We cannot stress how much the cash flow importance to the health of a business. Let me quote “revenue is vanity, cash flow is sanity, but cash is the king”. As a business we would like to see a large inflow of revenue from each sale that we make, but the focus here should be the cash flow. Many business may still be operating even they are making loss especially if they can continue to manage their cash in & outflow, for example, delay payment to creditor so that the business have enough money to pay any variable cost. Ultimately, without cash, no business will survive long enough.

When a large or small amount of cash comes to a business, it is known as “cash Inflow” and this cash inflow come mostly from the sales of a goods or services activity. “Cash outflow” is the opposite where a business needs to pay for cost such as transport, labor, raw material and electricity. The different between both of this is called the “net cash flow” and it can either be a positive value or a negative value. When a business receives more money that they spend, it is a positive cash flow which helps to ensure the sustainability of the business operation.

A negative cash flow is when a company receives less money than its spending. This may let the business to struggle in paying bills and create the needs of borrowing money to help in the shortfall. In accounting, a clear indicator of a profit and loss is that the loss will be shown in a bracket. Well most of company may have a huge amount of cash reserve to survive; some smaller company may find this as alerting to them.

These come to a reason why controlling cash is essential to business sustainability. Management accountant role will have to be smart in dealing with a range of cash issues that arise.

· Make sure that there is sufficient cash available that is not tying in any unnecessary activity for future investment.

· Develop a process and procedure that help to reduce outstanding debt and making sure the inflow of cash is higher than spending.

· Controlling different level of cash outflow need to be done according to the size of the business. If your business is a car workshop, then make sure the outflow in buying car parts is done meeting the company needs and don’t overspend things.

Written by: Hafiz Hanafi (Comfori Sdn Bhd)

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HR Jargon Do You Need to Know?

Every profession has its own language or jargon. Here are some of the words you might hear coming out of an HR manager’s mouth and what they really mean when they use them.

A Seat at the Table:

Imagine a group of decision makers sitting around the table making a decision. Anyone who is there has a “seat.” It’s just a description of who is invited to the meeting. HR often talks about having a “seat at the table” to emphasize that someone needs to be there to ensure the people perspective is taken into consideration.

Additionally, the terms refers to a seat with the executive leadership in the executive conference room.This is where HR wants inclusion and input to decisions made that affect the strategic direction of the company and the successful deployment of the people to attain the goals.

Balanced Scorecard:

This term comes out of Harvard Business School, and as such, can be explained in either a very complicated manner or in this way: everything matters. You can’t just ignore your people and focus on the numbers.

The scorecard looks specifically at four different areas: Learning and Growth, Business Process, Customers, and Finances. Often, the HR Business Partner is heavily involved in the learning and growth portions of determining this scorecard for each senior person.

Competencies of Core Competencies:

These are generally the skills needed to do a particular job, but the reference is often a little fuzzier. Skills imply something concrete like - must know how to do financial modelling - while competencies can also include soft skills such as problem solving abilities.

When HR managers talk about Core Competencies, they refer to the knowledge, skills and abilities that are absolutely critical to the job. So, while it’s nice to have an accountant with good interpersonal skills, all accountants must be able to work with numbers.

Corporate Culture:

Every company has its own culture. Cultures can develop naturally without any effort, but often the HR department will attempt to build a specific culture. You’ll see mission statements and team building activities and a number of other activities designed to create a specific culture within the organization.

Good HR departments make weeding out bad managers (or training bad managers to become good managers) a priority in creating a good corporate culture. Bad HR departments focus on mission statements and then wonder why the culture is still toxic.

Downsizing, reorganization, restructuring, or rightsizing:

As a general rule, these all mean that a company is going to lay off a number of employees. It’s possible to reorganize and restructure and keep all of the employees, but in reality, if you hear discussions about company-wide reorganizations, freshen up your resume, because you might need it.

Family Friendly:

Businesses often claim that they are family friendly when they have policies that are meant to support working parents. Benefits such as flexible schedules, on-site day care, and generous sick leaves to care for yourself and your sick children are often cited as important aspects of a family friendly business. HR departments are usually the ones who develop and implement such policies.

Gross Misconduct:

if you do something that is so bad that the consequence is that the company immediately fires you, your actions were gross misconduct. For instance, if you set fire to the boss’s office, it doesn’t matter that you had a perfect performance appraisal the week before, the boss will fire you. Gross misconduct is generally determined by company policy rather than by law. But, just because the employee handbook doesn’t say no arson allowed doesn’t mean that the company won’t fire you - and have you arrested - for that action.

Let go:

One of many euphemisms for fired. Now, of course, there are two main types of “fired.” The first is when an employee is terminated for business reasons unrelated to performance. This is generally known as “layoff.” The second is a true firing - when an employee has done something wrong. That something wrong includes poor performance as well as something terrible like stealing.

Onboarding:

When you’re hired, you have a bunch of paperwork to fill out. This is the very basic step that is done for all new employees and in some cases, this is the entire “onboarding” program. Some companies have elaborate programs that involve cultural integration and building a general company knowledge base. The goal of all onboarding programs is to bring new employees into the company and get them working effectively.

Talent Management:

Talent = people, management = management. When HR people talk about talent management, they are really just talking about making sure that they recruit, train, manage, develop and retain the best people.

Sometimes talent management programs don’t include everyone in the organization, but only high potential employees and current leaders. Both management and HR departments are involved in a talent management system.

80/20 Rule:

This terminology is used for lots of different situations, but in HR, it typically means that 80% of the problems are caused by 20% of the employees. HR departments may also speak of “frequent fliers.” There are employees who seem to have problems with everything and everybody and take up a great deal of HR time. These words are certainly not a complete list of HR jargon, terms that non-HR people need to understand. But, hopefully, they will help you understand a bit more of what is being said - when HR speaks.

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