the accountant's corrections. Also, you should refrain from reconciling accounts to financial institution statements until your accountant completes his or her examination. |
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HOT BIZ TRENDS |
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| Company Book Clubs Ensure Everyone
Is on the Same Page |
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In the small and medium-sized enterprises (SME) world, hours are long, tasks seem endless, and responsibilities are often onerous. There's barely time to eat and sleep, let alone keep up with business trends. Yet accessing the wisdom of thought leaders is critical to success in today's global economy.
Books provide insights into people who have faced down challenges and learned the kind of critical lessons the rest of us need to learn. This is why company book clubs are currently having a moment.
A company book club not only is a way to learn and leverage this knowledge, it also can foster a learning culture, challenge employees' mental models, and provide a forum for them to exchange ideas.
Company book clubs generally meet monthly, and participation is always voluntary. A facilitator is usually designated to keep the group focused and the discussion flowing. Groups often choose to discuss books that align with issues the company is facing, such as growth, talent retention, marketing, and competition.
The group may simply talk about a book's main points and highlight any ideas that seem to resonate. Or participants may try to relate the material to the firm's operations or strategic road map. Usually, it's a combination of the two: learning and applying.
A company book club can also be a way to encourage continuous learning, foster team building, and help employees de-stress and pull away from their busy workdays.
Many companies have discovered it's a tradition that enriches the team, the culture, and the company. But best of all is knowing that everyone's on the same page. |
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SAFETY |
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June Is Internet Safety Month: Be Aware of Cyber Threats |
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The Internet adds new access, enhancements, and abilities to businesses. Most of its offerings are beneficial, but the downside to the Internet is cyber threats. In today's world, businesses must be prepared for these risks, which come in many forms, including:
- Intellectual property threats. Depending on the business, hackers may be seeking technical plans, blueprints, patents, or other secure information.
- Hacktivists. These tech pros are on a mission to make a political point or simply make a company look bad.
- Criminal hackers. On a different mission from hacktivists, these masterminds are trying to accumulate funds illegally. Think of them as online thieves.
- Terrorism. These hackers aren't looking for monetary gain, and they are definitely in it for more than an embarrassing prank. Terrorists may want to hurt the economy or steal information that aids in a physical attack.
- Disgruntled employees. The other four types of cyber threats come from outside sources; this is an inside job, involving employees with access to passwords and other insider information. A disgruntled employee wants to hurt you and your business.
Raised awareness can help businesses identify vulnerabilities and take protective measures. Because these attacks are almost inevitable, company owners must take steps now. While your primary goal is to prevent breaches, should they happen, your next goals are to act quickly to minimize damage. |
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FINANCE |
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| Key Ratios
for a Healthy Balance Sheet |
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It's an outdated concept: entrepreneurs who believe that all they need to know about their companies' finances is revenue and expenses are fooling themselves. Those who want insight into the true strength of their company are familiar with their balance sheet and the crucial financial evaluation it facilitates.
Getting started
The Balance Sheet is a tool for investigating the vital signs of your business. But before you start taking Balance Sheet health readings, you have to know what signals to evaluate; it's essential to know the components of this financial report.
The three key areas on a Balance Sheet are assets, liabilities, and equity. Accounts in these sections show the balances as of the date of the Balance Sheet.
Assets are what the business owns, liabilities are what it owes, and equity is simply the difference between the two, the so-called net worth of the operation. When your business makes a profit or borrows funds, or you reinvest through a cash infusion, the money from these sources goes into some asset, such as cash. This balances against the increasing new worth or liability.
Further breakdown of assets and liabilities distinguishes their life span. Current assets are cash and things that can be quickly converted to cash, such as accounts receivable and inventory.
Items that are expected to stay on the Balance Sheet for more than a year are fixed assets, like machinery and computers. Similarly, current liabilities are payable in less than one year, while long-term liabilities come due in more than one year.
What's important
Lots of current assets, such as cash, are generally considered an indicator of Balance Sheet strength. However, current assets, including growing inventory or accounts receivable, must be supported by higher sales. Businesses that require plenty of equipment find its depreciated value on the Balance Sheet. Accumulated depreciation is a negative asset that lowers the net value of fixed assets.
If your company is paid immediately by customers and has no need for inventory or equipment, the asset component of your Balance Sheet is nothing more than a bank account. At the same time, the operation is certain to have some liabilities.
A large amount of debt is typically a sign of trouble. A substantial amount of current liabilities ultimately will lead to serious problems. These are typically incurred by small businesses as credit card debt, sales tax owed, and payroll taxes payable.
A few simple key ratios can establish Balance Sheet strength. First is the current ratio, which is current assets divided by current liabilities. Aim for a result of 1.5 or higher.
Another fundamental gauge is the ratio of liabilities to equity. A strong Balance Sheet will have much less debt than equity, thus yielding a ratio well below 1.
Many other measurements are helpful, and some are particularly applicable to specific industries. Discussing the health of your Balance Sheet with your accountant will lead to ongoing examination of your business from a new, and ultimately very helpful, perspective.
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Gold Gerstein Group
505 Pleasant Valley Avenue
Moorestown NJ 08057
856-727-0100 Office
856-727-0772 Fax |
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| www.g3cpa.com |
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| info@g3cpa.com
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| How to Win Big in Today's Economy |
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| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
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| Find out how by requesting my free report "How to Win Big in Today's
Economy" by replying to this email." |
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| Just reply to this email and I'll send it right out to you. |
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| Quick Quiz |
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Just reply to this email for the answer.
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| Worth Reading |
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What Google Learned from Its Quest to Build the Perfect Team
By Charles Duhigg |
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The New York Times Magazine
Studies show that people working in groups innovate faster, identify mistakes quicker, problem-solve more effectively, and achieve better results. Google launched Project Aristotle to discover why some work groups thrive and others fail. The study revealed that building a great team is about a norm of "psychological safety," in which group members feel valued and respected.
Digital Innovation Is Kind of a Big Deal Right Now
By Daniel Burrus
LinkedIn Pulse
Burrus distinguishes two types of innovation accelerators: hard trends (those that will happen) and soft trends (those that might happen). Business strategy based on hard trends enables innovation with little risk and real upsides in terms of value and ROI. Learning to use hard trends to anticipate disruptions, problems, customer needs, and opportunities is a must for today's businesses."
Google Ventures on How Sketching Can Unlock Big Ideas
By Jake Knapp
Fastcodesign
For service companies that bill on a recurring basis, rate of churn is a key profitability factor. However, V. Kumar, a marketing professor at Georgia State University, believes companies should focus their marketing efforts on lapsed customers whose prior behaviors and reasons for leaving indicate a predisposition to return. Firms can target these customers with advanced analytics.
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LINKS YOU CAN
USE
This Month: Learning from Your Financial Statements |
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Small-business owners regularly make key decisions affecting the financial future of their companies. Are these decisions well informed? To ensure they are, use one of your most valuable decision-making tools: financial statements. Check out the following tips on how to use these resources to your advantage.
Financial statements are a fountain of valuable information. Find out what they have to offer at
12 Things You Need To Know About Financial Statements
Many small business professionals are intimidated by financial statements because they don't understand how to track sales and expenses. Luckily, they're not alone. Conquer that fear.
If You Fear Financial Statements, You're Not Alone
Analyzing certain trends in your financial statements could put more money in the bank each quarter. Learn how.
What Are Your Financial Statements Telling You?
What are the essential tools of a business plan? Find
out here.
How to Make Sense of Your Small Business Financial Statements
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