Or – how to become an irreplaceable business partner to your CEO.
Why do accounting departments exist? The accounting department can be a processing machine producing mountains of data and reports that get little to no attention OR they can serve as business partner to senior management.
But how do you make that transition to the irreplaceable business partner?
It starts with innovation. Most people think about inventing a specific product when they hear the word innovation. That is not necessarily the case. It can also mean changing a process – even something as basic as how an entity receives mail, pays bills or records revenue.
Innovation – a new idea, more effective device or process; the application of better solutions that meet new requirements, unarticulated needs, or existing market needs (Wikipedia, 2015)
Consider these examples of innovation:
- NetFlix innovated Blockbuster out of business with online streaming.
- Amazon innovated a new way to interact with customers with the Prime and Subscribe and Save programs.
- New technology in police cars that carry canine officers has the ability to sense when the temperature in the car is too high, triggering the window to automatically roll down and starting a fan to keep the dog cool.
Companies have implemented lots of new ways to process a piece of paper and save steps, time and money … small changes like these add up and allow the accounting team to provide a better product to stakeholders.
Where do we start to transition from a process machine working too many hours … to a business partner to senior management? The key is to move the work time from “process and reporting” to “advisor and special project work.” To do this, you must shorten the month end process and change the annual budgeting process to a rolling monthly or quarterly process.
The CEO must support this change and as an accountant, you will need to pitch the change by thinking through the emotional drivers that will appeal to the CEO. If your CEO is the type who is uncomfortable with the financial side of the entity, he or she may ask for more data than they actually need. It’s your job to help them understand the best way to guarantee their success is to know the answer to key questions and have the answers to these questions laid out in a meaningful dashboard format.
A great place to start is with the laborious process of Accounts Payable. The paper associated with Accounts Payable and Expense Reporting can be overwhelming.
Here are 11 actions you can take to streamline your company’s accounts payable process:
- If possible, use an automated purchasing system so that purchases are approved at the beginning of the process. This minimizes time on the back end. The system should be set up so that employees that can order a specific type of product and then send to the appropriate approver.
- If you do not have an automated system, think through your process with the goal of moving the approval process to the beginning of the payment process – rather than at the end.
- In all cases, maintain a list of vendors and their websites with the logins and passwords, securely stored where only authorized users can access. This is especially important with PayPal, who is relentless if you lose the login and password for their site.
- In all cases, set up an Accounts Payable email address that routes to at least two accountants. It should go without saying – but I will anyway because I see it all the time – You do not want vendors sending emails to a specific person. When that person leaves, it creates chaos with the accounts payable communication.
- If possible, with your technology, set up a process where vendors upload invoices to the purchasing or accounts payable system, with the general ledger codes already noted.
- If this is not possible, ask the vendor to send invoices to the accounts payable email address. From there, the invoice can be matched with the purchase order, approved or sent to the cost center owner for approval.
- If you do cannot automate the receipt of invoices, except for nonprofits that must maintain original invoices for grant purposes, scan paper invoices and save invoices emailed with a naming convention either in a cloud-based storage or on a shared drive. Set the naming convention to assist with location of invoices later for research. Something like: <invoice date_vendor name_cost center>; think through what information you will need when you research a payables question. If you are the lead of the accounting department or a leader – do not set this naming convention without the input of the person doing the work.
- Process payments on a regular basis. If you are processing invoices when the cost center owners request it or vendors call – you are flushing money down the toilet. This is not a good practice. Get your employees and your vendors on board by communicating the payment pattern.
- Consider implementing an e-Payment process, either through your accounts payable software or using a third-party vendor who specializes in e-Payments. Utilize the controls that are built into these types of products, don’t bypass them if they seem inconvenient, they exist to protect the company from fraud.
- Process all invoices for the month by the last business day of the month. This is essential to maintain a tight monthly schedule. So you may say – I will not have all the invoices – OK – but you generally get 12 invoices a year and it really does not matter if each and every one is in the month it covers. For the month you implement the change, you may need to record an accrual of expense you will reverse until you get the pattern of expense working correctly.
- Reconcile Credit Cards on a monthly basis. You can use Expense Management Apps from your phone similar to “Expensify” to assist management with keeping up with receipts and expenses.
If you can implement these changes in your AP environment, you have made a great start to free up time for the transition to a trusted financial advisor to the CEO. The next part of this series discusses changes to the month-end process that will continue to advance your progress from “process and reporting” towards “advisor and special project work.”
Mindy Barker & Associates ([email protected]) works with companies to help maneuver the many questions of strengthening accounting processes and practices through process improvements, as well as other decisions that face growing companies.
Part 3 of the Equity series. The Equity series concludes with five additional key considerations for startups, as you lay the foundation for the future growth and development of your new business.
- Equal split of equity and decision-making with a Partner(s). For this arrangement to work, quick decisions have to be made and put in writing so progress is not deterred and there is no confusion over what was agreed to. Teams need leadership and someone has to act as a leader to build value effectively.
- Allocating fully vested equity to a partner who has not been properly vetted. Don’t do it – here’s why: fully vesting a major C-level executive with substantial equity, only to find out they don’t work out, means you have just given away all of that equity. You have also limited your options for giving equity to the new C-level executive who does work out, because buying back the equity you gave away may prove difficult.
- Giving equity to an advisor who later proves to be unethical could affect your brand and ability to do business. Conduct proper due diligence and background checks up front to avoid such situations.
- Back up your actions – maintain accurate records. When you are spending money to get a company up and running, there is a tendency to deposit funds in the bank account and worry about documentation later. As the Founder, you need to “paper up” transactions and issue yourself either a promissory note, stock certificate or some other form of documentation to back up the deposit of funds – and here’s why: I have seen many Seed and Series A rounds delayed because accountants and attorneys are working to determine what the actual capitalization of the company looks like. Don’t be that shortsighted founder.
- Refusal to part with any equity. Some entrepreneurs refuse to give away any equity and this is not good either. This example explains why. I once met with an entrepreneur who told me he had a solid offer for a large investment in exchange for 50% equity in his company, which he turned down. Further information revealed the entrepreneur was having difficulty making payroll, paying rent and keeping the company moving forward due to limited financial resources. I walked away from the conversation concerned he would, at the end of the day, own 100% of nothing when he ran out of money.
In conclusion, here are some final words of advice on investors and equity. Once you have proven your unique value proposition by building your customer base and generating revenue, you may start to seek an Angel or Seed round of investing. Do your due diligence prior to entering into a partnership with an investment partner, including speaking with other entrepreneurs with whom they have invested. The right investment partner will offer invaluable wisdom and advice.
Beware investors who may attempt to incorporate unreasonable terms or harass you to a point where you put your business’s survival at risk. Avoid these types of arrangements: a convertible note that converts into 100% of the equity to the investor if the company defaults on the payment; terms that allow the investor to fire the CEO/Founder without cause; or surrendering voting rights to make major corporate decisions at the expense of engaging with that investor.
The common theme here is to be a well-informed entrepreneur by doing your due diligence as you journey through your startup adventure.
Mindy Barker & Associates ([email protected]) works with entrepreneurial growth companies to help maneuver the many questions of funding, employee compensation and other decisions and is available to discuss your questions on equity.
Part 1: https://mindybarkerassociates.com/virginity-and-equity-think-before-you-give-away-either/
Part 2: https://mindybarkerassociates.com/primary-considerations-for-equity-allocation-agreements/
Part 2 of the Equity series. In Part 1 of the Equity series I laid the groundwork for equity allocation by discussing the impulsive entrepreneur who gives away the business to friend and family just to have them involved in the new venture.
Part 2 focuses on equity allocation to key roles in your organization. Unless your entrepreneurial idea is to start a new kind of venture capital firm or become an attorney who specializes in IPOs, discussing employee stock option plan (ESOP) allocations and agreements with potential staff members may seem intimidating.
That’s why I am sharing some key considerations for you to be aware of when you are ready to start that conversation. My perspective is that of a former principal and chief financial officer of a private equity firm.
Equity allocation to Principal Management. 
The rule of thumb for the allocation of equity to senior management and advisors is 15 – 20%.
The allocation to individuals depends on several factors and even timing. For example, if the founder(s) know they need to hire a CEO/President after they get the entity to a certain level, they should reserve some equity for this position.
Sales executives typically will earn more through commission than most of the management team, therefore should have the lowest allocation of equity of the C-Suite.
Technology and Financial positions are critical in most companies, which means the majority of the allocation should go to these positions.
Equity to advisors is another factor when divvying up equity, and discussed in more detail in Part 3 of this series.
Finally, there is vesting equity ownership as an employee incentive to perform well and stick with it while the company evolves from start-up to success. My advice is to keep it simple – don’t have one-off vesting arrangements for each person – keep it straightforward, make all terms and conditions with all option arrangements pari passu (on equal footing) with everyone – this makes it easy.
Part 3 concludes the Equity series with other key considerations for entrepreneurs considering equity allocation for their startup.
Mindy Barker & Associates ([email protected]) works with entrepreneurial growth companies to help maneuver the many questions of funding, employee compensation and other decisions and is available to discuss your questions on equity.
I am often asked how to find the right investor to invest in an entrepreneurial business. The question often comes from an entrepreneur who is about to run out of money and wants me to introduce them to someone that is going to write them a check by the end of the week. For the investor/entrepreneur relationship to work effectively, a relationship of trust and understanding has to be cultivated during the pitch and due diligence process.
How prepared are you to ask investors for funding?
Would you ask a friend of yours on Monday to introduce you to a spouse you can marry on Saturday? I hope not! So why would you think an investor relationship would work that way? The message you are sending is essentially, “I’m a poor planner and waited until I was in trouble to take action.” Not a good way to start a relationship involving asking for money, is it?
Getting ready to find an investor begins long before you think you will need the money. Preparations include thinking through how to build a business that investors will want to invest in, that they can identify with. You have to maintain credible data on your financials and your potential client base so that each time you meet with an investor you can definitely and consistently communicate your position.
How confident are you that if the right investor comes along, you are prepared with accurate historical and projected financials? Can you show the investor you have thorough knowledge of the financials, cash flow, burn rate, use of proceeds and return on investment? You have to know your product inside and out as well as the financial numbers behind it. You will get drilled on it when you meet with investors and it will feel like the worst spelling bee you ever participated in if you are not prepared. Do you feel confident?
If the answer is, “Not confident…” make the investment in your business to prepare. Let’s schedule some time together to dive in to gain financial clarity and understanding. Let’s talk. Contact me at [email protected] to set up a no-obligation 30 minute discovery call to see how we might work together to prepare you to meet with potential investors.
Managed by Q, which I will call “Q,” has helped me maintain my true and deep routed feeling that America is a great country – the best place to start and conduct business. As Clayton Christiansen (who coined the term disruptive innovation) says, “…disruptors displace an existing industry and offer something new.”
Q is a disrupter in the most exciting way. Let me count the ways…
From their website:
We work hard to provide the best people possible to power your office operations. From cleaners to handymen to software engineers, you can trust our team is covered by competitive pay, health benefits, 401k, and stock options – a happy team at Q makes a happy office for you.
Q is a little over two years old and cleans more than 2.1 million square feet of office space in New York City. In addition to cleaning, the company offers a suite of other services to its clients, including maintenance, I.T. support, security, supplies and others. It has expanded its operations to San Francisco, Chicago and Los Angeles, with the eventual goal of conquering every major city in the United States and, eventually, the world.
Nothing disruptive about this, right? Here’s where it gets good…
Traditionally, a high percentage of cleaning companies change their cleaning service each year when the contract renews. Q is changing the game by providing transparent hourly pricing rather than annual contracts, a high standard of service and state-of-the-art communication. The bet is that the client will be serviced in a way that makes them want to stay on forever. By promoting their high standard of service as an investment, Q is optimistic that it will help maintain traction and create sustainable recurring revenue.
Q leverages technology to provide precise, real-time communications. They install an iPad in each client’s office so the client can communicate directly with customer service in the modern way. There is no calling a phone number, only to hear an automated robot answering the phone, while in the meantime you are losing your mind and looking at the dirty floor or bathroom. The iPad provides, (again, from their website) …
Effortless communication.
It’s 2016, time to say goodbye to the post it notes by the trash and the little white board on the fridge. With Q’s powerful suite of technology, your team can work in sync with our Q Operators to fine tune your office operations, and you conduct the symphony.
Q hires “Operators” to clean the offices. Operators are employees who are trained and supervised, being held accountable to high standards of customer service not typically associated with the office cleaning industry. The results show in the customer satisfaction, which in turn leads to high employee satisfaction and pride. Q is betting this will reduce turnover and result in a long-term investment in quality and customer retention. The income statement does not have an expense line item for turnover costs; however, the costs really do exist. Another factor contributing to employee satisfaction could be their ownership in the company. Reported by , co-founder of Q, announced in April the Company has committed to give non-management employees 5% of Q’s stock beginning in July 2016.
In a , Mr. Teran shares his views that the on-demand economy to hire non-employee workers (aka independent contractors) is setting itself up for two risks: 1) the legal eagles are circling and class action lawsuits by “misclassified workers” are in the process of forming, and 2) the supply of employees willing to work as such is declining. When workers are told what to wear, when to show up and how to do their job, they consider themselves employees and want the compensation package to reflect that status. Q chooses to hire employees outright and invest in them, which makes his model more sustainable.
Percy Forrest is a Q Operations Manager. , in medium.com, of what his first year has been like with Q, and the up-side to scrubbing toilets.
Q is getting a lot of support from the private equity investment community, having recently raised $42.43 million from investors, including David Stern, Google Ventures, RRE Ventures and Kapor Ventures, posts Jordan Crook (@jordancrook) for Techcrunch.com. Mr. Teran and his CFO have calculated the benefits of low turnover of employees and clients and determined the long term investment is worth the upfront investment.
Employers have had the luxury of shrugging, then continuing to operate in a world where the employees were happy to have a job and a paycheck in exchange for employer loyalty. It’s safe to say that the economic downturns and layoffs finished breaking the already weakening loyalty bond between employees and their employers. Combine that with the millennial generation insisting they will have fun at work, and the tide is turning, as employees vote with their job selection. High turnover rates and quality products and services with long term sustainability don’t mix over the long haul. The new model continues to evolve as employees, employers and customers figure out what they want, and Managed By Q is helping to lead the way.
Mistakes happen to the best of people and organizations. When I was promoted to Chief Financial Officer at the age of 29, I articulated my fear of making a mistake to one of my mentors. It was overwhelming to accept and consider the responsibility of the lead financial role. I would be the last one to review information before it went to the President and Board. The response I got from expressing my concerns was great – You will make mistakes, I guarantee it. What sets great leaders apart is how they deal with the mistakes.
What I learned from that experience is that leaders can impede or even stop the ability to develop and execute strategy if they do not take responsibility for their own mistakes. Lack of execution can cause the organization to miss revenue opportunities and quickly burn through cash.
When you are a leader of an organization one of the toughest responsibilities you have is leading by example. The Type A leaders who are bold enough to put together a start up or buy a company may not be sufficiently self-aware to take responsibility for their own actions and, as a result, when something goes wrong they can turn into one of three personalities: the Victim, the Judge or the Warrior. What happens next depends on which personality the leader assumes.
The Victim says, “I can’t believe the team did this. They are out of control and now this project is ruined.” This is followed by public accusations that humiliate workers.
Leaders, put on your big girl or boy pants and take responsibility as the Warrior.
The Judge says, “I can’t believe this happened. I am so stupid for trusting the team and I am never going to do it again. The project is ruined.” This is followed with micromanagement and control freak like activities.
Either personality can lead to turnover in the organization, which significantly slows down the organization’s ability to develop and execute strategy. A Star player on your management team will not stay and live in chaos. The star players on the team are all updating their resumes and keeping their ear to the ground to determine what other positions they can pursue. They will resign and say something like: “This opportunity was just too good to give up” or “They approached me, I was not looking.” They were not looking until the leader turned into the Victim and/or Judge and created chaos and an uncomfortable working environment. The culture is such that the star player cannot contribute in a meaningful way and they will leave you. Baby boomers tend to have a deeper sense of loyalty, so they may stay and hope the situation will change. The Millennial generation, in contrast, will bolt quickly once the Victim and/or Judge show up. They are very focused on making certain they can personally contribute immediately.
The Warrior says, “I’m responsible for this team and actions. How can we correct and learn from this mistake?”
Instead of using blame and shame to work through the dissonance, Warriors use tools like awareness, compassion, integrity, and ownership. Warriors empower their team to fix issues with customers at the earliest point possible. Warriors take responsibility and execute. Execution leads to building enterprise value and higher existing values.
Leaders, take an honest assessment of your leadership style and adopt a Warrior attitude!
Responsibility can be scary. Leaders put on your big girl or boy pants and take responsibility as the Warrior. Stop the blame and shame, micromanaging and control freak ways that keep the organization from executing. We all have the ability to change once we become self-aware – take an honest assessment of your own actions.
Board members, investors, coaches, and mentors – challenge the leaders of the organizations in this area. Although it can feel distressing to challenge a leader without it sounding like a personal attack, it comes with the territory. I have sat in many a meeting when I knew the Board wanted to ask these types of questions and did not because it is uncomfortable. You have a fiduciary responsibility to address the issue if you think it exists. If you suspect it exists – it almost certainly does.
Star players – before you update your resume and bolt, try to effectively manage up and have a frank conversation with your leader about the situation. Even if it does not work and the leader does not change, it is good practice for you. To help develop the dialogue, consider reading the book, “Crucial Conversations, Tools for Talking When Stakes Are High,” (Patterson, Grenny, McMillan, and Switzler), before initiating the conversation.
As a Chief Future Officer, I can help you analyze your financial results and determine if the actual results are aligned with your strategy. Contact me at [email protected] or www.mindybarkerassociates.com.
In my
The perpetrators of fraud often rationalize their choices by telling themselves, “No one pays attention to what I do anyway.”
experience I have found that whether you are a new business owner or an experienced CEO, it’s easy to overlook some basic controls in your organization to detect and prevent fraud. I’ve put together six practices you can…and should…implement if you have not done so already.
Read further at The CEO’s Guide to Fraud Prevention.
As new entrepreneurs become caught up in day-to-day survival it’s easy to overlook these four practices that support the long-term strategic growth of the new business:
- Annual budget
- Business plan with 5-year forecast
- Planning for leadership evolution
- Impact of decisions on cash flow
Let’s start with budgeting. The key to survival is measuring and monitoring the results. It is essential to complete an annual budget, break it down in monthly components and monitor each month. The budget should include an income statement, balance sheet and cash flow. Most companies have an income statement; however, I have seen fewer balance sheets and cash flow projections. This can really get you in trouble as you will not have any line of sight to your working capital needs. Working capital is the cash you need to run the business.
Grow in leaps and bounds when you incorporate these 4 strategies.
For example, if you sell goods, chances are you will need to spend money on inventory prior to selling the item and recognizing revenue. If you have projected your sales to increase by 25%, you may have painted a lovely picture of growth with your projected income statement that is not reality if you do not have the cash to purchase the inventory to sell because you have not projected the use of cash to purchase the inventory, which is what the balance sheet and cash flow projection are for. This can really get you into trouble, especially if you have inventory on your balance sheet, but not enough cash coming in from sales to pay for it.
In addition to a budget, your company should have a business plan and a five-year forecast. The business plan should articulate the plan for your company’s growth and address anticipated changes in the economy and future trends. It is difficult to predict all of these things, but if you develop a robust business plan, you are thinking through the different scenarios and how these scenarios will impact your business.
Think through leadership, including yourself, as your company grows. Clayton Christiansen* of Harvard Business School, says managers who are talented and skilled in the area of productivity and squeezing out the last bit of value from a company’s assets, are usually not the same people who are great at innovation and major change. Often a successful manager replaces the person who is responsible for helping the company become successful when the company becomes mature enough to establish systems and balance checks.
It is imperative to think through how decisions you make can impact cash flow – and here is why. I worked with an organization a few years ago that historically had double-digit growth each year and was very profitable. The initial product the business launched was a great success because it was much better than anything on the market. The company was getting ready to launch a second product. At my first management meeting they discussed how the product was on its way to the warehouse, noting they had offered extended payment terms to customers on their entire order if they added the new product to their order. No one had projected the impact this decision would have to their balance sheet and cash flow, so they were unaware that the plan they had in place was going to essentially stop incoming cash – and they had just signed up for a huge payable to the vendor. We had to react quickly and manage cash to meet payroll and other obligations. Such a decision caused a 5-6 month stressful time, requiring we run cash flow projections daily during that time to ensure obligations would be covered.
Unsure how to get started on these four critical processes to help with your growth? Contact Mindy Barker & Associates to find out how we can assist with the process.
* Clayton Christiansen is regarded as one of the world’s top experts on innovation and growth. He is the Kim B. Clark Professor of Business Administration at the Harvard Business School, where he teaches one of the most popular elective classes for second year students, Building and Sustaining a Successful Enterprise. – See more at: http://www.claytonchristensen.com/biography/#sthash.jS5zzfLx.dpuf
Instant rice and online banking have a lot in common. Instant rice is obviously quick, providing you with an immediate result. It works really well for casserole recipes or for certain dishes where rice and other ingredients are mixed together. But if you are serving dinner guests or in a fine restaurant, you expect the chef to put in the extra effort to serve gourmet rice prepared in an exotic way.
Don’t just rely on point-in-time views. Take time to reconcile accounts.
As with instant rice, online banking provides instant information regarding your bank balance, making it a great tool for certain situations; however, if you want to use it as an effective tool to manage your daily cash flow, it requires the extra effort of being connected to a cash reconciliation process that is properly maintained and reviewed periodically.
Before the days of online banking, the standard practice for both personal and business checking accounts was to reconcile a check register to a monthly bank statement. When accounting professionals adopted online banking into their processes, organizations tended to forgo the discipline of maintaining a check register as part of their reconciliation processes.
The following is a typical conversation I’ve had when consulting with clients on accounting process improvements:
Accounting professional, with a bundle of unsigned checks, “This is our process for obtaining check signatures.”
Me, “How do you know you have enough money in the account to cover these checks? What is your procedure?”
Accounting professional, “I checked the balance on line this morning.”
Me, “Where is the reconciliation to the check register? How do you know that all of the uncashed checks will not deplete the entire balance?”
Accounting professional, “I know there are not that many outstanding checks.”
Me, “When is the last time you reconciled the account?”
Accounting professional – answers range from a year ago to do not remember (not good) – to yesterday or a month ago (which is good).
As with using instant rice, there are times when viewing online balances without going through the reconciliation process are appropriate, but it’s not the final reconciliation tool.
Let’s try an experiment: If you are a CEO or President of an entrepreneurial company or a Finance Chair of a non-profit, ask the accounting department for the latest bank/cash reconciliation of the operating account. Ask specifically for these documents:
- The bank reconciliation
- A copy of the bank document to which it was reconciled
- The Balance Sheet balance to which it was reconciled
(Note: Publicly traded companies, financial institutions, insurance companies and other regulated industries have to maintain reconciliation procedures, so if you are in charge of one of those, regulation will take care of this.)
If you are bold enough to move forward with this call to action, my experience tells me about 50% of you will get a reconciliation completed in the last 45 days. If you get one and do not know how to review it, contact me for a free, no-obligation checklist that will guide you through a high-level review. If you do not get a reconciliation, and, in fact, get a blank stare from your accounting person, contact a financial professional to complete a review of your cash procedures and process. You may have plenty of cash flow today – however, that can change quickly if you do not appropriately manage it. Don’t risk finding yourself in a position where you cannot meet your basic financial obligations. “Cash is king” is a cliché’ for a reason – it is a requirement to run almost any type of business.
Mindy Barker & Associates works with entrepreneurial business owners to empower them with the tools and financial information to improve company value, profitability, and cash flow. To find out more on how you can be empowered, contact them today at [email protected], or call 904.728.2920.
Nonprofit leaders often make decisions about adding structure, enhancing staff expertise, or conducting advanced planning in response to a risk situation, or, as an afterthought. 
Savvy leaders recognize the need to make periodic adjustments to processes, staff and technology resources if they want to stay on the path to financial brilliance.
Donors have many tools to assist with decision-making. GuideStar is a tool most sophisticated donors use. GuideStar is a public charity that collects, organizes, and presents the information in a neutral format. GuideStar publishes your 990, providing potential donors with full access to the information. Do you know what your GuideStar rating is? The process of adding the appropriate information to receive a Gold (the highest level) rating takes less than an hour and the return on that investment is providing transparency and financial clarity for sophisticated donors.
Take this quiz to see if you are on the right path to financial brilliance, or if it’s time for one of those adjustments, then tally up your score to see where you stand:
- Do you have a financial professional on staff? How often do you forego infrastructure development to save money? When you engage the expertise of a CPA on your team, the next six characteristics can become reality.
- Do you have an annual budget? Navigating the fiscal year without a budget is like driving down the interstate blindfolded. By reviewing past revenue and expense flows to forecast future income and expenses, you can create a budget to see where you are going.
- If yes, do you monitor actual vs. budget? The annual budget is a dynamic document, meant to be part of your monthly financial review process – planned versus actual expenses. It’s OK to make periodic adjustments, a process that helps you know if the company goals are on track.
- Is your G/L infrastructure meeting the need? If your monthly financial reporting: (a) is either non-existent, or (b) is not helping you run your business, consider a review and restructuring of your GL. Make it work for you – not the other way around.
- Do you have an endowment fund? If yes, ensure accountability with a documented Endowment Fund Management Policy and related procedures.
- Do you have restricted funds for operations? With the help of your financial professional, meet the obligations to record, report, and effectively manage restricted funds by understanding the requirements. Document how your company meets these obligations in your fund management policy and follow the practice in day-to-day activities.
- Do you have grants and loans with covenants? As with restrictions, part of monthly reporting should be key indicators on how the business is complying with covenants.
- Do you know the core financial data contained on your organization’s 990 and its GuideStar rating? Knowing the answers to the questions before potential donors is a must to maintain credibility and be in the best position to make the “ask”!
How many “Yes’s” did you score on the Financial Brilliance Meter?
0 – 3 – Financial Dunce
3 – 5 – Financial Aptitude
6 or more – You are on the road to Financial Brilliance!
Whether it’s creating your first budget, enhancing your general ledger infrastructure or reviewing and tightening up financial reporting, successful leaders ensure these characteristics are part of their culture. This financial clarity helps ensure stability to carry out your mission.
Raise your Financial Brilliance score, let Mindy Barker & Associates show you how. We can help you gain the financial brilliance that empowers you with the tools and financial information to improve company value, profitability, and cash flow. Contact me here.
Mindy Barker | Barker Associates 
