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HOW BUSINESSES CAN USE THE CHANGING LANDSCAPE TO AUTOMATE.

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By Paul McFadyen, Managing Director of metals4U 

 

The Coronavirus pandemic has dominated our global markets for the first half of 2020 and will continue to impact business for the foreseeable future; it has drastically changed the landscape of how we do business now and will continue to do so for some time.

The Internet of Things (IoT) is a growth industry but has largely been overlooked by a huge section of industry and manufacturing – many believing they are not a large enough concern to warrant the initial financial outlay, while others may not see where it can help them. ‘Smart’ technology is not just about robotic production lines, it is about increasing effectiveness across all areas of your organisation, regardless of which business sector you belong to or what size your organisation is.

Now it the perfect time to analyse what your business does, how you do it, and most importantly, what aspects can be upgraded to utilise the possibilities of the IIOT (Industrial Internet of Things) to take your business forward to meet the new demands of post-Covid-19 global markets. The IIOT can be used to monitor, control, and update any aspect of your business.

IIOT sensors can be fitted within new installations or retro fitted into existing systems.  The sensors can monitor and detect changes in offices, warehouses, outside spaces, machines, server rooms, they also detect temperature changes, chemical reactions in manufacturing processes that may have an adverse effect on the end product or machinery, they monitor changes in air pressure, in air conditioning units, lighting levels, lift mechanisms; all this monitoring of space and systems create data that is automatically analysed, stored, and acted on following a set of protocols relevant to that particular environment and data set parameters.

Introducing elements of IIOT into the workplace brings benefits that may have been overlooked for a long time. As industry changes, procedures must be challenged and changed to incorporate savings; these can be financial, or time focussed, but are usually a combination the two as in business they are interwoven. The data created by IIOT installations is usually delivered to the system user via an app featuring real time reports and analytics. These dashboards enable a ‘call to action’ to meet maintenance requirements meaning less unplanned downtime, it can help decrease labour costs, and improve work safety.

Manufacturing is perfect for utilising IIOT and automation as all elements of the process can be led by data. An order can be processed, resources allocated, manufacture time scheduled, and the final product ready for dispatch without a human ever needing to be physically present.

The ability to have an overall view of machinery and resources over a small site can start to build a new generation of more efficient workflow and save valuable resources, of course these systems are scalable for those requiring a global overview of all your sites, personnel, and assets.

Automating elements of workflow within any business, from a small manufacturing business, to a customer service call centre, through to a vast market leading production plant, will make the difference between successfully navigating the changing landscape, and floundering helplessly as success and growth pass them by.

Smart factories utilising data collection technology makes it possible to do great things. Sensors on machinery monitors processes and builds a data fingerprint that can be used to alert staff when equipment needs repair or maintenance. This means you drastically reduce downtime due to broken machinery and save money on expensive repairs. Self-Driving Vehicles (SDV) are another automation option, these are used for picking and moving products during manufacture or logistics operations; they are responsive to employees moving around so are safer than human driven vehicles within an industrial setting. There is less room for human error causing accidents, and no accrual of holiday pay, maximum working hours, or days lost to sickness.

Automation is not about replacing human employees; it is about empowering employees to be more productive and effective. For example, utilising a chat bot for the most basic and frequently asked enquiries means that customer service advisors are more available to deal directly with customers that require deeper information and more personal service, or using an automatic call distribution system will direct callers directly to the most appropriate employee; reducing the number of contact points each enquiry entails saves your organisation time and money while providing your customers with a more meaningful customer journey.

Labour shortage is a commonly reported concern for many manufacturers, the move towards smart factories will create an evolution and even a revolution in the tasks your employees undertake. Automating some or all of your processes frees up time for your workplace talent to embark on more complex projects and elements of the business, the parts that need creativity and originality, while the automated processes complete the repetitive, mundane, or more dangerous elements of your business environment.

Investment in automated infrastructure and systems does require a financial investment that company owners and financial directors may be concerned about committing to now, but this resistance could be the decision that stalls growth and security in the long term. Automation brings many long-term productivity gains and leaves a business less susceptible to financial downturn when the next pandemic strikes, and sooner or later it will, automation is the way forward to future proof your business and preserve the long term health and safety, and financial security, of your employees.

We have all heard about the digital talent gap, and businesses should be taking the opportunity during this time of changing business landscape to invest in training and increase the digital skills set of its employees. Following a period of investment in automation, we need to safeguard new assets and resources to ensure we do not face a shortage of workers with the required skills to work and operate our new automated processes.

Smart Manufacturing Platforms are experiencing a steady growth in demand and now is the time to get proactive in the automation revolution to reap the financial, environmental, and increased productivity rewards.

Crucial to the success of automation is the monitoring of data and harnessing the power that data provides; smart data collection and automation connect the top floor to the factory floor.

 

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HOW TO CREATE A PROFORMA INCOME STATEMENT FOR YOUR STARTUP?

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There are two reasons why you are on this page right now. First, you are just starting with your business, and you want to learn about pro forma. Second, you are not sure if you are making your business proforma income statement correctly.

Before we discuss the process of creating a proforma income statement for your business, let’s start with the definition of proforma.

 

Pro forma: What is it and why I need one

Pro forma is the process of calculating financial results with the use of presumptions or projections. It is a Latin term that means “for the sake of the form” or “as a matter of form.” Businesses used this to describe a document needed to conform to a specific doctrine or norm.

A pro forma income statement is a component of the financial projections of any business. It should be included in the financials of a business plan. This income statement is just like a historical income statement. The only difference is that it projects the future instead of the past. It will help you make some operational changes right away if the projections predict a decrease in profitability.

Now that you know what a proforma is, the next part is about creating a proforma income statement for your startup business.

 

Uses of Proforma Income Statement

Pro forma income statement has several uses. Some of which are as follows:

Planning and Control

The income statement is used in estimating in-coming budgets and sales. It serves as a planning tool to set standards for future operations and business activities. The financial information is used to control and monitor the performance based on the set standards. It is achieved through the use of various tools like variance analysis and ratio analysis.

Reporting

Some businesses are required by the legislation to prepare a pro forma financial statement as part of their financial report.

Financial Modeling

It is also used in creating a summary of the expenses and incomes of your business. The financial models can help you in deciding, and it is based on the presumptions done by the company.

 

Steps on How to Create a Proforma Income Statement

Below are the steps in preparing the proforma income statement:

 

Step #1 Calculate Business Revenue Projections

When creating a proforma income statement, you should use realistic market assumptions. You can do some research or talk to the experts to determine the expected yearly revenue, asset accumulation, and cash flow.

Here are steps on how you calculate revenue projections of your business:

a.   Estimate How Much to Sell

Determine how much of your product you are going to sell within a specific period. Also, you should have a better understanding of the market.

b.   Calculate the Projected Income

To calculate your projected income, multiply your total estimated sales by the amount you charge for every item you sell. After estimating how much you will sell, determine the cost of each product.

c.    Calculate the Projected Expenses

Next, calculate the projected expenses of the company. It is a must to figure out how much the company is spending in producing your products or services.

d.   Subtract projected expenses from projected income

The final step in calculating business revenue projections is subtracting projected income from your projected income.

Step #2 Estimate Liabilities and Costs

Liabilities are the lines of credit and loans of the company. On the other hand, the costs are your lease, insurance, materials, licenses, employee pay, permits, etc. In creating the first part of your company pro forma, you will use the business revenue projections calculated from step one and the estimated costs and liabilities.

This step is your chance to evaluate if all your expenses are necessary and what you can do to reduce them.

 

Step #3 Estimate Cash Flows

Cash flow is calculated by making some adjustments to your net income by subtracting or adding differences in expenses, credit transactions, and revenue, leading from transactions that happened from one period to the next.

These adjustments are carried out due to non-cash items calculated in the income statement and total assets and liabilities. Since some transactions do not involve cash items, some are re-evaluated when computing the cash flow from operations.

Cash flow is calculated using these two methods:

Direct Cash Flow Method

The direct method adds the receipts and the different cash payments, including cash paid to suppliers, cash paid as salary, and cash receipts from customers. These numbers are computed using the starting and ending balances of the different business accounts and assessing the net increase or decrease in your account.

Indirect Cash Flow Method

With the indirect cash flow method, the operating activities are computed by getting the net income off the company’s income statement. Because it is set on an accrual basis, revenue is recognized if earned and not received.

This part of the proforma statement will project the company’s future net income, dividends, sale of assets, issuance of stocks, etc. The estimation of cash flow is considered as the second part of your pro forma financial statement.

 

Step #4 Creation of Chart of Accounts

The chart of accounts will complete your proforma income statement and includes data collected for a three to five-year period. The first year is detailed and broken into every month increments. The following years will be split into by quarter, and the fourth and fifth years are then broken into yearly.

 

Final Thoughts

Some business owners are surprised at how good a pro forma income statement is to their startup operations. But, if done correctly, you can consider it a strategic planning tool to direct your company in the right direction.

Follow the steps in this guide to make sure you get the correct estimations and numbers in completing a proforma income statement. Others think that the income statement will not benefit new businesses. But for others, it is a good start in foreseeing the future of the company. If you want to share your thoughts about the topic, or have questions, feel free to comment below.

 

Resources:
https://www.investopedia.com/investing/what-is-a-cash-flow-statement/
https://en.wikipedia.org/wiki/Pro_forma
https://getpoindexter.com/blog/pro-forma-income-statement-example
https://www.freshbooks.com/hub/accounting/calculate-liabilities
https://businesstown.com/articles/how-to-create-a-pro-forma-income-statement/
https://smallbusiness.chron.com/write-pro-forma-3064.html
https://www.investopedia.com/terms/p/proforma.asp

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WAYS TO KEEP YOUR HYBRID WORKPLACE SECURE FROM THE IRREVERSIBLE DAMAGE OF A CYBER ATTACK

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By Alex Bransome, CISO at Doherty Associates, specialists in managing and securing cloud services in the finance sector.

 

recent in-depth study into 3000 UK firms and 2000 employees commissioned by our team at Doherty Associates found that 42% of the financial and legal firms questioned including those in private equity, investment and asset management, said their firm was inadequately protected against the cyber risks of hybrid working.

At the same time, one in five of the firms admitted that a major cyber attack could significantly cost their business at least £10 million or more in irreversible damage such as through loss of sensitive information, corporate and confidential data, due to a GDPR breach or fine, and long-term reputational damage to the firm.

Yet hybrid working is here to stay for over half of the firms we spoke to, despite being more vulnerable than ever to a cyber breach. A recent BBC poll on 50 of the biggest employers in Britain, including investment firms JP Morgan, Rathbones and investment bank VSA Capital, said they had no immediate plans to bring staff back to the office full-time.

And you can see why flexible working is the preferred choice for both firm and employee, as over a third of the finance and legal professionals we spoke to said that they found it easier to win new business and close deals when working from home.

However, a more flexible, hybrid scenario is creating increasingly complex cyber security challenges as employees move between different set-ups, in different places, using different devices.

 

More than one front door

With employees working outside of the office, using a blend of personal and company devices, finance firms no longer have a single ‘front door’ to protect but a multitude of entry points to secure against cyber criminals.

While it remains the case that most information leaks out by accident, the chances of this happening increases with more employees working from home, as the ‘attack surface area’ extends out to every device being used, no matter who owns it. At the same time, cyber criminals are finding ever more sophisticated ways to target remote employees, with finance an increasingly attractive target due to the high value of transactions.  What’s more, it seems a high number of employees working remotely are experiencing cyber or data breaches unknown to the firm.

 

It’s the unknown you need to worry about

52% of the finance and legal firms we interviewed said their organisation has yet to experience a cyber attack or data breach since transitioning to remote working since the first UK Covid-19 lockdown back in March 2020. Yet, a quarter of employees said they had been the victim of a data breach or caused one themselves since working remotely, one in seven had experienced a phishing attack or similar, and 42% admitted to emailing confidential client information or unencrypted attachments.

The difference between how many firms are detecting breaches compared to the reality of them occurring suggests that employees are not reporting all of the mistakes they make. It also shows that firms are still in need of a well-rounded cyber security programme that incorporates protective, detective and responsive solutions, if they are to keep their information, people and workforce safe.

It’s not the tip of the iceberg you need to worry about. It’s the bit you can’t see underneath. Underestimating the risks and vulnerabilities that come with home and hybrid working could prove costly.

 

Reinforce your moats to protect your castles

Many firms appreciate that a single ‘castle and moat’ perimeter defence approach – where employees are protected within the boundaries of the office firewall – is no longer fit for purpose in a hybrid workplace. However, some are struggling to keep up with the fast-moving challenges that blended working brings, but there are steps your firm can put in place to safeguard a firm’s ‘borderless’ network.

  • Improve your cyber hygiene and widen your security perimeter to protect those working outside the office

Cloud-based technologies such as Data Loss Prevention and Information Protection can help protect against data leakage. Ensure that all internet facing systems have multi-factor authentication, so employees keep their identity secure while working remotely, and restrict the use of personal devices.

Use software that ringfences and encrypts all the corporate data on a mobile or ‘bring your own’ devices as this means the corporate data can be wiped if the device is lost or stolen without this affecting any personal data – such as family photos – if the device is then found or recovered.  Also using disk encryption to protect all data on company devices such as laptops, will mitigate the risk of it being lost or compromised if the device is stolen.

Ensuring though that no company information is shared via personal cloud storage platforms where documents can easily be forgotten, and just as easily hacked, is also advised.

  • Conduct a cyber risk assessment at least every six months to improve your security posture

This will identify and address any critical vulnerabilities, gaps or compliance issues. An assessment should involve identifying your most important/critical assets; identifying any weakness/vulnerabilities in those assets, or in how they are used or accessed, assessing the likelihood of a risk materialising; and finally identifying controls to help address the identified risks, to reduce risk to an acceptable level.

  • Carry out regular cyber awareness training

Over a third of the financial professionals in our poll say they’ve had no cyber training since working from home from the start of the pandemic despite the fact that they are now using different software and platforms to collaborate as well as a mix of personal and work devices.

Building in regular comprehensive cyber security awareness training for every employee is critical to safeguarding against any vulnerabilities, weak spots or compliance breaches.

It should most importantly clearly convey your organisation’s approved methods of working, communicating and sharing data. Beyond this, user awareness should cover the end user security best practices and how to spot common attacks such as phishing, plus phishing assessments to actively test and measure awareness levels across the organisation.

Empowering employees with the knowledge to identify threats in real-time can become a firm’s greatest security asset so making cyber security training a ‘must’ and not just a nice-to-have is critical in this new era of hybrid working.

Your firm is only as safe as your weakest link but cyber savvy employees, robust cyber security measures, and a strong cyber defence system will keep both firm and workforce safe and secure no matter where they are.

 

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