http://www.financialpost.com/story.html?id=914649&p=2
Summary
This article talks about the many ways to improve liquidity for companies since the Canadian economy hasn’t been too great the past few while. This article teaches how companies can survive the credit crisis. Some things to improve on is to keep track of weekly cash flows. Another important thing is to reduce accounts receivable, and to be able to follow up on it since companies tend to forget to pay their bills. A helpful tip is to offer cash discounts, so you don’t lose your customers while trying to get your payments in earlier.
Connection
Chapter 12 is about synoptic journal, but it also talks about cash discount. “Cash discount is a reduction of the amount of a bill if payment is made on or before the discount date stated on the bill.”[1] This article connects with chapter 12 since it talks about decreasing the credit risk by offering early payment discounts. So, if a business is in a bad state, with a large amount of account receivable, it would really help to have their own terms of sale with the customers to encourage earlier payments, so incoming cash flow increases.
Personal Response
I think that the biggest problem for businesses is that their payment policies are too lenient. Paying within 30 days is normal, but some companies do allow up to 60 days to receive their payments. This can really bring down their cash flow coming in, and without cash, the companies will not survive. I think all the tips in the article are really helpful, and if businesses actually use them, they could have a longer lasting company. The cash discounts is an awesome tip, since not only will you not lose any customers, but you are encouraging customers to pay their bills sooner since I’m sure everyone would love to have discounts.
[1] Accounting 1 – Fifth Edition
Thursday, October 30, 2008
Wednesday, October 8, 2008
Hands off the cookie jar, or pay
Summary
This article goes on to talk about employee stealing from their own employers. A study taken in 2004 actually proved that 79% of employees have stolen or have thought about stealing from employers. The article also talked about a case of a Safeway employee theft. The company had to install more security cameras to finally catch the thief in action. In just one year, Canadian employers lost about $120 billion just for employee theft. Employee theft is a big problem, as said in the article, about 30% of business collapses due to this.
Connection
In the article, Safeway, they had started to notice shortages in their inventory. This relates to our chapter, which talks about physical inventory, a procedure to count and value the unsold merchandises. This article goes to show that having a physical count of inventory is very important. Also, this relates to the chapter since the chapter talks about cost of goods sold. If items are stolen, or broken, it is considered as cost of goods sold. This means for Safeway, all the amount of merchandise stolen would be considered as COGS, and their gross profit and net income would be lower.
Personal Reflection
I always imagined it would be customers that do the stealing, and I never would have thought that such a high percent of employees would steal. I think that companies should have higher security, by installing more security cameras, or set up store alarms. For example, the store I currently am working at, has no alarm, so if somebody steals and run out of the store, no one would have known. On the other hand, if someone stole from Zellers or any clothing stores, the alarm would start ringing once they walk out the store, and attention would be brought upon them. Even though it will be a large expense, security is something worth investing in.
http://www.canada.com/story.html?id=702695
This article goes on to talk about employee stealing from their own employers. A study taken in 2004 actually proved that 79% of employees have stolen or have thought about stealing from employers. The article also talked about a case of a Safeway employee theft. The company had to install more security cameras to finally catch the thief in action. In just one year, Canadian employers lost about $120 billion just for employee theft. Employee theft is a big problem, as said in the article, about 30% of business collapses due to this.
Connection
In the article, Safeway, they had started to notice shortages in their inventory. This relates to our chapter, which talks about physical inventory, a procedure to count and value the unsold merchandises. This article goes to show that having a physical count of inventory is very important. Also, this relates to the chapter since the chapter talks about cost of goods sold. If items are stolen, or broken, it is considered as cost of goods sold. This means for Safeway, all the amount of merchandise stolen would be considered as COGS, and their gross profit and net income would be lower.
Personal Reflection
I always imagined it would be customers that do the stealing, and I never would have thought that such a high percent of employees would steal. I think that companies should have higher security, by installing more security cameras, or set up store alarms. For example, the store I currently am working at, has no alarm, so if somebody steals and run out of the store, no one would have known. On the other hand, if someone stole from Zellers or any clothing stores, the alarm would start ringing once they walk out the store, and attention would be brought upon them. Even though it will be a large expense, security is something worth investing in.
http://www.canada.com/story.html?id=702695
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