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The Development Conundrum

Development Conundrum
I recently heard from a nonprofit leader who wished to hire a Development professional but was held back by a struggling financial status. However, the leader didn’t have enough time to devote to development activities personally.
It is worth exploring your organization’s financial status…exploring whether you can free up the capital to bring in a development manager or director.
From the perspective of the accounting department, common reasons why nonprofit organizations suffer financially include:
GRANTS/EXPENSES
  • overspending of grants >>> arises from no one giving you real-time financial clarity to manage grant spending
  • grant expenditures being denied by the grantor >>> arises from you not receiving receipts and other expense documentation in real time
  • portions of salaries being denied by the grantor >>> arises from no one knowing how to (or having the time to) allocate salaries and document the rationale for that
  • salaries unreimbursed by the grantor >>> arises from no one knowing how to efficiently create a clear, formal method for allocating salaries to grants
GRANTS/INCOME
  • grant money coming in too many days after grant funds were spent >>> arises from no one with the time to place follow-up calls to grantors
  • invoices to grantors sent out too many days after the grant funds were spent >>> arises from not having the information that you need in real-time, such as expenses incurred during the month
DAILY SPENDING
  • unauthorized spending >>> arises from lack of policies and/or not keeping the conversation of fiscal responsibility alive and vibrant with employees with organizational credit/debit cards, and/or lack of real-time monitoring of spending
  • overspending >>> arises from lack of real-time clarity regarding how much is available
PLEDGES
  • not materializing >>> arises from no technology being used to automate payments, pledges receivable not being tracked anywhere, and/or no one tasked with following up on pledges receivable
RISK
  • don’t feel like you’re getting an ROI from each team member >>> arises from misaligning salary structure and salary level with job duties/job performance/job level
  • theft >>> arises from weak internal controls, which are policies and procedures designed
TIME
  • Good people are not fulfilling their roles >>> arises from higher-paid employees spending time on tasks that could be delegated to a team member who costs less…or delegated to technology…or avoided altogether if steps hadn’t been skipped or done incorrectly in a process
  • Overpaying hourly employees >>> arises from weak internal controls over documentation of the number of hours actually worked

Accounting Geek Alert! How to create a consolidation template

How to Create a Consolidation Template
[1] As a one-time exercise, create the financial statements the way you want to see them as a final product. Formatting, line items, headers.
[2] Export the trial balances of each company to Excel. In one separate tab but in the same workbook as your financial statements, paste them one above the next on the same tab.
[3] Create a column called DR (CR) with a formula that takes whatever is in the Debit columns and subtracts whatever is in the Credit column.
[4] Create a column called B/S Account and link to the desired line item on the Balance Sheet. I recommend using absolute references to save time. Remember that unless you have a Net Income line item on your B/S, you’ll want to map all revenue, COGS, and Expenses accounts to Retained Earnings in this column.
[5] Create a column called P&L Account and link to the desired line item on the Profit & Loss statement (appropriate accounts only)
[6] Don’t map the intercompany accounts or other accounts that need to be eliminated.
[7] On the face of the financial statements, where the numbers should show up, use the SUMIF function to pull the figures from the Trial Balance tab. Reference the entire column (i.e. ‘Trial Balance’!D:D) rather than a limited range of cells.
[8] Create an Error Trapping tab and enter formulas to confirm the obvious, such as Total Assets per B/S, Total Liabilities + Equity per B/S, Variance = 0.
Special note: If you want to present financials that are rounded to the nearest whole number, then in step [3] above, use the ROUND function to do so, and add a line item to each Trial Balance called Rounding, add a formula to balance the Trial Balance for that entity, and map it to an account of your choice. I have learned to choose A/P.
When it’s time to run financials again, just export a fresh Trial Balance. Make sure the T/B structure hasn’t changed (or insert/delete the occasional row) and then simply copy and paste the new amounts over the old ones.

Getting ‘Wow!’ insights in organizations with construction activities

organization with construction activities
Tracking categories. One of the glorious features of Xero is the ability to easily choose a batch of tracking categories. For example:
Tracking Category 1 = Property
Set up the names in the Property tracking category with a Site: Unit structure
Site A: Unit 01
Site A: Unit 02
Site A: Unit 03
etc.
and then
Site B: Unit 10
and so on.
When you run an income statement, you can show all of the apartments sides by side for a given site, or you can select Edit Layout, Column, Property, and then type Site A in the filter box. All of the tracking categories that begin with Site A will come up, and you can quickly combine them into a single column by checking them all off.
All this, and you still have Tracking Category 2 for some other way to slice and dice the organization. Perhaps by city or region, or General Contractor used, to see how profitability differs across cities, regions, or General Contractors.

Do members of a team want a guided approach to complete a project, or be left to their own creativity?

Do team members want a guided approach?

Be absolutely, crystal clear on the problem to be solved by the project.

Be absolutely, crystal clear on what sorts of things matter and don’t matter on the project and what is flexible/not flexible, for example:

  • timeline
  • method for solving the problem
  • technologies used
  • processes used
  • people involved
  • team-level communication channel & schedule
  • what, specifically, constitutes success

Be absolutely, crystal clear on your level of commitment and your “why.”

Then let each team member know that you are (or whoever is) available for whatever degree of support they require to get the job done and enhance their own value.

If a team member wants checklists, provide checklists.

If a team member wants to be left alone to do the work with latitude and independence, provide a deadline and a problem to solve.

If a team member wants daily meetings, provide daily meetings.

If a team member wants to you to be available via IM, be available via IM.

If a team member wants you to review completed milestones, set up a system to be notified of those milestones.

Is it worth it to track inventory quantities, not just dollars?

 

How much money do you stand ready to make & keep from this data?
Uses of quantity-specific inventory information include:
* prevention & detection of theft and loss
* guard against being overcharged by the supplier
* highest ROI on giving of samples
* shaping of messaging & promotion strategy to focus on highest-margin products, not just highest or lowest sale price
* cash flow management from clarity on reorder points so disbursements aren’t accelerated, or on the other end of the spectrum, she isn’t left without product when a customer needs it
* prevention of losses when she has too much of a non-selling or slow-moving product and has to let it go at a fire sale
* once her business is large enough such that she has to file on the accrual basis, you can help her to make sure she’s not paying too much in income taxes (or too little and then pay extra for it later with money and time)
* assist in setting sales targets & plans for achieving those targets
Track.
Profit.
Repeat.

Five Ways to Ring in 2018

Happy new year! January is the month of new beginnings and a perfect time to strategize about projects that will boost your business prosperity. Here are five ideas to get you thinking about new beginnings for your business in 2018.

1.Learn new technology.

Every year, tens of thousands of new online software applications are invented that will save us time and money. Learning at least one new app will keep us sharp and hopefully improve our business. There are many to choose from, and one way to narrow it down is to find one that will help you do your job better.

Look for an app that supports your administrative work, such as a new phone system, video conferencing, scheduling, cloud storage, shipping, document management, or data entry automation. Or you might have a need for apps in marketing and sales, such as social media, customer relationship managers, email list management, or web applications. If you’re not sure where to look, ask your friends what has saved them the most time.

2.Upgrade your accounting system.

If your accounting system is not updated to the current version, it may be time to perform the upgrade. Check with us for advice on the current version and any new features that you can benefit from.

3. Develop your 2018 prosperity plan.

The word “budget” has somewhat of a negative connotation, but a prosperity plan sounds like fun. They are the same, of course, and the idea is to determine what goals you want to reach so that you have a clear path to making your desired prosperity a reality.

4. Create a theme or mantra.

Want to stay more focused in 2018? A theme or mantra can remind you to stay on track with a particular project or goal. Brainstorm a phrase that will guide you in 2018. Here are some examples:

  • Customer service excellence
  • More me-time
  • Enthusiastic, engaged employees
  • Expanding digital presence
  • Going green
  • A prosperous new product line

5. Delegate something that isn’t getting done.

One way to feel amazingly rejuvenated and re-energized about your business is to give someone an item that’s been on your to-do list for far too long. It magically gets done right before your eyes!

We’re wishing you a most prosperous and happy new year.

How can a startup nonprofit create a budget needed to apply for its first grant?

 

A budget isn’t a guarantee. It’s a plan, a target.
Just because your nonprofit is a startup doesn’t mean you can’t have a budget.
Even for long-running nonprofits, no one can say what the future is. You don’t have to have guaranteed revenues in order to have a budget.
As you learn more about what revenue streams are available to you and what is available for your mission as a result, consider designing a target revenue portfolio.
Consider how some revenue sources come with rules about how to use the money (i.e. grants) and some don’t (individual contributions). Consider that come with easily definable costs (i.e. product sales) and some have costs that are less easily definable (i.e. sponsorships).
Use that information to shape up the expense side of your budget that corresponds to your revenue portfolio.
Then you’ll have your budget.

Accepting a Payment Plan from a Donor or Customer

 

If you accept a payment plan in any situation for any reason, bear in mind that risk is something you can play with and not just be subject to.
A payment plan introduces risk into the equation, because it’s replacing a certainty with an uncertainty.
So if you do ever accept a payment plan, propose terms that then reduce your organization’s uncertainty and/or compensate for the additional uncertainty.
Examples:
* AutoPay only
* Weekly payments, not monthly payments
* Pull from their bank account instead of the credit card account – lower fees for your organization – and only pull from the cc account if the bank account pull bounces, and of course if so then include that fee to get reimbursed plus a surcharge to cover the cc fees (check your state’s laws on this).
* Charge a financing fee
In my experience, a lot of organizations suffer for lack of training about how to identify and counter financial risks. My life certainly suffered for it. I did what I knew…and when I knew better, I did better.

How do you deal with a difficult co-worker?

 

Although it might seem strange to see this topic on a CFO blog, knowing why it’s here might might place it in context and help this to be more valuable to my readers.
[1] In smaller organizations, the Human Resource function often falls under the Office of the CFO. There is intersection with both compensation and compliance.
[2] We looove efficiency. And there’s nothing that will take a bite out of organizational efficiency than human drama. So those of us who fulfill the CFO role for a combo of hard & soft skills and not just for being geekier than everyone else are really great at this stuff.
How do you deal with a difficult co-worker?
Language is our access to high performance. Language is access to reaching our potential. Language shapes how we view the world and what actions we take.
The question has two powerful words in it and a powerful assumption, and none of these lead to making mission and none of them lead to joy.
There is no winning answer to the question as asked.
The second word (stay with me) is ‘difficult.’
The assumption is that a person is fixed and unchangeable, and this assumption is revealed by the language ‘a difficult co-worker.’
The first word is “deal.” If I do not have the ability to create relatedness with others and create transformation in relationships and in performance, I will need to ‘deal’ with people for the rest of my life.
As long as I continue to believe that a co-worker IS difficult, as if that were a fact, I will never be successful in ‘dealing’ with that person.
The key is to see the world as my co-worker sees it. To be able to describe life, work, mission, a challenge as my co-worker would use language to say it.
Once I can do that, and my co-worker knows that I can do that, change is possible.
Does my co-worker need to change?
No such assumption.
Miracles come out of communication like this. Possible results include:
* I use language more effectively because I can communicate in the way that my co-worker needs
* My co-worker creates a new relationship with life, with work, with mission, with me
* A loyalty is created between us, because I cared to get someone else’s world. Loyalty and high performance go hand in hand.
This list is only the beginning of what happens when in the face of ‘deal,’ ‘difficult,’ and an assumption of unchangeability we instead create relatedness and transformation.
Author Richard Bach wrote: “When you ask the question properly it answers itself.”
The only way to ask the real question obviates the need for the question because it illuminates the solution.
“How do you create transformation in a professional relationship with someone whom you currently do not know very well?”

How to Write Your Mission Statement

Mission statements are not just for large corporations. As an owner of a small business, you can benefit from going through the exercise of writing your mission statement. It can not only re-connect you with your “why,” it can also communicate an important part of your business to all of your stakeholders.

What Is a Mission Statement?

A mission statement answers the question “What impact will you have on the world?” It’s your core purpose, your reason for being.

Here are a couple of mission statement examples from large companies you’ve probably heard of:

Harley-Davidson: We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.

Darden Restaurants:  To nourish and delight everyone we serve.

FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.

Ford: We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world.

Levi-Strauss: People love our clothes and trust our company. We will market the most appealing and widely worn casual clothing in the world. We will clothe the world.

At Microsoft, we work to help people and businesses throughout the world realize their full potential. This is our mission. Everything we do reflects this mission and the values that make it possible.

NIKE: To bring inspiration and innovation to every athlete in the world.

The mission of The Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.

A mission statement differs from a vision statement because a vision statement communicates what the company wants to be.

Ask yourself what your business’s core purpose is.  What is the impact you want to have on the world?  Once you know, you’ll be able to write your own mission statement.

Sharing Your Mission Statement

There are many ways you can share you mission statement.

  • Make sure your employees know it.
  • Display it in the About section of your website.
  • Add it to your marketing material where appropriate.
  • Use it when recruiting for new employees.
  • If it’s short, use it on promotional items such as mugs and t-shirts.
  • Frame it and hang it in your office.
  • Mention it in speeches you give.

A mission statement is something to be proud of and something that should make people smile. Yours should motivate and energize you. Once you’ve written yours or if you already have one, be sure to share it with us.

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