by MHolland | Feb 18, 2021 | Remote Work
Man ‘o man, I love it when big companies get it right. As in mega-companies. Think “380,000 employees mega”.
Who is the mega-company that just got it right?
Siemens.
And what exactly did they get right?
Two crucially important things “managing” remote workers (I hate that word when used with people).
Here is what they got massively right…
Outcomes versus Hours
Empower people to produce outcomes. Do not pay them by the hour.
Hmmm, been saying that for years and years. Sorry for this…and, oh well, I just have to shout this out – “I TOLD YOU SO!!!”
Trust
Trust that people want to excel. They want to do great work. If not, do you really want them working for you by the hour?
Good point, right?
Let them produce the outcomes with their methods and using flex-time. (With the exception of some remote work that may be “emergency driven”).
Here is the blog:
The Best Two Sentence Remote Policy Ever
Thanks for reading…
by MHolland | Feb 10, 2021 | Remote Work
This pandemic has forced a lot of people to work from home…but…wait…why…is…this…happening…
I took an in-depth look at recruitment ads over the last few weeks.
There are a lot of companies looking for Controllers, Senior Accountants, and bookkeepers.
The shocking thing is how many want someone to – still, in these days – drive to work.
At best, I have seen the words, “temporarily remote”. Huh?
Is this a control thing? Or “hey we have such an amazing culture; we want you to come to our office and share in the joy” thing?
A lot of work has to be done away from home, at a workplace. I get that.
But accounting?
We have been working for over 20 years, “in the cloud”, virtually, without paper. It works better. It is more effective, and our Team produces better results working in a comfortable home space.
There are so many benefits to working from home. Let us look at 3 types. For the worker. For the business. And for the environment.
Benefits for The At-Home Worker
No commute. This can be a huge amount of extra time for your family or just to get more done.
No dress code. You can work in your housecoat, or whatever you prefer.
No lunches out. This can save a lot of money, time, and eating at home can be much healthier!
No commute means less wear and tear on your car, and no gas. Maybe you now only need one car. Now there is a savings!
Coffee or tea or snacks when you want with no one watching. Coffee is always better when made at home.
Flex-time. Often you can work different hours – sleep in and work late.
You can take your kids to school and pick them up.
Working from home is definitely much better for your kids in every possible way!
Benefits for the Business
Happy workers means less turnover. The savings here are amazing. No re-training costs. No severance pay.
More productive workers. Happy workers, creating their own unique at-home bubble, will get more done.
Giving a benefit that people really want will increase loyalty.
Benefits for the Environment
No driving to work. This clearly is a positive impact on our planet! Less emissions, no clogged roads.
Paperless – at our company, we do not print cheques, or use paper. Everything is online, virtual, and paperless. Less trees to cut down to make paper is a good thing. Ask a tree.
Less chance of bad accidents when weather conditions are grim. Hey, this is Canada, with ice and snow, and it can get slippery out there.
In Summary
Kindly consider your people – who in your business is a knowledge worker? Consider that they will get more done at home, be happier, and stay with you longer. All this is not only good for them, and saves you money, the earth will love you for it!
Thanks for reading…
by MHolland | Feb 3, 2021 | Business Tips
We have all heard the saying, “what you can measure, you can manage?”. It is over-used to the point of being cliché…
Yet, it is true. The challenge is – what to measure?
Start with this – focus on the activities that produce results.
There are two things we must measure – activities and results.
Activities are real-time, happening now, and controllable.
Results are after-the-fact, past based, and non-controllable.
Wayne Gretzky could not control how many goals he got per game. He could, for the most part, control how many shots he took on goal.
You get the difference.
What are Your Business Activities That Lead to Great Results?
What is your strategic purpose?
To grow?
To grow you need a pipeline.
Ok, here is a starting point. Measure your referral rate. Do you know what it is?
Here are some interesting facts –
70% of all new business for service-based businesses comes from referrals…
…and clients are responsible for 30-60% of those referrals.
The simple act of asking for referrals can result in a 9% increase in referrals. Wow!
But do you ask?
Who is Making the Referrals and Why?
Once you know this, you can put a system in place to increase it.
How Much do you Currently Spend on Advertising?
Before you spend another dollar on advertising, find out where your customers are coming from.
How much exactly do you spend?
What is your per client cost of acquisition?
A Few More Probing Questions
What do your clients think of you?
What is your attrition rate?
How frequently do your customers come back to do business with you?
How frequently do you write to your clients – particularly just to say thank you?
What is Your Turnaround Time on Sales Calls and Leads?
Here is an interesting study…
A while ago, a company called Performark mailed in thousands of responses to ads for goods and services costing at least $5,000.
You would think the price tag alone would be enough to trigger a quick response!
Hmmmm, well, not really. It took on average 58 days for a response. 25% of enquiries went unanswered.
Only 1 in 8 requests triggered a follow-up sales call. That call came 89 days – on average – after the initial enquiry.
Two More Activities to Measure
How are we creating new customers?
How do we ensure they keep coming back?
Keep this in mind – a 5% increase in customer retention can cause a 25-85% increase in profitability.
To Summarize
Know your acquisition costs per customer/client.
Know where you are getting quality leads from.
Focus and expand on what is working.
Follow up on enquiries fast.
The old adage “what you can measure you can manage” becomes, “measure the right things to get the results you are seeking”.
Lastly, remember this – you cannot control results, only activities…
What activities will you start tracking?
Thanks for reading…
by MHolland | Jan 27, 2021 | Accounts Payables
Cheques are becoming less common now. But not uncommon enough. Here are 5 reasons to wean your business from the cheque addiction (for those still afflicted) …
Reason No. 1 – Con Artists
Cheque fraud is bigger than online fraud by a country mile. A cheque circulates in physical reality. Thieves can acid wash your cheque, print their name on it, and cash it.
Reason No. 2 – Cost
The Canadian online bill payment service we use is inexpensive. Yet I have had business owners balk at the price. It is about $1.50 per payment for 20 payments.
A stamp is $1.07 now. Then there is the paper and envelope.
How about the time to print, get a signature or two, and stuff the envelope?
Then your bookkeeper has to record that cheque in the accounting system.
This adds up to $20 or more per cheque.
Check out this article on the true costs of cheques:
The Hidden Cost of Check Payments
Reason No. 3 – Convenience
When you need two signatures, and one person is away what do you do?
Mail it from person to person? Yikes! With Canada Post that could take weeks. Courier? Please see reason 2 above.
Some people pre-sign cheques when they will be away to avoid this problem. This opens up fraud. Please see reason 1 above.
Reason No. 4 – Covid
With Covid, the rules of engagement have changed. Your office may be closed. Where are the cheques? Can your bookkeeper get into the office? Yes?
Great! How about the signers? Both of them? Are all three working from the same office?
You get my point…
Reason No. 5 – Controls
With a solid online bill payment service, you set an accounts payable approval matrix. Vendor bills can be routed to as many people as you like, working from as many places as you can imagine.
This makes for a great audit trail. You can see each person who approved the payment.
Oh, and a really cool feature – you can see the actual vendor bill attached for easy reference!
So, what are you waiting for?
Want to know what we use? Kindly email me, and I will let you know…
by MHolland | Jan 21, 2021 | Accounts Receivables, Business Tips
Two weeks ago, I talked about the timing of your sales pipeline. Last week I wrote about your cash conversion cycle…
As a refresher, your Cash Conversion Cycle is the number of days – on average – it takes for you to convert working capital to cash.
You start with the number of days it takes to collect your accounts receivable. Then you add that to the number of days it takes to sell your inventory. Finally, you subtract the number of days you take to pay your vendors.
|
Business A |
Business B |
| Days to collect receivables |
40 |
25 |
| Days to sell inventory |
15 |
35 |
|
55 |
60 |
| Less – days to pay vendors |
(15) |
(25) |
| Cash Conversion Cycle |
40 |
35 |
Quiz – which is better, Business A, or Business B?
Business B. Why? Because it takes only 35 days, compared to 40 days to convert working capital to cash.
How can Business B get even better? By managing inventory better! It is 35 days on average to sell and only 15 days for Business A.
How can Business A improve? By getting paid quicker, and/or paying vendors a bit more slowly. It is taking 40 days to collect its receivables versus 25 for Business B.
Here are 6 ways to increase your cash-flow:
Way # 1 – Order Inventory Later
Inventory is money on the shelf.
I remember touring a warehouse once, years ago, and was shocked to see so many items laying on the floor. Other items were collecting dust. I said, “you know, if those were gold bars, would you treat them like that?”
Ordering the wrong stock too soon is going to tie up your working capital.
Order the wrong stock and you have trouble selling.
Too soon, (before people need or want), and again you have money sitting on a shelf.
An example of “too soon” is buying stock for Christmas in March. That said, if you get a great deal that could be a good business decision.
Inventory management is an art. It is related to three things:
- Timing of purchase
- Ability to re-sell the inventory quickly.
- Availability from suppliers
Way # 2 – Get Deposits from Customers Upfront
I believe Dell Computers had a negative cash conversion cycle because you pay for the computer upfront. Only then do they build/assemble it for you.
When I suggest getting deposits upfront to businesspeople the response is often – “I cannot. My customers will not accept that”.
How do you know? Who sets the terms?
If Michael Dell had asked his customers I am sure they would have said – “we prefer to pay on delivery”.
Michael Dell set the rules and grew a massive global cash-machine as a result.
Way #3 – Get Accurate Invoices Out Fast
The longer it takes for you to issue an invoice the slower the payment. This one needs no explaining, right?
Way #4 – Chase Those Receivables
Once you have sent your invoices – chase them with a system.
We use software that is incredibly friendly, powerful, and consistent. It is fully automated to chase our clients receivables for them.
This shortens the days your receivables are outstanding before becoming cash in the bank.
Way #5 – Only Sell to Credit Worthy Customers
It makes no sense to sell to someone who is a credit risk.
When they do not pay, you have lost more than the receivable.
As I have written about before, you lose the entire Gross Profit on that sale.
A bad debt of $1,000 is not $1,000. Take that and divide by your Gross Profit %.
$1,000/30% = $3,333.33.
To understand the philosophy behind this, please read this blog:
Top 7 Mistakes People Make in Managing Their Accounts Receivable
Way #6 – Take a Wee Bit Longer to Pay Your Payables
If you can, pay a wee bit more slowly.
Big companies and the government are notoriously slow payers to their vendors.
Develop a policy. Too many businesses just pay, well, whenever. The “whenever” is when a vendor screams loudly!
By all means, pay small vendors faster. For bigger ones, certainly pay a couple of days before due. Not sooner. BC Hydro will not need your money early. Pay it close to the due date.
Conclusion
Doing the above 6 things will lower (remember less is more) your cash conversion cycle.
Thanks for reading…
