budgeting & banking for small businesses in israel
TRANSCRIPT
Getting a Grip on your Business’ Financial Heath
Shuey Fogel
Shuey FogelPrincipal, Fogel CFO & Management ServicesHusband & Father of 5Lower East Side Jerusalem ElazarPublic Service & NonprofitsIsrael Banking SectorDepartment Mngr, Banking Solutions for
Businesses & NonprofitsNonprofitBanker: Online Resource for Israel’s
Global Nonprofit SectorFormer Chairman & Treasurer of Town Council
Shuey FogelPrincipal, Fogel CFO & Management Services
Outsourced CFO/Controller:• Internal Fiscal Direction & Management• External Financial Communication• Satellite Office Services• Banking & Credit• Consulting Projects• No-Kickback Referrals
Do I need a long term plan? I don’t know the answers.Do I even know the questions?What tools are at my disposal?Whom can I trust?
Our Business’ Health
Uncertainty + Annoyance
AgendaDefine TermsIntroduce Key ConceptsTools & Best PracticesPractical Applications
Defining Terms• Income = Billing = Payments from Clients • Profit = Income - Expenses• Fixed Costs = Constant• Variable Costs = Changing
BUDGET ToolMeans to an End
The What ≠ The HowBe Conservative≠ Reimbursables
BUDGET The Dream
CASH FLOW Reality
Defining Terms• Working Capital = Available Cash
= Net Liquid Assets = Current Liabilities - Assets
CASH FLOW Bank Account
The How ≠ The WhatReimbursablesVAT
Destroyer of Companies & Countries
TIP #5When creating spreadsheets, enter data only once to avoid inconsistency.
Fact of Life:
Owners Get Paid Last
TIP #1Simplify life by consolidating payment dates. Paying by creditcard can help.
TIP #2Choose a credit card payment date that matches client payments. Otherwise, the calendar month.
TIP #3In the early life of a company, cash flow might be more important than saving money.
TIP #4When creating spreadsheets, enter data only once to avoid inconsistency.
ONE WORKSHEET:
Budget BillingCash Flow
Financial Theory of Relativity:
Cash flow problems can become budget problems when:
1. Increased interest expenses related to credit.
2. Greater income needed to cover cash flow issues.
CLIENT ACQUISITION COSTS Time & Money
Increase existing clients
Axiom: “Losing 1 unsatisfied customer = 40 new clients”
FINANCIAL GOAL SETTING Planning
When to change the status quo?
Were original estimates correct?
Defining Terms• Liabilities = Payments for past expenses• Assets = Resource with economic value• Solvent = Assets > Liabilities
LIABILITIES: AM I SOLVENT?LiabilitiesOutstanding checksUpcoming paymentsLoan Payments
AssetsChecks in-handCash Credit LinePayPal/Credit Card
COST OF TIME Client WorkBizDevAdministrationShmoozingEducation & Development
PRICING Your TimeProduct
Top Down (Salary/Time)Bottom Up (Product)
Payment Dates
CLIENT NET WORTHIncomeReferralsAdditional Value• Timely Payments• Reputation• Volume• Quality of your Work
CalculatingClient Net Worth• Analyze both past and present clients• Create common denominators• Convert these commonalities into services, products,
or modules• Assign income and expenses• Map clientele • Divide income according to mapping
FROM THEORY TO PRACTICE:Client Net Worth:Client Mapping
STAFF Two Kinds:1. Salaried2. Outsourced
STAFFSalariedPull in 120%Pay by the 10th Mandatory benefitsAccording to law
OutsourcedPer costAccording to contractVATPer month/contract
Quality & Ownership
CREDIT Do I have a Cash Flow problem or a Budget problem?
CREDIT: LINE OF CREDITCash Flow Challenges
Discrepancy btwn income and expenses
Ongoing, occasionally used
CREDIT: LOANSInvest ≠ Pay YourselfRefinance Credit
Personal or BusinessHome Equity(Protect Yourself)
GROWTH Growing our biz to:• Increase profit• Increase quality of life
Funding growth with:• Surplus• Credit
• Budget• Cash Flow • Client Acquisition
Costs• Financial Goal Setting• Liabilities• Cost of Time
• Pricing• Client Net Worth• Staff• Credit• Growth
Topics Covered
Making Business Banking
in Israel Work for YouShuey Fogel
Israeli Banking Today:• New technology• Rotating managers• Increased regulations• American (IRS) Invasion
Accept the possibility of switching banks every 3 to 5 years.
When it comes to service, there are no good banks,only good branches.
DIGITAL SERVICESCheck Deposits Shekel WiresF/C Conversions“Super” BranchOnline Tellers
Don’t use your brain when navigating bureaucracy.
Just do what they tell you.
ACCOUNT NAMESWill mirror company or charity name.
Individuals can use DBA (Doing Business As) name.
Incoming checks & wires need to match too.
FEE TRACKS The Great Equalizer
FEE TRACKS Basic = בסיסי10 Automatic ישיר1 Clerk פקיד
Expanded = מורחב50 Automatic ישיר10 Clerk
FEE TRACKS Defined as Small Business עסק קטןFirst Year or under 5 million shekels annually
MULTIPLE ACCOUNTSOptional: separate accounts for independent projects.
Banks may not name other accounts as you wish.
INTERNATIONAL TRANSFERS Banks
Exchange BrokersPeer-to-Peer
Peer-to-Peer in Israel is less popular & perhaps not needed
“It's easy to get a loan unless you need it.”-Norman Ralph Augustine
CREDIT Types:LoanLine of Credit Credit Cards(Checks)
CREDIT Loan = הלוואהLower InterestFull amount up front
Line of CreditHigher InterestUse as Needed
CREDIT Banks treat all credit as the same.Approved one amount, broken up as you wish (kind of).
Use/change to your advantage.
CREDIT CARDSMost issued directly from your bank.
Need to provide collateral.
Exception for small amounts.
Choosing the right bank for my business:• Service• Online capabilities• Credit• Not about the money
Thank youShuey FogelOutsourced CFO/ControllerInternal Fiscal Direction/Management & External Financial Communication
[email protected]@fogelCFO/shueyfogel