CFOs on the go

Where are you going? Ideas to be bigger and better in 2010. repost by popular demand!

Supposedly, Yogi Berra once said,

“If you don’t know where you are going. Chances are you will wind up somewhere else”

This is true of many businesses today; many of us are just making the motions of being in a viable business. Do you have a roadmap of where you want to be in six or twelve months? I have read a few articles on marketing and basically the bottom line is this;

Companies that continued to market throughout the last recession in the eighties saw a sales growth of 250% in the two years following the end of the recession. Want to guess at the growth rate of the companies that survived that cut or reduced their marketing? It was a whopping 19%!

Now, I can tell you that I have decided which one I want to be. It is not a tough decision to make by the way.

I am sure you are all saying I really do not want to be spending money at this point. But it doesn’t require that much to make your presence felt in your market. I am not claiming to be the marketing genius, but there are some inexpensive things that you could be doing today that will pay dividends in the future.  If you have a Yahoo or Gmail account, I encourage you to get your own domain. Total cost is under $40. Go to www.verio.com and register; we have used them for eight years with zero issues. If you have the budget, have someone create your website (we can refer you to some of our favorites) or you can use Verio’s templates to get a basic website created. If you are a contractor you really need 5-7 pages. At a minimum they should include the following:

1.       About us - What you do and where you do it

2.       Completed projects – photo gallery

3.       Management – a short bio on the top 3-4 individuals in your firm

4.       Testimonials –quotes from happy clients

5.       Contact us address, phone, emails as appropriate and picture of your office if it makes sense

6.       List of clients - get their permission

7.       There are other pages but this a great start.

Create a tri fold or two sided glossy brochure to distribute to former clients or to a list of companies you would like as clients. We only use www.vistaprint.com , custom design on line and 500 brochures will set you back all of $300 in round numbers. Send them to your happy clients with a stamped envelope and ask them to send it to someone they think could use your services or mail to a select list of prospects.

Create a press release, announcing a completed project or new project or a new hire. There are firms that can write and distribute for you to all the search engines. We use a local service and the last one completely written and submitted was $400.

Last thought, if you were going to buy something today, what is the first step- yellow pages, dial information or Google what you want?

 

I would love to hear your comments on these ideas or if you have others you would like to share. dennisf@cfosonthego.net

Final Implementation article - part 18

Moving Forward

 

Congratulations on a successful new software implementation! I hope that you’ll reap the rewards from your new software investment for many years to come.

A few final points:

Ø  While the emphasis in this guide has been on accounting implementation, the guidelines also apply to project management and estimating functions.  

Ø  Training to learn new software is critical, but also don’t forget—or neglect—the need for ongoing training. As your staff becomes more familiar with the software and begins to delve into it more deeply, they will require additional training.

Ø  Most software users only utilize a very small portion of the software’s capabilities. Review any work that you currently do with an outside word processing or spreadsheet software package. See if you can integrate these functions into your new construction business management software.

Ø  Become familiar with the new software’s system and program security features. Most business management software contains built-in security features to let you decide who has access to key information within the program. Make certain that all security features are understood and documented. Once you have live data in your system, be sure to set up the security. And don’t forget to keep track of all passwords!

Ø  Finally, enjoy the new capabilities and information your system provides. Avoid dwelling on what you no longer can do; instead, embrace what you can do and how you can use the software to the fullest capabilities that match your business’s needs.

 

 

Control Costs - part 17

A Note about Job Costs

Job cost information is vital to the understanding—and profitability—of your business. In an ideal world, all previous job cost information would be sent to the new system. However, this goal is not realistic. Consider these factors when determining how much and what job cost information to move from the old system to the new:

·         What level of detail do you really need:
~ By Job only—summary
~ By Job and Cost Code—summary
~ By Job, Cost Code, Vendor, Employee—detail
~ By Individual Cost Records—full detail

·         How accurate is your historical data?

·         How much will it cost in time and consulting fees to recreate the past?

 

The Conversion Process

Here is a checklist to use when converting data:

1.     Clean up data in your old system—as much as possible, and where appropriate.

2.     From your old system, print the following reports:
~ Trial Balance—at current year conversion date
~ Balance Sheet—prior fiscal year
~ Balance Sheet—at current year conversion date
~ Profit & Loss Statement—to current year conversion date
~ Accounts Payable Summary and Detail—at current year conversion date
~ Accounts Receivable Summary and Detail—at current year conversion
   date
~ Payroll Summary and Detail—at current year conversion date

3.     Export data from the old system. (Be certain to keep your old system and all relevant historical data, for backup and validation purposes.) You may choose to make a copy of your data from your old system at the point of conversion. This can be a useful future reference point. This is a particularly important step if you plan to continue using your old system to finish out existing jobs.

4.     Import the data into the new system. This process may only import lists of names and addresses, or it may include actual accounting, budgeting, and job costing data.

5.     Modify data in the new system as appropriate. Be certain to build detail only to produce greater value.

6.     If needed, enter startup balances for the Balance Sheet, the Profit & Loss Statement, Accounts Receivable, Accounts Payable, Payroll, and Inventory.

7.     Enter the current year General Ledger information (if not included in the export/import function above).

Conversion Checklist—continued

8.     Enter the prior year General Ledger information (if needed and not included in the export/import function above).

9.     Enter Job Cost information for current jobs (summary or detail).

10.  Verify, verify and verify! (Use the “print and proof” method to compare information in the old system with the new system.)

11.  Install any customized forms and reports. The customization process should have been completed prior to the final conversion, so that once you begin entering data in the new system, you can immediately produce the reports and forms you need.

12.  Begin using your new system! Change the passwords in your old system to confirm that you still have a copy of your existing data exactly as it was when you converted.

 

KEY POINT: Be certain to document and proof each step of the conversion process, and keep notes throughout. Also, it may be helpful to make backups at each step to be able to redo a process if necessary.

 

Data Conversion - Part 16

Trial Use and Going Live

With your existing software still functioning as your live software, test the new software as extensively as possible. Add data. Create new jobs. Try to make mistakes and then determine how to correct them. Experiment. Attempt to learn as much as possible with this “dummy data” before going live.

After testing and training, the decision can be made to go live with the new software. This should be closely coordinated with all implementation team members, and in accordance with your implementation timeline.

Some companies try to run parallel, which means they keep the existing system running while reentering all data into the new system. This doesn’t work. First, you are asking staff to enter information twice—once in the old, comfortable system, and another time in the new, unfamiliar system. The time commitment to run parallel is extensive. Does your staff have that much extra time?

Second, most systems have different posting methods. Therefore, the reporting between the two systems probably will not look the same, and will need reconciliation. So not only are you asking your staff to do their job twice, you are requiring them to spend another portion of their time reconciling the two systems.

Running parallel is not recommended for accounting data, but it is recommended for any payroll conversion. If you perform in-house payroll, create one or two payrolls in each system, then verify the taxes as well as the net paychecks.

While running parallel may not work in its entirety, it is valuable to continue to work in your existing system, and start using your new system for smaller portions of your daily work. Using smaller program elements is an excellent way to test staff training and understanding of the new program.

 

 

Data Conversion

 

An important element to the overall success of the new software implementation will be how much historical data can be accurately transferred, or converted, from your old system to the new one.

Whether you utilize internal staff or an outside consultant, be aware that the conversion process requires the following four items:

1.     Speed. The conversion should be done as quickly and as efficiently as possible.

2.     Value. You need to determine what will be converted and what won’t. You only want to convert necessary information.

3.     Accuracy. You must trust your data, especially the historical data imported into the new system. Ask what tests and other data verification measures have been built into the conversion process.

4.     Effectiveness. You want as few problems as possible during the conversion process. Be sure to ask questions like: What potential problems might come up? How can the data conversion be done with the least negative impact on staff? What data could be converted but shouldn’t necessarily be done?

Finally, remember the “80/20 rule”—20 percent of your existing data will give you 80 percent of what you need. In other words, you are not going to be able to import all historical data. And that’s fine. Unless you’re simply upgrading from a software program’s previous version to a new version, it will probably be impossible—or extremely costly and impractical—to transfer all data from the old to the new system. Instead, attempt to transfer that 20 percent that will give you the “most bang for your buck” in terms of critical business data.

Another point: Remember, your old data will still be available on your old system. Knowing this, you may choose to transfer as little data as possible to quicken the conversion process. You also can continue to use your old system for just those jobs winding down.

As stated before, expectations play a critical role in the success of your implementation. Do not expect to have an exact duplicate of your old system in your new system. Do not expect that all historical job costs will be included in the new system. The key: transfer only what you need and then move forward with the new system.

 

 

What to Convert

Transfer, if possible, these elements from the old system to the new one:

Files/Information to Convert	Available from Previous System: Y or N?	Date Completed
List-type Data
Chart of Accounts
Customers/Jobs
Vendors
Employees
Payroll Calculations
Cost Codes
Start Up (Beginning) Balances
Balance Sheet Account Balances—Prior Fiscal Year (Optional)
Balance Sheet Account Balances—Current Year
Income and Expenses—Current Year
Open Accounts Payable (Invoices that tie to the total balance in Accounts Payable; optionally, by job and by vendor)
Open Accounts Receivable (Invoices that tie to the total balance in Accounts Receivable)
Job Cost information for current ongoing jobs

Data Conversion - part 15

Data Conversion

The data conversion process involves important decisions. Two key decisions are:

·         How much data do you want to convert?

·         Do you want to convert the data manually or electronically? Often, the answer to the first question can be a function of the answer to the second.

A manual conversion requires you to enter information from your old system into the new one. The advantage of a manual conversion is that it allows you to review all your current information and only input that information needed in the new system. If you have been using your existing software for several years, it probably contains a great deal of information no longer valid or of use. If you are a small company, this is a great way to begin a new system. Data entry also is a good form of training.

However, the disadvantage of a manual conversion is the amount of time and energy it takes to enter all the information.

You also may choose some sort of electronic data conversion. This is certainly must faster, but also imports into the new system all the old or out-of-date information in the current system.

It’s also important to remember that any automated conversion process is only as good as its “mapping”—that is, the program may not place the information in the correct place or in a correct format. And if your current system does not have the same level of detail that your new system has, no electronic conversion will be able to know where all information belongs. For example, if your new system allows you to classify jobs by job type, and your old system did not have job types, then you will need to add this information in the new system after all existing jobs have been created. In other words, it may have been faster to actually enter directly only those jobs that need to exist in the new system.

Finally, if you decide to convert your data electronically, be sure to perform a trial conversion before the final conversion. After the trial conversion, print reports, verify data, and play with the converted data to determine if anything is missing or incorrect.

Data Conversion is discussed in greater depth beginning on page 23.

 

 

Training - part 14

Training

Once the new software has been successfully installed and configured, now is the time for staff to begin to learn how to use the program. This is critical—the time to make mistakes on the new system is now, when using play data and information, not later when the new software is live.

Training can be done in a variety of ways:
          ~ Reviewing user manuals, in-product Help, or using a tutorial book
          ~ During an at-the-office seminar or class led by a software expert
          ~ Attending a seminar or training class at an off-site facility
          ~ At the desktop using a CD-ROM program
          ~ Over the Internet with live or taped classes       

Follow these points regarding the important topic of training:

Ø  Training should be viewed as an investment, not an expense. Money spent on training will be recouped many times over in terms of greater productivity, accuracy, and efficiency.

Ø  As mentioned previously, know that some members of your staff will be reluctant learners because they feel more comfortable with the old system.

Ø  Realize that people learn in different ways. Some will want to read materials, others are more comfortable doing tutorials on their own, while others learn best when shown what to do. Make as many types of training available as possible.

Ø  Many training programs use their own sample date. Be sure to install this sample data to get the most out of the training. However, as you create your own company dataset, make a copy of your data in another section of your computer and rename this “Play Data”. Your staff will learn more quickly if they have the opportunity to play with familiar data.

Ø  Training takes concentration. When conducting group or individual training within your office, prevent staff distractions. Do not have the staff involved in the training session answer the phones. Remember, all except the most dire of emergencies can wait a few hours.

Ø  Plan your training for a date and time convenient for you (not for the training leader or consultant). You may want to schedule night or weekend sessions to keep distractions to an absolute minimum. Perhaps you can conduct the training off-site. Let your staff know that you are making the commitment both to the training and to each individual reaping as much as possible from the training.

Ø  Create an expectation around training. First, let your staff know that training is important to your company. Second, establish a training timeline. Create a schedule, require homework between sessions, and set milestones.

 

 

Customization - part 13

Customization

Now is an excellent time to customize specific elements of your new program to best meet your company’s needs. The customization you require may be minimal or significant. You should explore customizing all elements of the software program, but especially estimating, proposals, forms, and reports.

All basic accounting software programs are similar—they must follow GAAP (Generally Accepted Accounting Principles). However, there are no generally accepted estimating principles, and each estimating software product is different. Therefore, now is the time to delve into the estimating package to determine what, if any, customization will be beneficial to your company.

KEY POINT: If you only implement the accounting part of your new business management software, you may be missing out on a large percentage of the new program’s value.

 

As with estimating, the project management benefits of your new software may be the very reason you selected this program over others. Now is the time to explore what project management features will work for you “as is”, and which features may need to be “tweaked” for your specific needs.

This is also the time to review the reports within the software. Use the software’s sample data to view and print reports. Not only should you try to find reports that are similar to your current ones, you also should review any new reports that come with the new software. Determine which reports you currently use that you “must have”. These reports may exist in the new program in a different format, or they may not be included at all. Most software packages allow some existing report customization, and some level of new report creation. Create a list of reports that must be either customized or created. 

Finally, forms are another example of customization that will need to be addressed. For example, can you continue to use your existing check stock? Is there a way to modify the existing check formats to work with your current checks, or will you need to purchase new checks? Review any forms sent to clients, vendors, subcontractors, or suppliers, such as:

·         Invoices

·         Subcontracts

·         Purchase Orders

·         Change Orders

·         Project Schedules

·         Any documents delivered on a regular basis

 

Which forms work “as is” in your new system, and which ones will need customization?

 

KEY POINT: Before doing any customization, review each form and report. Some may no longer be valuable to your business. In other words, don’t automatically spend valuable time and money customizing all previous forms and reports—be selective.

 

Use the following chart to help with the customization process:

Program Element	Customization Required	Responsible Person	Date Completed
Estimates
Budgets and Proposals
Project Management
Reports, Names
Forms, Names
Other
Other

 

A final point: You will probably need an outside consultant to modify and/or create the forms and reports in the new system. Making simple modifications should be part of your training, but using a consultant to assist with complex customization will save time and be well worth the investment.

 

Implementation setup - part 12

Implementation Setup

Having organized your information, you still need to make decisions and set up your system before finalizing the implementation process. The following chart lists tasks that must be finished before entering any accounting data into the new system:

Task	Required Information	Date Completed
Input Company Information	Company name, address, phone, fax, e-mail, Federal and State ID numbers, etc.
Create Users and Security	List of all software users and passwords. List any parts of the program where you want to limit access to specific users.
Create and Modify Chart of Accounts	Do you want to: 1. Keep your existing Chart of Accounts 2. Use the new system’s Chart of Accounts, or 3. Create a custom Chart of Accounts? (With most accounting programs, it’s much easier to modify the new system’s Chart of Accounts than create one from scratch.)
Create Departments	Do you need Departmental Income Statements? If so, how many and which ones?
Create Subaccounts	Can you simplify your Balance Sheet by creating Subaccounts?
Create Cost Codes	Create a list of line items to classify job costs (may be called Cost Codes, Items, Phases, or any combination of the just-mentioned).
Create Vendor Types	Do you want to organize vendors to sort, select, or report on a specific group of vendors?
Set Up Vendors	What information do you need beyond standard contact information? Tax ID numbers? Workers’ Compensation Expiration Dates? etc.
Create Customer Status Codes	Do you want to organize customers to sort, select, or report on a specific group of customers? (Examples: current customer or prospect)
Create Client Types	Can you create Client Types? (Examples: commercial, residential, etc.)
Set Up Clients	What information do you need beyond standard contact information?
Set Up Jobs	Does your new system distinguish between Clients and Jobs? If so, what additional information do you need for your jobs? (Examples: contract amount, milestone dates, etc.)
Create Budgets for Open Jobs	Which open jobs will you want to create budgets?

Organizing Existing Data - part 10

Organizing Existing Information

Besides the physical installation of the software, you must also organize your existing information prior to entering data directly into your new system.

The following questionnaire will assist the internal team and outside consultants in gathering key information. The information described below does not contain any accounting data, so it can be assembled as soon as possible:

General Information

Company’s Legal Name:            ______________________________________

Company Mailing Address:        ______________________________________

                                                ______________________________________

Phone Number: __________________                Fax: _____________________

Company Web site:                   ______________________________________

Fiscal Year-end Date:                ______________________________________

Outside CPA Contact Info:         ______________________________________

                                                ______________________________________

Number of Jobs per Year:         ______________________________________

Number of Employees:              _______ Union              _______ Non-Union

General Information—continued

Number of Unions:                    ______________________________________

States Where Work                   
is Performed:                            ______________________________________

Other Companies on Software:  ______________________________________

                                                ______________________________________

Other Key Company Info:          ______________________________________

                                                ______________________________________

Key Information from Current System (No accounting balances included)

The following should be readied for transfer to the new system:

·         Customer and Job List

·         Vendor List

·         Employee List

·         Payroll Calculation Rates (State Disability, State Unemployment, Local Payroll Taxes, 401K and other Non-Statutory Deductions)

·         Other Payroll Burden Rates (Workers’ Compensation, Liability Insurance, Health Insurance, Union Benefits, etc.)

·         Year-to-Date Employee Payroll Information (quarter-to-date and year-to-date earnings and deductions, etc.)

·         Job Cost Codes and Item List

 

Please note that now is a good time to clean up these lists—remove vendors, jobs, and other information no longer valid or needed.

Features and Functionality

When implementing a new system, many companies often make the mistake of not preparing all the information needed in the new system. When moving to a new system, be aware of the features included in the new system that were not available in your current (old) system. For example, you may have purchased a new accounting system that now tracks Workers’ Compensation Expiration dates of all your vendors. If this information was not included in your current system, it would be wise to collect this information prior to going live. Otherwise, you won’t gain the benefits of this new feature.

The chart on the following page should be completed and presented to the Implementation Team. In the “Current System” column, list any specific information that you must keep; in the “New System” column, list any new features that you want to address during implementation.

Item	Current System	New System
Accounts Payable
Accounts Receivable/Billing
Asset Management
Change Orders
Equipment Management
Estimating
General Ledger
Inventory Control
Payroll
Production/Scheduling
Purchase Orders
Quarter/Year-end Closing
Tax Preparation
Word Processing
Reports, Names
Forms, Names
Other

Software Installation and Implementation - part 8

Software Installation and Implementation

 

Once you have the team, a plan, and a timeline in place, it’s time to begin the actual software installation and implementation.

Hardware Preparation

The new software must be installed somewhere. This normally happens on:
          ~ one or more desktop computers
          ~ the network
          ~ a combination of the network and one or more desktop computers

Be certain to answer these hardware-related questions:

Will the software be installed on the network?       ____ Yes        ____ No

Will the data be installed on the network?              ____ Yes        ____ No

If yes, does the network have enough storage?     ____ Yes        ____ No

Will the software be installed on desktops?          ____ Yes        ____ No

If yes, which ones?                                              _______________________

                                                                          _______________________

                                                                                _______________________

                                                                                _______________________

Has each desktop been checked for storage        ____ Yes        ____ No
and memory capacity?

 

Installation

Installation is the process of installing the new software program onto the appropriate systems (your company’s server and, if needed, one or more desktop computers). You may rely on an outside consultant or have an internal IT department for this process. Regardless of who performs the installation, be certain to follow the instructions accompanying the software. Also, as you install the program, note all passwords created and any changes to the computer’s configuration (if problems arise, you may need to restore the computer to its pre-installed state).

 

 

Setup and Configuration

Before entering any data into the new system, it must first be set up to work best for your company. For example, you may need to establish the network data path, select specific printers, and create users. This is where the use of a good consultant will be very important; he can help you make the distinction between what choices must be made now that cannot be easily changed later, and what choices can be postponed.

Finally, during this step, the most important process is to establish data backup procedures. Obviously at this initial stage it’s not crucial to protect your sample data; but once you go live with the new system and your own company informa-tion, you must have a clear backup system in place and operating. All too often companies skip this step, only to later spend hours and hours trying to recover
or recreate lost data.

 

Overcoming reluctance to change - part 7

Overcoming the Reluctance to Change

At the beginning of the implementation process, you should be aware of one final element: Some (or many!) system users may be less than thrilled about having to learn and use new software. Change means uncertainty or even fear, particularly when it comes to such a vital part of your business as the accounting software. Even if the existing system has flaws or limitations, people know how to get around these; in other words, they are comfortable with the “way things are.”

To overcome the reluctance to changing software, consider the following:

Ø  Acknowledge to the entire group that uncertainty or fear are normal feelings, and should not be suppressed. As appropriate, have a question-and-answer session or share the Implementation Plan with everyone. (Often what generates the most uncertainty among people is when they simply don’t know what’s going on, or have only a limited amount of information.)

Ø  Describe what training and learning opportunities will be available. Inform the staff at the beginning that they will have considerable help learning, practicing, and using the new software. Explain that while you expect them to become competent in the new software, you do not expect that this will happen immediately, and you will understand when early mistakes are made.

Ø  Remind everyone that you have chosen a new system to make the entire company better. While your current system may have been fine from an accounting standpoint, it may have lacked project management capabilities. A team effort will make the implementation process easier on all. This will be especially powerful if your company has some sort of bonus or profit-sharing program.