Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsChecklist for Managing Work-in-progressActionRecord alldetails atorderTrackprogress ofoutstandingordersInvoice ondeliveryUse recordsfor cash fl owforecastingDescriptionEnsure that all orders are recorded and all relevant detailsare noted, such as when the order is due, anypayment received (e.g. deposit), any progress paymentsto be invoiced, how long the job takes to complete, and anyadditional costs incurred in completing the job.Have procedures in place to track all outstanding orders andrank them by priority. The procedures should highlight anyactual or potential delays and have steps outlined for actionwhen delays occur.When an order is completed, ensure that the invoice is issuedand sent with the goods.The record-keeping system should provide details of expectedcompletion, delivery, and invoice date, and therefore provideinformation on cash receipt to assist in cash fl ow forecasting.TIPS FOR IMPROVING WORK-IN-PROGRESS• Only order inventory when you are ready to use it to effectivelyreduce the number of days held (and hence paid) before productionbegins.• Identify any bottlenecks in the production process and look forimprovements.• Look at the process, including the physical layout of goods, andidentify possible improvements to speed up the movement throughthe work-in-progress stage.• Before accepting the order, make sure that you know how muchinventory you need to have on hand to complete the order. Delay inreceiving goods is delay in preparing the sale.• Review work-in-progress procedures annually to identify possibleprocedures or technology that could improve the process.• Where specific materials are required for the customer order (e.g.fabric for covering a couch), include in your order agreement that thecustomer pays a deposit up front before the order is commenced.59Chapter 2-5 p22-65 Eng.indd 598/15/11 5:01:59 PM