This document discusses various aspects of financial operations and management for a professional services firm. It covers topics such as financial planning, accounting systems, financial reports, financial health, managing cash flow, overhead expenses, project expenses, and financial strength. The key aspects discussed are setting financial targets through planning, using accounting to track revenues, expenses and profits, analyzing financial health factors like profitability, liquidity and solvency, and controlling costs like overhead and cash flow. The overall aim is to effectively manage the finances and stay operational.

1. FINANCIAL OPERATIONS

2. WHY?
AIA
To Stay in Business
Are we making Profit?
Enough to cover Payroll &
expenses
Set aside upgrade funds
Price- to stay in business & deliver
quality Service

3. 1. Financial Systems
2. Financial Planning
4. Acquiring Capital
3. Financial Health

4. SOURCES & USES OF FUNDS:
>Revenues- from Projects
>Capital infusions
>Any associated business ventures
>Misc Sources
FINANCIAL SYSTEMS

5. SOURCES & USES OF FUNDS:
>Direct Expenses- support project activities
-Salary & Consultant expenses
>Salary- time charged by Staff
>Consultants - outside service w/ mark -up
>Other expenses -travel, phone, etc.
FINANCIAL SYSTEMS

6. SOURCES & USES OF FUNDS:
>InDirect Expenses- Indirectly supports
Proj
-payroll burden & Admin costs
>Payroll burden- benefits
>Admin costs-management,
marketingeduc. Etc
-rents, taxes (2.5 x DSE)
FINANCIAL SYSTEMS

7. SOURCES & USES OF FUNDS:
>Profit- Difference of Revenues &
expenses
-sustains practice
-cushion for lean times
-reward
-funds for investments
FINANCIAL SYSTEMS

8. ACCOUNTING SYSTEMS:
Project & General Accounting
Proj. Acctg- Labor, other direct expenses
+overhead Expense (%)or 150%
Gen. acctg- keeping acctg books
FINANCIAL SYSTEMS

9. ACCOUNTING SYSTEMS:
>Chart of accounts
>Assets-Owned by the Firm (Car, Condo,
Office, equipts)
>Liabilities- What firm owes to others
FINANCIAL SYSTEMS

10. ACCOUNTING SYSTEMS:
>Net worth- what firm owes to the owner
>Revenue- Money earned during acctg
period
>Expenses- Firm’s Cost to produce
revenue
>Profit or Loss- difference of revenue &
expenses
FINANCIAL SYSTEMS

11. ACCOUNTING METHODS:
>CASH & ACCRUAL METHOD
>Cash Methods- what cash on hand
>Accrual Method- Revenue records even
not yet received
FINANCIAL SYSTEMS

12. FINANCIAL REPORTS:
>Income Statement
- moving picture
-summary for a particular period
>Balance Sheet – snapshot
-net worth at a particular time
FINANCIAL SYSTEMS

13. -Sets Target for pricing & operating costs
-Effective way- sets guideposts:
profit targets, staffing needs
& costs in providing the level of
service
FINANCIAL PLANNING:

14. Business Planning
>Active instead of Reactive
“Big Picture”
>Annual Financial Plans:
-Revenue Projection
-Staffing Plan
-Overhead Cost
-Profit plan
FINANCIAL PLANNING:

15. Revenue Projection
- OnGoing Proj
- Upcoming Proj
FINANCIAL PLANNING:

16. Staffing Expense
- Current
- Future Hiring
FINANCIAL PLANNING:

17. -Continually assess to stay healthy
-to achieve practice goals
>To check:
1. stay in Business
2. fulfill promise to clients
3. fulfill own practice
4. provide rewards-performance, risk, ROI
FINANCIAL HEALTH:

18. 3 Factors in Financial Planning:
FINANCIAL HEALTH:
PROFITAB
ILITY
LIQUIDITY
SOLVENC
Y

19. 3 Factors in Fiancial Planning:
-Profitability-excess of revenue over
expenses
-Liquidity- convert asset to cash w/ ease
-Solvency- meet finacial obligations as
they come
FINANCIAL HEALTH:

20. PROFITABILITY:
>Required at 3 levels
-For Firm, provide capital
investment, endure downward
cycle, sustain growth
-For people, Rewards
- For Owners- ROI
>Project cycle: Perform services, invoice,
collect cash
>Office Loss- due to failure in one of it.
FINANCIAL HEALTH:

21. LIQUIDITY:
> Fixed Asset (Long Term) - Real Estate,
Car, Equipments
> Current Asset (Short term) - Cash
Key? Invoicing regularly
FINANCIAL HEALTH:

22. SOLVENCY:
>Feels the day to day effect of Profitability
& Liquidity
>Solvency & Profitability – closely related
FINANCIAL HEALTH:

23. MANAGING CASH:
>Solvency is a problem
>Cash Flow Projection:
- Forecast Billing
- Forecast collections, other
investments
- Forecast payments
- Combine & calculate
FINANCIAL HEALTH:

24. MANAGING CASH:
>Cash Flow Controls:(Active)
- continuing flow of proj
- Billing promptly
- monitor receipts & pursuit
collections
- Control disbursements
- prepare cash budgets
FINANCIAL HEALTH:

25. MANAGING CASH:
>Cash Flow Controls:(Active)
- continuing flow of proj
- Billing promptly
- monitor receipts & pursuit
collections
- Control disbursements
- prepare cash budgets
FINANCIAL HEALTH:

26. MANAGING CASH:
-Continuing deficit solution:
- refinance a major asset
- adding capital
- retain earnings than distribute
- Control disbursements
- defer expenditures
FINANCIAL HEALTH:

27. FINANCIAL STRENGTH:
>Working Capital- min. amount to sustain
the firm in business
> Receivables- largest current asset
>Profit- 10-15%
FINANCIAL HEALTH:

28. MANAGING OVERHEAD:
- 30-40% of Revenues
- 100-200% of Direct Salary
- Too High > No Profit
- Too Low > affects Qlty
FINANCIAL HEALTH:

29. MANAGING PROJECT EXPENSES:
> Direct salary, consultants, travel,
repro, models, etc. directly related
to Proj.
> Impt Principles:
- Utilization> keeping staff engaged
in Proj
- Productivity > Degree to generate
revenue
Net Multiplier = Net Revenue / DSE
P3 = P3 / P1
FINANCIAL HEALTH:

30. Overhead Expense
The Profit Plan
- Compensate employees
- capital
- Reward for the risks
-By percentage
-or by profit target
Individual Project Planning
-Right Clients & Projects
- Appropriate Price
- Contracts
- Staff with Talent & Experience
- Good management
FINANCIAL PLANNING:

31. Fostering Creativity:
Accept New Ideas
Encourage Risk-taking & Failure
Allow individual Efforts
MANAGING PEOPLE

32. Fostering Creativity:
Provide Professional Growth
Reward Contributions
Communicate “Big Picture”
MANAGING PEOPLE

33. Determining the Need:
Adds to Firms’ capabilities &
achieve practice
ADD, REPLACE, TRANSITION
Questions: NOW & FUTURE,
Better & Brighter, Most Positive
Impact
RECRUITING & HIRING

34. Determining the Need:
REVIEW- Billings, Work to be
done, skills needed,
compensation, equipments
OPTIONS: Contractual Services,
Loaned Employees
RECRUITING & HIRING

35. R ec r uiting:
Employee R eferrals from c urrent Staff
Adver tis ing
U niver s ities
R E C R U I T I N G & H I R I N G

36. R ec r uiting:
Sear c h Fir ms & Exter nal R ec r uiter s
Employment Agenc ies
Ongoing R ec r uiting
R E C R U I T I N G & H I R I N G

37. Sc r eening & Inter view ing:
R eview R es umes -Standard or open
s tyle
Ste p s : Ap p lic a tio n L e tte r, Ph o n e C a ll,
Interview
R E C R U I T I N G & H I R I N G

38. Sc reening & Interviewing:
Applic ation Letter :
1. C omplete & On - Time
2. C over Letter, R es ume < Ac c ur ate
3. Exper ienc e fits
4. Employment H is tor y Pr ogr es s ion
5. Expec tations matc h the Needs
6. Wor k Sample Matc hes ?
7. C ompens ation Matc hes
R E C R U I T I N G & H I R I N G

39. Sc r eening & Inter view ing:
Phone Call - Verific ation in Details
Inter view - J ob -related C r iter ia
Fo llo w - up Phone c all,Letter or e - mail
(If rejec ted) Brief & Fac tual
R E C R U I T I N G & H I R I N G

40. Selec tion:
Written, or verbal then written
Letter - J ob C ategor y, w or k s c heudle ,
pay r ate, other benefits
Big Fir ms - H andbook
R E C R U I T I N G & H I R I N G

41. Or ientation:
Initial D ays - deter mines long - ter m
employee < c arefully planned &
exec uted
Infor m ever yone for the new c omer
Infor m Mis s ion, C ultur e & Values
R E C R U I T I N G & H I R I N G

42. Or ientation:
Infor m Mar k ets & Pr ojec ts
Inform Internal Res ourc e & s upport
Ser vic es
R E C R U I T I N G & H I R I N G

43. In itia l Pe r io d :
3 - 6 Months
Fr equent Feedbac k
Appr ais al
R E C R U I T I N G & H I R I N G

44. Employee < Impt. Res ourc e < Retention
is mos t impt .
Sens itivity to N eeds & As pir ations
S T A F F D E V E L O P M E N T

45. Key fac tor s :
Rec ognition
Open C ommunic ation
J ob Stability
H igh w ages
S T A F F D E V E L O P M E N T

46. Super vis ing:
Help individual to s uc c eed
C hallenge & R ec ognition
Challenge - involve in “Big Pic ture”
S T A F F D E V E L O P M E N T

47. Super vis ing:
R ec ognition< Pos itive Feedbac k vs
N ega C r itic is ms
Sp e c ific p r a is e
S T A F F D E V E L O P M E N T

48. Super vis ing:
C ommunic ation:
- Infor mal Ever yday c ontac t
- For mal R egular Mtgs
- Off- s ite r etr eats
- Soc ial Events
S T A F F D E V E L O P M E N T

49. Per for mance Appr ais als : &
Profes s ional Devt
Appr ais al - Look s Bac k w ar ds
- Per for manc e vs J ob des c r iptions
- Improves performance
Pr ofl D e vt- look s at Futur e
- Gr ow th
Timin g - R egular
- Onc e a/ yr
- or team r eview
S T A F F D E V E L O P M E N T

50. Tr aining, Lear ning & Pr ofes s ional
D evelopment:
Retention advantage
For ms :
C o n fe r e n c e Fe e s
Tuition Fee
Profes s ional as s oc . Time
S T A F F D E V E L O P M E N T

51. Tr a i n i n g , L e a r n i n g & P r o f e s s i o n a l
D e v e l o p m e n t :
P r o g r a m s :
M e n t o r i n g
I n - h o u s e P r o g r a m s - c o n t i n u i n g
o u t s i d e S e m i n a r s - b u d g e t / y r & r e p o r t b a c k
Tu i t i o n r e i m b u r s e m e n t - s e t b u d g e t &
C r i t e r i a
I n t e r n D e v t P r o g r a m
C i v i c P a r t i c i p a t i o n
S T A F F D E V E L O P M E N T

52. Tr a i n i n g , L e a r n i n g & P r o f e s s i o n a l
D e v e l o p m e n t :
P r o g r a m s :
M e n t o r i n g
I n - h o u s e P r o g r a m s - c o n t i n u i n g
o u t s i d e S e m i n a r s - b u d g e t / y r & r e p o r t b a c k
Tu i t i o n r e i m b u r s e m e n t - s e t b u d g e t &
C r i t e r i a
I n t e r n D e v t P r o g r a m
C i v i c P a r t i c i p a t i o n
S T A F F D E V E L O P M E N T

53. D oes n ’t C lic k
Pers onal R eas ons
For Other s
BIG IMPAC T
T E R M I N A T I O N , L A Y O F F, A N D
P E R F O R M A N C E I S S U E S

54. Voluntar y R es ignation:
Par t in Good ter ms
2 week s notic e
not dis s uade if s omeone is dec ided
pos s ible ear lier
Exit Inter view
T E R M I N A T I O N , L A Y O F F, A N D
P E R F O R M A N C E I S S U E S

55. Ter mination:
N ot s ur pr is e, infor med of impr oving
per for manc e
Planned meeting
Objec tive r eas ons
from defens ivenes s to Tears
Pr oc edur es befor e leaving
T E R M I N A T I O N , L A Y O F F, A N D
P E R F O R M A N C E I S S U E S

56. Layoffs :
C r unc hTime
C os t- c utting -Be H ones t
Severanc e pay
T E R M I N A T I O N , L A Y O F F, A N D
P E R F O R M A N C E I S S U E S

57. Per for mance Pr oblems :
inform> verbal or Memo
1.State Is s ue
2.Employee’s p t of view
3.As k s olution
4. Agree on Ac tion Plan
5. Set Time to r eview
T E R M I N A T I O N , L A Y O F F, A N D
P E R F O R M A N C E I S S U E S

58. Per for mance Pr oblems :
Coac hing tips :
C our teous & R es pec tful
Ac tive lis te n in g
Attend to non - ver bal c ues
Avoid jumping to c onc lus ions
R eac h a C onc ens us
T E R M I N A T I O N , L A Y O F F, A N D
P E R F O R M A N C E I S S U E S