Finance Presentation• Aidan O’Byrne• OBK Accountants/• The Food Accountants • aidan@obk.ie : www.obk.ie•

Background

Ex Finance Director Batchelors/Ex CFO Valeo Foods

Founder director of Love Irish Food

• 80% Mark Identification

• Significant Annual Media Spend

Food Accountants

• Accounting & Advisory to Food Companies of all Sizes

• Mentor Role

• Fundraising• M & A• Non Exec Director• Restructuring

Contents

• Recap on Food Academy Start• Capital & Funding Structure• Internal Business Controls• Preparing for Growth

Recap on Food Academy Start

• C – Cash• I – Information• P – People

Cash

• Cash will always be King• Financial Activity not valuable until it

delivers cash• Cash allows founders to deliver on

their goals

Cash – Lack of Cash leads to

• Firefighting• Compromising Quality• Scrambled Thinking• Business Failure

How to Maximise Cash - Debtors

• Bill Promptly• Bill Accurately• Understand your Credit Terms• Have Credit Check Procedures• Have Credit Limits

How to Maximise Cash - Debtors

• Debt Review Procedures• Payment by Direct Debit• Process Credit Notes• Have Rapport with Payer• KPI Days Sales Outstanding

How to Maximise Cash - Stock

• Buy in Economic Quantities• Trade Off Price & Holding Costs• Use all Stock before Changing

How to Maximise Cash - Creditors

• Understand Pressure of Suppliers• Extend Terms

Understand your Cash Flow

• Annual Cash Forecast in Months• Split into Component Parts• Identify Peaks/Troughs• Monitor every Month & Amend

I - Information

• Profitability• Flash Reports• Accounts

Information :Profitability

• How to make Profit• Understand all the Moving Parts

Profitability• Sales • LTA/Rebates• Net Revenue• Direct Costs – Variable• Direct Costs – Fixed• Promotional Costs• Logistics Costs• Brand/SKU Contribution• Fixed Overheads• EBIT• Interest & Tax• Profit

Breakeven

• Always understand how much you need to Sell to Breakeven

• Breakeven INCLUDES your expected Return from the Business

Sales

• Know what your Net Revenue per SKU is from Each Customer

• Consider all LTA’s – Rebates

Costs

• Always have an Up to Date Bill of Materials

• Review before each critical business decision

• Sign off each month

Direct Costs - Variable

• Raw Materials incl waste : Can you resell waste

• Packaging Materials incl Waste• Logistics Inwards for Raw/Pack• Currency Implications• Direct Labour• Direct Energy

Direct Costs – Fixed/Quasi Fixed

• Plant Insurance• Supervisory Labour• Factory Consumables

Promotional Costs

• Reduced Margin• Racks/Ends Fees• Multibuy Accruals/Costs

Logistics

• Case cost of Warehousing• Case cost of Transport/Distribution to

Retailer

Fixed Overheads

• Administration Costs (incl Wages)• Rent/Rates• Selling & Marketing Costs/Salaries• Training• Safety & Compliance

Information – Flash Reports : Daily

• Sales – by product / customer• Service Levels• Stockouts• Cash

Information - Accounts

• Monthly P&L , Balance Sheet, Cash Flow

• Compared to Budgets/Forecasts & Variances noted & explained

Information – Accounts : KPI

• SKU Growth• Retailer Growth• Average Order Size• New Order as % of First Order• Debtor Days• Working Capital Investment

P : People

• Founders spread themselves too thin• Learn to trust others with your

Business• Have Key skills internally –

(Production/Sales/Finance)• Outsource your weak areas

Capital & Funding Structure

• Most small businesses have poor capital structures which leads to cash problems when unforeseen issues arise

Capital & Funding : Equity

• Own Equity : Shares & Loans• F & F Equity• EIIS Scheme • Venture Funds/Angels/HBAN• Crowdfunding

Capital & Funding : Debt

• Overdrafts• Term Loans• Asset Finance• Invoice Discounting• Micro Finance Ireland• Covenants : Read Them & Comply!!!

Capital & Funding : Trade/Revenue

• Understand Terms of Trade : Fine line between good creditors management and annoying suppliers

• Use Revenue – PAYE/PRSI/VAT can be paid at different intervals

Capital & Funding : State

• EI/LEO – myriad of opportunities• Priming Assistance• Web Site Assistance• New Frontiers Programme• HPSU• Competitive Start Fund• Innovation Vouchers• Mentors

Capital & Funding : State (Grow)

• Strategic Marketing• Market Access• Internationalisation• International Selling• R&D Funds• Lean Programmes• Green Programmes

Internal Business Controls

• Starts at the Top• Owner attitude drives Company Philosophy • If a LTD co remember it is not your cash it is

the company’s cash and you own shares in the company – not the same

• Do not treat company funds as your own

Internal Business Controls – Why ?

• Safeguard Assets• Prevent Fraud• Improve Reporting• Encourage Good Management

Safeguard Assets

• Physical Security• Access Controls in IT –

Passwords/Firewalls

Prevent Fraud

• Most fraud is internal• Have Segregation of Duties • No one should control all the process (Order to

Payment or Despatch to Receipt)• Regular Reconciliations – Bank/Stock• Compulsory Annual Leave• Authority Levels • Review & Investigate

Improve Reporting

• Chart of Accounts• Regular Management Information• Compare to Forecast• Do Timely• Review, Measure and Manage• Staff Competency

Improve Reporting

• VAT Rates Signoff – Issues• Cash Payments – Know Implications

thereof : For less than 30k provide about 20% for Tax

• Subsistence/Mileage

Encourage Good Management

• On Site Statistics• Sales• Growth• Days since last accident• Improves Morale/Transparency

Food Academy Advance - Growth

• Production• Sales & Marketing• Distribution• Accounting & IT• Compliance & Tax

Advance - Production

• Capacity• Manpower• Maintenance Costs/Shutdowns• Availability of Raw/Pack• Food Safety Compliance

Advance – Sales & Marketing

• Resources (HQ, Field)• Self Service or Distributor• Promotions – Costs• Promotions – Mechanisms• Promotions – Synchronising Accounts &

Sales/Marketing

Advance - Distribution

• National Distribution• Warehouse – Rotation, Pick Rates,

Traceability

Advance – Accounting & IT

• Larger volumes• Technical Skills• Front End Sales Reporting• Budgeting & Forecasting• Daily Dashboards• Checklists – BOM’s/Revenue/Promo

Calendars

Advance – Compliance & Tax

• More scope for difficulties

Compliance & Tax

• VAT Rates Signoff – Issues• More scope for Difficulties• Cash Payments – Know Implications

thereof : For less than 30k provide about 20% for Tax

• Subsistence/Mileage