Days Payables Outstanding (DPO)

Similar to Days Sales Outstanding (DSO), a useful measurement for payables management is Days Payable Outstanding (DPO).

DPO is an indicator of how long the company is taking to pay its trade creditors. It is usually calculated by dividing Accounts Payable by Cost of Sales and multiplying it by the number of days. It can be tracked monthly or quarterly.

Entrepreneurs interested in cash management might want to supplement the DSO metric with DPO. Tracking these metrics reflects how well working capital components are being managed.

Ravi Patel

Adding Value to Business Processes

I have previously emphasized examining your business processes with a view to continuously improving them. This exercise makes your processes more efficient increasing productivity.

However, if your business process does not add value, how good is it? Having an efficient process is not useful for only its efficiency; the process should add value to your business operations and ultimately the bottom line of your company.

Entrepreneurs should instill in their company culture a philosophy of examining every process and task from a perspective of adding value and being efficient at it.

Ravi Patel

Segregation of Duties

An important internal control for companies is proper and adequate segregation of duties in key risk areas.

When Entrepreneurs start out, there are fewer people in their organizations and proper segregation of duties is difficult. Entrepreneurs exercise greater oversight over all areas of the company to ensure internal control.

As their businesses grow, Entrepreneurs cannot and should not have too much oversight, but need to develop effective organizations with adequate internal controls with proper segregation of duties

All key business processes need to be examined to review that no individual performs multiple duties such that there is a potential for malfeasance. Duties should be properly segregated to avoid such situations.

For assistance in establishing effective internal controls, please contact us at Patel CFO Services (

Ravi Patel

Audited Financials

As Entrepreneurs grow their businesses, accurate financials become quite important. Not only are timely financials required for monitoring performance and the financial health of the company, but also are necessary for external parties. An audit reveals the strength of your internal controls and accuracy of your statements.

As capital needs grow, Entrepreneurs need to reach out to bankers and equity and debt sources to raise funds. Having “audited” financials if often a requirement. If Entrepreneurs are contemplating any M&A or exit strategy, audited financials for at least three years are mandatory.

Entrepreneurs might want to think about having their financials audited if they do not have already done so. Choosing the right firm to audit your financial statements is equally important.

If we can assist you in this process, please contact us at Patel CFO Services (

Ravi Patel

Is Your Time at the Office Effective?

Entrepreneurs often spend too much time at the office. But, is your time at the office spent effectively?

“Working” long hours at the office may definitely send a signal to your employees and show leadership by example. However, if your time is being spent in administrative tasks and being distracted by trivial things, it might not be the best use of your time.

If you have a capable management team in place, you might want to consider taking some time and spending it away from the office planning to “Do the Right Things.”

That might be more effective in the long term!

Ravi Patel

Application of P4P Programs

We have discussed Pay for Performance (P4P) programs in previous posts (Pay for Performance and  Measuring Employee Performance). During my presentations and discussions, I have been asked who is the P4P program applicable for.

The simple answer is – for every level in a company. The beauty of a P4P program is that it is not restricted to management level employees. If properly designed, it could become a valuable tool for every level in a company.

Performance management is important for all employees of the company and tools to enhance and reward performance should be a focus for all Entrepreneurs.

For more information, please contact Patel CFO Services at

Ravi Patel

If it ain’t broke, fix it!

You must be surprised at the twist on the popular saying. The normal convention is that if things are not broken, do not fix them.

Well, challenge the norm!

I suggest that if things are not broken, they are also status quo. Find ways to improve the status quo.

In the current environment when things are slow, review things that are not broken with an eye to make them better. It may serve you well when the economy picks up and you might not have time to review your operations.

Ravi Patel

Shared Learning

Successful Entrepreneurs keep current with popular management thinking by reading a lot of relevant books. Reading good books by expert and knowledgeable authors allows Entrepreneurs to expand their horizon and experiment with proven management techniques to improve their businesses.

Do you, a constantly-learning Entrepreneur, share your knowledge with your management team? If so, how? If not, why?

Entrepreneurs might want to consider a “Shared Learning” program in their company. If you come across a great management book and want to implement some of its ideas in your company, buy a book for each of your management team members. Implement a program that requires the management team to read that book and periodically have sessions to discuss the book and its relevance to your company.

You will be amazed at the level of learning and acceptance of new ideas in your company. Do the Right Things!

Ravi Patel

Finance 101 for Non-Financial Managers

Entrepreneurs grow businesses by holding key executives accountatble for both operational and financial performance and rewarding accomplishments.

But have you trained your non-financial managers in key financial concepts? How are they trained in the use of financial tools to manage their areas of responsibility? Do they understand the elements of an Income Statement?

If Entrepreneurs hold members of their management team accountable for financial performance, it behooves them to arrange financial education and training for their non-financial executives. Are you doing that?

Ravi Patel

Measuring Employee Performance

In an earlier post I suggest the use of Pay for Performance

A fundamental aspect of using Pay for Performance is measuring performance. How do you measure the performance of your employees? Do you have objective and SMART metrics? In the event you use some type of metrics to measure performance, you need to evaluate if they are appropriate for Pay for Performance. If not, you might need to refine them.

If you do not utilize objective measures to gauge employee performance, your evaluation of an employee’s performance  is not comprehensive. Entrepreneurs might want to re-think the performance measurement and evaluation process in their company before thinking about Pay for Performance.

If we can assist you, please contact us at Patel CFO Services at

Ravi Patel