Friday, May 31, 2013

Understanding The Language Of Fnance For Non Financial Managers

This article will take you through the maize of financial jargons and show you how income is calculated by finance experts to help you better understand your financial statements. This is a resource for non financial managers. I start of with very simple questions. What is income? How is it calculated? Very often, non financial managers and experts make the mistake of calculating income as the amount of cash received, totally oblivious to credit sales. This is not correct because strictly speaking income is related to services or products that are delivered and accepted by customers without any dispute in return for a fee. As long as the services or products have been delivered in line with the requirements agreed between the two parties and the customer accepts the goods and services thereby accepting liability to make payment immediately or sometime in the near future, income has materialise. So the key to determining what is income can be summed up as delivery of goods and services by the supplying organisation and acceptance by the buying organisation. When these two activities have occurred, cash need not be paid by the buying organisation or individual to determine income. Cash may be paid immediately or not as the case may be where the supplying organisation offers credit for 30 days (shorter or longer). Another important point to note is when the activity takes place. This determines the period the income arise. In short, if the activity takes place in 2011 and buyer make payment the following year, the income is accounted for in 2011 not the date the cash was received in relation to the transaction. Use this as a generic approach to guide you and you will always get it right.

It is important to note that what constitutes income for an organisation is very much dependent on the nature of the business. For commercial profit making organisations, income will be the sale value of services or products in money's worth. For public sector or voluntary organisations (such as charities), income will mainly be the sum total of fees, grants and voluntary donations received during the year as well as the value of any services or products sold in money's worth. In the case of the governmental accounts, income will be mainly derived from revenue collected through tax assessments and other levies paid by individuals and businesses.

The size of an organisation's income is dependent on a number of factors:

Commercial profit making businesses

- The size of the market the business operates (i.e. the number of people and/or businesses who need the products or services of the organisation and have the means to pay for them).

- The size of the business clients or customer base in relation to the overall market size - as defined in the previous point. This represents the demand for the business' services or products.

- The price customers are charged for products or services. It is important to note that the price customers are charged will be influenced by the costs of producing the products, the business' profit margin policy (i.e. how much profit is required), the quality of the products relative to products from competitors and the intensity of competition in the market.

Profit margin is simply the difference between the selling price and the cost of producing the goods or services sold.

Non commercial not for profit businesses

- The range and level of services provided
- The importance of the organisation's services or products as perceived by governmental bodies and other funders.
- The financial resources of funders/ governmental bodies giving grants, relative to the demands on their funds.
- In the case of services or products being sold in return for money consideration, the amount customers are willing and able to pay, the number of customers and any regulatory restrictions placed on the organization.

The government
- The amount of revenue generated from taxation and other levies imposed on individuals and businesses.
The amount generated will depend on the tax rates, size of business profits and individual earnings/profits, government economic policies, as well as the number of taxes and efficacy of the tax system.

Having a good understanding of the relationships between the factors that determine the size of a business income goes a long way in helping users of financial statements to analyse the financial performance of the business.

Let us now look at a few examples to strengthen our understanding of income determination for the purpose of the financial statement.

Example 1- Illustrates how a private restaurant will determine its income

A restaurant provides a range of meals to customers. Customers can either buy their meals and eat in the restaurant or take their meals home. The restaurant charges a fixed price for eating in or take away meals. During the course of the year, the restaurant sells 200,000 meals at an average price of ?10 per meal. Assuming all meals were sold on a cash basis (i.e. no credit was given to any customer), the income of the restaurant is simply:

No of meals sold multiply by the average price per meal.
This is 10 x 200,000 = 2,000,000

Let us look at another example involving credit and cash sales

Example 2

Suppose the restaurant in example 1 sold 100,000 in cash and the remainder 100,000 on credit at an average price of 10 per meal. Suppose its accounting year is 1st January to 31st December. At the end of the financial year (i.e. 31st December), although the restaurant sold all 200,000 meals, only 100,000 meals were paid for fully. 100,000 meals valuing 100,000 still remains unpaid.

The total income of the restaurant is still the total meals sold (200,000) multiply by the average selling price of ?10 per meal.

Notice nothing has changed as far as the total income calculation is concerned

Looking at both examples, the total income is not restricted to services or products that customers actually paid for. The total income is the value of the services or products sold during the financial year for which the financial statement is prepared. This is an area that sometimes confuses non-financial experts, as they sometimes feel the income should be restricted to the cash received for services provided during the year. This is not the case when preparing the profit and loss accounts or income and expenditure accounts.

In preparing financial statements, accountants are guided by a principle known as the accrual principle. There is no need to be confused or worried about this term.
It simply means that the value of all services or products provided to customers should be accounted for in the financial year they occur. Similarly, the value of all services or products received from suppliers must be accounted for in the financial year they occur regardless of whether the business has paid for them or not.

Let us now turn our attention to the non-commercial /not for profit businesses. We have already seen that the income of this type of business can vary considerably. Income sources can include grants, donations from the public, legacy from supporters, fundraising income, and sale of second hand products or gifts.
The nature of the main income source tends to be voluntary. As a result the amounts pledged cannot be demanded if not paid. For instance, if a supporter pledges 5,000 and fails to pay the pledge, the organisation cannot demand the payment as in the case of a commercial business that provides services in return for cash consideration. For that reason, income is normally limited to actual cash received during the course of the year except where there is a contractual agreement, with a governmental body or a reputable organisation, to provide services in return for grants. In such cases, the grant donors will put in place systems of accountability that will ensure that the voluntary organisation provides the level and quality of services it expects for the market concerned. Where such an arrangement exists, then income will be determined on an accrual basis. This implies, the value of the grants for the contracted services delivered during the year will be quantified and recorded as income irrespective of whether the grants have been paid or not.

I do hope this article has helped you understand how income is calculated and how to interpret income in financial statements.Attending training courses such as Finance For Non Financial Managers delivered by organisations like ours can help you quickly learn the tools of the game and apply the skills correctly within your organisation. To find out more about how we can assist you, visit us at

Author: Sheila Elliott FCCA, MBA- Founder of BSS Management Consultancy and author of My Business Is My Business.



Transformational Leadership Theory - The 4 Key Components in Leading Change & Managing Change

Transformational leadership theory is all about leadership that creates positive change in the followers whereby they take care of each other's interests and act in the interests of the group as a whole. James MacGregor Burns first brought the concept of transformational leadership to prominence in his extensive research into leadership.
"Essentially the leader's task is consciousness-raising on a wide plane. The leader's fundamental act is to induce people to be aware or conscious of what they feel - to feel their true needs so strongly, to define their values so meaningfully, that they can be moved to purposeful action."
In this leadership style, the leader enhances the motivation, moral and performance of his follower group. So according to MacGregor - transformational leadership is all about values and meaning, and a purpose that transcends short-term goals and focuses on higher order needs.
At times of organisational change, and big step change, people do feel insecure, anxious and low in energy - so in these situations and especially in these difficult times, enthusiasm and energy are infectious and inspiring.
And yet so many organisational changes fail because leaders pay attention to the changes they are facing instead of the transitions people must make to accommodate them.
In my view it is the responsibility of the director leading the change to supply an infusion of positive energy.
The transformational approach also depends on winning the trust of people - which is made possible by the unconscious assumption that they too will be changed or transformed in some way by following the leader.
The transformational approach also depends on winning the trust of people - which is made possible by the unconscious assumption that they too will be changed or transformed in some way by following the leader.
This is often seen in military commanders and wartime political leaders. An example of this would be the way in which Lady Thatcher - as Prime Minister of the UK Government during the Falklands War in 1982 - was able to engender an enhanced feeling of British national identity amongst the UK population.
Sounds like this leadership style is ideally suited to change management, doesn't it? However - this approach requires absolute integrity and personal behaviour that is consistent and resonant with your vision and message.
I can recall a ridiculous situation, at one UK company I was involved with, where the directors were attempting to effect a culture change of greater inter-departmental trust and communication yet still retained a separate directors dining room and specially allocated car parking places closest to the office front door!
OK here's the important bit - how NOT to apply transformational leadership theory to change management
- Be preoccupied with power, position, politics and perks
- Stay focused on the short-term
- Be hard data oriented
- Focus on tactical issues
- Work within existing structures and systems
- Concentrate on getting the job done
- Focus processes and activities that guarantee short-term profits
Doesn't all this just sound like a description of a typical good project manager with a task driven mentality?
And hey, I have nothing against this style of leadership and management. There is a time and place for the Attila the Hun school of leadership. I have done it many times myself and very effectively - and with no regrets.
But, this leadership style is not enough in a change management situation and particularly in the current climate.
The four components of the transformational leadership style are:
(1) Charisma or idealised influence - the degree to which the leader behaves in admirable ways and displays convictions and takes stands that cause followers to identify with the leader who has a clear set of values and acts as a role model for the followers.
(2) Inspirational motivation - the degree to which the leader articulates a vision that is appeals to and inspires the followers with optimism about future goals, and offers meaning for the current tasks in hand.
(3) Intellectual stimulation - the degree to which the leader challenges assumptions, stimulates and encourages creativity in the followers - by providing a framework for followers to see how they connect [to the leader, the organisation, each other, and the goal] they can creatively overcome any obstacles in the way of the mission.
(4) Personal and individual attention - the degree to which the leader attends to each individual follower's needs and acts as a mentor or coach and gives respect to and appreciation of the individual's contribution to the team. This fulfills and enhances each individual team members' need for self-fulfillment, and self-worth - and in so doing inspires followers to further achievement and growth.
Transformational leadership applied in a change management context, is ideally suited to the holistic and wide view perspective of a programme based approach to change management and as such is key element of successful strategies for managing change.
And, to ensure that you ARE employing successful strategies for managing change - that are appropriate to your organisation - you need to know how to apply: (a) these transformational leadership skills, AND (b) how to apply the supporting programme management based processes - to ensure that you avoid the catastrophic 70% failure rate of ALL business change initiatives.
For more on this: " Transformational leadership theory "
I invite you to take advantage of this FREE download: Starting the Change Process "
Find out the 3 main reasons for the 70% failure rate of all step change initiatives and how to avoid it. This FREE 29 page document offers a brief introduction to some of the key themes and key points that you need to consider in starting the change process.
Stephen Warrilow, based in Bristol, works with companies across the UK providing specialist support to directors delivery significant change initiatives. Stephen has 25 years cross sector experience with 100+ companies in mid range corporate, larger SME and corporate environments.
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Friday, May 17, 2013

Advantages and Disadvantages: Continuous Ink Supply System

Before, printing solutions can cost you thousands of cash, especially if it's bulk printing we're discussing. But with the advent in the continuous ink supply system out there today, printing becomes cheaper and much more accessible for all people. This printing system truly attracts to budget consumers given it guarantees to print more at this type of low-cost price.

There are certain circumstances to which continuous ink supply system was basically thoroughly involved with , which then comprises continuous flow system , automatic ink refill system , bulk feed ink system , and off-axis ink delivery system . However all these terms indicate to a certain thing: the printer device is redefined to make certain it does produce high volume of liquid ink to the small ink printhead , in this way providing method for an unlimited, efficient printing alternative . With regards to this type of printing system, you don't have to change cartridge for refilling. The ink source in a common printer that uses a continuous flow system is placed outside the printing device: a set of outboard printing bottles that attaches plastic tubes to the ink printhead .

When you plan to think about continuous ink supply system for your printer you probably may also measure the advantages and drawbacks for this printing system, and determine if the efficient far counteract the flaws in your case. To guide you to think about this, the following below provides you with a concept on how the continuous ink flow system is being noticed these days for as long as advantages and disadvantages are concerned.

Continuous Ink Supply System: Advantages

• This printing system is low-cost and very budget friendly. It would make printing considerably available to every users, both student and professional. Anybody can produce a lot of documents as it can for half a value of a typical tank-on printhead designs.
• This printing system works with large quantities printing. If you happen to own a business that offers printing solutions then this printing system is efficient and affordable for your usual operational needs. If you need to obtain the printed documents eventually you probably may like to consider this.
• This printing system is reliable. A printer with a continuous ink supply system will produce documents without throwing away your ink supply, with all your documents assured really good printing.
• Ease of usage in ink refill. You just need to place the ink on the printing ink containers outside the printer if the printer is running out of ink - there will be unnecessary to place in the ink on ink cartridges.


• If you set up this printing system on your printer then simply the product and service assurance that is included with the purchase of the printer is instantly said to be void.

• In the near future, your printhead could get defective particularly if you made use of low-quality kind of ink.
The continuous ink supply system can only function for certain varieties of printers. Several of the printers that are suitable to this specific printing system are produced by major products like Canon, HP and Epson. Majority of the printers manufactured by these brands usually come packed with printing cartridges and tank-on printhead designs - either of which is modified in case the printer user will choose to go with continuous ink flow system.
-- Endless Ink has Continuous Ink Supply System or CISS that are compatible with Brother, Canon, Epson and HP inkjet printers.
Continuous Ink Supply System(CISS) Specialist's. NEVER BUY ANOTHER INK CARTRIDGE! We have clients ranging from photographers, professional printing companies, to offices and homes. Visit us at for more info. Source:

Wednesday, May 15, 2013

The Importance Of Financial Literacy In Our Life

What is the relevance of  Financial Literacy in our life? What is it all about? These two questions  are probably the top questions that need to be answered to realize the pressing needs to understand and educate the people about financial literacy. The needs to educate the people how to manage their finances and how their money works.

Some few International Findings taken from

An international OECD study was published in late 2005 analysing financial literacy surveys in OECD countries. A selection of findings[10] included:
  • In Australia, 67 per cent of respondents indicated that they understood the concept of compound interest, yet when they were asked to solve a problem using the concept only 28 per cent had a good level of understanding.
  • A British survey found that consumers do not actively seek out financial information. The information they do receive is acquired by chance, for example, by picking up a pamphlet at a bank or having a chance talk with a bank employee.
  • A Canadian survey found that respondents considered choosing the right investments to be more stressful than going to the dentist.
  • A survey of Korean high-school students showed that they had failing scores - that is, they answered fewer than 60 per cent of the questions correctly - on tests designed to measure their ability to choose and manage a credit card, their knowledge about saving and investing for retirement, and their awareness of risk and the importance of insuring against it.
  • A survey in the US found that four out of ten American workers are not saving for retirement.
Here are some few questions to test you financial literacy:

 Did you know that April is Financial Literacy Month? With taxes fresh on your mind and spring cleaning in the air, it’s as good a time as any to brush up on your financial literacy. After all, as we’re required to make more and more financial decisions, financial literacy is becoming almost as important as being able to read and write....M O R E

Sunday, May 12, 2013

Tips for Developing Applications for Your Business

Web applications are very useful for any business. Whether you are a large enterprise or small company, the advantages of creating applications to automate work for you outweigh the cost of creating them. You can create it to optimize your work, distribute communications better or even be a product that you sell. Needless to say, there are so many things that you can do with the right idea and the right programmers.

The following are some practical tips that can help you in development phase of your application project. They are simple reminders that can keep your grounded on your project and on-track.

Visualize your Process Flow

According to experts from R&G Technologies, one should never start a project without a working model and flowchart of how you want it to work. If you want to be able to create a program that is functional, make sure that you know where you want to start and what output you want to get. While there are many things that happen along the way, knowing where you are supposed to start and knowing the outcome will keep you focused toward completion.

Simplify the Steps

Make sure that you clarify the phases of your application's development. Chokepoints happen when the steps are not clearly defined in your work. Specify what needs to be done, who needs to do it, and when it is due. Before you even step forward toward designing, make sure that this working framework is hashed out.

Work With the Budget

An application's success largely depends on two things: time and money. If you do not have enough of either, there is a chance that your project will fail. It is critical that you work with your budget.Make sure that you have plenty of funds for all the aspects needed in the project. It is important that you also have an emergency fund available. Like extra time, extra money will allow you to account for things that you did not expect.

Create Your Own

While modeling is an important aspect of development, make sure that you are not caught in the trap of copying other people's work. Innovate, think out of the box and explore other options. Don't be limited by what is already available. While it may take a bit of time, it may prove to be your projects biggest selling point.

Document Changes

The strength of a program is often found in its documentation. It is, in some sense, what separates the ‘men from the boys'. A program is often in flux in development. The best way to maker sure that you are able to manage this dynamism is proper documentation. It is critical that this is enforced properly even in the thick of the development. Make it a habit to check the logs of the programmers. It is what will ensure whether your project is doing what you planned it to do.


Support is often an afterthought. Nevertheless, it is what makes great programs what they are. If you are planning to develop a program, make sure that you have the manpower to support it even after its launch date. Consider it the human aspect that ties in everything together.
-- Are you planning to create new applications for your company? Don't where to start? Learn how to do it right with R&G Technologies.

Wednesday, May 1, 2013

Free Educational Resources for The Small Business Owner

I love free stuff. Who doesn't I also love learning and gaining wisdom on a wide variety of topics. So I have compiled a list of awesomely amazing free learning resources and educational programs available to business professionals and entrepreneurs. I am not paid or affiliated with any of these companies, but I do use their services regularly. offers an amazing array of free college textbooks, business books, and travel guides. All books are written exclusively for Business topics range from accounting and finance to time management planning, IT, and marketing. You will also be able to find textbooks for varied areas of study including calculus, engineering, earth science, and statistics. My favorite part of is their wide selection of books on MS Office programs. Guides for the 2003, 2007 and 2010 versions of MS Word, PowerPoint, Excel, Access, Visio, Outlook, and Publisher are all available for download on the website. An added bonus, allows users to download multiple books at the same time using a zip file.
National Association of Certified Public Bookkeepers (NACPB)
The NACPB is an organization composed of accounting and bookkeeping professionals. This organization is an excellent tool for accounting professionals or business owners and entrepreneurs who are responsible for maintaining their own financial financial records. Although a majority of free training and educational materials are available to members only, there are other valuable training opportunities available to nonmembers as well. The following is a listing of current lessons that are free to both members and nonmembers of the organization:
  • How to Build a Highly Profitable Bookkeeping Business
  • Accounting: The Language of Business
  • Tax: Introduction to Federal Taxation and Understanding Federal Tax law
  • The Need for Payroll and Personnel Records
  • Excel: Getting Started
NACPB also provides free accounting and QuickBooks competency tests, which can be reached through the NACPB website at allows people to enjoy free limitless reading of electronic books through their website. Free book downloads are limited to 5 ebooks per month for members with free accounts. Users can pay for more or unlimited downloads. The site offers fiction and nonfiction reading choices, plus academic articles and textbooks. Books can be downloaded in several different formats, including Mobi, PDF, ePub, and HTML. Writers can also submit their ebooks to be featured on the site. For a limited time only, will promote a writer's ebook for free.
Project Gutenberg
Project Gutenberg is the largest single collection of free eBooks, with over 40,000 ebooks available to read online or download for free. Project Gutenberg carries only high quality books that have been digitized and proofread by their own volunteers and staff. Most of the books available on the site are older literary works. A majority of the classics are available on the site for free. website and blog is run by CPA and QuickBooks expert, Scott Gregory. This site offers free tutorials on QuickBooks that are available for download. The site currently offers 14 free tutorial guides on topics ranging from remote access options to new features in QuickBooks 2012 edition. allows users to take free college level courses online. Videos of select free courses are available for viewing online. After watching the videos, students can take a free quiz to access their knowledge and understanding. The great benefit of using is that their classes prepare students for the CLEP exam. CLEP, which stands for College-Level Examination Program, was designed for independent learners and anyone can take the exam. Each exam is $77 and will earn 3-6 college credit hours.
The following are a few of the courses available through
  • Biology 101: Intro to Biology
  • Business 101: Principles of Management
  • Business 102: Principles of Marketing
  • Chemistry 101: General Chemistry
  • Economics 102: Macroeconomics
The list above is only a small sampling of the free educational resources available on the Internet. With a good Google search one will find an array of training tutorials and eBooks, many of which are free of charge. Many businesses and organizations offer these free benefits as a marketing tool or membership incentive. Whether you are a college student or business professional, I urge all to take advantage of the free knowledge that is available in this age of information.
Raquel Delemos is a certified bookkeeper and administrative consultant from Houston, TX. Raquel is the founder of Paramount Virtual Office Solutions and is also and Independent Sales Rep. for Avon Cosmetics. If you would like to contact her, please email

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