Our financial system overview

Our system for managing our finances

Overview of our system “How it works”

Summarise your system, how does your system work Imagine someone asking you “How does your xxx system work”

[e.g. We receive revenue from xxx, this then goes to..]

Critical to the success of our system is:

What critical success factors have you identified to ensure a smooth system

• [e.g. having trained people to handle the tasks]
• [e.g. sufficient capital to fund replacement machinery]
• [e.g. access to raw materials]
• [e.g. orders delivered on time]

Goals and objectives – finance

Financial Overview

The financial section of the business plan will help you and potential investors (or loan officers) estimate how much money will be required and how much profit and sales will be generated.

Break – even

We estimate our break – even point to be [$xx,xxx] per month and [$xx,xxx] per year

Preparing Invoices

Outcome

Invoice correctly prepared, sent/given to client and software and paperwork correctly filed

What you will need before you begin

Safety hazards awareness

Any safety hazards to be aware of – delete this section if not needed

• [e.g. nil]
• e.g. enter your own information here

Steps

1. [e.g. Receive instructions from salesperson]

[e.g. Open quickbooks/myob accounting software and go to invoicing. Enter clients name and enter purchase.]

…as a suggestion, add a supporting image or video here

2. [e.g. Print invoice and hand or send to client]

[e.g. If client is on premises hand to client or send by mail]

…as a suggestion, add a supporting image or video here

3. [e.g. File paperwork]

[e.g. Place paper copy of invoice in invoice file for current month]

…as a suggestion, add a supporting image or video here

4. ..other

Tips

Any tips learnt from previous experiences that should be passed on – delete this section if not needed

• [e.g. Login to quickbooks using your bookkeeper username]
• [e.g. If client is waiting for invoice and will take some time offer them a cup of coffee]

Traps

Any traps to avoid learnt from previous experiences that should be passed on – delete this section if not needed

• [e.g. Always make sure client is not already on the system]
• [e.g. If new client and purchase value is over $5000 make sure you do a credit history check first]

Receipting Payments

Purpose

• Ensure accurate and timely receipting of funds to bank account
• Ensure proper allocation of journal entries to appropriate customers or other accounts.

Background

If invoicing is a key area of our business, receipting the funds from those invoices is equally important. This procedure was developed to assist in ensuring that banking and allocation of funds occurs with minimal mistakes and issues arising.

Scope

All staff who handle funds received

Procedure

When payment is made to an account it must be entered into the database, thus ensuring the accuracy and currency of the account record.

To maintain a system of checks and balances, you should first provide a  receipt for the money and enter the amount received into the Accounting Software (PROVIDE A STEP BY STEP PROCESS TO IDENTIFY HOW THIS IS DONE IN YOUR ACCOUNTING SOFTWARE).

The other key part in this process is telling the software how the money is to be used, ie. which transactions should be credited with the money received. For example, if there are a series of outstanding invoices – how is a payment to be allocated Should it be paid off the oldest account first or is there an account in dispute that will remain unpaid until the dispute is resolved This is a decision that you must make.

Your Responsibility.

• To make sure that the receipts for each account are recorded accurately in the accounting software.
• To determine, in line with the business’s policy or procedure, how each payment of money is to be divided.

What you will need before you begin

Safety hazards awareness

Any safety hazards to be aware of – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Steps

Select the type of payment (Bank Deposit/Transfer, Cash, Cheque, Credit Card, EFTPOS or Money Order).

• If it is a Bank Deposit Receipt
• (IDENTIFY STEPS INVOLVED)
• If it is a Bank Transfer ie. the Customer has a direct debit setup from their account to yours:
• (IDENTIFY STEPS INVOLVED)
• If it is a Cash Receipt:
• (IDENTIFY STEPS INVOLVED)
• If it is a Cheque Receipt:
• (IDENTIFY STEPS INVOLVED)
• If it is a Credit Card Receipt ie. a Manually swiped Credit Card transaction has taken place:
• (IDENTIFY STEPS INVOLVED)
• If it is an EFTPOS Receipt ie. your business has an EFTPOS setup through the bank for Debit and Credit Card transactions:
• (IDENTIFY STEPS INVOLVED)
• If it is a Money Order Receipt.
• (IDENTIFY STEPS INVOLVED)

Tips

Any tips learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Traps

Any traps to avoid learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Accounting for Discounts

Purpose

Ensure Credit Notes for discounts are managed effectively as a key result area of our business.

Background

Failure to properly manage and account for discounts by the use of Credit Notes can cause significant rework and lost resources.  This procedure seeks to formulate rules for the effective processing of Discounts.

Scope

All Sales and Accounts Staff

Procedure

All DISCOUNTS must be approved by (WHO)

Issuing credit notes

A credit note is a formal financial document that reduces (or credits) the value of an invoice issued to a customer. This may be due to return of goods by a customer or as a result of resolving a dispute about services provided where it is agreed that a lesser amount is owed by a customer.

(DETAIL STEP BY STEP THE PROCESS YOU USE IN YOUR ACCOUNTING SYSTEM FOR GENERATING CREDIT NOTES)

What you will need before you begin

Steps

5. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

6. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

7. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

8. ..others

Tips

Any tips learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Traps

Any traps to avoid learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Overdue Accounts

Purpose

• overdue accounts are addressed in a timely and appropriate manner
• sensitive accounts are managed in ways that ensure that payment is obtained without unduly upsetting the customer

Background

Cash flow is the lifeblood of business and the performance of your receivables cycle holds the key to maximising your cash flow.

It starts out as a customer service function, with calls and letters to verify satisfaction, encourage payment and forecast potential problems. All are handled in a customer-oriented manner.

Then follows a steadily escalating process to ensure payment is received for works performed or products provided.

Scope

Accounts receivable staff and management

Procedure

This procedure has been left largely untouched because it varies widely from business to business.  In designing step by step procedures, plainly the best approach is a steadily escalating pressure to obtain payment. 

Usually this will start with a friendly telephone call for accounts over x amount of dollars and late by x days.  Normally this will ensure that payment is received by those who have merely mistakenly failed to make payment. 

REMEMBER TO MAKE FILE NOTES REGARDING PAYMENT. 

Next steps will require a form letter modified to suit the circumstances.

• Try not to be too generic. 
• After this letter is sent, normally a further follow up call is appropriate – ask when the payment will be made and diarise it.
• Call the client again on the diarised date to ensure payment will be made.
• A further more stern letter will need to be sent for further defaults.
• A Manager will need to follow up this letter with a telephone call seeking to identify the reason for payment default and making arrangements for collection.
• Consider the use of outsourced receivables management.
• When and if payment is unlikely to ever be received – identify what accounting and other steps need to be taken to identify the debt as a “bad debt”
• Consider at every stage what action to take to ensure that the customer does not run up further debt – that is, that the customer cannot make further orders whilst recovery action is occurring.

What you will need before you begin

Steps

9. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

10. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

11. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

12. ..others

Tips

Any tips learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Traps

Any traps to avoid learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Information Technology Security and Recovery from Disaster

Purpose

• Ensure all electronic data is secure and retrievable in the event of loss of working files from unauthorised access.
• Protect ‘e’ data.
• Quickly and fully recover from software loss or system crash
• Establish Standard File System

Background

A significant exposure in any organisation is the potential of failure of electronic data.  This procedure addresses the need to protect and maintain electronic data through robust backups, virus protection and structure

Scope

All Management and staff

Procedure

Back-up

Daily Back-Up

• All My Docs records are backed-up daily to CD burn.
• All proprietary software (describe) records backed up daily to CD burn.

Monthly Back-Up

Accounting Software (describe) records are backed-up monthly to a CD.

Virus prevention

• Where necessary, a virus check will be conducted before use.
• Virus checks will be run as scheduled daily.
• Immediately download updates when available.

Virus eradication

When a computer virus is detected:

• Inform customers or other parties who may be affected
• Seek professional advice from IT PROVIDER
• Follow instructions for eradication
• Re-run and test to ensure eradication
• Run antivirus program
• Re-commence normal operations
• Advise customers and stakeholders of outcome.

Access control

Password/s:

Each staff member within the business is responsible for his or her own data security.  Data Security is a compliance issue related to Privacy Legislation. It is vital that all computer systems have a unique password security control.  Each staff member is responsible for ensuring that password security is engaged during extended absences from their computer.

Firewall Protection

Protect computers from intrusion from the Web and unauthorised access to the Web (by spyware/malware) by the use of a firewall such as a hardware firewall and/or a software program (DESCRIBE YOUR SOFTWARE OR FIREWALL SOLUTION IN GENERAL TERMS – BUT BE AWARE OF YOUR SECURITY IN DOING SO).

Email Access

Email access is available to all staff with access to a computer.  Care should be taken in the use of Business email for private purposes as the company may be liable for inappropriate emails sent by staff of this organisation.  From time to time the company may exercise its right to delete or archive old emails and to review all emails held on company computers to ensure that inappropriate material has not been sent  or accessed using company equipment.  Staff should be aware that in the event of termination, access to these emails and data will also be immediately terminated.  Ownership of emails and electronic data of all forms contained on company equipment rests with the company.

Disaster recovery

If a computer crashes, with loss of data and/or software, and/or system damage:

• Obtain back-up disk
• Contact (IT PROVIDER) for professional advice
• Take action suggested by (IT PROVIDER) until the computer system returns to operational status.
• Re-instate lost data
• Run and test

Data recovery operation must not exceed 24 hours.

After system is back to normal:

• Record the event on a CAR Form (Corrective Action Required Form)
• Identify the underlying (root) causes
• Identify preventive actions
• Improve procedures
• Inform all staff of reasons/causes of computer failure if identifiable.

Email set-up

Email folders should be established on each system in (Email Program such as Mozilla or Microsoft Outlook/Outlook Express) as follows:

• Personal (if personal emails permitted)
• subfolders according to personal preference
• Business
• customer Emails (customer specific)
• General Business (Tax/Correspondence/General)
• Promotions in (emails advertising information that you wish to retain – delete any that you don’t need or want)
• Internal Emails (establish sub folders to this based on general forms of such emails)

Emails may be printed if necessary to be attached to the customers’ file. All attachments must be scanned for viruses immediately upon being downloaded.  If a virus exists, immediately power off the system and seek advice from (IT PROVIDER). 

Computer file management

The following identifies management of computer files and records:

• Depending on your operating system (ie not available in Vista) reassign “My Documents” folder to separate physical HDD or Partition. (seek advice from your IT Provider especially if you have a separate file server)
• Use File Save Name Format: <Descriptor> yy mm dd (eg “letter to client regarding portfolio performance 07 12 05”)
• Create two sub-folders labelled “Personal” (if permitted) and “Business”
• Customer Files (create sub-folders specific to normal generic files required by your business eg correspondence out, correspondence in etc)
• Business Records
• Tax Files
• Minutes of meetings
• correspondence out
• invoices
• other
• Promotional Materials (designs for promotional materials such as ads and brochures etc)
• Draft
• Obsolete
• Approved
• Forms
• Draft
• Obsolete
• Approved
• Resources (from time to time you will come across items that are useful in your business and need somewhere to store them.  You will find however that unless you store them methodically you won’t use them and if you haven’t used them and converted them to your business use within 12 months – you probably won’t so have a process to delete them unless you really think you will)
• Separate folder for each month (review data in each month after twelve months.  eg data stored in March 07 should be reviewed at the start of March 08 with a view to deleting anything not used – if it has been used it should be transferred either by being converted to eg promotional material or a procedure or the like)

Protection of Assets Policy

Policy

[enter-your-company-name-here] aims at all times to prevent disrepair, excessive risk, untraceable transactions, or conflicts of interest in the management of the organisation’s resources. 

Procedure

The CEO shall not:

• Permit any unauthorised person to handle cash.
• Deposit the organisation’s funds other than in accordance with Board policy
• Allow abuse or misuse of the organisation’s assets.  The organisation’s property will be inventoried and a security system in place to ensure adequate safeguards to prevent loss, damage, or theft of property.
• Propose that the organisation’s assets be insured for less than what is considered necessary for prudent risk management. 
• Allow employees to drive the organisation’s or rental vehicles while their licence is suspended or cancelled or if their driving record increases the premium or cancels the vehicle insurance.
• Allow intellectual property, information or files to be used for purposes other than in the organisation’s best interests

Equipment for Operations

Purpose

Identify equipment used in the business to develop/produce product for customers

Background

This informs staff as to what equipment is used in the business.  This enables staff to clearly identify if the business has the equipment to perform certain tasks and is a valuable planning tool because it helps to identify shortfalls.

Scope

All Staff

Procedure

List here all equipment and locations in table format.

Workplace Facilities

Purpose

To identify and provide:

• plant and equipment
• tools
• communication hardware
• computer hardware and software
• furnishings and
• a safe and an appropriate working environment for visitors.

The work environment should:

• conform to regulations, industry guidelines and contractual requirements
• provide a positive climate to enhance performance, of all staff.

Background

This procedure is provided primarily as a nod to the Quality Standard such that a part of the management system identifies the key elements of an effective working environment.

Scope

Management

Procedure

Management will ensure that adequate facilities are provided for staff and visitors, with regard to:

Scheduled asset maintenance

Purpose

• Ensure all inspection, measuring and test equipment in use is known to be calibrated, accurate and appropriate to service and testing activities
• Ensure plant and equipment is maintained in a safe and reliable manner.

Procedure

Calibrated equipment

• All equipment requiring calibration, is registered in the Calibration Equipment Master List.
• Each individual item has its own Calibration Record, to record calibration schedules, tolerances and records of calibration results.
• All newly purchased measuring and testing equipment is checked and registered before use.
• All staff are required to store and use measuring equipment in a manner which prevents abuse, misuse, or damage.
• Where measuring equipment (apart from tape) is found to be out of calibration, it is withdrawn from service and tagged until the status of error is determined.  The equipment may need calibration, or it may become unserviceable.
• Goods or work which has been inspected by calibrated equipment, which is “out of calibration”, is quarantined immediately for recheck.

Vehicles, plant and equipment

• Company plant and equipment must be maintained in a safe and reliable condition. 
• All plant and equipment details are written up on the Plant and Equipment Register.
• Records of service and repair work are written on the Plant and Equipment Maintenance Record Sheet.

Cheque signing and authority

Purpose

To spell out procedures that must be followed in the signing of cheques on behalf of [enter-your-company-name-here].

Procedures

• All cheques must contain two eligible signatures.
• Eligible signatories are Board members or staff members who have been previously nominated and endorsed by the Board.
• Any two of the above have the authority to sign cheques.
• Signatories cannot sign a cheque made payable to themselves.
• A list of all cheques issued each month will be provided to the Treasurer.

Purchase Orders (ensuring a paper trail exists)

Purpose

To ensure an auditable paper trail exists for all purchases and to control purchases to ensure that we only pay for what we order.

Background

This procedure exists to control the way that our business spends money.  All too often, businesses pay for products that either weren’t ordered or were not supplied according to specification.  This procedure seeks to ensure that there is conformity between goods ordered and goods received.

Scope

All purchasing staff

Procedure

(Who) have purchasing authority up to (how much) – (allow a nominal amount, say $100-$200 without a Purchase Order – this might be through the petty cash or otherwise)

Petty cash is a limited purchasing facility for staff amenities such as coffee, milk and sugar and to reimburse minor expenses such as taxi fares and parking for authorised events.  The total of any given item purchased through petty cash must not exceed (How Much).  for all other expenses to be reimbursed to staff, an expense form must be submitted to (WHO).

Below is a table of purchasing authority levels within our business.

(The above is intended to enable a limited number of people to be able to authorise expenditure on a rising scale – eg Junior staff have no authority to expend money, supervisors may have authority to expend at petty cash level only, Managers have authority to a higher amount and so on up the line.)

To purchase any item over (how much) a purchase order must be raised and approved by the appropriate authority holder.

The process for raising a purchase order is detailed below:

(DESCRIBE THE PROCESS FOR RAISING PURCHASE ORDERS IN YOUR SYSTEM)

Purchase orders valued more than (how much) will require a detailed explanation in writing together with (how many – usually 3) quotations.

Purchase orders must include:

• Purchase order number
• product number
• supplier ID
• Details in the purchase order must be sufficiently complete to enable the product being purchased to be identified clearly from the purchase order itself.
• Price quoted
• Requirements as to standards and specification if different to details of the product. – ie different measurement to standard or colour or other attribute.
• Special condition – certification, pre-delivery inspection, etc
• Signature of Authorising Staff Member

Purchase orders must always be faxed to the supplier on the same day.

Managing Petty Cash

Purpose

To ensure that petty cash is monitored regularly and not abused

Background

The use of petty cash is restricted to purchase of items required at short notice that cannot be acquired either through the normal ordering system within the required time.

Payments of a payroll nature (salary, allowances, leave, etc.) must be made only through the payroll system.

Scope

All staff

Procedure

Detail your petty cash procedures ensuring that:

• Petty cash is kept in a safe place away from casual access
• funds are adequate for Petty Cash purposes but not excessive
• Petty cash is controlled by one individual (with enough seniority and experience in the company to adequately control the petty cash process)
• Petty cash is reconciled periodically (usually monthly) by someone other than the custodian.
• Attach the receipt to the Petty Cash Voucher and store all the vouchers locked away with the petty cash.
• Cash a cheque to reimburse the petty cash when the money is low.

Confirming Receipt of Goods and Conformity of Supply

Purpose

To ensure that product received has actually been received and that it conforms to our requirements.

Also to segregate product that does not conform.

Background

If appropriate we can request the right to inspect products and services at the supplier’s premises, at agreed stages.

Where specified, our customers may also be given the right to verify at our supplier’s premises, that the product to be supplied confirms to their specified requirements.

Scope

Goods Receiving and Accounts Payable Staff

Procedure

• Receive Materials
• check against delivery docket/purchase order
• initial delivery docket
• staple delivery docket to purchase order and hand to accounts payable
• Inspect
• check quantity
• check damage
• check specifications
• check for documentation (MSDS or other)
• Product has problems
• Confirm to accounts payable that issues exist with the product
• set product aside (WHERE)
• clearly mark “NON-CONFORMING NOT TO BE USED”
• Arrange for disposal/replacement with supplier
• inform Manager (WHO)
• Manager to consider status of supplier on supplier register
• If product passes inspection and is ready for immediate use
• start use
• If product passes inspection and is not for immediate use
• place in stock storing Hazmat per MSDS
• all other stock stored safely and securely until used.

Payment Approval (paying for what we get)

Purpose

To confirm receipt of product before payment and to ensure we only pay for what we have received and that non-conforming product is not paid for.

Background

This is a significant area of leakage in virtually every business.  This procedure was drafted to ensure that we only pay for what we have physically received and checked to ensure what we have received is what we purchased.

Scope

Accounts Payable

Procedure

• Purchase order has been raised
• goods received into site and checked.
• delivery docket received by accounts payable and married to a purchase order.
• Invoice received and married to purchase order/delivery docket
• Cheque prepared and attached to the front of the invoice/delivery docket/purchase order OR Electronic Transfer stamp on invoice with details complete
• Payment noted in Accounting Package (provide step by step process for doing this)
• Note any discounts available for early payment and take advantage where possible
• otherwise hold payments until due date
• Note cheque number, details and mailed date in Cheque Register

Employee use of Time Sheets

Purpose

Identify responsibilities of staff for informing business of hours work and provide system for verifying hours claimed.

Background

This procedure has been developed to place controls around the data collection side of the payroll process.

Scope

All staff

Procedure

Time sheets must be submitted no later than (WHEN) for counter signing by (WHOM).

Once approved by (WHOM), Time sheets will be submitted to (WHOM) for processing into our payroll system and payment will be made by (Electronic Transfer, cheque, other) no later than (WHEN).  Staff should be aware that when payments are made by Electronic Transfer, we have no control as to when the funds arrive in your account.

Payroll staff will check all time sheets against rosters for discrepancies and confirm any discrepancies with supervisors as appropriate.

Payroll staff with verify that time sheets have approving signature prior to processing pay run.

Preparation of Pays

Purpose

To provide controls for process of pay runs and to ensure appropriate verifications are in place to ensure staff are paid according to benefits and entitlements.

Background

A significant area of stress for accounts staff and indeed payees is when there are errors or perceived errors in payment.  Staff need to be paid their entitlements with a clear and transparent process.  Rework is a difficult and annoying where time sheets and other data is inaccurate or unclear.  This procedure intends to make this process as painless and easy as possible.

Scope

Payroll Staff

Procedure

As all accounting software is different you will need to provide a step by step process for your software.

Be careful to include checks to verify hours, rates of pay, people on holiday and people who are leaving the company.

Your accountant or bookkeeper may be able to advise and support you in producing this procedure.

Outcome

A significant area of stress for accounts staff and indeed payees is when there are errors or perceived errors in payment.  Staff need to be paid their entitlements with a clear and transparent process.  Rework is a difficult and annoying where time sheets and other data is inaccurate or unclear.  This procedure intends to make this process as painless and easy as possible.

What you will need before you begin

Safety hazards awareness

Any safety hazards to be aware of – delete this section if not needed

• [e.g. if pump is located in a confined space then make sure ventilation gear is worn]
• [e.g. older pumps have been known to shatter causing potential eye damage]

Steps

13. View time sheets and collate hours worked

[e.g. Instructions > Do this and that and while doing this step make sure that you]

…as a suggestion, add a supporting image or video here

14. [e.g. Verify pay rates]

[e.g. Instructions > Do this and that and while doing this step make sure that you]

…as a suggestion, add a supporting image or video here

15. [e.g. Enter into payroll software]

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

16. ..others

Tips

Any tips learnt from previous experiences that should be passed on – delete this section if not needed

• [e.g. Do before …]
• [e.g. Always check …]

Traps

Any traps to avoid learnt from previous experiences that should be passed on – delete this section if not needed

• [e.g. Avoid doing this ..]
• [e.g. Avoid doing this ..that]

Superannuation – Retirement Funds Policy

Purpose

To ensure that all staff are aware of their rights to choice of Superannuation provider and that the company meets its superannuation obligations.

Background

Significant penalties attach to companies that do not meet their superannuation obligations.  This procedure should reflect the appropriate legislation that applies to your workers.

Scope

All Staff

Procedure

You need to discuss with your accountant procedures for ensuring that superannuation obligations are met and that they are properly accounted for.

The superannuation guarantee was introduced on [e.g. 1 July 1992] to ensure most employees receive superannuation support from their employers. You are an employer if you employ workers under an employment contract (oral or written) on a full-time, part-time or casual basis. You may also be an employer if you make payments under a contract.

Under the superannuation guarantee, you must pay compulsory superannuation contributions into a complying superannuation fund or retirement savings account so employees can enjoy the benefits of superannuation in their retirement. The superannuation support you provide for your employees is

usually tax deductible up to certain limits. If you don’t pay enough superannuation contributions for employees to the correct fund by the quarterly cut-off dates, you will be liable for a tax called the superannuation guarantee charge.

Under the superannuation guarantee, you have to pay superannuation contributions to the correct superannuation fund, by the cut-off dates, for all your eligible employees.

You may also be required to offer a choice of superannuation fund to your eligible employees.

The superannuation guarantee is administered on a self assessing basis. There are laws requiring you to meet your superannuation obligations, and it is your responsibility as an employer to ensure arrangements you have in place for your employees satisfy the government’s superannuation guarantee

requirements.

The minimum you have to contribute to a complying superannuation fund or retirement savings account is [9%] of an eligible employee’s earnings base. Your contributions need to be paid at least every quarter (that is, every three months). Superannuation contributions you pay for your employees are usually tax deductible.

If an employee pays their own personal superannuation contributions by making payments through the payroll system after tax has been deducted from their salary and wages (i.e. under an ineffective salary sacrifice arrangement), these contributions don’t count towards meeting your obligations under the superannuation guarantee. These personal contributions don’t count even if you, as the employer, have arranged for the payment to go into the employee’s superannuation account.

BAS Reports – Australia Only

Purpose

Ensure Business Activity Statements (BAS) reports are completed accurately and on time.

Background

This is a relatively straightforward process and provided you have accurately entered information to your accounting package, should be completed with a minimum of fuss.

Scope

Accounting Staff

Due when

Procedure

• Doing your BAS is a relatively simple exercise, because you have already told your accounting package all the information it requires to classify the various receipts and payments by their GST type. Your accounting package will provide you with figures for GST and any wage deductions if you have entered them. It will not provide figures for other forms of tax such as car tax, fringe benefits tax or tax deductions from payments to contractors.
• The entire design philosophy of most accounting packages is not to overload you with technology so they take the view that most of users would not want to be logging onto the ATO via the internet and making electronic returns.  Most accounting packages therefore expect you will still use the paper form that the ATO provides.
• (PROVIDE A STEP BY STEP PROCESS FOR PRODUCING A REPORT ON GST PAYMENTS AND RECEIPTS FROM YOUR ACCOUNTING PACKAGE)
• Looking down the form you will see it is broken into three sections. The first analyses the income of your business, the second analyses the expenses of your business and the final section analyses any wage deductions you may have made.
• From the computer generated report, you should be able to transpose the appropriate amounts onto the BAS report.
• (WHO) will check the report and details before payment is made.

What you will need before you begin

Steps

17. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

18. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

19. e.g. enter your own information here

e.g. enter your own information here

…as a suggestion, add a supporting image or video here

20. ..others

Tips

Any tips learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Traps

Any traps to avoid learnt from previous experiences that should be passed on – delete this section if not needed

• e.g. enter your own information here
• e.g. enter your own information here

Profit and Loss Statements

Purpose

To ensure regular Profit and Loss Statements are prepared for management and that processes are in place for a regular review of the Profit and Loss situation of the business.

Background

• The Profit and Loss report generated by your manual record keeping, your computer software, or the accountant you’ve previously hired, is also known as an Income Statement.
• This is perhaps one of the easier reports to compile, but one of extreme importance. Why Because the businesses net income or loss is the result shown on the Income statement.
• Net income information is transferred directly onto your Balance sheet, and is used by business owners, lending institutions, and prospective investors to assess the financial health of your business.
• In general, business owners will examine the Profit and Loss statement to determine profit ratios, to examine selling prices and costs, to compare wage expense from month to month, and to set advertising, purchasing and inventory budgets.
• Not every business owner utilises the wealth of information available in the Profit and Loss report, sometimes simply due to a lack of understanding about the benefits gained by evaluating the report.
• Not utilising this report, however, can be compared to neglecting some part of your health. If you realise there is a problem internally, but see no obvious outward sign of ill health, do you just ignore what is happening
• Examination of the Profit and Loss reports for several months should be the equivalent of seeking professional advice concerning your health. You should be able to pinpoint problem areas, and seek solutions.
• The other, sometimes crucial reason for maintaining accurate accounting information, especially as it pertains to profit and loss is to accurately report income and earnings for preparing tax returns. The [e.g. your countries Tax Office name] requires that business owners comply with some very specific rules about net income, depreciation, and inventory value.
• The Profit and Loss provides you with the information you need to most efficiently utilise your available resources and keep a larger portion of the net profit.
• If you’re among the growing number of small businesses who choose to purchase software and do their own bookkeeping, generation of the Profit and Loss and Balance Sheet will be tremendously helpful at year end. Most businesses, while able to perform the bookkeeping requirements, are often not equipped to handle tax returns or the monthly reporting of GST or Tax withholding for staff that is often required by the [e.g. your countries Tax Office name].
• Accurate record keeping, and reports that can be provided to an accountant, make end of year tax issues much easier to resolve, and your accounting bill much smaller. After all, you’ve done the leg work, all the accountant now has to do is put the information together on the return. You can see, again, the benefit of using your Profit and Loss report.

Scope

Management and Accounting Staff

Outcome

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What you will need before you begin

Safety hazards awareness

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Steps

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Tips

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Traps

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Management Reports

Purpose

Prepare a standard monthly suite of management papers for review by senior management

Background

This procedure details the minimum reports that should be prepared monthly for management review.

Scope

Management and Accounting Staff

Procedure

Prepare the following reports for use by management in monthly management meetings (where appropriate prepare both monthly and year to date reports):

• Profit and Loss: refer separate procedure
• Budget variance report: (sometimes called performance to budget)  This report identifies the percentage variance on individual accounts to budget.  for example, advertising might have been budgeted at $2,000 for the month but due to a special promotion authorised by management, actual expenditure was $3,500.  The variance of $1,500 must be reported together with a brief explanation of the variance.
• CAPEX Report: where capital expenditure has occurred, a detailed list of all items purchased together with amounts expended should be prepared.  Any projected major Capital Expenditure for the next 3 months should be forecast.
• 12 month Rolling Projection:  Based on existing budgets, each month, a projection of future income and expenditure should be prepared.
• Payroll and Staff Reports: Report identifies staff levels and wages for the month and projections for next month.

Outcome

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What you will need before you begin

Safety hazards awareness

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Steps

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Tips

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Traps

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Budgeting Policy

Purpose

The annual budget is a reflection of [enter-your-company-name-here]’s annual operational plan and as such should be presented in partnership with the plan showing the relationship between planned-for events and associated costs and revenues.

Policy

It is the responsibility of the CEO to research and develop [enter-your-company-name-here]’s overall annual operating budget.  The annual budget should be soundly prepared reflecting a mix of ongoing operational and capital requirements and [enter-your-company-name-here]’s critical strategic issues as identified in the strategic plan.  The budget should reflect both expenditure and revenue projections. 

Procedure

The annual budget shall:

• Contain sufficient detail to allow an accurate projection of revenues and expenditures.
• Comply with the Board’s stated objectives and priorities.
• Be presented in such a way as to make it easy to interpret and follow and comply with standard budget presentation formats.
• Give consideration to any need for change in [enter-your-company-name-here]’s reserves

CEO Responsibilities

The CEO is responsible for the annual presentation of draft budgets (capital and revenue) and for providing such additional information to enable the Board to properly consider it.

The CEO is responsible for ensuring that any application to the Board for expenditure which has not been specifically budgeted for is supported by adequate costing and a recommendation as to how the new expenditure can be funded.

Credit Card Authorisation Policy

Purpose

[enter-your-company-name-here] may provide authorised staff with a credit card to facilitate easy and convenient financial transactions.

The purpose of this policy is to:

• ensure that organisational transactions are carried out as efficiently as possible through the use of credit cards and transaction cards as appropriate.
• guard against any possible abuse of organisational credit cards

Policy

The CEO will develop and maintain an operational policy approved by the Finance Committee

Procedure

1. Card Issue

The Credit Card may only be issued by the CEO.  Cards will thus be issued only to people on the approved Organisational Credit Card List [see Appendix B]. The approved Organisational Credit Card List shall be held by the CEO.

Other persons may be added to the list by the Board. The Board may delegate this power to any or all of:

• The Finance & Audit Committee
• The CEO

Cards may be issued on a temporary basis and recovered afterwards.

Each Organisational Credit Card will be issued to a specific person, who will remain personally accountable for the use of the card. Card holder’s will sign the attached declaration (Appendix A).

Only the authorised signatory may use the card. No more than one card shall be issued per cardholder. Credit limits as appropriate shall be set for each card by the issuing authority.

2. Cardholder’s Responsibilities

The Card holder shall:

In all cases obtain and retain sufficient supporting documentation to validate the expense (e.g. tax invoice) or shall in lieu provide a statutory declaration

• Attach these to the monthly statement from the bank
• Review the monthly statement for inaccuracies (and report these to the CEO)
• Verify that that goods and services listed were received
• Sign the monthly statement to verify that transactions have been made for official purposes
• Forward the papers to the authorised signatory for approval (the board chair shall authorise payments to the CEO; the CEO shall authorise the expenditure of all other Card holders).
• Notify the bank and the CEO (or in the case of the CEO, the board chair) immediately if
• The card is lost or stolen.
• Any unauthorised transaction is detected or suspected
• Notify the CEO of any change in name or contact details
• Take adequate measures to ensure the security of the card.
• Return the card to the CEO if
• the Card holder resigns
• the CEO determines that there is no longer a need for the Card holder to retain his or her card
• the Organisational Credit Card has been cancelled by the bank.
• Be personally liable for any unauthorised transaction unless the card is lost, stolen or subject to fraud on some part of a third party.

The Card holder shall not:

• exceed any maximum limits set for the Organisational Credit Card from time to time
• obtain cash advances through the Organisational Credit Card
• use the card for any proscribed purchases
• authorise their own expenditure
• claim double allowances (i.e. request reimbursement for an expense already paid by the card).

3. Credit Card Expenditure

The Card will only be used for those activities that are a direct consequence of the Card holders’ function within the organisation.

Where coincident and/or private expenditure occurs on the same transaction (where, for example, a person incurs a debt for personal telephone calls during a hotel stay) the Card holder must settle the private expense prior to charging the balance on the Organisational Credit Card.

Where doubt exists as to whether or not an item is function-related, prior authorisation should be obtained from the CEO (or, in the case of the CEOs own card, the Chairperson of the Board or the Chairperson of the Finance & Audit Committee).

The use of the corporate card for “services of a dubious nature” is expressly prohibited. “Services of a dubious nature” are defined as any goods or services that might bring the name of the organisation into disrepute.

4. Credit Card Misconduct

Wherever a breach in this policy occurs, the CEO must assess the nature of the breach and if significant report the breach to the police for criminal investigation or if lesser in nature, institute an appropriate disciplinary process:

• in the first instance, counselling and or verbal warning (and diary or file note created)
• in the second instance, a written warning
• in the third instance, or if the dollar amount is greater than $1000 the card is to be immediately withdrawn.

At the next Finance & Audit Committee meeting the CEO shall report:

• the investigation of the circumstances of the breach
• police reports and action (if any)
• disciplinary action taken (if any)

Financial Management Policy

Policy

The CEO is responsible for the day-to-day financial management of [enter-your-company-name-here] and shall carry out this duty in a manner that shall promote and further [enter-your-company-name-here]’s financial strength and shall in no way threaten it. 

Procedure

To ensure the affairs are managed on a prudent basis, the CEO shall:

• Ensure that [enter-your-company-name-here] does not incur  indebtedness not authorised by the Board
• Develop an annual budget for consideration by the Board.
• Record all financial transactions using standard accounting practices.
• Utilise funds solely for the furtherance of [enter-your-company-name-here]’s purposes and priorities as approved by the Board.
• Not allow ordinary operating expenses to become undischarged debts beyond a three-month period from when incurred. (unclear – delete)
• Ensure that debts owed to [enter-your-company-name-here] are collected in a timely manner if they are considered collectable, and ensure that payments are made within 30 days of the due date.
• Use restricted or tagged contributions for designated purposes only.
• Not allow any one person alone to have complete authority over any of [enter-your-company-name-here]’s financial transactions.
• At all times operate within [enter-your-company-name-here]’s approved budget and within [enter-your-company-name-here]’s policies.
• Settle all pay-roll debts in a timely manner.
• Not incur expenditure that is beyond [enter-your-company-name-here]’s ability to meet.
• Ensure that the accounts are audited yearly by an approved auditor.
• Comply with internal control requirements established by the Finance Committee.
• Arrange insurance’s as required by the Board

Limits of Delegated Financial Authority

The CEO is authorised to spend up to [e.g.$5000] on unspecified budget items without obtaining permission from the Board or any Board member provided that such additional expenditure can be achieved within the broad budgeted limits established by Board and is consistent with the organisation’s goals and objectives.

Investment Policy

Policy

[enter-your-company-name-here] investment assets are to be invested in such a way as to maximise long-term total returns consistent with prudent levels of risk, while maintaining sufficient liquidity to enable the organisation to meet its day-to-day financial commitments.

Procedure

The Board considers that the investment of the assets should aim at the following:

• all available funds to be invested securely to achieve the maximum long term return consistent with a low tolerance to risk.
• maintain the real value of assets after funds have been released to meet needs.

Allocation of Investment Responsibilities

The Board will be responsible for the following:

• Determining the appropriate types of investments, acceptable counterparties and counterparty limits.

The CEO will be responsible for the following:

• Managing day-to-day investment matters.
• Determining how investments shall be made provided that these are consistent with the Board’s guidelines.

Credit Levels

Purpose

Regular monitoring and consolidation of reporting on credit levels with suppliers and on overdrafts etc occurs

Background

This is an area that requires close and careful monitoring as proper management of credit will facility smooth cashflow whereas nasty surprises in this area can and often do cripple a business.

Scope

Management and Accounting Staff

Procedure

Prepare monthly reporting on all credit facilities from the accounting software and by consolidating all statements from creditors.

(IDENTIFY ALL STEPS TO PRODUCE SAME FROM YOUR ACCOUNTING SOFTWARE)

What you will need before you begin

Steps

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Tips

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Traps

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Financial – List of attached files

List of attached files for this department

Create a list by:

• Click the “Hyperlink button”

• When the dialog appears click the “Existing File” radio button at top

• Browse various folders and find all the documents you want to link

• Select them individually and click “Apply linked list item” or

• multi-select and click “Apply linked list item”

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Cash_flow_budget_worksheet.xls