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 7th of
the month
• Biweekly Productivity Data – by the 5th 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.
2.
3.
4.
5.
6.
Cash Flow is King, Queen, and Court Jester!!
Keep Budgets & Budget Reporting Simple
Productivity Reports naturally flow out of cash flow, budgets and
financial reporting – both tracking outstanding receivables and
biweekly monitoring and management of expenses
Timely reports allow for solid management and VERY quick
modifications in a low margin industry
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!!!
Most Importantly, common sense is your friend, despite what
others will tell you!!!!
Questions or Comments
• Please contact David Ellison –
ellisonmt@columbus.rr.com