Don Welker's Financial Minute

In order to properly manage your company you need accurate and timely information. How are sales? Is your marketing program working? Are there any problems in operations? And so forth.

Underlying all of this, you need to have a firm grasp of your company’s financials. For example…

• Are you on track to meet or exceed your goals, or do you have ground to make up?
• Is your spending proportionate to your sales level?
• Is your staffing level appropriate?
• Is your cash position getting stronger or weaker?
• Are you in compliance with your loan covenants?
• Is the information reported in your dashboard accurate?

Unfortunately, if you’re struggling with your month-end close, chances are you’re flying blind. You’re making decisions based on inaccurate and outdated data, and don’t have the necessary data to spot potentially problematic issues or trends before they get worse.

It’s time to turn the situation around
If your month-end closes are not timely and accurate, you probably do not have the right team in place. To change this you need to be sure that your Accounting Department is staffed with people who have the training, time and skill set to ensure all of the following get done:

• Basic accounting activities – Including accurately completing billing, recording purchases and related accounts payable, processing payroll, and maintaining up-to-date general ledger accounts.

• General ledger analysis – A detailed review of the general ledger to identify and research any unusual or nonsensible entries or account balances. This function should be performed by a senior-level accountant.

• Monthly financial statements – Timely preparation of an accurate Balance Sheet, Income Statement and Statement of Cash Flow, all in a format that properly segregates current assets and liabilities from long-term assets and liabilities. This is usually done by the Controller or CFO.

• Variance analysis – A written narrative prepared by a strong Controller or CFO that clearly explains any significant variances from what was expected in the budget or plan, and what caused them to occur.

Compliance with loan covenants – As explained in a previous article, failing to comply with loan covenants can ruin your banking relationship. Compliance with the reporting aspects of your loan covenants should be done by a strong Controller or the CFO as part of the monthly close process.

Need help putting all of this in place? Give me a call. As your part-time CFO, I’m here for you.

Your company is in growth mode, and you’re having a hard time keeping up. You’re definitely past the point where as the CEO you can do it all: manage multiple departments, cultivate banking relationships, keep an eye on the vendors, and much more. Things are slipping through the cracks, and you just don’t have time to give sales or operations the attention they need.

Meanwhile, you’re not receiving accurate and timely financial statements. Neither is your bank, which is not making them happy. And your budget…well, what budget? Who has time to create a proper budget?

If you recognize yourself in this scenario, it’s time to bring in an experienced part-time CFO to significantly lighten your load. Some of the many services that a part-time CFO can provide include:

• Developing a strategic plan, goals and budgets – Work with senior management to create a comprehensive strategic plan, as well as goals for this year and the next four years. Then create a detailed budget based on these plans and goals.

• Analyzing all the numbers – Look at the trends, review profitability by service or product line, monitor the budget, and more. Analyze your firm’s overall financial health, and provide expert advice as to where to go from here.

• Supervising the Accounting, HR and IT Departments – Plus work with department heads to identify areas for improvement and implement trackable solutions for these issues.

• Improving your accounting processes – Help your senior accounting personnel expedite the month-end close to ensure you get accurate and timely financial statements. Create easy-to-use dashboards that give you real-time financial data for effectively managing your business. Develop a template to also capture the information that lenders require.

• Identifying and eliminating wasteful spending – See where your money is going, including looking at whether or not you’re getting the best prices from all of your vendors, and right-sizing the Accounting Department.

• Providing valuable introductions – Bring in already-vetted professionals as needed, such as lawyers, CPAs, insurance brokers and marketing experts.

• Maintaining your banking relationships – Help you obtain necessary financing, and then ensure all loan reporting requirements are met.

Having a part-time CFO on board can give you and the rest of your senior management team more time to grow sales, improve operations and strengthen customer relationships. It also enables you to get better information, which leads to better decisions and even more success.

If you’d like to explore this idea further, give me a call. Part-time CFO services are what I provide!