Excel or paper = no system?

By Emily Coltman of AskM

Reading back through the Xero blog this morning, I found this post from Vivian Morresey, who says;
It’s amazing how many people have joined Xero recently, that actually come from ‘no system’ at all, ie shoebox, Excel or paper, and I’m sure that once people truly see that it can be done better, the better off we will all be.

By "Excel or paper", I'm guessing Vivian means accounting records kept either on an Excel spreadsheet or a manual cashbook. And I'd take issue with his/her statement that these are "no system".

I agree that spreadsheet records or a manual cashbook would probably only suit the very smallest of businesses. Elizabeth Jackson of Great Guns Marketing says in her book "Start Up!" that when she began her business, it was a one-woman band, and she kept her records on spreadsheets, before upgrading to QuickBooks when the business grew bigger.

For micro businesses, a neat well-kept set of records on Excel or a manual cashbook can be more than adequate. They've certainly done just fine for me in the past when it came to preparing year end accounts for those businesses.And, I keep my own records on an Excel spreadsheet :-)

In the next paragraph of his/her article, Vivian says;

Generally, it’s at the end of the (financial) year when all the real pain comes to the surface, such as collating all your receipts and trying to remember why you spent that money, and what was it for, do I claim the GST or not? Digging up your bank statements, and realising you’ve lost one, it won’t matter how far back, or how efficient the online bank statement export is, you know it will still miss the thing that you need. Finally, sorting through your invoices and realising that you haven’t been paid or worse, that you still have to pay someone. I could go on, but I think you get the point.

Now there I would say that (s)he is spot on.

Trying to go through a pile of receipts at year end and remember what every receipt was for is a nightmare. By then you won’t have the foggiest idea why you might have bought a train ticket to London . To visit a customer? To go to the theatre? To go to a lap-dance club? (I did know a business owner who tried to claim "entertaining" for his visits to an address in Soho ...)

It’s not just your accounting records that you need a good system to keep track of. What about employee expenses? Purchase orders? Credit control? The list is endless.

So, Excel and paper systems do most definitely still qualify as systems. Pick a system that’s the right size for your business and keep on top of your paperwork as it comes in. The day after your trip to London , you’ll remember what it was for. The following month, you probably won’t.

[P.S. My apologies for the use of "his/her" and "(s)he" in this article, but "Vivian" can be either a man's name or a woman's and I don't know whether Vivian at Xero is a man or a woman.]

Emily Coltman is a qualified Chartered Accountant who, after several years in practice, now runs her own business making bespoke screen-capture videos.

The Lean Office - Learning to see information with Data Flow Diagrams

by Andrew Nicholson of Nicholson Consultancy

Back in 1999 Mike Rother and John Shook produced a guide to Value Stream Mapping, with the memorable title “Learning to See”. A more accurate title might have been “Learning to see manufacturing”, since manufacturing is where Value Stream Maps originated (at Toyota, like many of the Lean tools and techniques), and where they are most effective. For some years now people have been applying the Lean principles to many other non-manufacturing processes, with varying degrees of success. It’s not difficult to understand why…

The world of operations and manufacturing deals largely with tangible items - materials, components, products that we can physically see, count and touch. When we need to look instead at information we quickly realise that we’re in a very different world - one where data can move at the speed of light and exist in more than one place simulaneously. It’s a bit like moving from the world of conventional physics to the world of quantum physics. We need a different approach when we want to see information.

Before we do this, let’s take a step back and consider what it is that we’re trying to achieve…

The starting point for many improvement programmes is to understand exactly how the current process works. We need the people who carry out the process to map it - “process mapping”. The idea is to create a visual model - a “cartoon” - so that everyone can see and understand what is going on. When we get together the right team - from all parts of the process - to map out the current way of doing things (the “current state” or “as is” situation) and then to study the process in detail, it’s usually very obvious to them where the problems lie. Given the right tools - and some expert help, of course - they can then improve or “re-engineer” the process, to create the “future state” or “to be” situation.

When it comes to manufacturing or other operations where we are processing tangible items - components, chemicals, food or other things that we can see, touch, count and measure - the preferred technique is Value Stream Mapping (VSM). VSM is a great tool to help the team visualise this type of operations. Unfortunately, it’s much less useful when it comes to the processing of information and data. We realise that we’re in a different world when we try to work with information - all of that intangible “stuff” that can move at the speed of light and be in more than one place at the same time. Then we realise that we’re using a hammer to drive a screw and that if we could find a screwdriver instead then maybe we’d find it a lot easier.

The first bit of good news is that the mapping tools are already out there, and have been for many years. They’re called Data Flow Diagrams (DFD’s). Put simply, people who work with products use Value Stream Maps and people who work with information use Data Flow Diagrams. The next bit of good news is that Data Flow Diagrams are much simpler and easier to use than Value Stream Maps. DFD’s can be drawn by using only four simple symbols.

So the next time you need to map out information-based processes, forget Value Stream Maps and instead use Data Flow Diagrams…

Andrew Nicholson is Managing Director of Nicholson Consultancy Limited, specialising in Business Strategy and Lean Thinking. Andrew contributes to the e-zine, "Better Today", with information for those who are interested in making improvements in their business. If you're interested in Lean Manufacturing, visit Andrew's blog, Manufacturing Times.

Is this the best use of my time?

by Glen Feechan

When launching the website for our new Spreadsheets by Email service, I started fiddling around designing a logo, knowing I wanted the website live in a couple of days. After a few attempts that looked far better in my head than they did when I tried to recreate them on the screen, I stopped short and realised that I was seriously undervaluing my time. I took a few minutes to find a service on the web, paid £19 on a credit card for next day delivery by email, and got on with everything else I needed to do.

Those of us who sell our services, often have a good idea of what our time is worth, but we still need to pull ourselves up quite regularly. It can be even harder when we are working within an organisation.

When I was back in practice, our charge-out rate was always three times our hourly pay-rate. Keeping timesheets, which were costed at this rate was a very useful reminder of the opportunity cost of any wasted time. Are you confident that the time you spend at work is worth three times what you are paid? Useful question, isn’t it?

It can be worthwhile, keeping a timesheet for a week, or even a day, and attempting to put a value on each job before comparing it to the cost of the time spent.
Areas where Finance Directors often spend time that can usually be done far more cost-effectively by someone else are:

l need to add value to our businesses., especially in the current economic climate where it is vitally important to add more value to your business than you cost them – so, don’t forget to keep asking yourself, “Is this the best use of my time?”

• Management Accounts preparation – the more you can automate and/or delegate this process, the better. The real value-added is in the review and decision-making based on the numbers;
• Technical tasks, e.g. setting up spreadsheets, fixing IT problems;
• Procurement – sitting in endless meetings comparing suppliers in areas where the possible savings far outweigh the time spent.
• Company vehicles – I have seen Finance Directors spend huge amounts of time sourcing vehicles, effectively acting as a used car trader. This is one of those areas where personal interests can really distort our priorities.

I’m sure you can think of plenty more.

Whenever you find yourself spending more than, say, an hour on something, just stop for a second and think, “Is this the best use of my time?”
If the answer is no, the next question you should ask is, “Who could do it better and cheaper?” Here are a few ideas:

• Another member of your department – we all know the benefits of delegation, so this route should always be considered.
• A member of another department – sometimes we spend ages on jobs to get information we need, when a slight variation of that information is already produced in another part of the business. Adding a few amendments to the way that information is collected, may add no work to the member of staff producing it, while removing the work altogether from your department.
• An outside supplier or freelancer – often these jobs are one-offs which mean there is an unproductive learning curve for whoever does it in the organisation. These are the times when it pays to go outside. It is very easy to find external suppliers via the internet. It can be very surprising the cost-savings available through this route. For example, within my own group of companies, we offer free procurement services and spreadsheets built from around £40/$60.

We all need to add value to our businesses., especially in the current economic climate where it is vitally important to add more value to your business than you cost them – so, don’t forget to keep asking yourself, “Is this the best use of my time?”

The right mindset for dealing with a difficult economy

I came across this video on Youtube and thought it might be a useful boost to anyone who is finding things difficult at the moment:




I hope this has inspired you.

Excel Tip: Reporting by year or month

Some very useful functions in Excel, particularly when reporting on transactional data, are the following date functions:

Year( ), Month( ) and Day( )

For each of these functions, you need only put the cell reference of a date field between the brackets and it returns the year, month (1-12) or day (1-31).

Using Year( ) and Month( ) in particular, you can add additional columns alongside a list of sales or other transactions to strip the year and month from the date column. This allows you to report by these in a pivot table or a simple Autofilter.

The easy way to cut your overheads (UK Companies)

The new FC Procurement website has been launched at www.fcprocurement.biz.

Here you can take advantage of savings from FC Procurement's wide range of suppliers at no cost, or risk, to you. An ideal way to beat the recession.

Simply register the spend categories in which you wish to save money and FC Procurement will endeavour to get you a saving (usually at least 10%, often greater). There is no charge for the service, and no obligation to follow the recommendations. If you like the saving offered, start using that supplier. FC Procurement are paid by the suppliers, ensuring that the service is entirely free to the client.

Take a look and see what you think.

Excel Management Reporting moves to London

My Advanced Management Reporting in Microsoft Excel Workshop has previously only been available in my native North East, however - due largely to a much increased web audience - I have decided to offer the next workshop in London, in May.

For full details, and to book online, please visit:

http://www.feechan.co.uk/index.htm?page=ExcelWorkshop

Excel Tip: Use any Excel function in seconds

People often ask me if there is an Excel function for what they are trying to do, or how to use a particular Excel function and, after answering their question, I always direct them to the Insert Function button (denoted by 'fx', see image to the right).

If you don't know what this button does, read on.

You do not need to be an Excel expert to use any of the advanced function commands in Excel as this little button helps you find the one you want and then guides you through using it.

There is a search facility to find the function you want or, if you prefer, you can browse categories of function. Each one shows you a short description, the format of the function and the arguments required.

When you have found the function you want to use, you do not need to type it in - the wizard does it for you, prompting you for each argument with a more detailed description of what is required at each stage.

I am a pretty advanced user but still find it very useful when I am looking for a formula to do something new, and I am constantly surprised by how many users of all levels don't realise this facility exists

So, if you have never used the 'fx' button, take a look, it will save you a lot of time and significantly increase the range of your Excel skills.

Interesting Forbes article on Social Media for senior management

Came across an interesting article from Forbes Magazine outlining the benefits and pitfalls of the use of social media by companies and their CEOs. Much of the article is also relevant to Finance Directors/CFOs:

http://www.forbes.com/2009/03/11/social-networking-executives-leadership-managing-facebook.html

I'd appreciate any thoughts on this subject from readers.