Every business owner looks for the information that they need to make the right decisions. Sometimes the information is not available, sometimes they don’t understand what data is needed to move the company forward. So often, information is just outside their reach, both practically and mentally. As a result, decisions are either not made, or made in a vacuum. In either case, the result can be expensive.
Computer systems and the software programs that run on them generate significant capabilities and information for businesses. Automation completes tasks in seconds that previously needed hours. The great secret to the proper use of an ERP system isn’t just the automation of mundane tasks, but the collection of data that wouldn’t normally be available or would take an inordinate amount of manpower to compile.
The owner had purchased a Lease Abstraction and Management company several years earlier that was spun-off from a large real estate management firm. At that time, the company was profitable. Although sales have stayed constant over the past few years, profitability has shrunk significantly. With a change in accounting policies driving more business to his door, he needed to determine what happened to the profits they had become used to receiving.
The company tracked orders in a number of spreadsheets with universal access. Proper billing was dependent on staff accurately color-coding specific cells while others identified what work was completed. By acting on the correctly colored cells, invoices could be generated. Missed invoices and double billing were not unusual in this environment. In addition, pulling together month-end data was done manually and wasted crucial staff time.
The company set targets for Gross Margin and Operating Margin, but the complexity of collecting detailed information (e.g., payroll, payroll taxes, PTO, medical insurance, and others) stalled the efforts to understand and rein in costs.
Lacking historical data on the number of abstractions, hours billed, and contractors/employees used, doing any planning was difficult. There was no budget for the current year, no cash flow forecast, and no KPIs or targets for key metrics of revenue and costs.
Data should provide the basis for any decision-making in a company. An accurate set of financials provides information that allows a business owner to make important and necessary decisions. The key to true business management, though, is getting into the details. You can’t manage large numbers or combinations of activities. You need to get to the individual causation, the activities that are the heart of the transaction. To do that, you need more than just total revenue, total payroll, and/or total COGS.
At its heart, data accuracy is critical to the most basic function of any company—issuing an invoice. But data is used for far more than just invoicing. It is the root behind all decisions. If that data isn’t concise and actionable, the CEO or even the line manager is unable to make decisions that drive efficiency or effective use of material and staff—which are critical in bringing more money to the bottom line.
Effective January 1, 2024, the Corporate Transparency Act (CTA) requires approximately 32 million existing corporations, limited liability companies, and other
The Managing Partner of a multi-state firm with 37 partners had concerns about firm operations and its plans to grow
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