This document provides an overview of key aspects of financial management for entrepreneurs, including accounting and financial reporting, budgeting, collecting accounts receivable, and risk management. It discusses the importance of accounting systems and bookkeeping for tracking finances, as well as outsourcing to CPAs. Budgeting is described as essential for matching expenses to revenue and ensuring cash flow. Collecting accounts receivable involves following terms and aging receivables to focus collection efforts. Risk management involves identifying, measuring, and prioritizing risks to minimize their impact on the business.

1. Financial Management for Entrepreneurs

2. Our AGENDA Accounting & Finance Budgeting Collecting Account Receivable Risk Management

3. Financial Management Let’s Find Out More…

5. Operating a Business Financial Management Legal Management Business Management Marketing Office Management Production

7. Financial Management Defined For small business How you raise your capital How you manage your money

9. Accounting vs. Bookkeeping

11. Financial Reporting alternative ways you can handle this. Manage everything yourself Hire an employee who manages it for you Keep your records in-house, but have an accountant prepare specialized reporting such as tax returns; Have an external bookkeeping service that manages financial transactions and an accountant that handles formal reporting functions. Use soft wares

12. Accounting vs. Bookkeeping Accounting System income, expenses, assets, liabilities an organized system for keeping track of how the money flows through your business where it is supposed to go Bookkeeping system keeps track of the nuts and bolts -- the actual transactions that take place. provides the numbers for the accounting system. Both accounting and bookkeeping can be contracted out to external firms

13. Accounting Accounting is the big picture the system that keeps track of data (including people) records your transaction history, gives you reports It also encompasses payroll tax status

14. Bookkeeping Bookkeeping is the tedious part the systematic recording of amounts, dates, and sources of every revenue and expense generated.

15. Accounting + Bookkeeping Accounting = giant sifter Bookkeeping = the process of pouring stuff into it. Accounting + Bookkeeping = information needed to run your business

16. Outsourcing Accounting Still need some type of Recordkeeping System to manage the day-to-day operations of your business Financial plan and budget to make certain you have thought through where you are headed in your business finances.

17. Hiring Certified Public Accountant Set up accounting system Consulting and tax preparation Helps generate reports & financial statements Updates with tax laws and reduce tax liabilities Compile financial statements Review statements Perform an annual audit

18. Software vs. Shoebox A system to monitor your business Collections Products / services Invoices Better BOOKKEEPING ~ avoid double entries

19. More on Accounting It’s not just about numbers Database ~ essential for future planning Customers Vendors Employees Establish a sound accounting system Input of data Record transactions = bookkeeping Regularly done

21. Operating budget

23. Budgeting Estimating and matching expenses to revenue (real or anticipated) Important for decision making fund operations, expand the business and generate income Without a budget or a plan, a business runs the RISKof spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete.

24. Budgeting Operating Budget to provide a blueprint for how the business is going to operate in the coming year. information from functional areas such as design, production, marketing, distribution, and customer service. the end result is a budgeted income statement that shows how much profit the business expects to make at the end of the year.

25. Budgeting Cash Budget strictly financial a vital purpose: to ensure that the business has enough cash to fund its activities throughout the current period. the goal of the cash budget is to ensure that you don't run out of cash.

26. Other purposes of Budgeting Check industry standard Make a spreadsheet Factor in some miscellaneous Look for ways to cut costs Review periodically Look around for services / suppliers

28. Collecting Accounts Receivable The time period and the terms of every receivable should be specified clearly. Terms can be stated in various ways, such as: Net 30 days from invoice Net 15 days from shipment 1% 10 days, net 45 days from invoice Other options deposit upon confirmation, balance upon delivery

29. Collecting Accounts Receivable One simple method of assessing the quality of your receivables is to compare the actual collection period, known as days receivable, to the stated payment terms. If the days receivable are significantly more than the sales terms, consider developing a receivables aging schedule to monitor who owes you money, when the debt was incurred and how long it has been unpaid.

30. Collecting Accounts Receivable Most receivables aging schedules are broken into 30-, 60- and 90-plus-day increments. Under each of these categories, total the amount due from each of your customers. This allows you to identify the problem customers and focus your collection efforts accordingly. An aging schedule also enables you to manage your credit policies according to the standards of your particular industry. Many software programs provide aging receivables templates and/or formulas that are handy for small and mid-size enterprises.

31. Collecting TIPS Be Prompt: If a payment was due in 30 days, follow up with the customer on day 31. Be Consistent: Send regular statements to customers who are behind in their payments. Offer Incentives: Consider offering a bonus or cash price discount for early payment.

32. Collecting TIPS Be Specific: Spell out any late-payment fees and penalties prior to granting terms. Follow Up: Be aware of your customers’ payments and debts. Send acknowledgments when accounts are paid. Be Realistic: In the final analysis, an AR aging schedule may indicate that it’s time to sever your relationship with a customer or resort to some other type of collection method.

33. Risk Management

34. Risk management Any good system should minimize the risks in your business. INSURANCE needs to be considered not only for your property, office, equipment, and employees, but also for loss of critical employees. Even in businesses that have a well set up system, cash flow can be a problem. Others ~ cash flow problems, debt obligations

35. Risk management The three elements of risk assessment are: Risk Identification Determining what is at risk and from what sources. Risk Measurement Determining the consequences of the risk (and to a lesser extent, the likelihood of its occurrence). Risk Prioritization Determining the appropriate resources to manage the risk.

36. Risk Management Risk assessment is a decision-making tool that helps managers sort through a number of possibilities and then chose those with the greatest payoff.

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