It’s always good practice to review your bank statements and bank reconciliations each month for errors or fraud. A good fraudster would commit the fraud on the first of the month and be long gone by the time you open the bank statement. Mint.com will bring each transaction to your computer, phone or tablet for a real time review.

Take it a step further, if you are using online bill pay with your bank, then the vendors will appear on the Mint.com report, not just the check number. Make sure you have proper approval controls if you are using bill pay.

This is a great tool for any small business and especially for small staff strapped nonprofits. Board chairs and treasurers can monitor the activity real time and ask questions as needed to keep everyone on their toes.

Remember, image is everything, make your control presence known.

www.mint.com  Set up an account and enter your business banking login information. No, Mint doesn’t pay me. Maybe some day.

Be careful out there.

Harvey

]]> http://www.metrometro.com/mma-blog/?feed=rss2&p=44 0 http://www.metrometro.com/mma-blog/?p=30 http://www.metrometro.com/mma-blog/?p=30#comments Wed, 07 Mar 2012 14:32:11 +0000 admin http://www.metrometro.com/mma-blog/?p=30 Continue reading →]]> I can’t tell you how many times I hear “I’m just not good with numbers” from our clients. in Excel. Run a profit and loss report by month for any period you want, let’s say January – December 2012. Click the collapse button. Export into Excel.

This excel sheet becomes your data sheet. Add a sheet to become your graph. Now, you have to have a basic understanding of graphing in Excel to pull this off. If you don’t, ask someone younger than you, all the kids know this stuff. In the graph below, I selected 4 categories from this restaurant profit and loss statement. Sales, cost of sales, labor costs operating expenses and operating income. I like to see how they all move together month to month. Ideally, sales and cost of sales should move together, labor costs maybe a little bit flatter, and operating expenses the flattest. Of course, we’d all like to see operating income stay above the zero line, but in this case, it didn’t.

Maybe you want to see product mix, then select your food sales and bar sales as data sets.

If you are a seasonal business, consider graphing your trailing twelve months (TTM) which is a smoother indicator without all of the ups and downs of a month to month chart.

If you want any help setting up these graph’s, let me know. Have fun. Don’t get addicted.

Be careful out there,

Harvey

“Work ON your business, not IN your business”

“Owners should sign all checks”

“Hire good people and let them do their work”

“Delegate to win.”

You’ve heard all this and more. It’s confusing.

Here’s a checklist of what I think are the minimum duties that any business owner should perform each month. This list is a little dangerous because it’s not going to be all inclusive. Your business may require more and some of these may not apply. The point is, make your list, check it each month (twice if you’re santa claus) and make sure that you maintain a presence in your financial controls.

Open all bank statements and review for irregularities. All businesses must receive cleared checks, either pictures or actual checks and those checks need to be reviewed by the owner. Consider having the bank statements mailed to your home instead of your office.

Review (or prepare) all bank reconciliations. Pay attention to old checks and old deposits that have not cleared the bank. Pay attention to any journal entries that appear on the bank reconciliation.

Scan your cash accounts’ general ledger(s). Every accounting system will allow you to review all of the transactions in a month. Pay special attention to journal entries and adjustments. You should have few or no journal entries made to your cash accounts. If you see journal entries, make sure you understand why they were made.

Go through the mail yourself. It’s ironic that opening mail is often left to the bottom of the totem pole when in fact it tells more about your business than maybe anything else. This is a task that some of our most successful clients never give up. If you can’t do it every day, make sure you do it enough to get a feel for what’s going on.

Review accounts receivable balances each month. Specifically, review your aging report for older items. Also, review all credit memos issued during the month and review the general ledger for credit memos. Your rank and file employees should not be able to enter a credit memo into your accounting system. Also, monitor your account called Allowance for Doubtful Accounts, you want to know when and why your company has written off a bad receivable.

Sign your checks. Think really hard before giving up this task. This is your last line of defense against improper payments be it intentional or unintentional. Never use a signature stamp.

Review your payroll journals.

Compare your budget to actual. Here’s one you may not be doing. If you don’t have a budget, get one. It can be a 2 hour process. I’ll help if you like. Then, once you have the budget, you can compare actual to budget and review and investigate differences. See the title of this paper, MINIMUM Owner Participation. Don’t leave this one out.

Stay Involved, make it clear that fraud controls exist and that you are involved. Image is everything. If you promote an environment without controls, your employees will find the weaknesses. Times are tough, your employees have financial challenges.

Let’s be careful out there.

Harvey

I love Mint.com, have you seen it?

 I’ve been a Quicken user since it was introduced.  My whole life is on Quicken.  My friend, Pamela Bolanis at Merrill Lynch told me to check out www.Mint.com and I did.  It’s awesome.  I was set up in less than 30 minutes.

Mint.com tracks all of your bank accounts, investment accounts, credit cards, mortgages, other assets and loans and even the approximate value of your real estate through Zillow.  All real time, updated constantly.  When a check clears your bank, you see it.  When a charge posts to your credit card you see it.  It’s really slick.

 Mint.com also allows for budgeting and goal setting.  It will tell you that you’re spending too much at Starbucks or that you’re not saving enough for retirement.

When you are setting up your personal balance sheet and goals, consider that you will have 3 categories of retirement assets:

1.       Nonqualified cash and investments

2.       Qualified cash and investments

3.       Capital items

Let’s say you have $1million in each.  Nonqualified cash and investments are savings and investments that you’ve already paid income tax on.  This is your general savings and brokerage account that is not inside your IRA or retirement accounts.  Qualified cash and investments are your IRAs, 401(k)s and other retirement plan assets and Capital Items are your investment real estate,  privately owned businesses and other non cash assets.

Since each will be taxed differently, $1million in each won’t add up to $3million.  The Nonqualified savings won’t be taxed, you can draw that whenever you like so that’s really worth $1mil.  The Qualified accounts will be taxed at ordinary income rates, as high as 45% or more so your $1 mil is worth about $500k and your capital items will be taxed at whatever the capital gain income tax rate is when they are sold.  Hopefully no more than 25% leaving you with $750k.  So, you’ll see, that retirement asset math is a bit different than regular math. 

When you’re setting up your personal balance sheet make sure you create a liability account for your Qualified assets and your Capital items.  This will give you a better sense of what your retirement assets really are.

Of course, we’re always happy to help.  Please let me know what you think of Mint.com. 

Have fun,

Harvey.