Accounting Tasks for the business

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Accounting Tasks for the business

Financial Planning

A good PDR manager will be in control of all aspects of the business as often decisions have to be made spontaneously: the length of leases to take on buildings in the storm zone, what capital is available and how much to invest, how many PDR technicians to call in, the average cost per vehicle (earnings), accommodation requirements, advertising and bearing in mind tax expenses.

The software chosen (spreadsheet, database, or the commercial software) to do the financials is designed to store much if not all the appropriate data and generate reports. Commercial software should be consistent to producing reports for BAS statements In order to remain on top of financials, spending should be regularly reviewed and adjusted in order to ensure that the budget does not blow out.

Debtors

During the storm, the software becomes an especially useful tool for management of quotations, invoicing, receipts, bookings, parts pricing and ordering, banking and reports on the financial position. What often is cause for concern in any business including PDR are monitoring debtors who pay monthly, those who don’t pay on time or make excuses why they will pay down the track or why they couldn’t pay! This can be very stressful and there needs to be a system in place or status on the software package to indicate the details: contact address and phone details, the amount and date payment was initially due, and monitoring on how many letters were sent in chasing up payment. In most cases, courteous letters may prompt the payment required. Occasionally, there are businesses who don’t pay and continue to avoid contact or payment.

There are debt collecting agencies who can act on your behalf but this has to be the last resort. They can cost money and it has to be a worthwhile amount before such agencies are used. Furthermore, once agencies to recover payments are introduced, the friendly partnership with this party is likely going to be severed. One strategy is to introduce payment by instalments but ensure this is a contractual agreement. Once again, a separate status on the software or whatever system to monitor payments made. Please be aware some companies make the first payment and then cease. Court action can be considered on the last resort when trying to recover significant payments of the order of $100,000 or greater for instance. Please bear in mind this is your money and in PDR, contractors (PDR technicians) want to receive some payment usually fairly promptly to keep the peace. So this outstanding money is required. What is unfortunate is the money owing is paid to them by insurance companies which rightfully yours. Companies often use this money to offset their own debts!

Creditors

Beside the PDR Technician contractors, there are often other creditors to be paid and this should be done promptly within a monthly cycle. Parts, unless with a regular account, are paid promptly. There are companies that provide online sales of parts Australia wide and having an account with one distributer can be advantage from this point of view allowing for fairly consistent accounting. this does come at a price though as often they are not the least expensive.

Other creditors are building lease payments and accommodation, equipment hire, and last if not least GST which need to be paid quarterly.

Accounts are usually required to be in two names and reconciliations should be carried out regularly if not daily! The employees within the company or partners in the business need to be fairly compensated in terms of payments but initially, most partners tend to reduce the amount paid out to grow the business and be in a better position in terms of capital available for future storm events.

Some of the larger PDR companies also hire staff such as for data entry and sub management. Because of the seasonal nature of PDR in general, most workers are contractors. However, if permanent workers are hired, this amplifies the responsibilities of management as suddenly it may include paying wages, payroll tax, leave entitlements, fringe benefits, superannuation and enforcing all the applicable regulations. It is a requirement by law to not allow too much accrued leave but it is probably good practice to not have excessive amounts to pay at one time (perhaps encourage leave entitlements during quiet periods). Although accountants will monitor these, it is a good idea to monitor regardless. You may require to have software that manage the financial components eg MYOB. In order to uncover any financial issues within the financial quarters, accountants will also assist in ensuring timely output of cash flow statements, profit loss statement and the overall account balance.

Financial Business Planning

Planning your business’s future is not an easy task but having some financial and business plan in place more as a guide of best practices perhaps is better than no plan at all. After the first one to three years, the nervous shackles are off, and if you have survived the first major errors, you will probably survive in the long run. You have a good idea of the typical costs and should have more capital to draw from in the next year. Remember the stronger you are financially, the more attractive your business looks for investors, partnerships or proposals.

In checking your financial status, there are various variables or criteria that can be analysed prior to planning. In general, you are checking the performance of the business and possible outcomes. Such criteria could include:

– the productivity of PDR technicians,

– how many vehicles repaired per day as compared to generated revenue,

– the effectiveness of advertising,

– best and worst case scenario analyses in case major contracts are lost,

– projected targets

– break even points (particularly important when heading into any storm)

– projected volume of work that can be handled by any manager

– the what-if questions, if changes occur such as staff moving on, insufficient PDR technicians

– profit and loss analysis from the previous storm and/or financial year that may provide a realistic projection depicted by the variance analysis

– cash flow forecasts

Partnerships, Mutual Agreements and Suppliers

Although partnerships are a way of consolidating contracts, it is always important to ensure that there is now slackening of performance from the partner. If so, the managers’ task is have meeting to discuss the issues and strategies that may help solve them. Sometimes the partnership or mutual agreement may be only applicable with one storm or even with one client such as a car yard. Regular monitoring of the work flow and quality is required to ensure that the agreements of the associated client’s conditions have been met. If the situation changes, it is best to be upfront and deal with the issue promptly rather than let things get out of hand.

In terms of suppliers, good suppliers whether it be pricing or service are important to maintain and extending contracts me be in order. If pricing are reviewed to be above the value found elsewhere, they may be able to match just to keep you as the customer.

TechnologicScreen1Largeal Changes

With technology changing rapidly (software, hardware and communication), the impact of some changes can be significant in that it could reduce overheads and improve performance. For instance, invoicing is now either sent via email using specific formats and the fax is almost a thing of the past. The commercial software have systems in place that generate invoices with simple input and the press of a button from data or already entered. Systems such as Estimage, ORM etc associated with the insurance companies allow for relatively rapid file transfer reducing processing times.

Discussing technological systems with partners or clients is essential prior to the rush period. All the loose ends and systems that need to be put in place should be dealt with and tested by passing through virtual jobs throughout the system if possible or perhaps a real job passed through the whole process and monitored for any issues.

hero-features-dashboard-d93d03There are software packages apart from the commercial industry specific software that deal with the various types of analysis discussed in this section. Although I am unaware of its capabilities, Cashwhiz is one example of such software  http://www.cashwhiz.com.au/ Screen2Large

 

Human Resources Strategies

PDR is an industry where workers often get lucky via some connection rather than get into the field via education. So generally speaking PDR technicians are the type of characters that can make unusual choices, play games on each other, and so forth. Unfortunately, some of the best technicians have for some reason or other drinking problems (or even drug abuse). There has to be strict polices in place ensuring that pleasure and work do not mix. What seems like harmless humorous actions by some technicians may not be as humorous to others. Let’s face it, technicians can often spread incorrect messages or rumours to other technicians about what they earn and can get jealous on how many vehicles or what percentage others may earn. PDR technicians also do not like others lurking and watching them. There is also the unknown when new technicians come and work given it is a contract based career. One mistake or action by a PDR technician can cost a contract.

A manager requires to be aware of these issues and the code and conduct requires to be in place from the beginning. They need to be consistent amongst their workers and also be aware of what they are doing. Never leave the PDR premises alone with unknown PDR technicians. Nevertheless, besides being firm about the code of conduct, they need to stress safety and quality within the workplace. Verbal conditions are fine so long as the technicians know what is expected of them but ideally written contracts are easier to enforce. Most of all, have a sense of humour as this industry more than most thrives on trust. And it is essential that PDR technicians get paid promptly as they often settle down quickly with payment. If decisions require to be made that may impact payments to the PDR technicians to get the contract, it is important to involve the technicians in the decision process.