Tag Archives: chief financial officer

Blog No 48 – Best Practice Tips

Where are you at?

 Financial Year ¾’s done

As you would all be aware, we are now more than ¾’s through the current financial year. It is a busy time of year so I thought I would share my best practice timings for working on your business, rather than in it.

Best practice timings

In my view, best practice timings for working on your business are as follows:-

  1. Activity Based Costing (ABC) project covering the December quarter actual numbers to be undertaken. The work on this snap-shot costing and profitability exercise covering all products/services for the December quarter should be undertaken during the January/February/March period. The information derived from such an ABC project provides excellent profit insight and cost behaviour understandings and are your most powerful strategic tools. Being armed with such knowledge BEFORE your annual strategic planning process is invaluable. Knowing where you make and lose your money is the very most important step in formulating a strategy and should have been completed by now. Have you?
  2. Strategic Planning – Your off-site strategic planning workshop/think-tank should be undertaken during March with your management team. Identify and prioritise what your new strategic initiatives for the following 12months will be. This is done as a precursor to the preparation of the annual budget for the following financial year. This will ensure new strategies are incorporated into the budget thus creating accountability and ownership for executing such new strategies for the next financial year.
  3. Forecast full year 2017 9+3 – once your March financial numbers are completed, undertake your 9+3 forecast using 9 months of actual numbers to March and forecast the last 3months. The 9+3 forecast exercise is to be completed in April and comes up with a FY2017 full year forecast. This provides the best starting point for the baseline of your next financial year budget.
  4. Budget next financial year – combining your 9+3 forecast, strategic planning initiatives and other factors such inflation, growth etc. you will work on your budget for the next financial year during the May/June period ready for July 1st start of new fiancial year.

2nd Annual Manufacturing Survey

Our second annual manufacturing survey has closed and produced some interesting results. The personalised reports to survey respondents will be distributed shortly. Thanks to those folks for their participation.


So, those are my best practice timings of key business activities. Are you on schedule? Do you disagree with my approach?

Don’t hesitate to share your best practice views on timings with me.

Ross – Billson Advisory

Blog No 46 – Insight and Incite

Last week I attended the annual MYOB Partner Incite Conference (yes I am a partner with MYOB)!

Over 1,000 of us filed into the Melbourne Convention Centre to be greeted by a jazz band and seating that ranged in style from beanbags to bench seats to a variety of coloured hard chairs. Quite funky!

The CEO of Lonely Planet Gus Balbontin (who was once homeless scavenging food off restaurant tables!) spoke of disruption and we were presented with updates on the evolution of MYOB and it’s soon to be released brand transformation “The Next Big Thing”.

Three Pillars

The evolution of technology presents you the business owner/manager with productivity opportunities and scope for fee reductions. It is clear that the three pillars of an Accounting practice is also shifting with technological change.

  1. Transaction processing – with bank feeds and artificial intelligence, data entry is getting more and more automated. Please ensure your bookkeepers and data entry folk are using bank feeds to improve productivity and hence reduce fees you pay for transaction processing services.
  2. Compliance – traditional annual reporting, tax returns and BAS are also being more automated and streamlined thus reducing the time taken to provide such services. You also should be pushing for fee reductions from your external Accountants for these services ensuring that the productivity gains they are getting through technology is being passed onto clients.
  3. Advisory – traditional practices are finding that they need to offer these services to sustain their income streams as the above two pillars shrink. Interestingly MYOB survey indicates that 7 out of 10 unmet needs of business clients is in the area of Advisory services. These include performance monitoring, forecasting and business planning. So ensure your Accountant is capable of offering these services, and if they are not capable of such, or are not meeting your requirements in this area, don’t hesitate to look for help from experts in this field.

MYOB Advanced

MYOB’s ERP system offering MYOB Advanced is Australia’s only integrated cloud ERP and Payroll solution, so if your system needs have moved beyond the MYOB AccountRight or Essentials offering, MYOB Advanced is worth considering. This is particularly true of you manage inventory, either purchased or manufactured.


Software vendors like MYOB are offering standard functionality to improve productivity and reduce the costs of your transaction processing and financial and tax reporting requirements. Ensure you keep on your Accountant/Bookkeeper to pass savings onto you and that they have the skillset and want to provide essential business advisory services.

Ross – Billson Advisory Part-Time Virtual CFO

Blog No 45 – Planning and Accountability

It is hard to believe but we are already one-eighth through the 2017 year, and more than 60% through the 2017 financial year!

I drove passed this sign below at the weekend and thought it appropriate for this week’s blog.


Did you make any resolutions back on January 1st? How are they going for you and are they still in play?

Or don’t you believe in making resolutions? Or are they tracking along nicely?

Ticking things off you bucket list? Losing some weight? Getting more exercise? Drinking less? Spending more time with family?

New Year’s Resolutions are a bit of a festive laugh, often with the best of intentions, but like any fad, they tend to come and go quickly.

Business Plans

This leads me onto your business plans.

You might recall we went through your strategic planning process last year? As we are more than half way through the financial year, how are your strategic business plans playing out?

Are they a bit like your New Year’s Resolutions and have gone by the by? Or are they on track and delivering the results you envisaged?


It is clear that when you are accountable for something, you are more likely to focus on it. If you are a business owner or a business leader, one of the simple ways you make yourself ‘accountable’ is to tell someone you respect what you are going to do and commit to giving them a regular update as to your progress. If you are a manager of staff, the best way to ensure staff accountability is to build the plan objective into the employees ‘promises’ and ensure that it’s delivery is measurable and forms part of their annual performance appraisal, and hence pay review.

Dare to Dream

We all have dreams about our futures, whether that be a personal dream, business dream, dream-job, family dream or money dream. But imagination can only get you so far. At some point, it’s actions that count. It’s the same with resolutions and business plans, actions count.

Dare to dream – but commit to act!

Ross – Billson Advisory – Virtual Part-Time CFO

Blog No 43 – The Future of Accounting

Last week we looked at the history of Accounting. This week we look at the future of the profession from my perspective.

The Future of Accounting

The ongoing evolution of technology means the role of the Accountant and Bookkeeper continues to change. The traditional bookkeeper is unfortunately one of those occupations to be replaced by robotic intelligence and Optical Character Recognition (OCR) technology in the future. In other words the data input into your financial ledgers will largely be automated.

The future is also clearly uncertain for traditional compliance focussed Accountants and Tax Accountants of traditional Accounting practices with ongoing automation of these tasks reducing the work required. The ATO is playing their part in simplifying and automating the lodgement process and integrating the data from our computer systems into the Taxation Office systems.

This is seeing the shift of traditional Accounting practice service offerings towards more advisory services, although the lack of experience and the ability of such practitioners to provide such services is brought into question. As an example, the Virtual Part-Time CFO offering that some practices are starting to offer is being offered by personnel in those practices who have not even been a CFO or Accountant from industry. The hands-on experience of industry accountants is far different from the experience of a public practice career tax accountant. So be careful when looking at such advisory services.

The modern accountant in business is a more strategic and value-add focussed professional who uses the base information generated from the ‘books’ as a source of data on which informed management decision making can be based. Partnering with businesses remains key.

Outsourcing and The Future of Accounting

A trap modern accounting practices are falling into is the trend of outsourcing and offshoring basic compliance and bookkeeping work to cheaper countries. This traditional training ground for local graduate accountants is being lost meaning there are fewer local graduate opportunities. This sets the scene for a skill shortage in the future for mid-level Accountants and the next generation of business Accountants over the coming 20years in my view.


The future of the Accounting profession continues to be disrupted by technology. In my view, the Accountant of today is a very different professional then the Accountant of the future. Data and analytics will become more and more important and the profession must continue to evolve to stay relevant in the changing landscape.

Ross – Billson Advisory

Business Blog No 39 – Blockchain

A new emerging technology is receiving quite a bit of publicity of late, that technology is called ‘blockchain’. Discussions on blockchain do appear vague and theoretical at this stage, due to the newness of the concept. It is however touted as a new secure internet based method of exchanging value.

Still in it’s infancy, the best way to describe the technology is as follows.

What is Blockchain?

Blockchain technology is basically a secure decentralised database that is a public register of assets and transactions in blocks of data. These blocks of data are single views of the truth in what can be described as an open ledger. As transactions occur, additional blocks of data are linked together to form the so-called block-chain. Transaction history is thus locked up in the linked blocks of data thereby creating an everlasting record of all the transactions across the blockchain network.


As a bit of background, we have always ‘traded’ and used some middle-man to enforce, facilitate or verify a ‘trade’, such as a bank or a marketplace. Blockchain technology means that traditional ‘middle-men’ are not needed to transact business. So it is likely that the disruption to the banks and the banking system will be the most obvious point of evolution of the technology. Bank to bank international settlements are an obvious opportunity for blockchain technology with one international bank quoted as saying that the technology could save $20billion per year to the world’s banks within 6years. Bitcoin, the digital currency, is an example of the use of blockchain technology, but there remain limited examples of it’s practical application currently.


The cost savings, efficiency improvements, speed, plus security profile are the big pluses of the blockchain technology.

There are many projects out there looking at using ‘blockchain’ including the banks, the ASX, CSIRO, Start-Ups and the Federal Government.

So why are the banks getting involved in this new technology when it will impact them so much, potentially adversely in terms of fee revenue? They clearly want to get on the ‘front-foot’ and be early adopters of blockchain before somebody else comes in and disrupts them. Even now, there are already ‘fintech’ peer-to-peer offerings on the web whereby currency is exchanged without bank involvement, such as CurrencyFair. The banks want to stay one step ahead of any long-term threats and blockchain is their big weapon and also greatest threat in one.

What will become of currency and banks in the future?

What will become of cash in the future?

What will become of paper-based transaction processes?

The internet and technology are rapidly evolving so rapidly and it’s impact on the way we live and transact and do business can only but change along with it.


The likely impact of blockchain is expected to be substantial but its impact remains some years off. So be aware what blockchain technology is, but as sure as the sun will rise, the practical application of the technology will extend far beyond what is envisaged so far.

Ross – Billson Advisory

Business Blog No 38 – ATO Digital Showcase

Last week I attended the ATO Small Business Digital Showcase at the new ATO Offices in Dandenong.

It is clear that the ATO are working hard to engage with small business and help with your tax and superannuation obligations and improve your overall experience with the ATO.


The showcase was split into 6 individual showcase rooms with each group of around 15people being taken around the six separate displays areas one group at a time. Key points from the morning showcase are as follows: –

  • The ATO’s Small Business Newsroom will deliver all the latest tax and super news straight to your email inbox. So, I suggest you sign up for this.
  • ‘Alex’ the ATO’s new online Virtual Assistant, will help answer basic tax and superannuation questions.
  • The free ATO app gives quick access from your mobile devices to key dates and frequently asked questions. A voice authentication option is available with a small business record keeping function under development.
  • Your Sole Trader myGov account can be used to manage and view tax instalments, make payments and lodge statements.
  • Sole Traders can now use voice authentication and cloud authentication to access online services.
  • There is an online tool available to help you determine if your workers are classified as an ‘employee’ or ‘contractor’ (and hence clarify your obligations to them).
  • All businesses with employees are now meant to be on SuperStream with the free online super payment clearing service available to pay contributions in one transaction available.
  • A new simpler BAS product has been launched with a Single Touch Payroll product under development.
  • There is an online checklist for ‘taking on a new employee’ at business.gov.au

Some key ATO phone numbers for your reference follow: –

Business: 13 28 66

Super: 13 10 20

24-hour self-help service: 13 72 26


The ATO are actively trying to reduce red tape for small business. The showcase was a great example of the ATO’s pro-activeness in this area. Jump onto their website at www.ato.gov.au/SBsupport for more information.

Ross – Billson Advisory

Business Blog No 36 – Workplace Flexibility

You may have been hearing quite a bit of reporting on the evolution of the workplace to a more flexible on-demand and freelance style lately? Publicity on this topic has been supported by statistics whereby a recent survey of ASX200 companies identified around half of these top 200 listed companies said around one-fifth, or 20%, of their workforce would be on an ‘on-demand/contract’ arrangement within 3 years (Australian Financial Review).


A recent McKinsey survey also identified that between 20-30% of working age Europeans and Americans do some form of independent work. They range from ‘free-agents’ who work independently by choice; ‘casual earners’ who by choice are looking to supplement their incomes; ‘reluctants’ who would prefer traditional employment but can’t get it; and the ‘financially strapped’ who do extra work as a matter of necessity.

The Business Perspective

Even the increasing percentage of part-time workers in the Australian manufacturing sector is an indication of the evolution of this dynamic workplace in Australia. It demonstrates how businesses can move to make their labour costs more variable and less fixed, thereby making a business such as a manufacturing enterprise more sustainable and competitive.

Full time staff are becoming more seen as ‘generalists’ with ‘specialists’ only being added only if, and when, their specialised skills are required. So a baseline of permanent full-time employees is supplemented by part-time, casual, freelance, on-demand and contract personnel.

This not only lowers the overall cost of labour for such businesses but enables them to tap into the super-specialists rather than relying on training up or making do with internal staff to do specialists tasks, which they may or may not be equipped to do. For the company, it is a win-win!

Extending this scenario a little further, the ‘flexible’ workplace is also seen a major attraction for businesses to become ‘employers-of-choice’. Workplace flexibility is seen as a key for future business success with technology being both a driver as well as an enabler of workforce flexibility. Employees are also seeking more flexibility in their lives (both inside work and outside work) and companies are working in an ever evolving 24/7 marketplaces. So, to offer a flexible work environment is a big positive to many prospective employees thereby enabling a business to be able to select from a wider range of candidates in theory.


The Individuals Perspective

It is just not businesses who are enjoying the benefits of this new flexible, mobile and on-demand workforce, individuals who work in such environments are also enjoying this new ‘portfolio careers’. These individuals may be the super specialists whose skills are in demand and so work with a variety of employers, rather than one single entity. Not only do they earn more by doing this, but they thrive on the variety of freelancing, temporary jobs and casual or part-time employment thereby deriving income from multiple sources. These ‘portfolio careerers’ may even opt for unrelated types of income or may also follow a passion that may not in itself pay enough to make a living. A seasonality factor may also be attractive to some individuals such as tax agents for instance.


So where does this lead us to?

The evolving ‘on-demand’ world we live in is clearly extending into the workplace. It is a winner for both businesses and individuals!

Pardon the pitch, but I can proudly say that Billson Advisory is an example of such a business that enables entities to tap into a part-time/Virtual CFO offering as well as specialist costing skills on a flexible and as-needs basis. Rather than having a full-time CFO on your payroll, use our ‘Virtual CFO’ or specialist Costing services on a weekly or monthly or quarterly basis or ad-hoc basis thus providing a sound foundation for business success.

Ross – Billson Advisory

Business Blog No 35 – Q1 – Forecasts

The first three parts of this four-part series reviewing your first quarter actual results, verses Budget and Prior Year, covered your Profit and Loss, your Balance Sheet and your Cashflow Statement. Now that you have reviewed your actual results for the quarter, you next need to look at your forecasts for the remainder of the full financial year.

Using accounting vernacular, the 3months of actuals plus 9months forecast will give you your 3+9 full-year forecast. When you come to redo your forecasts after Q2, that new forecast will become your 6+6 full year forecast.

Interestingly this is perhaps the most important part of your Q1 review because your historical reports are a reflection on where you have been, whereas the forecast is where you are going based on latest assumptions.


You have already undertaken a budget process for the year, so you don’t want to go through another budget process to come up with your 3+9 forecast. You do however want to use your budget, and the assumptions on which the budget has been built, as a starting point and adjust it for known material changes, updates, variances or changes to your base assumptions. I recommend using your budget spreadsheet models and rename them to ‘forecast’ and adjust the numbers accordingly to come to your 3+9 forecast.

The development of your phased 3+9 forecasts for the full financial year should be co-ordinated by your CFO/Controller and needs to be presented at your management review meeting to ensure buy-in and sign-off by the management team.


Profit and Loss (P&L)

As with the budget P&L, sales are the starting point for your full year forecast. You now have the first 3months actual sales so you need to forecast the remaining 9months of the year. Get your Sales Manager to have a look at the budget sales for the 9months to the end of the year and update as required to become your forecast sales. Summing the 9months forecast plus the first 3months actuals will give you your 3+9 P&L Full Year Forecast. The review of sales projections needs to take into account your segment outlooks, forward orders, inflation data, pricing assumptions, economic conditions etc. so that your budget sales figures can be updated to reflect more current circumstances and assumptions and hence become the forecast sales figures.

Based on any revisions to the sales forecast verses the original budget, you will need to make corresponding adjustments to your direct costs (direct labour, overheads and materials if you are a manufacturer). As with sales, you will also need to adjust for other known variations to your budget assumptions to your expenses and overheads. If you need to contain costs to compensate for downward sales revisions, these proactive adjustments need to also be reflected in the forecasts. Similarly, if your business is performing ahead of budget, you might need to consider increases to budget overtime levels, increased manning etc. and reflect these incremental changes in your 3+9 P&L Forecast.

Balance Sheet

Starting with your budget Balance Sheet, run the forecast updates to the P&L into your Balance Sheet to arrive at a prima-facie 3+9 forecast Balance Sheet. Further, adjust your Balance sheet for any other known or pro-active changes to your Debtors, Creditors, Inventory, Capital Spending assumptions etc. and other Bank/Funding requirements to arrive at your phased 3+9 Balance Sheet forecast.

Cashflow Statement

By updating your P&L and Balance Sheet forecasts, you will have a revised phased 3+9 Cashflow Forecast. This is a key report and will make you aware of your funding requirement changes from Budget to Forecast. You need to make sure the forecast funding outcome is both logical and explainable and passes the ‘sniff-test’ when you step back from the detail.


Use this week to derive your 3+9 full year phased forecasts and understand the variations in your forecasts to your Budget P&L, Balance Sheet and Cashflow Statement. Going forward, you will need to measure your actual results against both your budget and forecast numbers as well as prior year numbers, thus providing a sound foundation for business success.


Now we have completed the four-part Q1 Report suite, we will revert back to our usual newsletter content. If anyone has any issues or questions they would like covered in future editions, please don’t hesitate to contact us.


We have recently moved from our Dandenong South location to be more central to our client’s locations. You will now find us at Ground Floor, 203-205 Blackburn Road, Mount Waverley, VIC, 3149. Our new phone number is (03) 9847-6834. As always, if you need any help or want a no obligation chat, don’t hesitate to contact us.

Ross – Billson Advisory

Business Blog No 34 – Q1 Cashflow Statement

This is the third part of a four-part series looking at the first quarter results of the 2016/17 financial year.  Previously, we have looked at the Profit and Loss and the Balance Sheet Reports. This week we look at the Cashflow Statement and undertake a quarterly review of your actual Q1 results compared to the budget and prior year.

Your Accountant or CFO or Virtual/Part-Time CFO should be providing you with your management reports and analysis within a week following month-end in a concise but comprehensive slide deck of six or seven slides/pages. The Cashflow Statement will be one of the slides in the slide deck, which should be presented and discussed at your management review meeting.

In relation to the last two newsletters, it is interesting, but not surprising, to note that the Profit and Loss Statement newsletter received 30% more ‘reads’ then the Balance Sheet newsletter. The pre-occupation with profit is understandable, but Balance Sheet management is just as important as Profit and Loss achievement.


I suspect that this newsletter with get less ‘reads’ than the Balance Sheet newsletter, but it really is a key part of this trio of management reports. The Cashflow Statement pulls the Profit and Loss Report plus the Balance Sheet report together to show how the movement in cash balances has occurred during the quarter.

Cash of course is the key number for SME’s, without it, your business will certainly fail, hence the importance of the Cashflow statement cannot be understated.


Back in Newsletter 20, you created your Budget Cashflow Statement. Using that same format, below is an example of a Cashflow Statement slide showing actual values/movements for the Q1/2016-17 (Column B), Budget for Q1 (Column C) and then the prior year Q1 actual values (Column C); refer Figure 1 below. Graphs and charts can also be used for illustration purposes.

Each variation exception should be reviewed by your Accountant or CFO in the first instance comparing budget and prior year figures and flagging variances/issues. TIP: I use a colour code system of RED (PROBLEM), ORANGE (WARNING) and GREEN (GREAT) as an effective flag for exceptions (refer Figure 1).

By understanding the assumptions on which the budget Profit and Loss and Balance Sheet numbers have been derived, you should be able to understand why your actual Bank Balance figure vary to the budget. At a macro level, in the example I have used over the last two newsletters, we achieved higher than budget profit, and yet our cash balances are well short of budget. The reason for this is we are carrying excess inventories, our Accounts Receivables balances are higher than budget and we are spending in capital faster than budget. Refer Figure 1 below. Actions should be taken to address these issues clearly.



Use this week to understand and analyse your Cashflow Statement for Q1 as it is the lifeblood of your business and provides a sound foundation for business success.


Next week will move to the fourth Q1 report, Forecast Report.


We have recently moved from our Dandenong South location to be more central to our client’s locations. You will now find us at Ground Floor, 203-205 Blackburn Road, Mount Waverley, VIC, 3149. Our new phone number is (03) 9847-6834. As always, if you need any help or want a no obligation chat, don’t hesitate to contact us.

Ross – Billson Advisory

Business Blog No 33 – Q1 Actual Balance Sheet

This is the second part of a four-part series looking at the first quarter results of the 2016/17 financial year.  Last week we looked at the Profit and Loss, this week we look at the Balance Sheet and undertake a quarterly review of your actual Q1 results compared to the budget and prior year.

Your Accountant or CFO or Virtual CFO should be providing you with your management reports and analysis within a week following month-end in a concise but comprehensive slide deck of six or seven slides/pages. The Balance Sheet will be one of the slides in the slide deck, which should be presented and discussed at your management review meeting.


The Balance Sheet is a report that shows ‘what you own’ and ’what you owe’ at a point in time, ie September 30th in this case. What you own are your Assets, and what you owe are your Liabilities and Shareholder’s Equity.


Back in Newsletter 19, you created your Budget Balance Sheet. Using that same format, below is an example of a Balance Sheet slide showing actual values as the end of Q1/2016-17 (Column B), Budget for end Q1 (Column C) and then the actual values as at the end of Q1 for the Prior Year (Column C); refer Figure 1 below. Graphs and charts can also be used for illustration purposes.

Each line of your Balance Sheet should be reviewed by your Accountant or CFO in the first instance comparing budget and prior year figures and flagging exceptions. TIP: I use a colour code system of RED (PROBLEM), ORANGE (WARNING) and GREEN (GREAT) as an effective flag for exceptions (refer Figure 1).

By understanding the assumptions on which the budget Balance Sheet numbers have been derived, you should be able to understand why your actual Balance Sheet figures vary to the budget. Key numbers such as Working Capital should have particular attention, refer Row 4 in Figure 1 below.

Ratios are also an excellent way to identify the health of your Balance Sheet. Some good examples include Stock Turns (if a product based business); Debtors Days Outstanding; Working Capital %; Quick Asset ratio, Return On Funds Employed (ROFE). Your Accountant or CFO should be across the best ratios to use for your particular business.


That is the beauty of Accounting and the ‘numbers’. When you understand what is behind them, you become more aware of issues in your business and can address them and measure the impact of your actions.


Use this week to understand and analyse your Balance Sheet as at the end of Q1 to provide a sound foundation for business success.


Next week will move to the third Q1 report, a Cash Flow statement.

Ross – Billson Advisory