Sharing on Production, Administration and Financial Management 

~ by Mr. Tan Nook ~

To operate a  business, no matter big or small scale, the priority task is to explore markets and adopt marketing strategies in order to sell your products to the world. Usually huge marketing networks will generate revenue and profits. This is the general theory that all businessmen believe.  

In the case of engaging in the manufacturing industry, it will be more complicated. The areas of concern cover the manufacturing processes, human resources, administration, financial management, raw materials, accessories etc. You need to plan, to administer, to monitor, to control and supervise to ensure the efficiency of all processes.  

Some companies still have not developed internal financial management system. They are unable to control the manufacturing processes, no detailed data record, no complete analysis, no monthly assessment and no review. They only handover all documents to the audit firm at the end of each year for the purpose of compiling the annual report and tax calculation.    

From my point of view, it is necessary to establish a systematic manufacturing process. Hence, to follow closely each step of the process and make proper record of all materials consumed or purchased everyday. It would be best to differentiate each recording files with colors to prevent confusion as well as for easy handling. 

The filing system must be categorized. If this process is overlooked, it will not provide up to date materials or data for the boss to monitor and subsequently will affect the co-ordination between departments.      

Similarly, the store keeping department should also establish such a monitoring system. All outgoing or incoming raw materials, semi products or products should be properly recorded (refer to Chart 1) stating clearly the accumulated balance stock of each items.  

On the other hand, before sending the Delivery Order and goods to clients, the sales personnel must get prior approval from the accounting department. This is to facilitate payment collection and to monitor the clients’ status. In the event of arrears, the accounting department can stop delivery of goods to prevent further losses.  

Besides monitoring all the abovementioned data, the accountant must prepare a monthly  profit and loss statement to be tabled before the monthly directors meeting. The report includes detail analysis on the stocks balance, outstanding bills, bank overdraft status and accruals. 

In addition to ensuring the smooth cash flow of a company, a responsible accountant must have the ability to collect debts on schedule. On the other hand, he has to settle monthly outstanding bills accordingly to upkeep the reputation of the company. If a company neglect the advice of the accountant and over financing or over debt, eventually will lost control of the financial management.

Once a company is in poor financial status, immediate remedy has to be taken to cut down lavish expenses, fix assets, non profit generate materials etc. Reluctant to let go may result in heavily indebted with gloomy outlook.  

Below are some of my personal financial management methods for your reference : 

  1. Settle monthly payments punctually by sending cheques to the payees;

  2. Avoid hire purchase; Hire purchase period should not exceed 24 months;

  3. Bank financing should be within the operating control range; The company is expose to great risk in over financing;

  4. Whenever there is surplus, company should pay tax to facilitate future development;

  5. Paying tax symbolize that the business is making profit and can accumulate cash;

  6. Be patient and advance step by step, it is better than skyrocketing rise.

The above are my personal views and sharing based on years of experiences. I look forward to receive feedbacks and encourage other members to share your experience and expertise so that we can learn from each other for improvements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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