Unwrapping the Top Three Overlooked CFO Year-End Processes
The holidays are upon us. And while we all may enjoy the traditions, family time, gift-giving, and merriment (likely even more so this year), there is still work to be done … particularly for CFOs. It’s time for year-end analyses and processes to end 2021 in an organized, balanced way in order to start 2022 with a clean slate. While it can all be overwhelming at times thinking about reviewing operations, marketing expenses, and all financials, it’s imperative these responsibilities are met accurately.
Unpredictability Doesn’t Change the Basics of Financial Planning
With all its tasks and checklists, end-of-the-year financial analyses and planning comes down to the assumption that when you evaluate where you were, you can better understand where you’re going. However, the past nearly two years has made this assumption somewhat unreliable with unpredictability appearing to be the only thing that’s predictable in business.
Despite this volatility though, CFOs ultimately remain responsible for performing the same duties – analyzing financial reporting, balancing accounts, preparing records and documents to file and pay taxes, and creating budgets. These tasks remain stagnant regardless of outside economic factors. But it has never been more important to dig deeper into some additional, often overlooked, processes.
Top Three Overlooked Year-End Processes
For many, we think CFO and Year-End and we automatically think financial statements, balancing accounts, and preparing for tax returns and payroll reports, but there’s so much more. The end of the year presents a unique time to unwrap real opportunities. Whether its negotiating with vendors, securing investments, or looking for better deals with health insurance, in some instances, you can start over in the new year, advancing your company even further (not to mention faster).
So, before you start the countdown to midnight, readying yourself for all that the new year has to offer, make sure you count the top three overlooked CFO processes so that your company is just as ready for 2022.
1. Accounts Payable. Sure, we remember to look at accounts receivable – our team has worked diligently, and we need to collect the money owed for that work. But what about what we owe?
Analyzing the company’s Accounts Payable is not merely a process to get caught up on payments though (although that is also clearly crucial). Rather, it is also an opportunity to review vendor contracts and negotiate better terms in an attempt to save money in the new year.
Are there any other options?
Are there hidden cost savings?
What does the competition look like?
If the CFO doesn’t look at ways to save the company money, no one else will.
2. Financial Technology. Technology has perhaps never been as important as it has been recently. Technology is what kept businesses running and team members connected when they couldn’t physically be together during a global pandemic. And yes, from an expense perspective, you’re likely spending more on it than ever before. But are you also considering what financial technology you are using? Are you asking yourself –
Is it up to date?
Have we switched over to the cloud, where there are automatic backups?
What does your accountant use and prefer?
If not, you probably should. This is a great time to do an end-of-year financial technology audit.
3. Future Scenario Planning. You may be saying, “Of course, we take time to strategically plan out the year,” and I’m sure you do, but things are different now. Knowing the challenges unpredictability creates in successfully running a company, it’s crucial to expand this planning by using future scenarios. Essentially, you create different scenarios and develop the response or plan of action for that particular set of circumstances. While this type of planning was historically the foundation of crisis management, with crisis permeating every aspect of business, it plays a more prominent role in day-to-day strategy.
With future scenario planning, you define triggers in advance and commit to be flexible and nimble enough to account for them. For example, a common future scenario planning topic this year is PPP forgiveness. For those who do not know yet if their PPP loan has been forgiven, future scenarios include full forgiveness, partial forgiveness, and no forgiveness. Analyzing how each of these scenarios will affect your business next year is key to unlocking future success.
Barker Associates has extensive experience in year-end processes and planning. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Five Steps to Committing to Financial Management Fundamentals
We seem to take one step forward and two steps back lately – with the pandemic, the economy, and life in general. In many instances, things are so close to “normal,” we’re ready to embrace it all again wholeheartedly. We need the familiar, especially during the tradition-filled holidays. We long for some normalcy and comfort. Yet, we’re hesitant in many respects, especially in business. And while this hesitancy is understandable after all that we’ve been through, we can’t run a business this way, especially as it pertains to financial management. In fact, our financials never needed more attention. As 2021 comes to a close and 2022 begins, it’s the perfect time to make a resolution to get back to financial management fundamentals.
Five Steps of Financial Management Fundamentals
Read Monthly Financial Statements
While this may sound entirely too elementary, we’re starting with the basics because there are those who tend to ignore them. By reading (and understanding) financial statements, you will quickly see what looks good and what doesn’t, if there are any red flags, and any trends. Monitor inventory levels against projected sales, receivables, and cash and identify other critical financial indicators and ratios from the balance sheet. If something doesn’t make sense to you, chances are there may be a problem that needs to be solved.
Review Bank Statements
Similar to your review of the financial statements, how will you know if something is off, if you don’t review the company’s bank statements monthly?
What’s coming in?
What’s going out?
Do the amounts look reasonable?
Do the canceled checks (reviewed online) look appropriate?
With this review, you shouldn’t be in the details of every single transaction (or you’ll never get any work done). Rather, your goal should be to get a good sense of the company’s overall activities. In this way, you can track monthly sales-to-expense ratios to better understand when to adjust spending and to identify the top impediments to profitability, so you can deal with them quickly.
Review Payroll Reports
Payroll reports should be reviewed quarterly when Form 941s are filed. During this review, you want to look at year-to-date wages paid for employees and ensure everything looks reasonable. If it doesn’t, find out why immediately.
Assess Expense Reports and Spending
Review credit card usage, expense reports, and overall spending, including meals and travel expenses. Take note of any entries that appear off, whether they are too high, too low, or too frequent. Once again, you don’t need to have all the details, but rather perform a high-level view – often, all that is needed to identify an issue sooner rather than later.
Listen to Feedback
No one has all the answers. The best leaders understand the intrinsic value of listening. In this case, that feedback should be from far more than the accounting department. It should also include feedback from operations and any other impacted department, as well.
What are the concerns?
Does anything need to be investigated?
These five steps will help ensure you are practicing financial management fundamentals, increasing oversight, and increasing overall engagement. Remember, the most successful CEOs are those who delegate, but also who stay close to the heart of the company’s financial picture. The consistent financial monitoring required of businesses takes attention and it takes work, but without a true long-term plan and careful monitoring, you cannot forecast or grow to the next level. So, in 2022, make a resolution to stay committed to financial management fundamentals. Barker Associates has extensive experience in financial management. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Thanksgiving has come and gone, and I sincerely hope you all took advantage of that special time to take a break from your busy lives, gather with loved ones, and remember to be grateful for all that you have. Too often though, we think about gratitude only in terms of our personal lives. Thoughts of gratitude invoke images of the Thanksgiving table filled with delicious food and sweet pies, surrounded by those we love most. And there’s no denying how important it is to remember to be grateful for our health, our family and friends, the home we live in, and the food we eat, but as leaders, we shouldn’t stop there.
Gratitude in the workplace is equally as important as at home, with long-lasting beneficial effects not only on you, but on those with whom you work. So, the question is—Are you accounting for gratitude in the workplace?
The Benefits of Gratitude at Work
Emotional intelligence, empathy, mental health, and gratitude have never been as important as they are right now. We have undergone a psychological and organizational shift through the pandemic. Now, more than ever, employees want to feel valued, appreciated, and empowered. Long gone are the days of clocking in and out for a paycheck. Rather, employees have a higher psychological need to feel a sense of meaning at work.
Gratitude, which can be closely aligned with recognition, goes a long way in finding value and meaning in the workplace. And the benefits include far more than putting a smile on someone’s face. Gratitude not only increases well-being in ourselves and others, but also morale, energy, and engagement, positively affecting performance and retention. In fact, in the Global Happiness and Well-Being Policy Report, the Global Happiness Council estimated that “a meaningful increase in well-being” yields, on average, about a 10% increase in productivity.
Tips for Gratitude in the Workplace
Below are a few simple tips to remember at work:
Be authentic. Authenticity creates the human connection so many long for now. If you are not authentic, the other person will quickly pick up on the insincerity, and your efforts will backfire.
Remember the power of simply saying, “Thank you.”
Don’t just recognize the big wins. Remember to recognize even the smaller, day-to-day ones.
Recognize those on your team who regularly show gratitude.
Incorporate gratitude into your culture not just around the holidays, but all year long.
With gratitude, not only do we feel better about ourselves, but we inspire others and help elevate them to be the best version of themselves. Lifting up your team members throughout the year will have long-lasting positive effects in your workplace. Then, you can be grateful for even more as you watch the successes unfold.
My hope is that each person who reads this chooses gratitude each and every day. Particularly after this past year and a half, we have seen firsthand how delicate life is and how our personal and professional lives can be disrupted without notice or question. So, please remember to choose gratitude.
I am exceptionally grateful to my clients, referral partners, friends, and family, all of whom help contribute to my ongoing journey.