October 2008

	Welcome…
	What is your gut feel?
	Debtor Follow Up
	Featured Client

Our Services

• Accounting Systems Diagnostics
• Management Accounting
• Business Bookkeeping
• New Business Start-up Packages
• Computerised or manual accounting systems
• Transfer of manual systems onto MYOB or Quickbooks
• One-on-one accounts & MYOB training
• Cash flow projection and management
• Budget preparation
• Financial statements including profit & loss and balance sheet
• Regular forums to discuss financial performance & position
• Regular contact with your accountant to provide update on progress
• Accounts payable and receivable
• Outstanding Accounts Follow-up
• Payroll
• Bank reconciliations
• GST : BAS : IAS (preparation & lodgement arranged)
• Clearing backlog of work and making sense of things when no one else can
• Aligning accounts & business systems for greater efficiency
• Preparation of year end files and working papers for submission to your accountant

Welcome…

It has been some time since our initial newsletter, however we have an extremely valid reason. For the best part of this year I have been assisting a client’s accounts department recover from a serious case of financial fraud and mess beyond comprehension. This business engaged our services to sort out the accounts mess and investigate their suspicions of money going missing. It has now come to light that they have lost several hundred thousand dollars. For more information on this horror story and invaluable tips to help prevent this from happening to you, take a look at our feature article.

We offer a timely reminder to all readers to collect those outstanding debts. With many businesses feeling the pinch, cashflow is increasingly becoming an issue that isn’t going away in a hurry. Did you know that once a debt becomes outstanding over 90 days there is only a 12% chance of recovering that debt? Our second article is worth a read if your debtors are not under control.

In this issue we introduce a long time client Carol Jones and Hamper Me to you. For gloriously gorgeous hampers for clients, family or friends you can’t go past this service. If you like to impress, you really need to get in contact with Carol. The website showcases all of the hampers available, and you won’t be disappointed.

And last but not least, a note of a personal nature. I would like to take this opportunity to welcome Alice to our country as a true blue Aussie. Alice is our Business Manager who arrived from New Zealand in 2000. An avid supporter of the “other team”, last year Alice made the unfortunate call that “they” would win the World Cup and went so far to make a bet. Well, true to her word last week Alice became an Australian citizen. Sadly this means less pay out time and more work time for us all.

What is your gut feel?

It has been some time since our initial newsletter, and for quite good reason. Most of this year I have spent assisting a client sort out their accounts after their Accounts Manager left on bad terms. The client was concerned with the state of the accounts and had suspected that money was going missing. They engaged our services to sort out the accounts and investigate their suspicions. It is sad to say that we were able to confirm their suspicions…several hundred thousand dollars had been misappropriated by the trusted Accounts Manager who had been with the company for 10 years.

We have spent this time gathering evidence against the ex-employee and since last month when the CIB became involved, over 170 charges have been laid against the former employee, with more to come as the investigations go back another year to 2001.

Needless to say, it has been a stressful year for our client, coming to terms with the lost money and cost of time and resources required to investigate this matter. I like to think that at least one positive thing comes from every negative situation. For the first time in many years this client has had up to date financials, systems implemented that work for them, and a real understanding of their financial position and performance as a result of timely monthly reporting.

You may be wondering “how did this happen?” A number of factors contributed to the situation. These are things to look out for :- 

1. If your accounts office is a mess with paperwork everywhere but in its proper place (either in a “to do” tray, “to pay” tray, “to enter” tray, “paid – to file” tray, or “to file” tray, just to name a few), ASK QUESTIONS!
   Perhaps there is simply too much work for the accounts person, in which case you really need to review the allocation of resources; or they need to implement systems to aid efficient paper flow. Ultimately, any piece of financial documentation should be able to be located with seconds. If this is not the case, there could be something amiss.
2. If your bank accounts (including credit cards) are not being reconciled monthly and are behind, ASK QUESTIONS as to why. Dodgey transactions can be easily hidden within unreconciled accounts, as transactions don’t need to be entered into your accounting software if reconciliation of accounts is not being performed. Also, reconciliations should not be done throughout the month. For easy traceability they should only be recorded on the last day of the month.
3. If you haven’t seen a P&L or Balance Sheet regularly on a monthly basis, or for a long time, ASK QUESTIONS! It is a reasonable expectation to receive these as soon as the previous month’s bank statement has been received. If there is something amiss you will see very quickly if you correctly review your financial reports and ask questions about anything you’re unsure about.
4. If your accounts person is unapproachable and always “too busy” to address your requests or questions, insist that they make the time ASAP to supply you with the information you require. This is after all what you hired them for.
5. If your accounts person is taking work home and has remote access to the financials, I would strongly recommend that this practice be ceased immediately. This setup leaves you open to risk. Risk of your highly confidential data being available to anyone outside of your business, and risk of losing company files and documents that are removed from your premises, as was the case with my client. There is no reason why the accounts job shouldn’t be able to be done during a normal work week with a reasonable amount of overtime (conducted at the office) during particularly busy times. If there is genuinely more work than hours in the week, you owe it to your business to address resource requirements and not burden well intentioned staff.
6. If your accounts person has full and sole responsibility for all areas of the accounts function (eg processing supplier invoices and making payments to suppliers) seek to split the division of these related tasks so as to limit opportunity for wrong doing. Additionally, if your accounts person is possessive over the accounts when it goes as far as not allowing other staff (accounts or management) to get involved, find out why. This is a characteristic of someone wanting to hide something.
7. If your accounts person has access to your online banking, even with a small transfer limit, and doesn’t require co-authority, take the time to regularly review the transaction amounts that leave your bank account. The Account Manager mentioned previously (with a $500 transfer limit per transaction) siphoned $160,000 between July 2007 and January 2008, through hundreds of small amounts that no one thought to verify.
8. If you have more than one trading entity with loan accounts between the entities that don’t balance or haven’t been reconciled for some time, ASK QUESTIONS. These accounts should be reconciled on a monthly basis as a minimum as they are great hiding spots for money gone missing.
9. If you don’t have a third party reviewing the accounts function and your accountant is not involved, ask them to get involved. In our client’s situation, the accountant has been servicing the company for 20 odd years and was preparing the company’s income tax returns without even looking at the accounting data files that contain the details of transactions. There were blatantly odd looking accounts and balances that weren’t questioned, and therefore this activity was permitted to continue for years until the business owner had a bad gut feeling and got Solution Central involved.

These are the main points that readily come to mind when I think about an unhealthy accounts department, although there is more that is worthy of mention, except for lack of space in this newsletter issue.

All I urge you is this…if you have that gut feel that something isn’t quite right, please don’t push it aside. Action could save you a lot of money and more importantly it could save you your business. Don’t feel bad asking questions that relate to the business that you have sacrificed so much for. If you suspect there is a problem, isn’t it time you looked into it?

Debtor Follow Up

Every business has unique needs. That’s why we believe that tailor made solutions are essential.

Chasing those outstanding accounts and slow payers cannot only be a costly exercise (exhausting already thin resources) but can often be perceived as an unpleasant and uncomfortable task.
At Solution Central we would like to offer you a weekly outstanding accounts follow-up service, contacting debtors on your behalf and endeavouring to assist with settlement of any outstanding accounts.

Research has identified that most businesses have only a 12% chance of recovering outstanding debts beyond 90 days.

Outsourcing your debtor follow-up calls to us will not only increase resource productivity but will result in “nipping it in the bud” when it comes to encouraging prompt payment of invoices. This invariably results in prompt future payments by training clients to pay on time through consistent follow-up contact on a weekly basis.

For 4 consecutive weeks we will contact your outstanding debtors to arrange settlement of overdue accounts. If any accounts are still outstanding after 4 weeks, we would recommend seeking legal advice and will provide you with a contact to follow this course of action.

This service is dependant on the volume of debtors with very attractive packages available (see below) and includes:

Telephoning outstanding debtors on the same day we receive an Aged receivables report from your company. To remain consistent with the process this report must be sent to us on the same day every week.

Provision of a progress report outlining:

• the contact person or person we speak to
• further follow-up that may be required (i.e. copy of invoice to be resent or call back)
• The number of times the debtor has been called in relation to a particular invoice
• Additional feedback that may impact on the settlement of the account

Service Charges are as follows:

• Up to 20 debtors: $300 per month (excl. GST)
• 21 – 50 debtors: $500 per month (excl. GST)
• 50+ debtors: $500 per month + $2.50/call (excl. GST)

We are also available on a monthly or quarterly basis to review your data file in preparation for lodgement of your BAS return. We also provide further feedback and assist in maintaining efficient accounts practices.

Simply call 3025 3368 or e-mail us at admin@solution-central.com.au

Featured Client

Hamper Me was created in 2003 by Carol Jones and employs a small team of talented staff. Drawing from the wealth of quality products from our beautiful country Hamper Me is pleased to be able to offer an extensive range of gifts, gourmet foods, organic and beauty products from all over Australia, made by Aussies and owned by Aussies. Hamper me is dedicated to making gift giving an easy and enjoyable experience.

Q. Who is your market?

A. Anyone wishing to spoil anybody. We offer a same day service in Brisbane, and next day delivery Australia wide. Corporate clients are a big part of our client base, as we offer account services and corporate discounts for regular purchasing. We love what we do…creating unique and beautifully presented affordable gifts. If you don’t find what you are looking for on our website, don’t fear! Around 50% of our gifts are tailor made to suit our client’s needs and budget. With presentation being our top priority, you can be assured that you have made a very special choice for any gift occasion that arises.

Q. If someone would like to order a hamper, how would they go about ordering?

A. Hamper Me has a extensive range of gifts available to be viewed and purchased online at www.hamperme.com.au Our website has a shopping cart which accepts Visa & Mastercard. Alternatively our friendly staff are just a phone call away on 07 3901 1420 or email at enquiries@hamperme.com.au, where we can also accept payment with AMEX. If you prefer to direct deposit, on request of an invoice our bank details are available.

Q. How has Solution Central been instrumental in helping you achieve your business goals?

A. Without Solution Central I would not be able to stay on top of my BAS obligations, or work toward budgets and goals for my business. Solution Central has been an integral part of achieving confidence in my financial records, and I know that I can sleep at night knowing that the Tax Man would have no trouble if he chose to audit my business.