I get a Profit and Loss statement for my newsagencies within two weeks of the end of the month. This includes an assessment of the month against budget, year to date against budget and a rolling forecast a year out based on current trends.
I am lucky to have a CPA on staff who can do this.
Unfortunately, too many newsagents do not get a profit and loss more frequently than once a year. I am sure that this hurts business decisions.
A properly constructed P&L will guide good business decisions. While Point of Sale software can also do this, it can only go so far as you really need all the business expenses to get a whole of business view.
This is on my mind today because of a newsagent who is in trouble and who has not seen a P&L for their business for more than a year.
As an accountant the first thing I will say is – are your P&Ls good enough to look at monthy?
The majority of Small/Micro businesses using Myob/Quicken do not take care of the appropriate end of month journals (heck or even appropriate daily entry) to rely heavily on.
Especially in a newsagency, there would be an absolute bucket load of stock accruals. (Assuming you weren’t using the MYOB in-built stock ledger, which would be redundant if your POS had this info), that alone could lead to 10s of thousands of dollars variance – especially with the way suppliers dump stock on you.
The best thing you should do is talk to your accountant and ask them what you should be doing each month if you want accurate monthly financials. We spent 2 days going through, re-arranging the chart of accounts, making lists of additional work required by the owner etc. End result was much more accurate monthly reports. None of it was necessary for EOFY really but its up to the owner to say “yes, I’m willing to spend the time and money to get this right”.
Hi,
I normally have my detailed P/L completed by the end of the first weekend post month end.
If you set-up MYOB correctly, it usually takes me about 2 hours to load all data… the tower sales info makes it easy to record sales, and with one bank statement, 2 credit cards and some cash expenses it simple.
If anyone does not do it they are mad… Its the only real may to know how you are performing.
Dont need an accountant to do, just dedicate a few hours each month – as a newsagent I know how time poor we are, but this is an investment.
Am more than happy to help anyone who needs it.
Cheers
Peter
every quarter after paying GST.
@Peter, glad to see you’re doing it well.
Just wanted to clarify – you don’t need an accountant to do it each month. I was implying more that if you are the kind of person that never looked at your accounts monthly before – you aren’t going to know if your data is any good.
After that, its something you can easily do yourself. For the client I mentioned above, after we sat down with them and helped them with the tidy up and gave them instructions what to do each month they were set. Been 2 and a bit years and the results are fantastic, we haven’t had to do anything since.
I am not happy with my chart of accounts on MYOB. Is there anywhere I can find a sample that other newsagents use?
I get quarterly P & L reports which i discuss with my accountant.
Agree it is essential to look at a timely P & L every month. Agree also that usefulnesss of the report is determined by the accuracy of the input data. Does anyone have any tips on better ways to record accurate SOH. That trips us up very month.
David & KMc
At high level and for preliminary analysis every month I have my sales and cost of sales set-up in the departments I want for example:
General Sales
1. Newspapers
2. Magazines
3. Tobacco
4. Stationary
5. Cards
6. Drinks & Confectionary
7. Drinks (GST Free)
8. Gifts & Souvenirs
Commissions
9. Postage
10. Phone Cards
Lotto Commissions
11. Lotto Commissions
12. ISI Commission
Other Income
13. Fax and Copier
When processing Lotto transactions from the weekly settlements I do this in one transaction and use a Lotto clearing account (one for Lotto and one for ISI) in my assets, my general clearing account, and then allocate the commissions to revenue and terminal hire to expenses – I can review the clearing accounts to ‘smell test’ to see if there has been ‘shrinkage’ occurring!
In terms of stock monitoring, probably not correct, but works for me I simply monitor the Gross Profit I am generating monthly – Sales to Cost of Sales… as we run a pretty tight business in terms of ordering we can usually control this for all departments excluding Gifts & Souvenirs… For this apart from the margin analysis we also do a ‘general stock stake, as we carry more in these lines than anything else – probably $20-$30K, depending upon trade fair timmings.
Given I also have each supplier set-up individually I can track our spend through each so as to leverage this information in an effort to achieve better terms for those we purchase more through…
I have also created an expense profile that works for me using the standard MYOB format – I create sub expenses that make sense – for example I have separate vehicle expenses for Delivery – Petrol, Maintenance, Rego and Insurance and Other Vehcile – Petrol, Maintenance, Rego & Insurnce that all roll up to one expense, but enable me to drill in and answer how much am I spending on maintenance on the delivery vehicle…
It has taken me nearly 6 years to get these right and I have no doubt I could probably do better, but they serve my purpose.
Cheers
Peter
Hi Peter,
It seems you have a great idea on the myob setup for newsagents… I am in the process of setting up ours at the moment.. you talk about a lotto clearing account? Is this a seperate bank account? and you transfer funds to it via the sales amounts on lotto? I am new to this and still learning any help would be greatly appreciated!
Thanks
Daniel
Gold Coast
You are right, time poor makes it hard, however we must make adjustments to our time management to do this most important role.
As a micro business I do it daily, everyday & in MS Excel & then through Pivot Tables, I know exactly where I am. however everybody has their own way and better systems.
If I were a Small Business, Peters Post #8 would be a must, brilliant & compartmentalised P/L set up.
Hi Daniel,
The clearing accounts I refer to sits in our Balance Sheet as an asset. I have 3 – one for general sales,and the other two for ISI and lotto…
This will be hard to explain, but will have a crack… End of month I get m monthly sales data from the Tower system, I then place all sales into the departments… Lotto and ISI sales and payouts go directly to the relavant clearing accounts, and then the surplus goes into the general clearing account.
Each weeks lotto and ISI settlements are then processed with commissions included in the P&L, terminal hire charges tothe expense account and the debit from the bank account processed to the clearing account.. With timming differences of debits and sales this will not rec to zero each month… also if you go in your store syndicates you will need to make some adjustments… for ISI’s the difference should be the increase/decrease you are holding…
When inputing my bank statements all credits (cash and eftpos) go into the general cleaing account…
I can exaplain a little more if you want to drop me a line @ peter.williams@wdscott.com and I can send your through some screen dumps…
Cheers
Peter
Peter
Sharing what you do is appreciated, it is that important in todays environment to keep track of everything. I am sure you can see with everything you are performing where your profit is coming from and where it is not. It helps us to work on where a product is failing.
Performing a P/L like the one you are doing actually saves you money or in other words can make you money, you can address it almost immediately.
I like this post because it has reminded me also to budget more efficiently as well as points me in the precise direction where I am falling down.
Thanks for you wanting share, I hope some other Business donot feel shy about contacting you to get an idea.
Another example I am using, over the past 4 years Electricity for my business would have doubled from next year, I actually put that money away each week for this, I am not saying its for everyone but for me it helps relieve the strain financially for a bill I never used to cater for.
Hi Derek,
Thanks for the comment. Whilst this is how I do it, I have no doubts there are other ways…
I use General Journal entries most of the time (excepts for Chq’s), and have created similar set-ups for friends who operate different types of businesses… Ultimately, its all about finding a way whre less is more…
I will pull together some screen dumps and a brief guide on how I do it for Daniel. At the end of the day, there is nothing privilidged about how you set up your accounts in MYOB or any other system. Its about how quickly you get it in, and then how you use it…
Will be more than happy to share hese through Mark…
Cheers
Pter