Cranking up the profits

How do we boost the bottom line? – without doubt the most hackneyed question in business.

There are 2 obvious solutions, (a) Cut operating costs and (b) Boost Revenue. If you’re the FD you’ll probably aim for the double.

The Sales Director only has one shot in his/her armoury namely increase sales. Sales targets can always be raised but a sense of commercial realism also needs to be applied.

If you are marketing a totally unique product or service the task is easier but for the most part there are many companies offering a similar range of products in a broadly similar price range.

As such for most companies it is about getting back to the basics – ensuring orders are processed efficiently and in a timely fashion.

Following up on customer satisfaction, in short providing what in old fashioned terms was called “service”.

 

Tapping the barometer

Very often the best indicators are the least sophisticated. The UK economy remains in a very fragile state – the clearest evidence of this can be seen as you walk down any High Street.

The rising number and popularity of charity shops tell underscore that many families are struggling whilst at the same time the spectre of Administration looms large.

The UK Chancellor may have to extend the squeeze on public spending until 2018 if the recent deterioration in growth prospects and tax receipts turns out to be permanent, a think tank has said.

The Institute for Fiscal Studies said George Osborne may have to find another £11bn from tax rises or spending cuts if the economy does not pick up.

With many people continuing to struggle with debt and job insecurity it is hard to imagine a return to the heady days of consumer excess.

As the knock on effect percolate back down the chain many businesses will suffer.

External factors by definition are difficult to handle but at the same time in-house disciplines can at least provide some insulation.

Cash-flow will be very difficult to manage over the coming months so as always strict governance of Debtor and inventory control will provide some measure of comfort.

 

Spot the fault line

The Financial Services Authority (FSA) has fined UBS £29.7m ($47.6m) for failings that led to trader Kweku Adoboli losing £1.4bn.

The regulator fined UBS for "system and control failings" that allowed him to trade in London well beyond authorised limits.

The FSA, which conducted the investigation into failings at the bank with its Swiss counterpart, Finma, said there were serious weaknesses at the Swiss bank.

It said in a statement: "UBS failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems, and failed to conduct its business from the London Branch with due skill, care and diligence."

In the financial markets exotic trading products and programmes were created which like the Frankenstein monster quickly became uncontrollable. Risks were taken on an unprecedented scale and those supposedly monitoring risk were “asleep at the wheel”.

Recklessness was encouraged and became the default position. There were no checks and balances – it became for the participants in the so-called casino bankers a safe bet.

What’s the worst that could happen following a spectacular flame out?Maybe you lost your job and had to move to another bank or institution. Get it “right” and the rewards were sky high.

Whenever there is a bonus culture unless the supervisory systems are rigorous there will be potential for abuse.

Whether through greed or stupidity there will always be people willing to take potentially catastrophic chances.

What is required is that the senior management spend less time forecasting their own bonus and more time scrutinising the bottom line and understanding how results are achieved. Until this balance is in place disasters in the financial system will continue to occur.

KYC - know your customer

In the US this basically refers to a due diligence process undertaken by Banks and financial institutions to combat fraud, identity theft and general scams.

It is however a mantra that most organisations would do well to adopt.

Rapid advances in technology continue to transform the way we do business. Everyday business tools would have been regarded as flights of fancy not so long ago. With the unstoppable rise of e-commerce come challenges.

One of the biggest dangers is the lack of personal contact between a company and its customers. Obviously this is not an issue for online retaillers selling product over the net and being paid via a Debit card or Pay Pal etc.

However the is an increasing trend for B2B ales to be concluded by email and even SMS. With the loss of the personal contact the identity and customer relationship suffers.

The surest way to avoid problems is by knowing your customer and understanding their business.

This relationship and mutual understanding cannot be achieved via a key pad and electronic ordering system.

 

Local knowledge - a valuable resource

 

One of the most valuable commodities available to any organisation is local knowledge.

How many times has a venture ended badly owing to a basic failure to understand and deal with local market conditions? 

The UK is a mature and sophisticated market and though offering different challenges than for example operating in a 3rd World destination there are still obstacles in trying to establish a presence.

Operating overheads present a crucial challenge and this is where we can assist you to achieve a cost-effective solution to marketing your products in the UK.

Take a look at our website www.glbconsulting.co.uk

or check out our video link http://youtu.be/ruUtQnlJwVM

 

‘tis the season to be – focussed

 

In recent times there has been the tendency for the Christmas holiday season to stretch out over a number of weeks and therefore with just over a month to go to Christmas it would seem an appropriate time to consider the implications for business.

Without doubt of biggest concern to SME’s will be the impact on cash-flow. Many companies are operating very close to the edge and any delays in payment could have serious consequences.

In some instances invoices which fall due for payment after the 17^th December could well not be settled until the 3^rd January – giving an at worse scenario of 3 weeks delayed payment.

It would therefore seem prudent to look at your last half December receivables and make a realistic forecast of just how much cash will “come in”.

Similarly with “just in time” inventory it would be sensible to ensure that sufficient stock will be on hand for the early days of January when there will be inevitable disruptions to the supply chain.

Trying to get things done in the UK during the latter half of December will undoubtedly prove to be a challenging task so it would be best to ensure you take appropriate action now and are positioned accordingly.

A true and fair representation?

By: PETER SVENSSON (AP)

NEW YORKCopyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

40.7143-74.006

Hewlett-Packard Co. said that a British company it bought for $9.7 billion last year lied about its finances, resulting in a massive write-down of the value of the business.

CEO Meg Whitman avoided calling it a fraud, but said Tuesday that there were "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation PLC."

HP is taking an $8.8 billion charge in its latest quarter largely to align the accounting value of Autonomy with its real value.

Whitman said Autonomy's financial illusion started to unravel after founder and CEO Mike Lynch left on May 23. A senior Autonomy executive then volunteered information about the accounting shenanigans, prompting an internal investigation, she said. 

The case has been referred to the U.S. Securities and Exchange Commission and the UK's Serious Fraud Office, she said. The company will also try to recoup some of the cash it paid for Autonomy through lawsuits. 

On a conference call with Whitman following the earnings report, analyst Ben Reitzes of Barclays Capital asked who will be held responsible internally for the disastrous acquisition. 

Whitman answered that the two executives that should have been held responsible — Apotheker and strategy chief Shane Robinson — are gone. But the deal was also approved, essentially, by the current board.

Quote most of the board was here and voted for this deal, and we feel terribly about that," Whitman said. "What I will say is that the board relied on audited financials. Audited by Deloitte — not 'Brand X' accounting firm, but Deloitte. During our very extensive due diligence process, we hired KPMG to audit Deloitte. And neither of them saw what we now see after someone came forward to point us in the right direction unquote.

The magnitude of this problem is huge but in itself it is not an unfamiliar scenario. 

Essentially there are many instances of conflict of interest such as taking on consultancy work for Clients and becoming too cosy with management teams. 

It is all too easy for companies to bully the young staffers sent in to do the grunt work.

For example what chance has a newly appointed auditor walking around a factory warehouse to adequate value stock? In reality they have to rely on the company for “valuations” and this can result in a totally inaccurate picture being presented. 

The validity of a company’s accounts reflects the integrity of the company which is being audited. 

As was demonstrated with the banking crisis in Spain an unrealistic valuation of the property portfolio either through deviousness or sheer incompetence ll ultimately had disastrous consequences.