HKSQ & HKQAA - TID Project Implementation Workshop for Startups – Financial Management

 HKSQ applied the Trade and Industry Department (TID) Funded project named “Feasibility Study on the Quality of Hong Kong Start-up Development for Supporting the Sustainable Business Growth” and HKQAA is our implementation agent. In the last stage, we arranged several workshops to share the study results and guidelines for startup.  The fifth workshops named “Implementation Workshop for Startups – Financial Management” (初創企業實踐工作坊－財務管理) was held on 11 Jul 2022. I represented HKSQ to attend the workshop.

Ms. Meico Cheong (HKQAA) is the speaker for this implementation workshop on financial management.  Firstly, she briefed the background of the TID funded project and introduced HKSQ and HKQAA to the participants. Then she employed PDCA concept for financial management.

Then she mentioned the goals of a company was to maximize profit and management of the company based on investment, budgeting and financing decisions.  She said accounting and financial are the language used to record and interpret a financial story (Story telling). And then financial statement including P&L, Balance Sheet and Cash flow statement were discussed.

Profit and loss statement (P&L) summarized the company’s operating result during a specified period (e.g. quarter or fiscal year). Operating items are including revenues, cost and expenses. Balance sheet summarized the company’s financial position at a given point of time. Items included assets, liabilities and shareholder equity. Cash flows statement summarized the company’s operating, investment and financing cash flows.  And then she mentioned different financial ratios to review company’s overall financial health.

Liquidity showed the company’s ability to satisfy its short-term obligations.  In the following examples, the current ratio is satisfied within 1.5 to 2. The average collection period and payment period are depended on the nature of business.  The longer the period calculated, the higher risk the company liquidity demonstrated. 

The other financial ratios in operating efficiency (Operating Ratio) and profitability (Gross profit and Net profit) were discussed.  Operating ratio plus net profit is equal to 100%.  The high portion of operating ratio may be high overhead (fix cost) in the company.

After that Ms. Meico Cheong introduced budget control and compared with the actual financial data. It demonstrated what’s wrong in operation of company. Some important accounting concepts are stated to be aware such as Prudence (Accrual), Consistency, Going Concern and Matching.

Finally, Ms. Meico Cheong briefed four financial recommended best practices and they are Budget Plan, P&L and Balance Sheet monitoring, financial ratio analysis and procurement procedure. Q&A held at the end.

Reference:

HKSQ - www.hksq.org

HKQAA - http://www.hkqaa.org/

TID SME Development Fund (SDF) - https://www.smefund.tid.gov.hk/english/tsf/sdf_background.html

One of my relevant publication about startup named “Implementing the Quality Startup Management System model in Hong Kong: a case study” and posted at https://jqualityinnovation.springeropen.com/articles/10.1186/s40887-017-0013-x .

HKQAA Hong Kong Registration - Start-ups:  http://hkqaa.org/en_regservice.php?catid=13

HKSQ TID Funded Project website - https://hksqstartup.hkqaa.org/

Privacy Commissioner for Personal Data - https://www.pcpd.org.hk/

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