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Imagine giving your company’s retirement plan a report card. Would it earn straight A’s in preparing your participants for their golden years? Or is it more of a C student who could really use some extra help after school? Benchmarking can tell you.

Mind the Basics

More than likely, you already use certain criteria to benchmark your plan’s performance using traditional measures such as:

• Fund investment performance relative to a peer group,
• Breadth of fund options,
• Benchmarked fees, and
• Participation rates and average deferral rates (including matching contributions).

These measures are all critical, but they’re only the beginning of the story. Add to that list helpful administrative features and functionality — including auto-enrollment and auto-escalation provisions, investment education, retirement planning, and forecasting tools. In general, the more, the better.

Don’t Overlook Useful Data

A sometimes-overlooked plan metric is the average account balance size. This matters for two reasons. First, it provides a first-pass look at whether participants are accumulating meaningful sums in their accounts. Naturally, you’ll need to look at that number in light of the age of your workforce and how long your plan has been in existence. Second, it affects recordkeeping fees — higher average account values generally translate into lower per-participant fees.

Knowing your plan asset growth rate is also helpful. Unless you have an older workforce and participants are retiring and rolling their fund balances into IRAs, look for a healthy overall asset growth rate, which incorporates both contribution rates and investment returns.

What’s a healthy rate? That’s a subjective assessment. You’ll need to examine it within the context of current financial markets. A plan with assets that shrank during the financial crisis about a decade ago could hardly be blamed for that pattern. Overall, however, you might hope to see annual asset growth of roughly 10%.

Keep Participants on Track

Ultimately, however, the success of a retirement plan isn’t measured by any one element, but by aggregating multiple data points to derive an “on track to retire” score. That is, how many of your plan participants have account values whose size and growth rate are sufficient to result in a realistic preretirement income replacement ratio, such as 85% or more?

It might not be possible to determine that number with precision. Such calculations at the participant level, sometimes performed by recordkeepers, involve sophisticated guesswork with respect to participants’ retirement ages and savings outside the retirement plan, as well as their income growth rates and the long-term rates of return on their investment accounts.

Ask for Help

Given the importance of strong retirement benefits in hiring and retaining the best employees, it’s worth your while to regularly benchmark your plan’s performance. For better or worse, doing so isn’t as simple as 2+2. Our firm can help you choose the relevant measures, gather the data, perform the calculations and, most important, determine whether your retirement plan is really making the grade.

Continuously generating positive cash flow is important for the growth of a business. Expenses are cash-outflow, while sales are cash-inflow. Cash inflows come from different sources like collections from customers, receipt of proceeds from a loan or interest on savings.

Below are four steps to improve your cash flow:

1. Timely Invoicing

If you are late in sending invoice to your customers, you are in effect financing their business and negatively impacting your business’ cash position. With timely invoicing, you will be able to collect timely and the better and faster the cash comes in. If you don’t have time to prepare invoice, outsource this task to your trusted bookkeeping firm. It is worth it.

 

2. Generate and Analyze Aging of Receivables Report

Be sure to monitor your accounts receivable aging report at the minimum, on a weekly basis.  Customers with aged receivables should be sent a reminder and follow-up with a phone call as needed.

 

3. Track Money

Managing cash flow is not only about getting or collecting more cash for your company. It also includes closely tracking the cash outflow or expenses incurred by the business and make sure these are necessary business expenses.

 

4. Review Vendor Costs

Incurring expenses is normal, but incurring without reviewing is not a wise choice. Businesses incur expenses to be able to provide the product or service. Identify which vendor will give you the greatest opportunity or most benefit. You can start off by renegotiating current pricing or leverage on volume discount, when appropriate.

 

If you need more help on how to improve your cash flow, contact us today at admin@fas-accountingsolutions.com or (832) – 437 – 0385.

We’ve reached the middle of the calendar year. So how are things going for your business? Conversationally you might say, “Pretty good.” But, analytically, can you put a number on how well you’re doing — or several numbers for that matter? You can if you choose and calculate the right key performance indicators (KPIs).

4 Common Indicators

There are a wide variety of KPIs to choose from. Here are four that can give you a solid snapshot of your midyear position:

1. Gross profit. This figure will tell you how much money you made after your manufacturing and selling costs were paid. It’s calculated by subtracting the cost of goods sold from your total revenue.
2. Current ratio. This ratio will help you gauge the strength of your cash flow. It’s calculated by dividing your current assets by your current liabilities.
3. Inventory turnover ratio. This ratio will warn you ahead of time if certain items are moving more slowly than they have in the past. It also will tell you how often these items are turned over. The ratio is calculated by dividing your cost of goods sold by your average inventory for the period.
4. Debt-to-equity ratio. This ratio will measure your company’s leverage, or how much debt is being used to finance your assets. It’s calculated by dividing your total liabilities by shareholder’s equity.

Customized KPIs

KPIs aren’t limited to widely used ratios. You can make up your own and apply them to any area of your business.

For example, let’s say the company’s goal is to improve its response time to customer complaints. Its KPI might be to provide an initial response to complaints within 24 hours, and to eventually resolve at least 80% of complaints to the customer’s satisfaction. You can track response times and document resolutions and eventually calculate this KPI.

As another example, say your business wants to improve its closing rate on sales leads. Its KPI could be to convert 50% of all qualified leads into customers over the next six months with the goal of raising this percentage to 60% next year.

Notice that these KPIs are both specific and measurable. Just saying that your company wants to “provide better customer service” or “close more sales” won’t produce a sound KPI.

Good Decisions

Midyear is the perfect time to stop, take a breath and objectively assess your company’s performance. This way, if things are really going well, you can determine precisely why and keep that momentum going. And if they’re not, you can figure out how you’re ailing and adjust your budget and objectives accordingly. Our firm can help you choose the KPIs that will provide the information you need, as well as help you apply that data to good business decisions.

Can your business become more profitable without venturing out of its comfort zone? Of course! However, adding new products or services may not be the best way for your business — or any company — to boost profits. Bottom-line potential may lie undiscovered in your existing operations. How can you find these “hidden” profits? Dig into every facet of your organization.

Develop a Profit Plan

You’ve probably written and perhaps even recently revised a business plan. And you’ve no doubt developed sales and marketing plans to present to investors and bankers. But have you taken the extra step of developing a profit plan?

A profit plan outlines your company’s profit potential and sets objectives for realizing those bottom-line improvements. Following traditional profit projections based on a previous quarter’s or previous year’s performance can limit you. Why? Because when your company reaches its budgeted sales goals or exceeds them, you may feel inclined to ease up for the rest of the year. Don’t just coast past your sales goals — roar past them and keep going.

Uncover hidden profit potential by developing a profit plan that includes a continuous incentive to improve. Set your sales goals high. Even if you don’t reach them, you’ll have the incentive to continue pushing for more sales right through year-end.

Ask the Right Questions

Among the most effective techniques for creating such a plan is to consider three critical questions. Answer them with, if necessary, brutal honesty to increase your chances of success. And pose the questions to your employees for their input, too. Their answers may reveal options you never considered. Here are the questions:

1. What does our company do best? Involve top management and brainstorm to answer this question. Identifying your core competencies should result in strategies that boost operations and uncover hidden profits.
2. What products or services should we eliminate? Nearly everyone in management has an answer to this question, but usually no one asks for it. When you lay out the tough answers on the table, you can often eliminate unprofitable activities and improve profits by adding or improving profitable ones.
3. Exactly who are our customers? You may be wasting time and money on marketing that doesn’t reach your most profitable customers. Analyzing your customers and prospects to better focus your marketing activities is a powerful way to cut waste and increase profits.

Get that Shovel Ready

Every business owner wishes his or her company could be more profitable, but how many undertake a concerted effort to uncover hidden profits? By pulling out that figurative shovel and digging into every aspect of your company, you may very well unearth profit opportunities your competitors are missing. We can help you conduct this self-examination, gather the data and crunch the resulting numbers.

Having a sound bookkeeping system is a foundation of the important information you’ll need to make strategic decisions. As a business owner, you are already challenged by a lot of responsibilities in running your business. Therefore, having a competent bookkeeper to take on the tedious job of keeping your books organized is a relief.

For a business owner, it may be hard for you to tell if your bookkeeper is taking the necessary actions to provide you with the financial information you need for your business.

To help you determine whether your bookkeeper is the right fit for your business, here are some of the signs you need to watch for:

 

1. They’re Always Behind on The Books and in Responding to You

As a business owner, you will need access to reports and other valuable information when making decisions. Given this, your bookkeeper should catch up with your business activities for you to stay on top of your business operation.

Maintaining clear communication with your bookkeeper is vital for your business. In order for your bookkeeper to get your point clearly, you both should be on the same page with regards to goals and expectations.  As a business owner, when you have questions, it is important that you get a timely response to your inquiries.

 

2. They Don’t Understand Basic Bookkeeping Terminologies

Encountering financial jargon is normal to a business owner. It is important to let your bookkeeper know that you don’t understand these terms. Good bookkeepers are happy to explain financial terms. But if your bookkeeper does not know the term as well, then it reflects the lack of competency.

 

3. They Fail to Provide Helpful Reports, Or They Don’t Know What A Report Means

You need timely reports in order for you to successfully grow your business or avoid business losses. These reports are powerful tools that provide you up to date information in the constantly changing world of business. It can help you point out your business’s strengths and weaknesses especially areas that need improvement. Having timely access to these reports allows you to act accordingly before it is too late to save your business to take advantage of business opportunities.  Therefore, if your bookkeeper is not providing you reliable financial information, then, your bookkeeper has failed to provide their fundamental service to your business.

 

4. They Don’t Let You See the Books

Sometimes bookkeepers get so protective over their work that they don’t want to show you or anyone else. As a business owner, you have the right to have access to your business’ financial records. If there is someone who is responsible for updating you of your business financials, it would be your bookkeeper.  If your bookkeeper hesitates to hand over your financial information then, you should be more cautious and take immediate action.

 

5. They Find Excuses or Pass the Blame

A good bookkeeper is willing to go over a routine task of determining trends to keeping your books up to date. This task requires your bookkeeper to be meticulous but making mistakes is inevitable. Finding an excuse or blaming others will not solve the problem but only delays the possible solution. As a business owner, you need a bookkeeper who is accountable for his work. If your bookkeeper makes mistakes, he should own and learn from it.

 

6. They Don’t Ask Questions

Many business owners may find it annoying to deal with questions. In any case, you need to give feedback to your bookkeeper to ensure that your business financial activities are accounted for properly. A good bookkeeper asks questions to understand how your business operates and analyze trends to identify opportunities to cut costs. Asking questions clarifies misunderstandings so if your bookkeeper never asks questions, then your bookkeeper most likely does not care about your business growth.

 

If you think it is time to find another bookkeeper to help with your business, contact us today at admin@fas-accountingsolutions.com or (832)-437-0385.

Companies tend to spend considerable time and resources training and upskilling their sales staff on how to handle existing customers. And this is, no doubt, a critical task. But don’t overlook the vast pool of individuals or entities that want to buy from you but just don’t know it yet. We’re talking about prospects.

Identifying and winning over a steady flow of new buyers can safeguard your business against sudden sales drops or, better yet, push its profitability to new heights. Here are some ideas for better targeting and converting your company’s sales prospects:

Continually improve lead generation.

Does your marketing department help you generate leads by doing things such as creating customer profiles for your products or services? If not, it’s probably time to create a database of prospects who may benefit from your products or services. Customer relationship management software can be of great help. When salespeople have a clear picture of a likely buyer, they’ll be able to better focus their efforts.

Use qualifications to avoid wasted sales calls.

The most valuable nonrecurring asset that any company possesses is time. Effective salespeople spend their time with prospects who are the most likely to buy from them. Four aspects of a worthy prospect include having:

• Clearly discernible and fulfillable needs,
• A readily available decision maker,
• Definitively assured creditworthiness, and
• A timely desire to buy.

Apply these qualifications, and perhaps others that you develop, to any person or entity with whom you’re considering doing business. If a sale appears highly unlikely, move on.

Develop effective questions.

When talking with prospects, your sales staff must know what draws buyers to your company. Sales staffers who make great presentations but don’t ask effective questions to find out about prospects’ needs are doomed to mediocrity.

They say the most effective salespeople spend 20% of their time talking and 80% listening. Whether these percentages are completely accurate is hard to say but, after making their initial pitch, good salespeople use their talking time to ask intelligent, insightful questions based on solid research into the prospect. Otherwise, they listen.

Devise solutions.

It may seem next to impossible to solve the challenges of someone you’ve never met. But that’s the ultimate challenge of targeting and winning over prospects. Your sales staff needs the ability to know — going in — how your product or service can solve a prospect’s problem or help him, her or that organization accomplish a goal. Without a clear offer of a solution, what motivation does a prospect have to spend money?

Customers are important — and it would be foolish to suggest they’re not. But remember, at one time, every one of your customers was a prospect that you won over. You’ve got to keep that up. Contact us for help quantifying your sales process so you can get a better idea of how to improve it.