Finance Presentation
•
•
•
•
•
Aidan O’Byrne
OBK Accountants/
The Food Accountants
aidan@obk.ie : www.obk.ie
Background
Ex Finance Director Batchelors/Ex CFO
Valeo Foods
Founder director of Love Irish Food
• 80% Mark
Identification
• Significant
Annual Media
Spend
Food Accountants
• Accounting &
Advisory to Food
Companies of all
Sizes
• Mentor Role
•
•
•
•
Fundraising
M&A
Non Exec Director
Restructuring
Contents
•
•
•
•
Recap on Food Academy Start
Capital & Funding Structure
Internal Business Controls
Preparing for Growth
Recap on Food Academy Start
• C – Cash
• I – Information
• P – People
Cash
• Cash will always be King
• Financial Activity not valuable until it
delivers cash
• Cash allows founders to deliver on
their goals
Cash – Lack of Cash leads to
•
•
•
•
Firefighting
Compromising Quality
Scrambled Thinking
Business Failure
How to Maximise Cash - Debtors
•
•
•
•
•
Bill Promptly
Bill Accurately
Understand your Credit Terms
Have Credit Check Procedures
Have Credit Limits
How to Maximise Cash - Debtors
•
•
•
•
•
Debt Review Procedures
Payment by Direct Debit
Process Credit Notes
Have Rapport with Payer
KPI Days Sales Outstanding
How to Maximise Cash - Stock
• Buy in Economic Quantities
• Trade Off Price & Holding Costs
• Use all Stock before Changing
How to Maximise Cash - Creditors
• Understand Pressure of Suppliers
• Extend Terms
Understand your Cash Flow
•
•
•
•
Annual Cash Forecast in Months
Split into Component Parts
Identify Peaks/Troughs
Monitor every Month & Amend
I - Information
• Profitability
• Flash Reports
• Accounts
Information :Profitability
• How to make Profit
• Understand all the Moving Parts
Profitability
•
•
•
•
•
•
•
•
•
•
•
•
Sales
LTA/Rebates
Net Revenue
Direct Costs – Variable
Direct Costs – Fixed
Promotional Costs
Logistics Costs
Brand/SKU Contribution
Fixed Overheads
EBIT
Interest & Tax
Profit
Breakeven
• Always understand how much you
need to Sell to Breakeven
• Breakeven INCLUDES your expected
Return from the Business
Sales
• Know what your Net Revenue per SKU
is from Each Customer
• Consider all LTA’s – Rebates
Costs
• Always have an Up to Date Bill of
Materials
• Review before each critical business
decision
• Sign off each month
Direct Costs - Variable
• Raw Materials incl waste : Can you
resell waste
• Packaging Materials incl Waste
• Logistics Inwards for Raw/Pack
• Currency Implications
• Direct Labour
• Direct Energy
Direct Costs – Fixed/Quasi Fixed
• Plant Insurance
• Supervisory Labour
• Factory Consumables
Promotional Costs
• Reduced Margin
• Racks/Ends Fees
• Multibuy Accruals/Costs
Logistics
• Case cost of Warehousing
• Case cost of Transport/Distribution to
Retailer
Fixed Overheads
•
•
•
•
•
Administration Costs (incl Wages)
Rent/Rates
Selling & Marketing Costs/Salaries
Training
Safety & Compliance
Information – Flash Reports : Daily
•
•
•
•
Sales – by product / customer
Service Levels
Stockouts
Cash
Information - Accounts
• Monthly P&L , Balance Sheet, Cash
Flow
• Compared to Budgets/Forecasts &
Variances noted & explained
Information – Accounts : KPI
•
•
•
•
•
•
SKU Growth
Retailer Growth
Average Order Size
New Order as % of First Order
Debtor Days
Working Capital Investment
P : People
• Founders spread themselves too thin
• Learn to trust others with your
Business
• Have Key skills internally –
(Production/Sales/Finance)
• Outsource your weak areas
Capital & Funding Structure
• Most small businesses have poor
capital structures which leads to cash
problems when unforeseen issues
arise
Capital & Funding : Equity
•
•
•
•
•
Own Equity : Shares & Loans
F & F Equity
EIIS Scheme
Venture Funds/Angels/HBAN
Crowdfunding
Capital & Funding : Debt
•
•
•
•
•
•
Overdrafts
Term Loans
Asset Finance
Invoice Discounting
Micro Finance Ireland
Covenants : Read Them & Comply!!!
Capital & Funding : Trade/Revenue
• Understand Terms of Trade : Fine line
between good creditors management
and annoying suppliers
• Use Revenue – PAYE/PRSI/VAT can be
paid at different intervals
Capital & Funding : State
•
•
•
•
•
•
•
•
EI/LEO – myriad of opportunities
Priming Assistance
Web Site Assistance
New Frontiers Programme
HPSU
Competitive Start Fund
Innovation Vouchers
Mentors
Capital & Funding : State (Grow)
•
•
•
•
•
•
•
Strategic Marketing
Market Access
Internationalisation
International Selling
R&D Funds
Lean Programmes
Green Programmes
Internal Business Controls
• Starts at the Top
• Owner attitude drives Company
Philosophy
• If a LTD co remember it is not your cash
it is the company’s cash and you own
shares in the company – not the same
• Do not treat company funds as your own
Internal Business Controls – Why ?
•
•
•
•
Safeguard Assets
Prevent Fraud
Improve Reporting
Encourage Good Management
Safeguard Assets
• Physical Security
• Access Controls in IT –
Passwords/Firewalls
Prevent Fraud
• Most fraud is internal
• Have Segregation of Duties
• No one should control all the process (Order
to Payment or Despatch to Receipt)
• Regular Reconciliations – Bank/Stock
• Compulsory Annual Leave
• Authority Levels
• Review & Investigate
Improve Reporting
•
•
•
•
•
•
Chart of Accounts
Regular Management Information
Compare to Forecast
Do Timely
Review, Measure and Manage
Staff Competency
Improve Reporting
• VAT Rates Signoff – Issues
• Cash Payments – Know Implications
thereof : For less than 30k provide
about 20% for Tax
• Subsistence/Mileage
Encourage Good Management
•
•
•
•
•
On Site Statistics
Sales
Growth
Days since last accident
Improves Morale/Transparency
Food Academy Advance - Growth
•
•
•
•
•
Production
Sales & Marketing
Distribution
Accounting & IT
Compliance & Tax
Advance - Production
•
•
•
•
•
Capacity
Manpower
Maintenance Costs/Shutdowns
Availability of Raw/Pack
Food Safety Compliance
Advance – Sales & Marketing
•
•
•
•
•
Resources (HQ, Field)
Self Service or Distributor
Promotions – Costs
Promotions – Mechanisms
Promotions – Synchronising Accounts
& Sales/Marketing
Advance - Distribution
• National Distribution
• Warehouse – Rotation, Pick Rates,
Traceability
Advance – Accounting & IT
•
•
•
•
•
•
Larger volumes
Technical Skills
Front End Sales Reporting
Budgeting & Forecasting
Daily Dashboards
Checklists – BOM’s/Revenue/Promo
Calendars
Advance – Compliance & Tax
• More scope for difficulties
Compliance & Tax
• VAT Rates Signoff – Issues
• More scope for Difficulties
• Cash Payments – Know Implications
thereof : For less than 30k provide
about 20% for Tax
• Subsistence/Mileage