Each year, you make a personal list of New Year’s resolutions to set goals for the year to come. This year, why not do the same thing for your business?
By making a list of resolutions and sharing them with your leadership team and staff, you can all commit to working harder and smarter to improve the company’s bottom line. Here are a few things to consider as you are developing the list.
* Watch for changing tax laws. The November election could impact tax laws. Old provisions could be extended past their 2004 expiration dates and new laws could be passed.
As you move through the year, don’t get caught with an outdated tax budget based on the 2004 laws. Keeping your eye on changes in the tax laws could help your business financially.
* Maximize the benefits of Sarbanes-Oxley. In 2004, large public companies had to comply with Section 404 of the Sarbanes-Oxley Act. This means public companies with a market capitalization of $75 million or more had to document their internal controls and have them reviewed by an auditor this year. Smaller public companies have until 2005 to meet these same requirements.
Whether your company has completed this task or you still have work to do, make the most of this initiative by using the work required to comply with Sarbanes-Oxley to help identify process improvements that can save you time and money. Consider having some of your Sarbanes-Oxley team help identify possible redundancies or inefficiencies within your business and determine ways to improve your processes.
Retain your best people. Today’s most successful companies realize that employee retention and talent management are integral to sustaining their leadership and growth in the marketplace. Employee turnover costs range from an estimated 25 percent to almost 200 percent of annual compensation. It is even more difficult to determine the cost of intangibles such as customer service disruption, loss of morale, burnout, absenteeism and emotional costs among remaining employees, as well as loss of experience, continuity and institutional memory.
With the onset of the New Year, take the opportunity to evaluate how you are spending your merit raise budget to determine whether you are actively working to retain your best and most valuable workers. While monetary compensation typically is not the only driver of employee satisfaction, it is an important consideration. Employees are also concerned about having interesting and meaningful work, acceptable working conditions and good management.
However, employers should work to make sure they are spending their salary increase budget wisely and where it can make a difference.
* Review your cash management plan. The Check Clearing for the 21st Century Act became effective Oct. 28. Referred to as Check 21, this legislation allows banks to exchange electronic images rather than actual paper check items in the clearing process.
This can have a significant impact on a company’s “float time” and cash management strategy. The relative effect of this new legislation depends on whether your receivables and payables are small or large, are widely distributed across the country or are coming and going close to home.
If you believe that your float time will lessen, it is critical that you retool your cash management processes in 2005. Improving clearing time for receivables is often possible through use of electronic payments or lockbox services. Managing payables through effective vendor negotiation, stringent use of discounts and consolidated distributions also can be effective tools.
On the flip side, if you believe that you might benefit from increased cash on hand, the New Year will be a good time to re-evaluate short-term liquid investments with an eye toward improving your profitability.
Finally, make sure your resolutions for your business are reasonable for your company and employees. Start with one or two goals that are meaningful to your business and manageable in size and scope. Once you’ve accomplished those goals, you can always set more … and don’t forget to celebrate your success with those who helped make it happen.
KRISTIE NICOLOSI, CPA, is an assistant vice president working with Large Corporate Accounts for Fifth Third Bank and can be reached at (614) 744-7588 or [email protected].
