tips and hints
Welcome to our flashy new results interface. Part 1 – the annual report
We’ve been working with Nothingrinder for the past couple of months to bring you a much improved benchmark results interface within MyCake. Here’s a preview of what’s now possible.
The annual report
The annual report set of graphs shows you your Profit & Loss sheet as a bar chart. It starts with the top level of information … income, cost of sales, profit, indirect costs and profit.
From this page you can either benchmark your company at this level or you can drill down to more detail on each of these key areas.
Benchmark top level – net profit
… in this example you can see that the top quartile (best 25%) have a net profit of some 54.5%. In this example you can see that the users’ net profit of 31.2% is at least above the average of 22.8% … so in the top half but not the top 25% asks the question of whether they could do better?
Benchmark detail – income
If the questions are “how am I doing and how can I do better?” then we probably need to drill down to more detail. In this example we’ve picked the income line to look at and see how it splits out into the main sales income, any grants received and ‘other’ income (typically expenses charged to clients, non-core products, interest on bank deposits etc).
Some sections of the P&L have more drill down levels than others so at each stage you’re asked if you want to benchmark at this level or drill down further. You know you’ve reached the deepest darkest level when you’re only given a benchmark!
We thought this ability to benchmark at a top level as well as in great detail would be useful for the times when you just need a rough answer to the question of what do others do and how do you stack up? Of course if you’re looking at ways of making cost savings for example you may well want to drill down into just one line of indirect costs … to see what others spend as a proportion of income on an area like travel.
So what might you do as a result of reading this … try this:
- pick a completed year of data (say 2008 or 2009)
- look at what your split of income was across sales:grants:other
- see how these ratios compare to the best, worst, average and top quartile for the whole of the MyCake user base
- sit down with a cup of tea and have a think about what ratio would be good for you to aim for in the rest of the year and 3-5 things that you’ll do differently to help you make this shift (perhaps charging more expenses to clients, finding ways to add some new products into people’s standard orders etc).
In the next instalment we’ll walk you through the What If? calculator to show you how you can use past information to help you plan for the future.
Investment Readiness … using MyCake to help you prepare
If you’re preparing your business plan for discussions with investors, banks or other backers you can be sure that you’ll need to be able to show some quite detailed financial projections. Ultimately this means getting to grips with Excel for those delightful 12 month detailed cash flow forecasts and 3 year financial plans. But the good news is that you can use the data you hold in MyCake to do some scenario planning and ‘what if’ thinking before you start on the heavy stuff.
Here’s what you need to do to get started:
~ 1 to 3 prior years of data … entered either through the book-keeping interface if you’ve been using this to manage the minutiae of your finances or entered through the benchmark annual summaries if you want to add prior years quickly and simply (and don’t need the details of every invoice or receipt)
~ Once these data sets to have been ‘approved‘ you can look at the results section
~ click on the results section and pick say 2008 or 2009 as the annual data set to look at. Click on the graphical results button.
~ of the three types of results information the two key pieces for this activity are the ‘what if’ and the ‘spread sheet’
What if?
What if…
Investors will expect to see a set of scenarios that looks at both better and worse than expected growth. In reality they’ll head straight for the worst case examples and probably calculate yet worse scenarios!
Here are some scenarios you could look at:
- growth of income by 10%, 20%, 50% and 100%
- reduction of income by, 10%, 30% and 50%
- increase of cost base (for a major item such as production or wages) by 30% … do this both for the income growth and the income reduction scenarios
One of the things you are looking for is the breaking point of the business … ie how bad can it get and yet you still survive. I realise this sounds like a negative view on things but success is a good problem to have (and probably means you can throw money at resolving it) where as haemorrhaging cash and failing to achieve income is significantly more painful for you and is a risk that investors would like to avoid (and will also want you to have done risk planning so that you know what to do should these circumstances arise).
When you do ‘What if?’ scenarios it is also useful to write down any assumptions you make. So if your largest client is worth 30% of your annual income one of the scenarios you’d want to look at is what the impact on the business would be if you lost them – would you reduce your staff costs? Would directors take a pay cut? Would you cut an R&D budget? You should also consider how long it would take to replace the client and whether or not you could expect to replace them with one large client or several smaller ones? These assumptions will also have an effect on the speed of financial recovery of the business.
Once you’re getting to this stage you need to be running the cash flow scenarios in excel so make a note of the outcomes on the ‘what if’ page and start translating this into an excel sheet.
MyCake spread sheet
Spread Sheet:
One place to start when putting together the detailed excel stuff is the spread sheet results page in MyCake. Here you can see not just your Profit & Loss sheet for a year (or quarter) on a line by line basis but you can also see how it stacks up against the best and worst in the sector.
You can use this benchmark data to help you build those detailed scenarios of best and worst cases as well as use the information to discuss with investors (especially if you have a financial structure that puts you in the ‘Best’ category for income or key costs). Evidence that demonstrates that you are ‘Best in class’ is always a good carrot to offer an investor!
MyCake ~ a few tweaks to book-keeping service
There are a number of tweaks and improvements for MyCake users of the online book-keeping software:
New fonts for invoices
Tahoma, Verdana and Courier New have been added to the list. In Settings -> Invoice Options -> Display Options, you get to chose the font used on your invoices and other PDF documents.
Postcodes with customer name
Following requests for the ability to include postcodes in the drop-down list of customers (ie, the list shown when you choose a customer or a new invoice) it has been added as an option. Go to Settings -> Advanced Settings and enable the option labelled “Show Post Code in Customer List”. The feature will soon be upgrading to offer a range of other display options.
Manage your list of payment types
You’ve always been able to edit the list of different methods that use to pay for your purchases – ie cash, cheque, credit card. For incoming payments from your customers the list has always been fixed. This wasn’t too much of a problem as the list contained most methods of payment you’d expect. But it’s nice to be able to remove methods you never use. So you can now edit the list of incoming payment methods. Click “Settings” and then choose “Payment Methods”.
Improved layout for settings page
There are so many different settings available that it was becoming problematic to quickly find the setting you are looking for. To improve this, the Settings page has been broken down into the following sections: Your Account, Lists, Configuration Settings and finally External Services. We hope this will make the Settings more manageable.
Priting labels
When viewing a customer or an invoice you’ve always had the option to quickly print either a C5 or DL envelope. You can now use the new option to print a Dymo label.
Changing account codes on multiple transactions at once
If you’ve accidentally recorded a large number of transactions against the wrong code then it can be a real pain to manually edit each one. So there is a new feature to let you do this very quickly. Run a Trial Balance, Profit & Loss or Balance Sheet report. Click on the name of the code containing the offending transactions. You’ll see a list of all transactions against this code for the date range specified. Next to each transaction is a tick box. Tick the transactions you want to move (or use the box at the top of the page to select all) Then at the bottom of the page, from the “Action” drop down list, choose the option to reallocate the transactions. You’ll be taken to a page where you can select which code to reallocate the transactions to.
Converting bank transaction to receipts / automatic code change
If you have a transaction in your bank account for money going out you can convert this to a receipt (or a Purchase Invoice in accountant-speak). If the bank transaction is assigned to the code “Other” then it will be automatically changed to the suppliers default Outgoing Type. This feature can be enabled or disabled in Settings -> Advanced Settings.
Financial planning for growth workshop
MyCake is giving advice at Cockpit Arts’ financial planning for growth workshop on Wednesday 11th August 2010. We invite you to come and explore how to use your own financial information to make more informed decisions about your business.
You’ll look at the pros and cons of different record- keeping systems and which approach is best suited to you and your business. Through practical group exercises, you’ll cover budgeting, financial planning and how to improve your cash flow on a day-to-day basis.
You will also look at improving profitability and using designer-maker case studies, you’ll be taken through a profit and loss forecast and show you how to interpret your own figures to make better decisions about your business.
What you’ll get:
- Guidance on setting up a record system that works for you
- Improved financial literacy and confidence in financial planning
- A clearer understanding of your own business model and how to develop this to improve cash flow and profitability
Wednesday, 11th August 2010 from 10:00am to 12:00 noon.
The cost is £10 and open to studio and non-studio members. Book here
Sales vs. Grants … income defined
What does your income look like and can you see what is at risk re public spending cuts?
Various folks have said they’d like to see how their income splits out between grants and sales. So in order to help you do this we’ve added in a few categories to the standard set of nominal codes in Kashflow and we’ve also added it as a line in the benchmarking side.
Now you can clearly see your income streams and the amount coming through from public funds that may be at risk as the new Government gets to grips with its spending.
If you’d like a hand working out how to make this separation in your own figures so that you can track the vissicitudes and variations in this area then please do have a look at the benchmarking forms or drop us a line …
prune your list of VAT Rates
Within MyCake, you will see that all relevant VAT rates are listed, based on your default currency symbol. This can be slightly annoying if you only ever use a couple of the available VAT rates.
You can choose which rates should be listed in your drop-down box by adjusting your account settings. Simply go to Settings – VAT Settings. Near the bottom of the page you’ll see the option to add and remove rates ~ it looks like this:
How to prepare for VAT return changes
From 1 April 2010, all existing VAT-registered businesses with an annual turnover of £100,000 or more excluding VAT – and all businesses newly registering for VAT – will have to submit their VAT returns online and pay any VAT due electronically (for example by Direct Debit, internet or phone banking etc).
If you think you will have to submit your VAT Return online from 1 April 2010, you should take the following action now:
- Register and enrol for the VAT online service. (You will need to do this to submit your VAT Return online, whether you choose to use commercial software or HMRC’s free online service.)
- Talk to your accountant if they will be submitting your VAT Return online on your behalf and discuss what you both need to do, to ensure you meet the deadline for your first online return.
- Consider whether you need to change any of your business processes for checking and signing off your VAT Return.
- Identify your preferred form of electronic payment (eg Direct Debit, internet banking, etc) and set up the necessary arrangements. There are lots of electronic payment methods to choose from.
- If your business has to pay your VAT by cheque, make sure you order from HMRC the necessary Bank Giro paying-in slips (preprinted with your and HMRC details), which you will use when paying in your cheque at a participating bank or building society. For more information on how to order the paying-in slips see the link below ‘Read more about ordering Bank Giro paying-in slips’.
You might also want to set up the email reminder service (this is a free service which reminds you when your next online VAT Return is due). You set this up by filling in your email address on the ‘At a glance’ screen, once you have registered and enrolled for the VAT online service.
Full details are given in HM Revenue & Customs’ guide: moving from paper to online VAT returns and paying electronically.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
TIP: If you are using MyCake for book-keeping you can submit your VAT return direct from the software.
add notes to a bank account within MyCake
We wish we could say you can literally add money notes to your bank account but instead we have a handy new feature for MyCake users.
You can add notes to individual bank accounts. We hope this will enable you to easily administer your accounts and have a central source for any information you need for your bank accounts such as SWIFT or IBAN numbers. You can add notes by going to the bank section and clicking the edit details for the account you would like to add a note to.
Correlating hourly rates and turnover
This post is a complement to the analysis undertaken for Artquest in the March – May 2010 newsletters. For more details on our partnership with Artquest click here.
The graph below shows the 2007-8 MyCake benchmark data. That large blue & yellow columns shows that the folks with the best income are also the ones who charge the highest hourly rates.
In the blue columns we have the overall benchmark across all MyCake users.
In the brown columns we see the average, max & min hourly rates for businesses with a turnover of less than £10,000.
In the yellow columns we see the average, max & min hourly rates for businesses with a turnover of over £50,000.
If you’re a MyCake user you can benchmark your own data (rather than just look at these general results) from in the results section of the benchmark. See this post for a how to guide to reading your results.
A longer list of sales types and outgoing types
Here at MyCake we’ve been burning the midnight (ok weekend) oil to bring you a better & more detailed list of income and expenditure types. With help from Frank Alice we are pleased to say that this is now live.
This means that all new users will get this list automatically. It wouldn’t be appropriate for us to change the codes for existing users but we thought you might like to help yourself to the below and make your own changes as you see fit …
The generic sales types list is now:
The set of outgoing types is now:
And the set of bank transaction types is now:
Enjoy!
Search
Subscribe
