News and Events : PVBS Newsletter August 2008

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Article 1: Go Beyond Your Reports to Manage Your Business

This article was submitted by John Hrastar of InterSource (McLean, VA). More information on CEO Advisory services that help you control your business destiny can be found at www.InterSource.net."

Keeping track of your company’s performance usually means regular review of your financial statements. With a little extra effort there are some other measures you can use that give you a better perspective on performance and let you see and act further into the future.

Reporting vs. Managing
Financial statements show the past; the format is useful for reporting, but not managing. Even with real time accounting, the data you are getting show what has already happened; there is no real indication of what is about to happen. Looking at the same data in a different format will provide some insights not available from the standard reports. You should augment your regular reporting with some other tools that will help you proactively drive your company’s growth. These tools are found in Microsoft Dynamics NAV from PVBS.

Noisy Data
First, look beyond month to month revenue comparisons. There are so many things that affect the numbers any given month that real performance changes get lost in the noise. Seasonality, billing and collection cycles, and the beginning or end of projects can all have a significant impact on how any two consecutive months look. For example, if July and August are always slow and then September always picks up, seeing a sales increase for September is meaningless at best. Even comparing this month to the same month a year ago could be affected by those same factors. Likewise if you collect a large receivable the last day of one month or the first of the next.

To smooth out seasonality and daily fluctuations total the last twelve months of sales figures and update that number each month. Every seasonal or fiscal period is included, and the effect of daily fluctuations is minimized. It’s most useful to look at this on a graph because then you can visually see in an instant if you’re headed in the right direction. When you start, graph two or three years of history to get a sense of how far ahead this technique starts giving signals.

Quality and Quantity
An even finer way to see into the future is to keep track of your quality of profit. All standard financial reports only show the quantity of profit, yet the quality will change in advance of the quantity.

The quality of profit is measured by the ratio of net cash inflow from operations divided by earnings before interest and taxes (EBIT). This indicates the amount of profit received in cash terms during the year. Cash is the fuel that enables your business to survive and gives you the ability to grow. This measure combines cash and operational profit in such a way that you can track your sustainability along with your cash position.
In addition, it filters out extraordinary items and debt so you’re not lulled into thinking that because you have cash in the bank everything’s okay. You may be living on asset sales or your line of credit while the business deteriorates only to have a nasty surprise when it’s too late. Growth consumes capital and especially in a high growth situation you may outgrow your own capital base. Once the growth train picks up a head of steam, being surprised by the cash crunch is more than an inconvenience; you could get completely derailed.

Results
The more accurately you can understand your company’s true performance the better your current decisions will be. Being able to look further into the future will enhance the reliability of your plans and forecasts. Both of these will have a large positive impact on your growth and profitability and both of these can be implemented with minimal extra work.

Article 2: CRM Helps Government Contractors Win More Business

DynLink is a Microsoft Gold Certified Partner and recognized CRM (Customer Relationship Management) leader. DynLink is one of only six firms across the nation along with PVBS tapped by Microsoft to serve in the Government Contractor Solution Circle. DynLink serves organizations requiring efficient, cost-effective, and market-proven business technology solutions.

We interviewed DynLink‘s Rajev Bricksin to learn more about how government contractors and resellers benefit from CRM and how they can tie the CRM system to their DCAA-compliant Microsoft Dynamics NAV financial management solution. PVBS has teamed frequently with DynLink to help government contractors and resellers more effectively manage their contracts and relationships with their Federal Government customers.
Read the Interview>>

Article 3: DOD Orders Steps to Verify Procurement Data

This article was submitted by Warren Corbett, Business Research Services Inc. (Bethesda, MD), publishers of Set-Aside Alert. Subscription information can be found at www.setasidealert.com.

The Defense Department has issued a detailed roadmap for improving the accuracy of its procurement data. The 10-step plan was developed in response to the Office of Federal Procurement Policy's call for all agencies to verify and validate procurement information they send to the official database, the Federal Procurement Data System. A number of investigations have found the official data is often wrong, especially in identifying small businesses.

The DOD plan was distributed to the military services and other defense activities on July 25 by Shay Assad, director of defense procurement, acquisition policy and strategic sourcing. The DOD components were instructed to verify and validate a random sample of their contract actions, with a goal of 95% accuracy for each of 46 data elements that are submitted to FPDS. When errors are discovered, the verifiers must determine how the error occurred and how to keep it from happening again. In May the Office of Federal Procurement Policy told agency chief acquisition officers to develop a plan for verifying and validating their procurement data. The CAOs must certify the accuracy of their agency's reports to FPDS.

Many independent assessments have found widespread inaccuracies in FPDS data. In 2006 the Democratic staff of the House Small Business Committee found that 15% of the contract dollars credited to small businesses actually went to large companies or nonprofits. SBA has blamed most of the mistakes on data-entry errors, but critics charge that some large companies are masquerading as small ones to take advantage of set-asides. (SAA, 7/11) The push for accurate data became more urgent with the creation last year of www.usaspending.gov, a website that makes federal contract and grant data easily accessible to the public.