Managing Cash Flow

Identifying Goals and Basic Business Principles 183
• The ability of a computerized payroll system to automatically process
labor distribution or labor costs to production jobs (e.g., production
employees time processing at their pay rates to job costs), maintain personnel
records (e.g., vacation, leave absenteeism records), and post to
the budget system as it processes payroll transactions
• General ledger
• Full computer integration with all other subsystems so that the general
ledger is automatically updated on a real-time basis
• Automatic generation of all repetitive journal entries, allowing for minimal
manual journal entries
• Ability to produce financial statements – balance sheet, income statement,
and statement of cash flows – on demand
• Accounting and financial reporting
• Automatic generation of all accounting and financial reports, showing
exceptions to key operating indicators
• Integration of accounting and financial reporting with operating statistics
• Ability to analyze and interpret all such reports so that each report is
most useful for both management and operational purposes
• Use of real time reporting via computer screens, and the requirement
for positive action to be taken in all areas
EACH FUNCTION’S REASON FOR EXISTENCE MUST
BE UNDERSTOOD.
In addition, management must clearly state its basic business principles,
such as the following five points:
1. Produce the best quality product at the lowest possible cost.
2. Set selling prices realistically, so as to sell all the product the company can
produce within the limits of production capabilities.
3. Build trusting relationships with critical vendors—keeping them in business
keeps the company in business.
4. Recognize that the company is in the customer service and cash conversion
businesses.
5. Focus on the survival of the company, which allows it to serve its customers,
take care of its employees, and achieve its goals.