This will conclude this round of posts on basic financial practices of a system integrator. Sure, there are a lot more to discuss. But for those of us engineers, we have to keep this in small doses. Before I let you go, here are a couple more fundamentals.
As the old saying goes, the only thing that is certain is death and taxes. Alliance Partners can’t escape this reality. Hopefully, death isn’t just around the corner, but taxes will be. So, you need to have a reliable process to account for and pay for taxes. While taxes may vary from geography to geography, they generally fall into two categories:
Sales taxes – Taxes on the goods and services that you sell. Do you have adequate measures to ensure that these are properly calculated, collected, and paid (to the appropriate government institution)? This includes exempt certificates for clients that don’t get charged tax on the products and services they buy.
Payroll taxes – Taxes due from the payments that you make to your employees. Typically, this is the money that they owe the government, but are commonly withheld by the company and paid to the government directly. How do you know that you are deducting the proper amount and paying that amount to the proper authority?
Perhaps, it goes without saying, but you should have processes to handle any other aspects of your business such as support contracts and services calls – how are they billed? When is the revenue recognized? You may also have additional products that you sell or material that you resale. Consider whether is a separate financial process to account for this business.
And, finally, you should have a defined practices for the handling of your financial records. Are they kept in an orderly manner and in a secure location? Do you have adequate measures to protect important financial information (e.g. duplicates of important documents, insurance certifications, account numbers, ….)
On my way to CSIA
I’ll be at the CSIA Conference on April 29-May 1. If you are tuned into this blog, you’ve probably already heard me talk about the Control Systems Integrators Association, an organization primarily of people who manage SIs who dedicated to the betterment of system integration by sharing best practices and promoting the recognition and importance of excellence. I look forward to their conference each year to learn from these experts – which I can, in turn, share with you. I look forward to seeing those of you who will be there to hear for yourself.