Businesspersons Must Monitor SRI, the 3 Critical Factors for Business Survival!

Written by Govindraj Muthyalu CPA, CIA, CISA

All businesspersons want to survive and expand their businesses. All of them are passionate, are energetic, are committed, work hard, sacrifice their family and social life, and undergo lot of difficulties. Even then, why is it that few businesspersons barely manage to survive or even close down their businesses, while others succeed?  What is it that these successful businesspersons do which others don’t?  Is there a tried and tested formula for succeeding in business?

Let me tell you there is no formula that guarantees 100% success in business. Business environment is extremely complex and dynamic, and business success depends not only on internal factors but also on external factors on which businesspersons have little or no control. However, it is observed that, businesspersons who are successful make it a point to monitor SRI, ie Sales, Receivables, and Inventory on a daily basis.

Sales.

Sales is the life blood of all businesses.  Monitoring sales regularly is very critical for business survival and growth. Best way of monitoring sales is to compare the actual sales achieved versus the budgeted sales.  It is very important to have a sales budget for each region, state, city, and sales person. I am not going into how to prepare sales budget because it is a big topic by itself. However, in short, your sales budget should generally be based on historical data, market potential and market share you want to capture, new products added to the portfolio, and new territories ventured into. It is very important to monitor actual sales achieved versus the budgeted sales, by each region, state, city and sales person on a monthly basis.  In case there is huge variance between the actual sales and the budgeted sales, corrective action should be taken immediately to rectify the situation.

Receivables

You need to collect the money as soon as possible after you sell. If you are selling on cash, you don’t have to worry about receivables. However, like most of the businesses, if you are selling on credit, it is very important that you collect the money on or before the invoice due date. Very few customers pay their debts within the credit period even if you do not follow-up. Generally customers try to delay their payment, as much as possible, even if they are in a position to pay.  As mentioned in one of my earlier posts, “a sale is a gift until you collect the money”.  So every effort must be made to collect the money as soon as possible. Every business should have a credit department who should be responsible for collecting the debts of the company and keeping the organization liquid.

Many businesses who have huge receivables borrow money to fund their operations, and incur interest costs. In a way, there are financing the operations of their customers by borrowing funds.  So it becomes very critical for business owners to monitor their receivables on a regular basis and ensure that the overdue receivables do not cross a certain level.  Ageing of overdue receivables is very critical and owners must closely monitor receivables which are more than 30 days overdue, and ensure that no receivable is more than 60 days overdue. If any receivable is more than 90 days overdue, they should consider initiating legal action to recover the amount.

Inventory

Inventory is another area which needs to be monitored very closely.  Businesspersons must realize that their cash is stuck in inventory.  Calculate the minimum and the maximum stock that is required for your business and ensure that your inventory does not exceed the maximum stock at any point. Don’t get tempted to order and stock more items just because the vendor is offering you special discount or payment terms for bulk orders.  If you stock items more than what is required for your normal consumption, you are funding your vendor.  Ageing of inventory is also very important.  Business owners must monitor their inventory regularly to identify those items which have not moved for a reasonable period of time, and disposed them off at a discount before they become obsolete and useless.

There are several other factors which also need to be monitored on a regular basis for survival.  However, any businessperson who monitors SRI (the three factors, Sales, Receivables, and Inventory mentioned above) regularly and takes corrective action immediately, is in a much better position to survive and succeed in this complex and dynamic world.

About the Author

Govindraj is a CPA, CIA, CISA and has more than 25 years of finance, accounting, auditing, and IT experience.  He has worked as a controller and a CFO of many multi-million dollar companies. He is a Gold Winner under the category "Executive of the Year - Computer Software" at International Business Awards 2016 held at Rome, Italy, and a Bronze Winner under the category "Executive of the Year - Cloud Computing / SaaS / Internet" at Golden Bridge Awards 2016 held at San Francisco.  He has lot of experience in designing systems / processes, and implementing ERP packages in various industries.  He is the CEO of Cashpundit Inc. (www.cashpundit.com), a startup that he founded to help businesses to manage their collections and cash flows.

5 Ways To Avoid Your Receivables From Becoming your Liability

Written by Govindraj Muthyalu CPA, CIA, CISA

One of our major customers, a consumer electronics distributor who had huge receivables from a well-known retailer, told me “IF I STOP SUPPLIES, THEY WILL STOP PAYMENT, AND START BUYING FROM MY COMPETITOR”. It was a catch 22 situation.  The retailer in question was a reputed company which had many branches across the country.  The distributor had offered 30 days credit to the retailer. Within 15 days after the first order, the retailer had placed another big order. After 30 days when it was time to pay the overdue  invoices relating to the first order, the retailer placed one more order and requested for additional time to pay the overdue invoices.  The distributor was comfortable in extending additional credit since he was getting sizeable orders, and he did not anticipate any issues with the payment from the retailer.  As weeks and months passed by, the supplies to retailer increased at a much faster pace than the increase in the payment from retailer.  Whenever the distributor used to ask the retailer to clear the overdue invoices to get new supplies, the retailer used to clear small part of the overdue invoices and request for additional supplies.  The retailer had excellent business but was poor in paying his suppliers. The retailer used to tell the distributor not to force him to go to other distributors by stopping the supplies. It was a “SOFT EXTORTION”. In about a year, before the distributor could realize, HIS HUGE RECEIVABLES FROM THE RETAILER HAD BECOME HIS LIABILITY.

I am sure many of you, who had offered credit without due diligence and proper documentation, must have faced a similar situation. Here are the 5 ways by which you can avoid your receivables from becoming your liability.  

Proper Credit Documentation

Never ever offer credit to any customer without proper due diligence, and before signing and completing the credit related documentation.  Many a times, small businesses, in their eagerness to get associated with big brands and customers, tend to either overlook or ignore this very important step before offering credit.

Get Post Dated Cheques

Wherever possible, negotiate with the customers and offer them credit against Post Dated Cheque (PDCs).  For example, if you are offering 30 days credit, get a cheque which is dated 30 days from the date of invoice at the time of delivery of goods.  In many countries, bouncing a cheque is a criminal offence and hence businesses may be reluctant to issue PDCs unless they are sure of honoring it.  If customers are reluctant to issue PDCs for supplies within the credit limit, then insist on a PDC for supplies over and above the credit limit.

Get a Revolving LC or a Bank Guarantee

Ask the customer to open a Revolving Letter of Credit (LC) or give a bank guarantee against credit supplier. Most of the big businesses will have bank facilities and they should be able to provide you one of these. You can negotiate and share the bank charges with the customer.

If a customer is not willing to provide a PDC or LC or guarantee, then be careful with such customer. If people have intention to pay on time, they should not hesitate to provide PDCs, LCs or bank guarantees.

Take credit insurance

Another good way of protecting your company against failure of your customers to pay your debts is to take credit insurance against your major customers. Even though credit insurance comes at a small cost, it will help you to increase your sales by offering credit to the credit insured customers, since you are assured of payment by the credit insurer in case the customer defaults.  Look for a credit insurer who has coverage across cities and countries wherever you have customers.  It is extremely important to evaluate and negotiate the terms and conditions of various credit insurance companies before finalizing one of them. In one of my earlier companies, I used to deal with “Euler Hermes”, which is the world’s number 1 credit insurance company that has coverage across major cities in the world.

Don’t be afraid to say NO to a credit sale if you are not comfortable

It is very important to know when to say NO to a credit sale.  Even though Sale is the life blood of    business, if the customer is not regular in payment, if his receivables has crossed the credit limit, or if there are several unpaid overdue invoices, do not offer additional credit to the customer without securing the existing receivables. Credit department should have a mechanism to get the credit rating / standing of all their customers from the market, and reevaluate on a regular basis whether to continue to offer credit to customers.

About the Author

Govindraj is a CPA, CIA, CISA and has more than 25 years of finance, accounting, auditing, and IT experience.  He has worked as a controller and a CFO of many multi-million dollar companies. He is a Gold Winner under the category "Executive of the Year - Computer Software" at International Business Awards 2016 held at Rome, Italy, and a Bronze Winner under the category "Executive of the Year - Cloud Computing / SaaS / Internet" at Golden Bridge Awards 2016 held at San Francisco.  He has lot of experience in designing systems / processes, and implementing ERP packages in various industries.  He is the CEO of Cashpundit Inc. (www.cashpundit.com), a startup that he founded to help businesses to manage their collections and cash flows.

Credit Controllers - The Unsung Heroes

Written by Govindraj Muthyalu CPA, CIA, CISA

Have you ever heard a school or college kid saying “I want to be a Credit Controller”?  I am sure you have not.  However, you must have heard kids saying they want to become a Doctor, Engineer, Pilot, Teacher, Journalist, Astronaut, Accountant, Lawyer, Banker etc., but not a Credit Controller. Even though kids do not aim to be Credit Controllers, it is surprising to note  that there are hundreds and thousands of Credit Controllers across the world who are adding lot of value to their organizations.  

Most of the newly-hired credit controllers undergo on-the-job training to transition to their duties smoothly.  Credit Controllers are primarily responsible for collecting the debts and improving the cash flow of the company.  Credit Controllers’ role starts after a sales person brings a customer’s Purchase Order and ends after they collect the money from the customer.  It is said that “A Sale is a Gift until You Collect the Money”. In a way, Credit Controllers ensure that the sale does not become a gift by collecting the money from the customers.  Credit Controllers also work for debt collection agencies where they are responsible to meet set cash and debtor targets on a daily basis.

Though Credit Controllers contribute a lot to the company, they do not get the kind of recognition that sales, marketing, finance, and other departments get. On several occasions, people within and outside the organization dislike Credit Controllers for doing their job sincerely.

Credit Controllers and Sales Persons

Credit Controllers regularly liaise with sales department to resolve credit issues smoothly. However, sometimes there are situations when they decide not to offer credit to a customer. In such situations, the sales department thinks that Credit Controllers are creating road blocks because of which they are unable to achieve their sales targets and earn their sales commission.

Credit Controllers and CFO / FM

Many a times the CFOs / FMs feel that Credit Controllers are not doing enough to collect the overdue invoices, even though the delay in payment of invoices by customers may be because of issues like incorrect invoicing, proof of delivery, credit notes, or any other dispute which is not related to credit department. Credit Controllers are always under pressure from CFOs/FMs to collect their debts faster and reduce the DSO (Days Sales Outstanding).

Credit Controllers and CEO / Owner

Sometimes the CEO / Owner overrules the credit advice of Credit Controllers and offers credit to non-credit worthy customers because of  business considerations. In such cases, it is little frustrating for Credit Controllers to follow-up and collect the debts of customers to whom they had decided not to offer credit in the first place. 

Credit Controllers and Customers

Credit Controllers are supposed to be regularly in touch with customers and resolve all issues related to invoices and ensure that the money owed to their company is collected.  But sometimes there are situations when he/she has to put the customers’ account on credit hold if the customers default payment or customer’s credit situation changes.  In such situations the customers dislike the credit controllers even though they are doing their job as per company’s policy.

Conclusion

Credit Controllers are the Unsung Heroes of the company. They always put company’s interest above everything else, even at the cost of becoming bad people in front of others.  Day in and Day out, they think of collecting the debts of the company and doing whatever they can to ensure that the debt does not go bad. They are as much concerned about the liquidity of the company as CFO, FM, CEO and Owner are. All their decisions, like denying credit to a customer, giving credit advice to the CEO / Owner, chasing a customer for payment, are all in the best interest of the company.

I feel that, all the people within the company especially the Sales persons, CFO, FM, CEO, and owner should appreciate Credit Controller’s role and respect their decisions. After all, they are also working in the best interest of the company, and doing their best to protect the company from going bust by collecting the debts of the company.

About Govindraj Muthyalu:

Govindraj is a CPA, CIA, CISA and has more than 25 years of finance, accounting, auditing, and IT experience.  He has worked as a controller and a CFO of many multi-million dollar companies. He is a Gold Winner under the category "Executive of the Year - Computer Software" at International Business Awards 2016 held at Rome, Italy, and a Bronze Winner under the category "Executive of the Year - Cloud Computing / SaaS / Internet" at Golden Bridge Awards 2016 held at San Francisco.  He has lot of experience in designing systems / processes, and implementing ERP packages in various industries.  He is the CEO of Cashpundit Inc., a startup that he founded to help businesses manage their collections and cash flows.

These 7 Signals Could Indicate Your Customer has Cash Flow Issue.

Written by Govindraj Muthyalu CPA

Customers are the lifeblood of your business. They are what allow you to in turn pay your bills, so timeliness of payments is not only important but also crucial for  survival of your business. That being said it’s important for you to be aware of the standing of your customers so you can be sure to be paid on time, and the sooner you are aware of  the issues the better it is for your business. For example if you know a customer is having some cash flow issues it could sometimes be beneficial to give them some breathing room for paying an invoice, this might be counter intuitive but can also go a long way in gaining good will. At any rate it’s important to know if  your customers are having cash flow issues, but what you do with that information is up to you. Here are seven signals that may indicate a small business is having cash flow issues.

1. Late Payments

This is one of the biggest indicators that a business is having cash flow issues. As soon as payments start to come in late it may be that because they are holding those payments waiting for cash to come in to cover what they owe. If late payments continue, be sure to communicate with your customer as communication with most business issues is often the key to a good outcome.

2. Partial Payments

If you receive partial payment against an invoice, this is also a big indicator that your customer has cash flow problems. Sometimes a business when they are worried about meeting all their obligations will send only a partial payment instead of the entire payment due. This might be all they have at the moment. When this occurs it should be followed up immediately.

3. Poor Communication or Late Communication

If it’s difficult to get a hold of your customer or communicate with them, whether its email or the phone, it could be a sign that they are having issues with cash flow. If you are constantly chasing down your customer either to get them to pay or simply to talk to them they might be having issues paying their bills and therefore having cash flow issues.  Many people have a tendency to avoid taking  calls of vendors and not responding to  their mails if they are not in a position to pay.

4. Bounced or Returned Cheque

This is another huge sign. If a cheque is returned from the bank it must be acted on immediately and you need to have your customer cover all bank costs. It’s possible that simply it was a bookkeeping mistake but you shouldn’t presume so and should move quickly to collect on that account. A bounced cheque is bad for everyone involved.

5. Post Dated Cheque

If businesses are regularly issuing post dated cheques on the due date of invoices,  this certainly is a sign that they are having cash flow issues. While post dating is essentially paying an invoice late, some businesses feel that if they give the cheque to you by the invoice date then they have paid on time, even if the cheque can’t be cashed until a later date. This of course is absolutely untrue, the day the cheque can be cashed is the day the invoice is officially paid. A post dated cheque is worthless until the date of issue unless you have cheque discounting facility with banks.

6. Requests to Postpone Cheque Deposit

If businesses regularly request you to postpone depositing your cheques, it is a clear sign that they have cash flow issues.  Depending on your relationship with the businesses, it may sometimes be OK to accept their requests, but you must keep an eye on how punctual they pay their future invoices. 

7. Requests for Statement of Accounts / Invoices

If businesses request you to send statement of accounts  and / or invoices whenever you follow-up for payment, it may be a sign of a cash flow issue. Many customers resort to this  tactic to delay paying their invoices whenever they have cash flow issues.  If customers request you for statement of accounts and / or  copies of invoices, send them those documents, call  them immediately, confirm  that they have received the documents, and ask them for payment.

Conclusion

Just because you see one of these from a client isn’t a guarantee that they are having cash flow issues but it certainly is a sign and should be taken seriously. These red flags are good opportunities to follow up with the business and see if you can find out what the real issue is and if there is anything you can do to assure that you get paid on time and you keep your customer, hopefully for years to come.

About Govindraj Muthyalu:

Govindraj is a CPA and has more than 25 years of finance, accounting, and IT experience.  He has worked as a controller and a CFO of many multi-million dollar companies. He is a Gold Winner under the category "Executive of the Year - Computer Software" at International Business Awards 2016 held at Rome, Italy, and a Bronze Winner under the category "Executive of the Year - Cloud Computing / SaaS / Internet" at Golden Bridge Awards 2016 held at San Francisco.  He has lot of experience in designing systems / processes, and implementing ERP packages in various industries.  He is the CEO of Cashpundit Inc., a startup that he founded to help businesses manage their collections and cash flows.

Exclusive Interview with Mr. Sharan Patil, Managing Director, Inspire India Financial Services, Bangalore.

In this issue, we are extremely happy to feature the exclusive interview of Mr. Sharan Patil, who is our CashPundit for this issue.

Mr Sharan Patil is the Managing Director of Inspire India Financial Solutions Pvt. Ltd.  Sharan is an accomplished executive and an identified expert in Financial Investments Planning (TFIP) and Portfolio Manager. He is known for his deep understanding of the distribution practices and its challenges. Also an experienced trainer, he has trained more than 10,000 people till date in major Indian cities and towns. He frequently conducts transformational training programs with well known corporate and Govt. organizations. His trainings are focused on effective financial planning via variety of investment instruments such as stocks, mutual fund, commodity, forex, insurance & real estate and taxation gains.  He started his career as a Financial Analyst with IEC (International Commodity Exchange) where he has managed big commodity portfolios. With his rich experience in the financial industry, he started Inspire India Financial Solutions Pvt Ltd with the aim of providing one-stop investment advice for investing in equity, mutual funds, systematic investment planning (SIP) and Total Financial Management to his clients. Sharan believes in positivity towards life and pledges by the idea of visualizing his goals in order to see them materialize. He is driven by passion to empower people to become financially independent. He and his highly qualified team takes keen interest in providing its customers with personalized investing advice into well balanced portfolio.

"Dream Big, Execute Smart, Be Honest" has been his success mantra. Sharan is an aeronautical engineer by qualification. He hails from Gulbarga where he completed his pre-university school. He later enhanced his education with a MBA in Finance in the year 2009.

CashPundit Inc: It is a great pleasure to interact with you and publish your thoughts in this interview.

Mr. Sharan Patil:

Thank you. I’m equally thrilled to share my experiences here.

CashPundit Inc.: Inspire India has been growing very fast and winning several industry awards, year after year.  What is the secret of your success?

Mr. Sharan Patil:

For me success isn’t a destination but the journey itself. That’s what makes it so exciting. This present model of ours took shape and has evolved over the past 15 years.

It all began as a personal life transforming program. But the financial decisions and financial management are the key areas that could reflect on the quality of anybody’s life. Eventually we realized that money is inevitable and most people’s worries revolved around money and they weren’t sure whom to approach in order to find solace to such issues. That’s when we decided to bring in financial awareness programs. We conducted educational programs on personal financial management. These were followed by wealth checks or financial planning for individuals and then goal based investments. We received a lot of appreciation for this and that’s when we understood the missing link and continued our efforts in that direction. We got better with each program. Today it’s one of the major contributors to our ever increasing clientele which stands at more than 7000! 

Through this model we could fill the gap and provide the one-stop platform for people to plan and invest. The major reason why we are so successful is we took the client-first approach instead of being product-centric. We were sure that if we made our clients create wealth we would always be winners. That’s the story behind all the awards that we’ve been recognized with for all these years. End of the day it the satisfaction of showing the right direction to people to achieve a financially healthy life that motivates us to reach out for more.

CashPundit Inc.: You seem to have coined the phrase “Honestly, Wealth is Health”. Why do you say that? And, what do you mean by “Financial Freedom”.

 Mr. Sharan Patil:

In India its very common to hear phrases like “Money isn’t everything”, “Money is not all that important”, “Money can’t buy happiness”, etc, mostly statements made by the middle class which struggles the most to make the ends meet. For such people big money is either created illegally or by sacrificing one’s happiness which are mere assumptions.

“Money isn’t everything but its next to oxygen”, this was quoted by none other than Warren Buffet himself. It’s very obvious in these days that you require both time and money to maintain a healthy lifestyle. It could be going to gym or a health club or a rejuvenating retreat. You’ll find time to do these only if you have the money. So financial well-being is very important for a healthy life!

We got our political freedom in 1947 but how many of us are truly financially free? As Joel Greenblatt puts it “One of the great benefits of having money is the ability to pursue those great accomplishments that require the gifts of being and of time”. Financial Freedom to me is having time and money to accomplish our goals and dreams. How many people truly enjoy their work and are doing what they’re passionate about? Most of them are forced to work and take up jobs that support their financial needs. How would it be to not worry about the finances and do what you actually love to do, at-least at some point of your life? It’s not retirement. It rather gives you the freedom to do what you enjoy doing without worrying about the expenses. We help people understand this and plan accordingly. That’s what financial freedom is all about.

CashPundit Inc.:  We understand that you have few customers who are Bankers, MBAs and Accountants. These people are supposed to have sufficient knowledge to weigh the risks and merits of an investment opportunity. Why do they come to you and what kind of advice do you give them?

Mr. Sharan Patil:

These professionals do exceptionally well in their area. But when it comes to investing they can only think in traditional ways. For example a banker, most often than not, would only know about how to give loans or how to collect deposits or at the most sell a couple of products that they’re told to. Unfortunately none of them foray into the goal based investments. Why this makes a difference is it lets the investor understand why he’s doing whatever he’s doing. This is very important to make the investor to stick-on especially when it comes staying invested for a long term. Most of the professionals like MBAs and accountants read about security markets in their academics but no hands on experience. So in a way they lack the right kind of knowledge and experience required when it comes to investing. Since they come with a preset financial background, instead of limiting themselves to their areas, it’ll be great if they upgrade their knowledge in goal based investments, financial planning, risk-to-reward ratios, equity investments for long term, inflation adjusted investments, etc.

CashPundit Inc.: Who should invest and at what age they should start investing?

Mr. Sharan Patil:

It is like asking the right time to plant a tree. The right time is now!! The moment you realise the importance of investment, you should start.

Anybody and everybody with financial needs, goals and desires can start investing. Ideally, we recommend people to start their investments at an early age. It need not be a big amount. Even a small amount like Rs 1000 a month invested over a long period can see immense growth due to power of compounding. This is considered as the eighth wonder of the world – one who understands this earns one who doesn’t, pays for it.

Long term investments in asset classes like equity, real estate and gold are very good options to maximise benefits. Also, starting early will prepare you well for the major upcoming goals like children’s education, buying house, holidaying and finally the retirement. Starting early means the time gap works in your favour while late starters have to put in more money to see similar results.

CashPundit Inc.: Is there anything else you would like to share with our readers?

Mr. Sharan Patil:

Yes, one of them is everybody must be an investor. As per Warren Buffet, you need not be wealthy to be an investor but you certainly must be an investor to be wealthy. Simple, yet so profound! I’ve seen people starting with a small amount and create huge wealth. It is possible with disciplined investment. It is important to understand your basic needs and first address them. Equally important is to have financial goals and dreams. They provide you the necessary fuel to stay motivated and keep investing.

Secondly, it’s a must to have a personal financial advisor, a good one though! It is like Kurukshetra war. Pandavas had Krishna as their advisor who steered them to victory. Like Krishna, a good advisor can help investor create wealth. A good advisor, even though pricey, is one who understands your actual needs, goals and dreams and is interested in making you rich. It’s a great practice to spend time with your advisor and review your investments, goals. It is never a onetime activity. Every 6 months is an ideal frequency. Also, as all things come with a price, so is it with financial advice. End of the day it’s the advisor on whom you can rely and rest assured that your portfolio would be handled with care. So avoid negotiating for a quality service and reap rich benefits.

At Inspire India we relentlessly strive to make sure the clients’ portfolios are wisely selected and periodically reviewed. That’s the way we’ve become the most trusted, reliable and approachable advisory in the industry. We follow some of the best practices prevalent to the current scenario. The numerous awards and recognitions we’ve won in all these years and the good-will we’ve created with the clients stand testimony to this.

CashPundit Inc.: You are an Aeronautical Engineer by qualification.  Can you please tell us about your journey from Aeronautical Engineer to Financial Investment Expert and the MD of Inspire India Financial Services?

Mr. Sharan Patil:

The shift was certainly not a conscious decision. It was purely by chance. Aviation industry was going thru tough times back then with not many openings. That’s when I happened to read the all famous book “Rich Dad Poor Dad” which inspired me into personal finances. Coming from a middle-class family I could relate to what the book said and how it is just the mindset that makes the difference. Neither my background nor my education was tuned to create wealth. So I slowly started making changes in all possible ways, like my knowledge, communication skills, self esteem and confidence. I also attended a workshop which helped me realize my true potential. Meanwhile a friend introduced me to commodity trading, after which there was no looking back. I took up qualifications to support me in this direction. A host of related seminars, workshops and conferences came handy in understanding the nuances of the industry. Meeting some of the well know fund managers like Nilesh Shah, Madhusudan Kela broadened my perspective. I treat them as my mentors. Reading about Warren Buffet, Robert Kiyosaki was one of my favorite pastimes. I’m very passionate about conducting workshops to educate people on financial matters. And the most overwhelming moments are when I see profits in my clients’ portfolios.

“Financial Freedom Is My Birthright” is my new tagline…

CashPundit Inc.: Thank you so much for your valuable inputs and time spared for CashPundit Inc. I am sure our readers will thoroughly enjoy it. Wish you all the best for all your future endeavors.

Mr. Sharan Patil:

Thank you very much!

Exclusive Interview with Mr. Surendra Jain, Group Finance Director of A.A. Al Moosa Enterprises, Dubai, UAE.

In our first issue, we are extremely happy to feature the exclusive interview of Mr. Surendra Jain, who is our CashPundit for this issue.

Mr.Surendra Jain is a fellow member of The Institute of Chartered Accountants of India and Post Graduate in Management. He has over 35 years of post-qualification experience in Industry in India, Saudi Arabia and UAE. Since past 20 years he is associated with a UAE Local Conglomerate – A A Al Moosa Enterprises, The ARENCO Group, Dubai and presently working as Group Finance Director. He is a member of the Executive Committee of the Group. In addition, he is on the Board of various entities of the Group.

Mr.Jain is Past Chairman of Dubai Chapter of The Institute of Chartered Accountants of India which has over 2000 members. He has been the President of ICAT (Institute of Chartered Accountants Toastmasters) Club, a forum involved for the development of soft skills (Communication and Leadership skills) of Indian Chartered Accountants.

CashPundit Inc: It is a great pleasure to interact with you and publish your thoughts in this interview.

Mr. Surendra Jain: 

Thank you.

CashPundit Inc: A.A. Al Moosa group is one of the oldest and the reputed groups in UAE. Can you please brief our readers about the various industries A. A. Al Moosa Group is into?

Mr. Surendra Jain: 

The flagship entity of A A Al Moosa (ARENCO Group) is Arenco Real Estate – leasing of office space, residential villas & apartments, warehouses and staff accommodations and hotel apartments. The Group has seven international chain of hotels which are managed by Hilton, Four Points by Sheraton and Ramada. Three upcoming hotels on Palm Jumeirah will be managed by Hilton, Marriott and Taj respectively. Arenco has oldest and largest Architect practice in UAE. In addition, ARENCO has fleet of over 25,000 vehicles which are leased under the brand name of Thirfty and Dollar. The Group has manufacturing entity – Dubai Furniture Manufacturing Co. LLC which produces King Koil and Serta Spring mattresses in UAE, India and Saudi Arabia. The Group has Furniture trading business – Marlin Furniture. In addition, the Group has high end Italian furniture trading business – Western Furniture (Nattuzi). The Group has joinery and laundry as well which mainly caters in house business.

CashPundit Inc: How has your finance department contributed to the growth of A.A. Al Moosa Group?

Mr. Surendra Jain: 

Organizing adequate bank facilities at the best possible terms & conditions without excessive leveraging for various development of properties. In addition regular monitoring of cash flow to ensure that bank commitments are met without fail. This resulted in to having positive reputation with financial institutions. We remain in driver’s seat. No sooner we conceive a project, we decide which financial institution we should opt for who fulfils our wish list.

CashPundit Inc:  Your group probably is the number 1 real estate company in UAE. What is your USP and how do you manage to be number one?

Mr. Surendra Jain: 

Arenco Real Estate is primarily in leasing business and not in freehold business. We therefore do not get affected with ups & down in the market. We provide a full range of real estate leasing to new entrants in Dubai – from office space to ware houses to staff accommodation to residential apartments and villas. In addition, we provide complete satisfaction to the tenants which includes all required amenities, 24 hours free maintenance and security to our properties.

Our ARENCO Architects provides full range of service – from design of a property to supervise construction and handover of the property. Allied businesses such as joinery, laundry furniture trading and manufacturing and car rental also add value to overall savings on cash outflow from the Group.

More importantly, key personnel have been with the Group for over 20 – 30 years. Complete independence and reliance from the Owners to these key personnel is the key to success for the Group.

CashPundit Inc: You were Chairman of the Dubai Chapter of The Institute of Chartered Accountants of India.  Can you please share with our readers some of the initiatives undertaken by the Institute to promote the CA profession in the region?

Mr. Surendra Jain: 

A student can undertake article ship in UAE under a practicing Chartered Accountant. Student can undergo Industrial training in the third year of article ship in UAE. Moreover a student can write exams from Dubai. Indian Chartered Accountants are well respected in Middle East in general and UAE in particular. Many local conglomerates, Real Estate giants such as Emaar, Nakheel and financial institutions are managed by Indian Chartered Accountants. We made an attempt to improve the visibility of Indian CA profession in UAE through various seminars and conferences.

CashPundit Inc:  In your opinion, how critical is cash flow management for the survival of business? And what is your advice to the fellow finance professionals on how to manage it?

Mr. Surendra Jain: 

Absolutely. Cash is king and managing cash flow successfully is key for every organization. Now technology is at our footsteps and we should take advantage of available software to closely monitor and forecast our cash & bank position to meet all the commitments on time.

CashPundit Inc: We would like to understand your point of view on how VAT may impact Cash Flow of UAE companies post implementation of VAT?

Mr. Surendra Jain: 

VAT will definitely impact the cost and cash flow of various entities in UAE. For example, hotels and hotel apartments, VAT will be on the top of Municipality fee and service charges. Hospitality Industry being very competitive, I doubt it could be passed on to the end user. 

Since fuel prices have been low for few years it is imperative for the Govt. to find alternate sources of raising funds for continuous infrastructure development in the Country. 

VAT can be very simple to monitor and comply with if all the systems are in right place but it can be equally highly complex, costly, and time consuming if systems and people are not fully prepared. Monitoring cash flow closely is the need of hour and UAE business houses should prepare well in advance to meet the challenges.

CashPundit Inc: Thank you so much for your valuable inputs and time spared for CashPundit Inc. I am sure our readers will thoroughly enjoy it. Wish you all the best for all your future endeavours.

Mr. Surendra Jain: 

Thank you and wish you good luck for providing better financial discipline.