Earlier this week Monica Glenny spoke at the Belvidere Chamber of Commerce Manufacturer's Appreciation Breakfast.
The topic: inventory management. 
Based on the discussion and amount of inquiries after the event, I think it's fair to say that inventory is something that is on everyone's mind.
During Business Clarity sessions, effective inventory management is often brought up by clients, and they're issues aren't isolated to just them.
Inventory is an issue that plagues businesses of all sizes and the same questions typically come up:
- Do we have accurate accounts of all products, materials, or parts?
- What is the physical location of each inventory item?
- What is the cost of producing each unit of product or service?
- Are we ordering appropriate quantities of inventory for future production and sales?
- Do we have any inventory that has been sitting on the shelves for years?
- Are we currently holding too much or too little inventory?
These are all questions that can be answered with the correct work flow process and by understanding inventory ratios
Because it is such a common pain point and has been a hot topic around here lately, we have pulled together some white papers that cover different aspects of inventory management.
Demand Planner
Inventory Turnover Ratio
Guide to Inventory Management
If you've ever wondered how to improve the performance of your accounting software to make it a little faster, a little more efficient, and a little more functional, there are four areas you should consider looking into.
Integrate modules
If your accounting modules are not "communicating", you may be missing out on some built-in efficiencies. For example, by integrating your accounts receivable and accounts payable modules with your bank reconciliation module, you will be able to quickly reconcile your bank statements each month.
Install or activate Crystal Reports
Crystal Reports is a report writer that comes bundled with many accounting packages. This powerful tool can help you write specialized reports using information from a variety of sources.
Customize data-entry screens
Many accounting packages allow data-entry screens to be customized for specific users. This type of tailoring can allow employees to enter data with minimal keystrokes or mouse clicks.
Run file maintenance periodically
File maintenance may be named differently in your accounting software. Other terminology may include "rebuild", "compact and repair", "re-index", or "synchronize". Whatever term your accounting software uses, the process of reorganizing your data files will increase the speed with which you are able to access them.
We've all been hit really hard by this winter weather, so what better way to relax than with a good book? We decided to take a break from our usual accounting basics and ERP software talk to compile a book list for you. Check out some of our favorites that made it to our 2010 Winter list
Make Today Count - John C. Maxwell (Center Street) This is the second time Maxwell has made it onto our reading list. (Check out the other time here). Maxwell's book discusses the importance of making the right decision in twelve critical areas of your life, or what he refers to as the "Daily Dozen." Maxwell suggests the path to being successful starts small with making the right choices on a daily basis.
The Narrative of the Life of Frederick Douglass -Frederick Douglass(Fall River Press) Considered a milestone in American history, The Narrative of the Life of Frederick Douglas chronicles the life of the famous abolitionist. Originally published only seven years after his escape from slavery, it became an instant success.
Common Sense -Thomas Paine (Penguin Classics) This is the pamphlet that started it all. First published in 1776, Common Sense challenged the authority of the British government and the royal monarchy. What made his writing so popular? He didn't try to wow the masses with philosophy, instead he wrote for his audience, not above them, impassioning them to want to make a change. It's still as inspiring today as it was nearly 250 years ago.
Embrace the Struggle- Zig Ziglar and Julie Ziglar Norman (Howard Books) Written after a traumatic fall that lead to a head injury Embrace the Struggle discusses the importance of optimism to get us through the hard times we all eventually face. Through his own stories and the stories of friends, Ziglar highlights "living life on life's terms."
Exploiting Chaos: 150 Ways to Spark Innovation During Times of Change- Jeremy Gutsche (Gotham Books) Hailed by many as one the best business books of 2009, Exploit Chaos takes readers on a visual journey to help ignite ideas for a successful business. Gutsche's writing style and graphics fit in perfectly with today's busy reader. Looking for inspiration to put these challenging times to good use? Check out this book.
The Findability Formula: The Easy, Non-Technical Approach to Serach Engine Marketing- Heather Lutze (John Wiley & Sons) Ever wonder how customers are thinking when they search for a product or service? Lutze's book helps marketers at all levels of experience re-energize their website to make them more profitable. Her step-by-step guide to Pay-Per-Click campaigns helps to make your company visible throughout the customers' buying cycle.
Your monthly business financial statements provide information about previous months' activities, but even if the statements look good, you can still bet more out of them.
Many business owners rely on monthly financial statements plus monthly financial ratios. Ratios can be prepared from information already in your accounting software. Following are tools for measuring particular aspects of your business:
Liquidity:
- Current ratio - current assets over current liabilities.
- Receivables turnover - how quickly customers pay.
- Inventory turnover - how long your inventory sits.
Profitability:
- Profit margin - profit generated by sales.
- Asset turnover - sales generated by assets.
- Return on assets - profit generated by assets.
Solvency:
- Debt to total assets - percent of assets owned by creditors.
- Interest coverage ratio - ability to pay interest.
- Cash debt coverage ratio - ability to pay long-term debt.
Program your accounting system to produce key ratios, review them monthly and get new insight on your business.
In talking with growing businesses, we're finding a common theme of data reentry. If your employees enter and re-enter sales information in multiple software programs, it can slow the sales process and allows for data entry errors. But how can you streamline the work flow management?
Answer:
Procedures within the sales process may be fragmented in various ways, for example:
- Sales inquiries are received by e-mail, telephone and fax
- Inquiries are maintained on a spreadsheet
- Price quotes are calculated on another spreadsheet
- Follow-ups are maintained on yet another spreadsheet
Most accounting software can maintain and integrate several procedures within a single program. The software applications can generate lead follow-up letters, check inventory levels and automatically reorder, forecast potential product demand and allow customers to enter orders through your Web site.
Streamline your software system. Your business will save money, and your sales force will become more productive.
What does scalability in terms of accounting software mean?
No, we are not referring to a) mountains or b) a career track. In the accounting technology world, "scalability" refers to how much or in what ways a particular accounting software package can be expanded. Usually, the term means a product's ability to grow without causing undue disruption of the processes associated with its use. "Scaling up" refers to expanding the size of the system, the number of users who can access the system, or the amount of information the system can handle. "Scaling out", on the other hand, means to increase the number or types of functions the system will process.
Let us give you some examples.
Scaling Up
Consider a person who has decided to start a pack and send company. When the business first opens, sales, accounts receivable, checkbook reconciliation, and accounts payable can be handled with a simple accounting package on a single computer. Only the owner of the business probably accesses the accounting system. As the business grows, additional computers are added and networked so employees, in addition to the owner, can work in the accounting system. Accounting packages with the ability to "scale up" are important for businesses that plan to add users to the company's current accounting functions.
Scaling Out
As our pack and send business grows, our business owner has hired several employees and needs to process payroll on the accounting system. Also, recognizing an opportunity in the marketplace, the business expands to include production of a special packaging material. Now the accounting system needs to be able to "scale out" and increase the functions it can perform. In this case, payroll, inventory management, and job costing modules could be helpful.
Small, privately owned companies have long been the basis for business growth in the U.S. The Small Business Administration estimates that companies with fewer than 100 employees drive 80% of the U.S. economy. DataCraft, Inc. applauds your efforts.
Many people use the accounting software in QuickBooks and forget the rest. For the most part, clients know how to use accounts receivable and accounts payable. What is often forgotten or misused in QuickBooks? That would be estimates, sales orders, sales reports and items (products and services you sell).
People misunderstand the importance of using estimates (bids, grants, proposals or quotes) for follow up and profit margin tracking. Sales people or customer service could be entering those estimates directly into QuickBooks. Worried about your employees messing up your software? Security controls can be established so that they can't go anywhere else in the software. Do you know what your profit margin is per job or are you simply making journal entries and "approximating" the profit margins? What was the estimated versus actual revenue and costs? Can you set up your company's selling workflow in the software? You should be able to.
Whether you sell products or services it is vital to set up items in QuickBooks. Why? The more detail you use for item lists the better your reports. Questions can be answered like ... Which item is my best source of income? Which items are my best sellers? Product costs and labor costs should all be set up and tracked in QuickBooks. Pricing? Set up your price levels and use those to your advantage to help control sales profit margins.
The Sales Order tool is excellent for managing partial shipments and sales order fulfillment for inventoried products and their interface to purchase orders, pick lists, and packing slips in QuickBooks.
A full or mini ERP implementation should take full advantage of the financial and business software your company purchased.
For the above metioned QuickBooks functions, it makes a difference which QuickBooks package you have ...
Now that 2010 is here, people are scrambling to figure out how they're going to keep their New Year's Resolutions. They picked out their personal resolutions - lose weight, quit smoking, start a hobby, save more, spend less... but what about New Year's resolutions for your business? How are you planning on taking what you learned in 2009 and putting it into practice for 2010 and beyond?
Coming up with goals for the New Year is great, it gives your business something to work towards, but don't let it stop there. Planning out how you're going to achieve those resolutions is just as important as the resolutions themselves. They don't always have to be grandiose tactics, sometimes it's the simple steps that keep you on track.
Let's say your resolution is to pay more attention to the financial health of your business- take what we like to call "5 at 5"
Every day at 5:00 (or whenever your day at the office is winding down) take five minutes to review your key performance indicators. Here are some possibilities:
- Day's cash receipts
- Days' cash disbursement
- Current ratio
- Accounts Receivable (A/R) aging
Work your tactics into your daily routine, and your resolutions won't be as lofty as they seem.
What are some of your business resolutions this year? Better yet, how do you plan on keeping them?
Don't be confused when you hear QuickBooks and ERP system in the same sentence. QuickBooks Enterprise is not to be confused with QuickBooks Pro and Premier.
The QuickBooks Enterprise Solution has been an affordable solution for our customers this year. It really is a mini ERP system that supports financial, manufacturing, supply chain, professional services, inventory, funding, time entry, and many other work flow processes. It has been a great economical solution for our customers' pocket books. The renewal fees are low and the software is affordable. QBES Brochure_10.pdf
(You recall that last week we referred to the definition of an ERP solution. )
The Intuit Solution Provider Program has enabled DataCraft to help grow local small and mid-market businesses through the sale, implementation and service of Intuit solutions in the manufacturing, distribution, professional services and not-for-profit industry segments. The implementations helped the owners of company's examine their accounting services, business work flow for the software and payroll service outsourcing.
The mistake that is made with QuickBooks Enterprise (QBES) is that companies hire an individual/company that is capable of installing the software but does not have QBES application set up and implementation knowledge; or the company/individual are accountants who may have some knowledge of set up but are lacking in the experience to fully understand the work flow of the software. Be careful!
Since 2008, DataCraft Inc. has been an Intuit®Solution Provider serving the Northern Illinois and Southern Wisconsin area. Intuit Inc., the publisher of QuickBooks®, is the leading provider of business and financial management solutions for small and mid-sized businesses, consumers and accounting professionals.
Next week .... what is overlooked in most QuickBook Enterprise implementations?
At the risk of sounding cliché, can you believe how fast this year flew by us?
We only have a few days until 2010 is in full swing. In just a few short days, companies will be faced with getting ready for the New year while wrapping up 2009.
The big question we get from area businesses it "How do I handle my accounting software?"
Many accounting packages allow a "preliminary closing" of last year's files while permitting transactions to be entered in the New Year. Here are some tips to help in the transition to the New Year:
- Back up last year's data files.
- Review your software's manual for year-end activities.
- Hold your prior year data files open until ALL transactions have been entered in the system - including entries for income taxes.
- Be cautious when entering transactions - verify that you are in the proper year.
- When in doubt, ask for help.
Closing out one year while trying to prepare for another doesn't have to be confusing. Just follow the steps above and you'll be able to close out 2009 while prospering in 2010.