Phase I – Needs Analysis
Perform a Needs Analysis to determine status of cost accounting and shop floor reporting. The Needs Analysis includes a proposed Implementation.
Phase II – Implementation.
Develop and implement improved cost accounting metrics, enhanced shop floor reporting procedures and/or document production procedures based on Needs Analysis.
Top Six Tasks Performed in Phase II
- Basic tune-up of existing cost accounting
- Major tune-up of existing estimating protocol
- Overhaul existing cost accounting
- Enhance daily shop floor reporting
- Manufacturing/shop floor software procedure documentation
- Develop and Implement an Economic Value Added (EVA)™ model
Typical Considerations for Improving Cost Accounting Metrics
- Chart of Accounts usage
- Realized yield measurement
- Overhead expense categorization
- Overhead rate allocation design
- Cost of sales determination
- Cost of manufacturing determination
- RM, WIP & FGDS inventory valuation
- Indirect expenses identification & measurement
- Identification, tracking & measurement of Direct Labor (DL)
- Identification, tracking & measurement of Direct Material (DM)
Typical Questions for Enhancing Shop Floor Reporting
- Who sets operator targets?
- How are production operator targets set?
- Current status of operator reporting?
- Production operation documentation?
- Inventory levels and capacity?
- Is there an accurate daily scrap report?
- Daily operator efficiency reporting?
- Optimum level for operator reporting detail?
- Management intervention feedback loop status?
Shop Floor Software Procedure Documentation Elements & Issues
- Status of daily transactions in & out of software system
- Level of computer literacy & system training among employees
- Status of software use for RM, WIP & FGDS inventory valuation
- Status & usage of RFQ forms, formats, sophistication, documentation
- Identification/documentation of when/who does which critical task
For Start-up businesses
- Set up accounting processes and procedures
- Create and customize a Chart of Accounts to closely fit the new business entity
- Create financial statements such as Balance Sheets and Income Statements
- Create the process and procedure of pulling together the General Ledger from which to draw the financial statements
- Provide on-site financial analysis of financial statements and market opportunities
- Set up procedure for recording accounting transactions
- Write Desktop Operating Procedures for accounting process personnel
- AR – train how to record and match cash receipts
- AP – train how to match, pay and archive invoices; train how to manage check-writing
- Credit – establish appropriate selection criteria for issuing credit
- Collections – set up procedure to collect from customers including how to handle complaints and refusals to pay
- Payroll – set up procedure to deal with forms 940 & 941 and other tax forms
- Set up payroll timekeeping forms and how to match to shop floor labor
- Develop/execute a long-term financial plan, including pro forma financial statements
- Insurance – set up and create a maintenance plan for Worker’s Compensation, Property and Casualty coverage and Business Liability insurance
- Set up simple bookkeeping using either QuickBooks or PeachTree accounting software, whichever is most appropriate
For On-going concerns
- Perform financial or operational tasks as needed to solve immediate problems while creating and implementing long-term solutions
- Reconstruct financial statements from canceled checks and bank statements
- Handle banking relations; negotiate credit line with financial institution
- Design a systematic way to deal with unsorted accounting transactions
- Improve cash flow by contacting vendors and arranging an adequate repayment plan
- Analyze selling transactions to determine actual realized margin for each product line
- Create a customized inventory management system
- Perform financial analysis on pricing and costing issues
- Build financial pricing model
- Create reasonable specifications for shop floor reporting software
- Train production operators how to report shop floor activity
- Link job estimates to actual job production performance
- Establish workable PO system that fits the business entity
- Write Policy & Procedure manual
- Teach accounting personnel how to use accounting software
- Train accounting personnel how to follow accounting and control procedures