The Importance of Credit Risk Management for Banking

The importance of credit risk management for banking is tremendous. Banks and other financial institutions are often faced with risks that are mostly of financial nature. These institutions must balance risks as well as returns. For a bank to have a large consumer base, it must offer loan products that are reasonable enough. However, if the interest rates in loan products are too low, the bank will suffer from losses. In terms of equity, a bank must have substantial amount of capital on its reserve, but not too much that it misses the investment revenue, and not too little that it leads itself to financial instability and to the risk of regulatory non-compliance.

Credit risk management, in finance terms, refers to the process of risk assessment that comes in an investment. Risk often comes in investing and in the allocation of capital. The risks must be assessed so as to derive a sound investment decision. Likewise, the assessment of risk is also crucial in coming up with the position to balance risks and returns.

Banks are constantly faced with risks. There are certain risks in the process of granting loans to certain clients. There can be more risks involved if the loan is extended to unworthy debtors. Certain risks may also come when banks offer securities and other forms of investments.

The risk of losses that result in the default of payment of the debtors is a kind of risk that must be expected. Because of the exposure of banks to many risks, it is only reasonable for a bank to keep substantial amount of capital to protect its solvency and to maintain its economic stability. The second Basel Accords provides statements of its rules regarding the regulation of the bank’s capital allocation in connection with the level of risks the bank is exposed to. The greater the bank is exposed to risks, the greater the amount of capital must be when it comes to its reserves, so as to maintain its solvency and stability. To determine the risks that come with lending and investment practices, banks must assess the risks. Credit risk management must play its role then to help banks be in compliance with Basel II Accord and other regulatory bodies.

To manage and assess the risks faced by banks, it is important to make certain estimates, conduct monitoring, and perform reviews of the performance of the bank. However, because banks are into lending and investing practices, it is relevant to make reviews on loans and to scrutinize and analyse portfolios. Loan reviews and portfolio analysis are crucial then in determining the credit and investment risks.

The complexity and emergence of various securities and derivatives is a factor banks must be active in managing the risks. The credit risk management system used by many banks today has complexity; however, it can help in the assessment of risks by analysing the credits and determining the probability of defaults and risks of losses.

Credit risk management for banking is a very useful system, especially if the risks are in line with the survival of banks in the business world.

Natural Healthcare – Are You Open To Natural Forms of Healthcare?

Are you open to natural forms of healthcare?

If you care about supporting and improving your health, and the health of your loved ones, using essential oils is a safe, effective, and natural solution that can enhance your entire life.

You Can Use Essential Oils:

  • For your overall physical, mental, and emotional welfare
  • In food preparation and cooking
  • As part of your cleaning routine
  • In the laundry
  • As part of your exercise routine
  • As part of your meditation and yoga practices
  • As part of your weight loss program
  • To eliminate odors
  • In your beauty routine – skin care, and make-your-own cosmetics
  • And much, much, more!

What Are Essential Oils?

Essential oils were mankind’s first medicine, and there are 188 references to them in the Bible.

They carry active volatile compounds in a highly concentrated form that can provide therapeutic benefits using very small amounts. These naturally occurring compounds are found in the seeds, bark, stems, roots, flowers, and other parts of plants. They provide plants with protection against predators, as well as play a role in pollination.

They are beautifully fragrant, lipid soluble (can pass right through the cell membrane), and have long been used for food preparation, beauty treatments, natural cleaning products, fragrances, and healthcare practices.

They support emotional, mental, physical, and spiritual success, and have a bio-electrical frequency that is several times greater than the frequency of herbs, food, and even the human body.

How Do I Choose The Right Oils?

When choosing essential oils, be sure they are gently and carefully distilled from plants that have been patiently harvested at the perfect moment by experienced growers for ideal extract composition and efficacy, as well as carefully and thoroughly tested using strict quality protocol to ensure they are certified, pure, and therapeutic grade.

How Do I Use Them?

Essential oils can be used a single oil at a time or in complex blends in one of three methods:

  1. Aromatic – certain oils, when diffused, can be very stimulating, calming or soothing, as well as purify the air of unwanted odors and airborne pathogens.
  2. Topical – essential oils are easily absorbed into the skin and can be safely applied topically alone or with a carrier oil, like jojoba or coconut oil.
  3. Internal – most oils can be ingested as dietary supplements supporting a wide variety of healthy conditions.

If you’re new to this whole natural healthcare thing, you’re not alone. There’s so much to learn and it can be overwhelming, but the benefits are worth it.

Being open to natural forms of healthcare is the first step in taking control of your health and well-being, and using essential oils is your next step.

Short Course on Developers Getting to Square

How to Be Sure You’re Engaging in the Right Web Development for Your Own Company Of all the things that companies today can do for themselves, it’s easy to see how a good online existence will help the most. This is because nearly all consumers are going to be turning to the internet to learn about all kinds of companies and the products that they offer. If you’re serious about finding an audience for your products and services, it’s going to be important for you to figure out how to present your company to the internet. More than anything else, companies today will need to think about how to build up a website that will allow you to represent yourself well. Because of this, you will typically want to look around for other companies that can offer you web development services. If you have a great business idea but little technical experience at website building, you will probably want to hire a company that specializes in startup web design. You’ll be able to find a great website development service in no time if you can follow the guide below. The main thing to consider when dealing with any kind of web development is finding a company that knows how to create something spectacular from the kind of basic designs that you’ve created. When you’re trying to figure out how to make your company a bit more successful, you’ll have to consider the sort of branding you have and how your website can feature it. This means you need a web development team that can understand the sort of vision you have and to make sure that you’re getting a resulting website that reflects and improves on your brand.
Questions About Businesses You Must Know the Answers To
You’ll also want to make sure that your web development team is skilled enough to make sure that you’re getting all of the various features you want out of your website. This is because of the fact that your site needs to be able to compete with some of the biggest names in the business. If you’re serious about standing apart from the crowd, it’s absolutely essential for you to think about whether your website is going to be powerful enough to give customers exactly what they want.
A Quick Overlook of Developers – Your Cheatsheet
After you’ve been able to consider the sorts of things you want your website to be able to accomplish, you will discover that there are all kinds of companies out there that can create it. You’re going to find it a lot easier to be able to improve your company’s fortunes if you can ensure that your website is strong enough to stick with the competition.

What Services Do Property Management Companies Offer?

Owning real estate is a wonderful feeling, especially for those who have really toiled for many years to become a property owner. Though it might sound a little materialistic, but a property is actually a mark of someone’s hard work. Thus, when a family has to relocate to some other place far from their land or property, due to job commitment or any other reason, it is a natural concern to be worried about the property. Managing the property effectively, without keeping an eye on it regularly, is almost impossible for the landlord. This is exactly when a property owner should start looking for a professional property management company. However, it is good to know what services these property management companies offer before you go ahead and fix a meeting with any agency. This would actually give you a clear idea of what you should expect and ask for while interviewing the property manager.

Basically, these companies deal with flats, villas, independent houses, rental apartments and commercial properties. Once you sign a legal agreement with any of these companies, it actually becomes their responsibility to rent out your property by searching suitable tenants. To look for right tenants, they advertise your property through the local media. The replies that come to the property advertisement are promptly attended by the company. Their expert staff then shows the whole rental property to the prospective tenants. In fact a clear and detailed report is provided to the landlord on all those potential tenants who had come to check out the property. This is to ensure that the landlord makes a right decision. Once the tenants are finalized, then the company would execute a rental agreement.

The responsibility of the company does not end here. They collect monthly rent on the landlord’s behalf and deposit it into his bank account. Apart from the timely rent collection, the professionals would also visit the property regularly, in order to make sure that it is efficiently maintained and not harmed by the tenants. Professional photographers are hired to take the photographs of various parts of a property to be sent to the landlord. Though these visits by the property managers are periodical, they are always keen to help tenants if they find anything objectionable.

Also, in case there is a repair work to be done, the company takes care of it by appointing an external contractor to fix the problem areas. Another very important service offered by a property management agency is conducting an inventory audit. It is conducted when a property is rented out to a tenant and when he/she vacates it. The reason for conducting this audit is to make sure that all physical assets of the property are in a good condition. To summarize, the services proffered by a property management company play a pivotal role in reducing the burden of a landlord, owning multiple properties. Therefore when you actually enter into a contract with such a company and you can indeed be totally assured of getting quality services.

In Summary – What Is Major Account Management All About?

Major Account Management Is a Long Term Process – It Takes Time:

We must recognise that we are in Major Account Management for the long term. It takes time to manage a major account and we will only receive a payback on our investment in time if we can have a long term result. In some of the organisations we have worked with this produces a tension because the whole culture is about creating a short term sales result in which product and profit are the main drivers and measures of success. We should not underestimate what a challenge Major Account Management can be to the corporate culture. It emphasises relationship more than product, profit more than volume, and team more than individual, long term more than short term. At the same time the practical short term realities of business life need to be recognised.

One of the best ways of managing this tension is to have someone who acts as a mentor, conscience or guide to the account manager and account team. They are not involved in the day to day management of the account but are invited in to look at and comment on major proposals and presentations. Their main role is to be involved in reviewing the long term plan every few months to ensure that the relationship is as productive as possible and is reflecting the values of the organisation as a whole.

The role of the major account manager is to be responsible for the overall relationship. They influence all those involved in the account to ensure a co-ordinated, synchronised approach. The major account manager is responsible for drafting the account plan, gaining the agreement and commitment of the team and then monitoring implementation

Major Account Management Involves Relationships Not Just a Mechanical Approach:

Under this heading we should discuss three main aspects of major account management.

o The importance of relationships in Major Account Management.

o The complexity of relationships in Major Account Management.

o Mapping relationships in Major Account Management.

Importance:

In Major Account Management it is essential that we manage people as well as processes. Of course we must get the product pricing right. We need to be excellent at administration. Our customer service and product range need to be strong. But “people buy from people” and “we are in a people business”. To manage the complex range of relationships within a major account is difficult and demanding but our ability to manage relationships will define whether or not we sustain success.

Complexity:

In a reactive sale there is only one relationship – that between the seller and the buyer. In major accounts the situation is much more complex. There are often contacts going on at many levels and many locations. In one major account, we have identified 1000 relationships between the account team of ten people and individuals representing the client. But it is not just a problem of numbers, it is often a problem of politics. Some contacts do not want us to talk to people in other departments or at different levels. It can also be that the complexity is caused by product range. The users of one product rarely speak to the specifies for another product. In any complex relationship some people will like us more than others. This is to say nothing of inter-departmental tensions. All these things make major account relationships complex and we need to recognise their complexity.

Mapping:

If relationships are important and if relationships are complex then it is essential that we find a way of mapping, analysing, planning and monitoring those relationships. Over recent years we have found that an approach based on the game of chess allows a very practical way of identifying the key issues.

If we can answer these questions confidently and communicate our thinking across the account team simply and clearly then we will be half-way to success. This approach has given people across a broad spectrum of organisations a common language and way of working

It Can Only Be Done With Selected Customers:

The final word from this definition is selected. Choosing the right key accounts is of critical importance for three main reasons:

o We do not have the resources to treat every customer as a key account.

o Not every customer wants to be treated as a key account.

o Selection allows us to prioritise our activities in line with our overall business objectives.

Many organisations grade their major accounts simply by the size of sales for the year but the organisations we see that are really moving forward in Major Account Management take a number of other factors into account. They also make sure that everybody knows who the major accounts are and why they are major accounts. It is important to be rigorous with the selection criteria you use! You will also need to apply some form of weighting to reflect your priorities. The fact that a major account does not meet all your criteria will not disqualify it from being a major account. It will just need to score higher in other areas to qualify.

On the basis of this scoring, organisations can grade their accounts. They might be Premier, 1st and 2nd Division like a football league, or Gold, Silver and Bronze like Olympic medals or First Class, Club Class, Economy and Standby like an airline. The analogy of an airline is a good one because on one flight you can have people on Standby being entirely happy with the service they are getting, even though they know there are people getting “better” service in Club Class. Grading your accounts is not a matter of giving some customers better or worse service. It is a matter of giving all your customers appropriate service. When we select our major accounts and consistently deliver what we promise, we are managing our accounts professionally and effectively.

In Summary – Success Factors In Key Account Management:

o Successful Development Of The Role:

o Effective working relationships with other members of the team.

o A continuing drive to improve account team productivity.

o Management commitment to the account team’s role with opportunities for career progression.

o Re-enforcement of the role through authorised career structures, job descriptions and core training programmes.

o The Key Skills:

o Understanding the financial and legal requirements of the account.

o Understanding of the company’s business objectives.

o Understanding of the company’s commercial policies.

o Build high levels of product awareness.

o Understanding of the customer’s business objectives.

o Identify the decision makers.

o Understand the customer’s purchasing strategy.

o Assess competitive activities.

o Put together an account development plan.

o Ensure effective sales order processing.

o Build the right levels of revenue and profitability.

o The Core Skills:

o Delegation

o Interpersonal skills.

o Consultancy.

o Financial control & analysis.

o Project management.

o Man management.

o Initiative & creativity.

The Secondary Skills:

E.g. Industry knowledge, competitive knowledge, product knowledge etc.

Success Factors In Key Account Development:

o The Stages Of A Long Term Process

o Pre-sales.

o Contract negotiation.

o Implementation / Delivery.

o Review.

o Exploitation.

o Objectives For An Account Team

o Ensure that the customer is presented with a coherent and professional image of your Company as a business partner.

o Secure a long term business relationship with the customer as the basis for growing business.

o Penetrate the customer’s organisation and decision making unit creating new opportunities that can be exploited to accelerate account growth.

o Understand and document, on an ongoing basis, the customer organisations strategic business direction and organisation.

o Provide the company’s senior management team with feedback on the long term growth potential in the customer’s market sector and on critical success factors for exploiting it.

o Ensure that the company’s solutions are technically solid and based on a proper understanding of the current requirements and re-inforce the customer’s perception of the benefits of the company’s market focus.

o Ensure that the company’s total resource is delivered in a way that satisfies customer requirements and supports the objectives of the account plan.

Conclusion:

An effective Major Account Management strategy depends on selecting your major accounts intelligently, creating a strong, consistent, flexible way of working with both major accounts and other customers and then implementing the plan in a disciplined, effective, efficient manner.

One of the successes of the Major Account Management programme has been the creation of common models and language that facilitate discussion and planning across units and departments. It has also stimulated a commitment for our clients to plan long term for key relationships. Major Account Management has many implications for individuals, departments and the business as a whole. It will always be demanding, but done right it will be highly rewarding

Copyright © 2006 Jonathan Farrington. All rights reserved

Importance of Acquiring Knowledge in Business

Knowledge is a resource referred to as knowledge capital or intellectual capital in a business. It is the essential element that allows businesses to operate in the market sector. The knowledge of the organization is within the human capital of the organization. Despite the rapid global changes, knowledge addresses key issues that can lead to successful management within organizations and can be used as leverage in collective bargaining of existing knowledge and creating new ones.

Understanding customers’ needs and the business environment is a huge interface of information. If a market research is done, then the knowledge of the market can be integrated to the target clients specifically in developing new products/ services and improving existing ones.

Having knowledgeable staff sets the business on a competitive edge because it helps the business run more smoothly and efficiently. For example, knowing customers’ needs and feedback to develop products or services to ensure that their needs are met.

Moreover, monitoring and reporting the changes in the business world is also needed. Knowledge in building networks by professional associations and trading partners can provide an easy way to find out what the competitors are doing and to see the latest innovations in the market sector. Making product research and development is a vital source of knowledge that can help in retaining competitive edge.

Furthermore, using knowledge more effectively can improve goods/services offered. It can increase customer satisfaction. Knowledge of the market can result better awareness of what customers want and what the staff require. Knowledge or information sharing can also improve staff productivity.

In order to manage the utilization of knowledge, there is a need to build a culture in which knowledge is valued across the business to retain the competitive advantage and understand the characteristics of the target market.

Knowledge of the business can help entrepreneurs evaluate and understand the needs of potential customers and develop products/ services that meet customer satisfaction since possible customers show different behavior patterns and preferences such as brand loyalty and the like.

Through knowledge acquisition, business supply chain management is visible everywhere and anywhere. It leads to faster growth and development. It also impacts the competitive advantage and become strategically important to understand knowledge transfer in a more predetermined fashion. The sustainability of organization depends largely on the acquisition of knowledge with a continuous learning process.

Hence, knowledge is vital to any organization because it empowers entrepreneurs to take informed decisions, improve services, produce better marketing decisions and increase profitability.

Easy Eyeliner Looks For Any Occasion

With regards to multi-entrusting a cosmetics thing – Eyeliner is the principal thing that rings a bell, joke thus a wide range of looks.

Covering is one of those cosmetics things that highlights and hoists the most essential element of your face and can offer you the correct look that you require on a day when you are running shy of time. There is undoubtedly in this that eyeliner is an unquestionable requirement to convey in your handbag and one can’t do much without it.

Winged Tip

Wearing your eyeliner thusly will give you a dazzling look as it is exceptionally well known these days. It gives your eyes an exceptionally very much characterized look alongside giving it a glitz touch. There are numerous instructional exercises through which you can without much of a stretch figure out how to get the winged tip.

White Liner

White liner is an unquestionable requirement to convey for a young lady. This in vogue eye liner can add such a great amount of glitz to your eye cosmetics that you wish you got your hands on it some time recently. The most ideal approach to utilize it is by applying it on the lower waterline to give your eyes a more extensive look. This look can likewise be utilized when you haven’t rested soundly it will give your eyes a very much refreshed look.

Straight As An Arrow

Wearing your eyeliner straight as a bolt can make your eyes look normal and more. Attempt this look as it will make an outwardly stunning look in simply some basic strides. To begin with you have to make a diagram and afterward fill in the space. When you are finished filling in the space then take a liner pencil and draw towards the inward side of your eye to get this total shocking look. You can attempt this look on night dresses and pretty sarees in the event that you are going to a wedding.

Smokey Eyes

There is something exceptionally cheeky about the smokey eye cosmetics. The smokey look make your eyes look grunge and sultry. To get this look you don’t need to do a ton all you need is to apply a thick line of Kohl pencil and smirch it. There are numerous video instructional exercises on the web, locate the one that is most simple for you.

Sparkle Liner

Sparkle liners never left form, who said they did? Well the uplifting news is they are still in pattern, so snatch your most loved sparkle hues. The sparkle liner will energize your look and change you from a working woman into a chic ruler. There is no hard science in utilizing it; you can apply it in an indistinguishable path from you would have finished with ordinary eyeliner. In any case, recall on the off chance that you are wearing sparkle liner then don’t wear any gaudy adornments.

Shaded Liner

In the event that you are no longer in a disposition to utilize a similar dark exhausting eyeliner, stress not. We got a decent option for you; they are such a variety of shading liners that can add an exemplary touch to your eye cosmetics. You can pick any shading you like, from pastels to strong or metallic hues.

Double Eyeliner

There is another look in the town; I trust you have caught wind of it. This new look joins of two hues, to get this look apply your dark liner first and after that “glitz up” this look with another shaded liner. Keep in mind when you apply the second liner apply it in a thin line, this will give it an incredible look and will make your eyes a moment consideration catcher.

Feline Eyes

Feline eyeliner look has turned out to be entirely in vogue nowadays and you can even get them with ordinary eyeliner. On the off chance that you are a successive eyeliner buyer then you will have no issue in getting this look. Begin by applying the liner in easygoing style, however as opposed to making the flick of the eyeliner with a dark pencil utilize a metallic shade pencil to make the flick. On the off chance that you don’t care for metallic shades than go for the sparkle liner.

Go Black and White

High contrast is the most tasteful hues ever, and on the off chance that you truly need a sensational and strong search for your eyes then I prescribe you to play with highly contrasting. This is an impressive eye search for night gatherings and suppers and will dependably give you a stylish look.

Benefits of the One Plan Health Insurance Blue Plan

Health insurance is not just for those with a six figure income, and it should not be a right but rather it should be a privilege. This might not be reality in South Africa at the moment but this is the vision of One Plan Health Insurance, a newcomer to the South African health care industry.

With One Plan medical aid everyone can afford to have health care at a price that will fit their pockets. And with the most basic plan starting at R100 a month, this can truly become a reality.

One Plan Health Insurance offers valuable services and products ranging from hospital plans, to cover in case of death and also cover for dread disease and HIV/AIDS cover. This means that One Plan Health Insurance truly is a one stop shop for all your health care needs, for you and you loved ones. Here is a look at what their comprehensive and affordable Blue Plan can offer you in the time that you will need it most.

What the One Plan Health Insurance Blue Plan Offers You

With the One Plan medical aid Blue Plan as a primary member you will receive R 5 250 worth of medical cover per year, excluding hospitalization, dread disease cover, and other benefits. This means that R 5 250 will go towards your average medical needs, like visiting a doctor, receiving prescription medication, pathology, radiology and maternity care.

Besides just covering your day to day medical needs One Plan Health Insurance will cover other crucial medical needs, such as accident cover, illness in hospital, emergency illness and natural birth and emergency caesareans.

Furthermore you will also receive accidental disability cover for up to R 130 000 for the duration of the policy. You and your family, if they are members, will also be covered in case of death, both accidental and from natural causes.

Optometry needs will also be covered and you will be able to have a comprehensive eye test, frames and specially cut glasses for your frames at any Eyenet optometrist nationwide. What more could you want from a health care provider?

But there is still more. As a member of One Plan Health Insurance you will also be able to take hold of amazing deals and goodies on offer from their online shopping mall, OneLiifestyle. Through the exclusive offers on their website you will be able to get discounts on over 300 trusted brands. So what have you got to lose?

Who can benefit from the One Plan Health Insurance Blue Plan

Those looking to cover themselves and their family in case of any medical emergency that might arise will benefit from the One Plane Health Insurance Blue Plan. And with low monthly rates it is not just the rich that can afford to look after their health. And with great value added bonuses there is no reason why you should not SMS them on 31644, and they will call you back.

Monat Global Review – Can You Get Rich Selling Hair Products?

So lately there’s been yet another start-up network marketing company that I’ve been seeing on social media sites and getting a lot of buzz. The company is called Monat Global. And chances are if you’re reading this, you’re looking for some information on Monat Global before joining the company. If that’s the case, look no further. In this third party Monat Global Review, I’ll cover information on the company, the products they sell and more importantly the actual business opportunity they offer. Before proceeding, I want to disclose that I’m not a Monat Global distributor so it really doesn’t matter to me one or another if you join or not. This is important because you can be sure that you’re getting an unbiased perspective of the company and the opportunity available for distributors.

Who Is Monat Global?

Monat Global is a Florida-based company that markets high-end haircare products through a Network Marketing business model. The company is extremely young but unlike other start-up companies, the company is actually owned and operated by the Urdaneta family. The Urdaneta family have been involved in Direct Sales for decades and run a huge company called L’Eudine Global. From the looks of it, Monat’s products look to be very high quality. The products are paraben-free, Gluten-free, ethanol-free and sulfate-free. Having premium products to market is essential if you’re looking to build a business because without satisfied customers re-ordering every month, you have no chance of building a residual income.

How Do You Make Money With Monat Global?

As a distributor, you can earn income 5 different ways. You can earn immediate income retailing products and acquiring VIP Customers. But just like any other Network Marketing company, the true potential lies in building a rep base and customer base. As you grow your group and accumulate customers, you can earn between 7%-12% on your group’s volume every month. You can also earn 5% through 5 Generations. Overall the compensation plan looks to be fair and lucrative. There’s both upfront and backend income potential which is what you need if you’re going to build a business.

Should You Join?

Well… only you can truly answer that question. The management team is experienced and solid. The suite of products are premium and high-quality. And the compensation plan is lucrative. Surely, you’ll see success if you join, right? Nothing could be further from the truth. You could have the best opportunity and products in the Industry, but if you don’t have a single person to tell about it, you’ll make no money. At the end of the day, your success will come down to your ability to sponsor people and get customers. And at some point, your warm market will run out. This is why I suggest you learn how to market online and learn Attraction Marketing. If you can position yourself in front of a highly targeted audience you’ll have more leads you can handle. And when you’re in a position where you have people chasing you, there;s no telling how prosperous your home business can be.

How to Evaluate Your Finance Department

Nobody knows your business better than you do. After all, you are the CEO. You know what the engineers do; you know what the production managers do; and nobody understands the sales process better than you. You know who is carrying their weight and who isn’t. That is, unless we’re talking about the finance and accounting managers.

Most CEO’s, especially in small and mid-size enterprises, come from operational or sales backgrounds. They have often gained some knowledge of finance and accounting through their careers, but only to the extent necessary. But as the CEO, they must make judgments about the performance and competence of the accountants as well as the operations and sales managers.

So, how does the diligent CEO evaluate the finance and accounting functions in his company? All too often, the CEO assigns a qualitative value based on the quantitative message. In other words, if the Controller delivers a positive, upbeat financial report, the CEO will have positive feelings toward the Controller. And if the Controller delivers a bleak message, the CEO will have a negative reaction to the person. Unfortunately, “shooting the messenger” is not at all uncommon.

The dangers inherent in this approach should be obvious. The Controller (or CFO, bookkeeper, whoever) may realize that in order to protect their career, they need to make the numbers look better than they really are, or they need to draw attention away from negative matters and focus on positive matters. This raises the probability that important issues won’t get the attention they deserve. It also raises the probability that good people will be lost for the wrong reasons.

The CEO’s of large public companies have a big advantage when it comes to evaluating the performance of the finance department. They have the audit committee of the board of directors, the auditors, the SEC, Wall Street analyst and public shareholders giving them feedback. In smaller businesses, however, CEO’s need to develop their own methods and processes for evaluating the performance of their financial managers.

Here are a few suggestions for the small business CEO:

Timely and Accurate Financial Reports

Chances are that at some point in your career, you have been advised that you should insist on “timely and accurate” financial reports from your accounting group. Unfortunately, you are probably a very good judge of what is timely, but you may not be nearly as good a judge of what is accurate. Certainly, you don’t have the time to test the recording of transactions and to verify the accuracy of reports, but there are some things that you can and should do.

  • Insist that financial reports include comparisons over a number of periods. This will allow you to judge the consistency of recording and reporting transactions.
  • Make sure that all anomalies are explained.
  • Recurring expenses such as rents and utilities should be reported in the appropriate period. An explanation that – “there are two rents in April because we paid May early” – is unacceptable. The May rent should be reported as a May expense.
  • Occasionally, ask to be reminded about the company’s policies for recording revenues, capitalizing costs, etc.

Beyond Monthly Financial Reports

You should expect to get information from your accounting and finance groups on a daily basis, not just when monthly financial reports are due. Some good examples are:

  • Daily cash balance reports.
  • Accounts receivable collection updates.
  • Cash flow forecasts (cash requirements)
  • Significant or unusual transactions.

Consistent Work Habits

We’ve all known people who took it easy for weeks, then pulled an all-nighter to meet a deadline. Such inconsistent work habits are strong indicators that the individual is not attentive to processes. It also sharply raises the probability of errors in the frantic last-minute activities.

Willingness to Be Controversial

As the CEO, you need to make it very clear to the finance/accounting managers that you expect frank and honest information and that they will not be victims of “shoot the messenger” thinking. Once that assurance is given, your financial managers should be an integral part of your company’s management team. They should not be reluctant to express their opinions and concerns to you or to other department leaders.