PRG – Financials for Non-Financial People (or A Funny Thing Happened on my Way to be an Activities Director David Ellison - Owner of Ellison Management & Training; Owner of Connections in Ohio

My Background Math Major turned Psychology Major Came up through the Human Services Ranks – Direct Support, to Program Manager, to Administrator, and Now Owner Never taken an accounting course – Yet reputation is in building and fixing business financial models

For Start Up or Small Companies Set up a Relationship with a Tax Accountant IMMEDIATELY!! Establish Cash or Accrual Accounting Software for Small Companies – Either Quickbooks or Peachtree will work Let the Tax Accountant set up the G/L Categories and Instruct on Routine Entries You do not need an Accountant inside your company when you are small (or maybe middle sized up to $5M)

MUST HAVE These Reports Monthly Financial Summary Sheet – by the 7 th of the month Biweekly Productivity Data – by the 5 th day after the payroll ends Simple Budget with very few categories and then OTHER!! – Only track categories that account for the major costs and/or can be managed by day-to-day managers Cash Flow Report – update every two weeks - I have spent two whole webinars on this alone.

Why Cash Flow Charting in a Business When I have (or Don’t Have) a Budget 1)Cash Flow Charting shows you a cash crisis faster than budget tracking 2)Cash Flow Charting anticipates cash crunches, such as a 3 payroll month or a Workers Comp payment 3)Cash Flow Charting shows you the cash aspects of growth or adding a new line of business

Productivity Data Flows Naturally Out of Cash Flow Charting 1)Accounts Receivable Chart – accounts for next billing cycle and any back billing 2)Billability and Overtime Chart – EVERY Key Leader in your Business should know your Overtime rate for the last 2-3 payroll cycles 3)Payables Expectation Chart – both monthly and less frequent – I have used this every month for over a decade 4)Payroll Summary By Team – Looks at overtime and non-billable hours in every team at one glance for everyone

Who are Budgets & Financial Reports Really For?? 1)12 Months a Year – Financial Reports and Information are to “manage” the business – So they must be simple and fast 2)1 Day a Year – They are for tax accountants!! 3)Whether you are a “cash” or “accrual” company in your accounting, there is only ONE DAY that the financials are REAL – The last day of the yearly accounting period!!

If Reports are Late or Do Not Have Useful Information, it tells me: 1)The Financial Person does not understand their role, which is “to get daily managers fast and simple information to make decisions.” 2)The Program Managers do not care about financial indicators, OR are too passive to request better information.

Keep Budgets & Budget Reporting Very Simple Account for the big ticket expenses – wages, payroll taxes, benefits, mileage, supplies, telephone, program activities, etc. – In my company, these manageable costs account for 85% of all expenses. The rest I put in OTHER. If your company has capital – buildings and vehicles – then these are tracked separately within the budget. Create budget estimators for all major categories – remembering that the WHOLE is more important than the parts – Modify the budget quarterly or at the half year based on performance and the WHOLE Simple Budgets and Budget Reports are in the best interest of the Managers, the Board, and the Investors

Line of Credit  In a low margin industry, a line of credit is critical. This is even more important in a retro payment business that pays you after the service is provided.  Cash Flow Charting leads to solid productivity results that shapes your company to be a good applicant for a line of credit.  The line of credit should be enough to cover one payroll at the start, and then you keep updating annually until you get to one month’s expenses.

Bottom Line 1.Cash Flow is King, Queen, and Court Jester!! 2.Keep Budgets & Budget Reporting Simple 3.Productivity Reports naturally flow out of cash flow, budgets and financial reporting – both tracking outstanding receivables and biweekly monitoring and management of expenses 4.Timely reports allow for solid management and VERY quick modifications in a low margin industry 5.Budgets, Financial Reports, and Productivity Data are the backbone of the front line success of any company – So they need to be SIMPLE, FAST, AND VERY USER FRIENDLY!!! 6.Most Importantly, common sense is your friend, despite what others will tell you!!!!

Questions or Comments Please contact David Ellison –