Is it Time for a Financial Tune-up?

I’ve worked with quite a few companies that have been in business for many years, have an excellent reputation with customers and within their industry, and are growing steadily. But to maintain that status and pace, owners had lost focus – and control – of their financials, with issues ensuing across the organization.

There are multiple tell-tale symptoms of an inadequate focus on financials and it’s a common struggle. Do any of these ring true for your business?

  • Bookkeeping is behind or of poor quality.
  • Timely and accurate monthly financial statements cannot be produced with the data available.
  • Owners are unable to determine whether they are making a profit.
  • Cash flow is usually a challenge.
  • Employee job responsibilities are not clearly defined.
  • General ledger inventory levels do not agree with the sub-ledger.
  • Inventory is regularly out of stock.
  • Accounts Receivable shows amounts due over 90 days.

These symptoms indicate the need for improved Financial Intelligence – an understanding of the most important financial statements, the ability to interpret them, and the know-how to apply those interpretations to inform business operations and decision-making.

To accomplish this requires a deep dive into the practices and procedures of the company, financial and otherwise, to uncover underlying issues. This involves examination of financial and operational documents as well as interviews with owners and employees. Using the information gathered, a Gap Analysis of the business is prepared which compares fundamental financial business practices with those of the company to identify any elements of the financial and accounting infrastructure that may be missing. A precarious infrastructure most often occurs in businesses which have gone without the regular guidance of a CFO, instead relying on their bookkeeper and tax CPA to keep their finances in order, when neither has the experience or skills to do so.

To restore a solid financial foundation and framework, fundamental best practices need to be established in all areas. Throughout this rebuilding phase, owners and key employees need to be intensely involved and work together to implement new processes and procedures that result from the extensive assessment and the recommendations that followed. This may include any or all of the following actions:

  • Get the books caught up, which may require hiring a new or supplemental bookkeeper to expedite the process.
  • Develop and document processes for all accounting functions or update existing procedures.
  • Train or retrain employees involved with bookkeeping and accounting to implement new processes and procedures.
  • Rework the chart of accounts to ensure the generation of meaningful financials.
  • Establish a process for timely recording of all transactions and a monthly schedule for presentation of financials, including analyses and reports.
  • Schedule budget and cash flow projections for quarterly review and revision.
  • Perform a physical inventory and ensure that the sub-ledger matches inventory.
  • Establish re-order points for critical inventory items.
  • Create an annual Profit Plan which includes a metric to assess actual results.

With an infusion of Financial Intelligence, you can expect your company to be a new version of itself – one that operates efficiently, effectively, and confidently, based on accurate data that is regularly and readily available. With best practices and fundamental tools in place, the company is positioned to dramatically change its performance and productivity including enhanced revenue growth, increased net operating income, and boosted company valuation.

I work with business owners who feel they don’t have their finger on the pulse of their company’s financials. As a former CEO of my own $20 million company, I can also provide insight into the issues business owners face overall, beyond the financial challenges. Through the implementation of Financial Intelligence that may have been missing, I work in partnership with companies to strategically guide their business onto a new and well-defined path to profitability and growth.

If you recognize any of these issues in your company, they are likely interfering with your ability to optimize operations, performance, productivity, profitability, and growth. Contact me to schedule a complimentary consultation to discuss regaining control of your company’s financials and its future.

Written by

Rick Arthur is a CFO whose expertise is built on Financial Intelligence and 35 years in senior financial roles. Coupled with a CEO’s perspective and the experience of building his own $20 million company, he brings a unique depth of insight into business from the top down. Wired to get to know people, Rick works hand-in-hand with business owners of intentional, growth-oriented companies, solidifying relationships as a trusted advisor and confidant to his clients. He leverages his experience to help business owners gain traction and stay laser-focused on the company’s vision, cash flow, and profitability – all while creating big picture solutions for strategic planning, growth and sustainable success.