BECAUSE THAT’S WHERE THE MONEY IS!

 Bank Robber

My column today is not the first one regarding your Accounts Payable department, nor will it be the last.

If you are a new controller unfamiliar with managing an A/P department, you need to get educated as quickly as possible.

Several years ago I was faced with the same challenge and through a stroke of luck,  I found Mary S. Schaeffer.  To say that Mary is a leading expert in the U.S. on Accounts Payable is an understatement.  I have almost all of her books and several of her writings.  I couldn’t have managed a multi-million dollar A/P department without her.

Mary has just published a new book ‘Internal Controls in Accounts Payable’ which I would describe as everything you needed to know about A/P but were afraid to ask!

I know it’s an old joke but it cannot be repeated often enough……….when Willie Sutton, a famous bank robber of the 20’s and 30’s, was asked why he robbed banks…………..he replied ‘because that’s where the money is’.
As controller, it is your job to manage and eliminate as much risk of theft in A/P as you possibly can.  As I have said before, A/P is not about cutting checks and making payments.  It’s also about fending off all would-be crooks inside and outside your company.

If you want to preserve your career and your reputation, don’t let yourself and your company become a victim of A/P fraud…..AND  don’t lull yourself into a false sense of security believing  that no one in your A/P department is smart enough to pull it off.  I’m giving you a stern warning that first…….it doesn’t take a genius to pull it off and second……some A/P fraud is committed by top management.

We often hear Controllers and others say that they cannot maintain necessary Internal Controls because of segregation of duties, probably because A/P might be a one person department.  In Mary’s book she offers practical solutions to segregation of duties and other Internal Control practices.

You can order her book now  at http://www.amazon.com.

Below is an image of her newsletter you can subscribe to in order to stay abreast of all the new developments happening in this corner of the world.

 

Newsletter of AP-Now

Newsletter of AP-Now

 

 

THE FIVE REASONS EMPLOYEES WANT A RAISE….and what to do about it.

This weekend we filled up the car, bought groceries, visited our Sam’s club, and had lunch out with our family…..and our electric bill was due. Let’s start with our 20 gallon gas tank that sat on empty.  We filled up at Sam’s for around $72.  I spent $80 at Walmart and $40 at Publix to feed my husband and I for a week.  We both are  home all day working from our prospective computer desks.  We eat lunch and dinner at home six days a week.  Additionally,  there is the astronomical costs of home heating this past winter.  Many parts of the U.S. were hit hard and long this winter. I used to think nothing of buying a couple of New York strip steaks or ribeyes.  It seems like just yesterday I paid about $8 for two steaks.  Today, they run from $16 to $20 for two steaks.  Almost everything at the supermarket is sky high.  Milk is pushing $4.00 a gallon where we live. An employee working a 40 hour work week making $12.00 an hour for the last three years because your company has forgone raises in the recent economy is now stretched to survive from week to week.  How are they able to pay for food, gasoline and other car expenses like insurance, maintenance and installment loans?  What about the cost of heating?  If they have children in school, there is no end to the costs of clothes, school supplies and the constant, almost daily requests for money to be sent to school with the child. As the job market slightly improves and now with the Affordable Healthcare Act, employees don’t feel tied to their current employer simply because of healthcare coverage. Very soon  many employers are likely to find that there is going to be a steady stream of employees through their door asking for a raise.  No matter how lofty your position in the company, you are probably facing some of the same strains on your finances as your employees. What are some ways to help employees cut the costs of working:

  1. Before you hire the next employee in a department, see if other employees would like to work overtime.  There is a point beyond where overtime does become so expensive it could be cheaper to hire a part-time employee but until that point is reached, offer the overtime.
  2. Would it be possible for your company to convert to a 4 day 10 hour work week?  If not, could some employees work that schedule to save on transportation costs.
  3. Could you allow some employees to telecommute, even for one day a week?
  4. Can your company facilitate an office car pool schedule?
  5. Is there money to buy gasoline gift cards (Walmart works great for this) and hand them out for a job well done?
  6. If you require uniforms for some employees and it is deducted from their pay, consider picking up the cost of uniforms.
  7. For companies that provide company cars to sales forces & management, could you extend the replacement term and use the savings to increase pay for lower level and staff employees?
  8. Bring lunch into the office at least one day a week.  Call it ‘Thank You Pizza Day’ or whatever you think works.
  9. As a company, do you have any discount programs you can offer employees.  In our community, the Chamber of Commerce offered discount cards to use at various restaurants and businesses in the community.  As a member of the Chamber, all employees in the county received the discount cards.
  10. Remember that pay increases may very well lead to reduced turnover.  We all know how costly and time consuming it is to hire and train new employees.

As Controller of your company, I know you may not be in charge of pay raises for all, but if you have input for your own staff, plead their case and communicate their value as often as you can.  And make a serious effort to  implement as many of the above recommendations as possible.

THE ROAD TO RUIN…..

Below is an article I wrote as a guest columnist for NEXXTEP TECHNOLOGY in Valdosta, GA.  Every Controller must be in tune to and aware of the status of their company’s data protection.

 

THE ROAD TO RUIN ….Why Business Owners Must Protect Their Data

In my entire career, I’ve never had a corporate executive or business owner tell me they lost sleep over  losing their data.  After all, what’s insurance for anyway?  The downfall of such ignorance is that no matter how high your insurance payout no amount of money can buy back your lost data.

In an article published in 2011 for IDG News Service, the author, Grant Gross examines the impact of the September 11, 2001 terrorist attacks and the fact that ‘losses of technology and intellectual property on “such a large scale” were considered unlikely before 9/11.  What has often been quoted by various sources is that 25% of the companies located in the World Trade Center towers were never able to come back from the disaster because all of their data was gone and no viable backups existed.  What we also know is that backing up your data isn’t enough if your software vendor has performed significant customizations of your software.  In the aftermath of Hurricane Katrina in New Orleans, many companies suffered complete and total losses of their data due to flawed or non-existent backups and were forced out of business.

If you are thinking that it’s unlikely you will be the victim of a hurricane or a flood or even a terrorist attack, there are lots of reasons you can lose your data including employee sabotage (more common than you might think) electrical fires, viruses (I’ve been through that), etc.   Would you wait until you start having chest pains to think about writing a will?  I hope not.

From BCN News Services we are told the following:

  • 30% of all businesses that have a major fire go out of business within one year
  • 31% of PC Users have lost all of their files due to events beyond their control
  • 60% of companies that lose their data will shut down within 6 months of the disaster
  • 93% of companies that lost their data center for 10 days or more due to a disaster filed for bankruptcy within one year of the disaster.
  • Every week 140,000 hard drives crash in the United States (From: Mozy online backup)
  • 34% of companies fail to test their tape backups and of those that do, 77% have found tape back-up failures.

There are plenty more statistics but I won’t bore you with them.  The above statistics should be frightening enough.

Maybe you’re an attorney or a doctor.  The loss of client or patient files would be catastrosphic.  What if you got a call tomorrow night at 2:00 a.m. that your office building is on fire.  Lose your data, lose your Accounts Receivable………how easy would it be for you to construct your accounts receivables from memory?  Could you prove that the numbers were correct?

The history of backing up data has evolved from someone using a zip drive or magnetic tape for backup and then taking it home with them to cloud or offsite solutions.  The fail rate for tape and zip drives is considerable according to the above statistics.  Cloud and offsite storage solutions can provide substantial protection of your data.

Most of you reading this column are NEXXTEP customers.  But are you taking advantage of NEXXTEP’s backup solutions?  If you are making your own backups but not testing them, you are just going through the motions.  Have you really thought about how devastating it would be to lose all your data in a fire, tornado, flood or broken water main?  You can replace your servers with new boxes, but without restorable data you just have new empty boxes.  And, if you are running a single data center (all your equipment is in one building) you are highly vulnerable to massive data loss.

If you are a business owner with a significant investment of time and capital, stay away from those one-man shops that can be here today and gone tomorrow.  They are not much help if disaster recovery becomes an issue.

I have never really understood why so many business owners are so unconcerned about the spectre of data loss that hangs over them.  As we march towards the era of cloud solutions knowing that your data resides far from your business in a protected and safe environment must and should be in the forefront of all risk management practices.  The future of your business in which you have invested your life’s work depends on it.

WHO WILL YOU HIRE NEXT?

accountingstaffpost

 

 

In the Wall Street Journal’s Saturday ‘Review’ section, the dean of the Columbia Business School examines public policy and unemployment in the U.S.  Finally I have found someone who agrees with me that people are out of work because they don’t have the right skills.  That’s really what is meant by a ‘structural labor shift’.

But as a controller, how do you justify adding another person to your team (not replacing someone).   If you’re a small shop, a department of one or two, then that decision may be much more straightforward.  But adding to an accounting/finance department of eight or ten calls for a very in depth analysis of what everyone is doing and if they are operating at 100% or more.  Could you squeeze out one more hour daily of productivity per person in a ten person department?  If so, you have figuratively added another employee to your group.  Where do you start in conducting your own investigation.  Usually requests for more personnel come from your own staff.  Here’s my list:

 

PART ONE – OBSERVE THE FOLLOWING:

  • How much texting do you see going on
  • Taking personal phone calls
  • Visiting between employees  for purposes other than ‘teamwork’ (gossiping)
  • Tardiness or leaving early
  • Salaried exempt personnel putting in less than 40 hours per week
  • Excessive absences
  • Periods of ‘downtime’ due to lack of work for the employee

PART TWO – ASK YOURSELF THE FOLLOWING:

  • Do I call too many meetings?
  • Are my meetings too long and rambling?
  • Do I call too few meetings and therefore my employees are unmotivated?
  • Do I make sure my staff is challenged?
  • Am I too accessible?
  • Am I not accessible enough?
  • Am I causing low morale?
  • Do I advocate for the best resources available for my staff?

PART THREE – EVALUATE THE FOLLOWING:

  • Is everyone on my staff competent for their given responsibilities?
  • Are any of my direct reports contributing to low morale?
  • Do all staff members have an interest in receiving training related to their skill sets?
  • How old are the p.c.’s and printers that staff are using?
  • Are the working conditions favorable to productivity?
  • Has a key staff member left the company in the recent past?

I want to strongly emphasize that just because  there’s a large acquisition ahead or more work coming your department’s way, the first response should not be to hire additional permanent full time employees.  If a company continues its growth obviously there can come a time when there is no other option but to expand the labor force.  However, it should be considered carefully in your department as Controller or CFO.

Growth is a wonderful thing.  But growth with no added incremental overhead (fixed or variable) can be an elusive goal…. one that may be achievable if there is still best practices and better personnel management yet to be achieved.

Finally, if a staff member(s) comes to you about needing more people in the department, tell them to submit a proposal to you which can be worked on jointly.  Make sure they outline the reasons WHY the current staff is unable to handle the workload and the reasons WHY another person should be hired.

 

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