I think we can all agree that having good financial intelligence is crucial to the success of your organization. But do you have the right player(s) on your team? Is their title inflated for what duties they perform? More importantly, what does your business need now?
As the life of the organization changes, growth happens, your need for financial intelligence changes. Often, business owners start with their spouse keeping the books at night. Then they move to someone doing data entry or a bookkeeper and from there it can get a little messy.
There are bookkeepers, controllers, CFOs and outsourced CFOs. Plus, your CPA or accountant. And at the end of the day, the buck stops with you in terms of financial accuracy.
A bookkeeper does data entry and needs to keep records up to date. It is a transactional position involving tracking income, expenses, paying bills, invoicing and staying on top of payroll.
A controller is responsible for month-end closing, reconciliation, and making sure that there is accuracy in every financial statement. A controller should be reducing risk, complying with generally accepted accounting principles and managing cash.
The CFO – Chief Financial Officer – is a strategic position managing the long-term financial picture of the company. CFOs look at investments, debt-to-equity and capital expenditures.
The Outsourced CFO – depending on the size of your company, you may not need a full-time CFO or even controller for that matter. You can outsource your finance needs to former CFOs. They will come in and help manage cash, raise capital, get your books cleaned up for sale, re-organize your books so that you can use them to manage the business – whatever it is that is needed. Outsourced CFOs are great resources; their work product is very high, they are trusted advisors and they work as much or as little as you want.
Your CPA or accountant looks at things historically. Typically, they are not forward looking. You should meet with them at least quarterly to make sure you are on top of tax payments and to keep them aware of what is going on in your business. They are trusted advisors as well. And, if there are things you need to do to help your tax situation, your CPA is the person to do that.
Why is this post called Financial Intelligence – Getting it Right? Well, there are many business owners who think they have the right resources in place… but they don’t. Sometimes the resources they have in position don’t have the right skills or sophistication. I recently had a situation where the company’s books were essentially accrual based. The controller, who was actually more of a bookkeeper, didn’t track some things properly, which had a major impact on the financials and the value of the business; and required a decent amount of work to get things cleaned up and accurate.
If you aren’t sure if you have the right resource in place, reach out to a third-party resource like an outsourced CFO or have an audit conducted to see where you really stand.
Need a financial resource? Let me know.
By Blair Koch