When Business Leaders
Confess That They Don’t Know What They Don’t Know
I have avoided yoga class for a few months because I was intimidated by the fact that most of the participants twist and turn like the performers in Cirque du Soleil®. This morning I decided I would break through my barrier of feeling intimidated and attend the class. As I drove to class, I realized one of the reasons I was willing to step outside of my comfort zone TODAY was because I had attended previous classes with this specific teacher. Alyson Foreacre is the owner of Yoga Den, where I attend. She is an amazing teacher who I trusted to lead me through my own practice of yoga. If all I did was stay in one yoga pose and breath, she would probably encourage me to do more in a very respectful and empathetic way.
My journey with yoga can be compared to how business leaders
feel about financial information. In my years of practice, I have learned that
they are intimidated by financial reports. They are fearful of asking questions,
they don’t want to sound ignorant. Feeling intimidated by yoga class and by
financial information is similar, as in both cases we are keeping ourselves
from something that can be helpful in our overall lives.
My feelings of intimidation with yoga were primarily tied to fear of not keeping up with the class and not knowing how to do all the moves. I didn’t know what I didn’t know about how yoga class is a practice, not a directive. I was so right when I told myself “I got this” with Alyson’s assistance. She is an encouraging teacher who provides alternatives if she knows you need them. She also lovingly encourages you when you need a little guidance. Today she even laid on the floor beside me to show me how to do a certain move. She validated my confidence in her ability to get me through the difficult moves.
I often meet with entrepreneurial business owners, nonprofit
leaders or business professionals in corporations to discuss their pain points.
The most frequent statement I hear during those discussions are “I don’t know
what I don’t know.” I have to admit that,
it wasn’t until I was attacked by the anxiety of doing the right kind of
Downward-Facing Dog and other yoga moves, that I truly have the proper level of
empathy for this statement. I also realized that I should feel honored that my
clients trust in me to share their own fears of financial information.
Being responsible for an entire organization, or even just a section of one, without understanding the financial implications can be frightening. It takes a lot of courage to push through your uncomfortable zone, to accept some uncomfortable space for some time until you understand. Just like my sore muscles right now are telling me it will take a few times before that class feels good. But I know that if I dare to go again and I struggle, Alyson will be there for me.
Is it possible that you don’t know what you don’t know? If you struggle with the following internal dialog, the answer is probably “Yes”:
I do not receive financial statements each month
timely and I do not understand why.
Cash is very tight, and I am not sure we have
enough money to pay the bills and make payroll for the next month or two. I am not sure how to address this.
The new revenue recognition guidance is
required, and I do not know where to begin with implementation.
The organization needs to raise capital and I do
not know what the right type of investor is for our organization.
The corporation needs to divest of a subsidiary
or a line of business and I am not sure how to make that work. What are the
I know we need better systems and process to
improve the customer experience but I do not know where to begin or have the
time to ask various vendors what their system does, or even understand the full
capabilities of our current system.
Barker Associates can help you work through these anxieties and guide you through the process. We are direct communicators who will share with you the reality of the situation, even it is not what you want to hear. Recalling my sore yoga muscles, I will be empathetic to your journey of not knowing what you do not know. Give me a chance to let my experience work for you. https://mindybarkerassociates.com/contact/
It is the first month of the calendar year and for many, the start of the fiscal year as well. The first month for you to start measuring the results you assuredly planned and documented in a budget for the year.
Each of you has a different relationship with your budget. Each of the components of this relationship can lead to great results or negative ones, depending on how you react to them. Your reactions can impact your personal career as well as the health of the company you own or work for.
Read more about some of the pitfalls of budgeting and how to enhance your relationship with the budget to achieve the great results for which you planned.
CEOs, Presidents and Executive Directors
If you created the budget while sitting with your accountant, made sure you were comfortable with the revenues and expenses, but have not communicated it to the managers and leaders of the organization, you have just cheated on your budget. My counsel is to get the budget in a presentable format to communicate to those who have a chance to manage day-to-day to help you achieve the results forecasted in the budget.
The message to your managers should include your overall strategy, backed by practical, measurable goals. Your leaders need to believe in your strategy because if they do, your job of leading the organization to positive results will be so much easier.
I repeatedly hear, in large and small organizations, from managers, supervisors and those on the front line, that they have no idea what the monthly budget is for repairs to equipment, printing costs, etc. They are spending money based on one decision at a time without the benefit of the overall strategy. Without involving your managers in the process, you are not benefitting from their knowledge and experience.
Nonprofit Executives and Finance Committee Members
Can you answer these questions? If not, your budget package needs work.
How much does it cost the organization to run each program? Of that total cost, how much is covered by actual funding commitments and how much has to be raised to maintain the program(s)?
How much of your administrative cost – Finance, Accounting, Development, etc., is funded by direct reimbursement and/or the de minimis administration expense reimbursement in grant budgets? How much money has to be raised to cover these costs?
Does the budget package have one column for the Net Change in Assets/Income Statement and no backup schedules to show the Revenues and Expenses by program and grant? If your answer is yes, the budget package is one-dimensional. In other words, it does not provide the fundraisers and the Board the needed information to interact with potential donors and speak intelligently about the real needs that are met through fundraising. Many nonprofits go under when they issue one dimensional budgets to Finance Committees year after year. There is no clear understanding of the true funding requirements. Your fiduciary responsibility should lead you to ask for more transparency regarding where the needed funds for programming and administration costs will come from.
Finance and Accounting Professionals
Did you manage the budget process so that the budget is constructed the same way the detail accounting entries are made month-to-month? Most non-finance professionals hate to deal with anything that has “Budget to Actual Variance” in the description; add to it that you are explaining that the variances are because the budget has one type of accounting and the actual has another, and you are sure to cause irritation that is just not necessary. It is like a spouse putting the toilet paper on the roll backward – it is irritating and just not necessary. It is your job to keep the conversations and analyses about real differences and tie those differences to a real discussion that empowers the team to react and strategically move the direction as planned or make a decision to pivot. Here are some pitfalls to avoid:
Differences Between Finance and Payroll Practices
Large and small organizations find themselves with the ineffective comparison of budget-to-actual salaries, caused by Finance dividing the total annual salary by twelve for the monthly budget. Payroll records the true payroll expense. Month-to-month variances result, as Finance budgeted for a full twenty-eight to thirty-one days and Payroll budgeted for twenty-eight or forty-two days depending on whether it’s a two or three pay period month.
Insurance is typically paid in advance for the quarter or year. If it is material, it should be set up in a Prepaid Account. If insurance bills are expensed as paid, the month variance could be a result of those payments and not an actual expense overage.
Annual payments for subscriptions
These payments should be reviewed to determine materiality; determine if they should be set up in a prepaid account when paid, or if they are immaterial and should be expensed. When you mirror the actual accounting and the anticipated expense pattern in the budget you can avoid unnecessary variances and questions.
A company that is anticipating a large increase in revenue should determine how the increased sales and related cost of goods should be spread throughout the year in the budget. Consider the current pipeline and sales cycle when budgeting sales revenue. If your sales cycle is 120 days and there is $1 million in your pipeline at the end of the year, you will not realize $3 million in sales in the first quarter. A fast-growing entity could possibly reach $12 million in sales for the full year, but it should not be spread evenly to each month. Patterns such as this will frustrate executives and sales staff and make them feel like failures. This would be the equivalent of us expecting our spouse to be Jeff Bezos and to increase our family’s net worth at the same rate.
Make sure you are empowered with the right information to effectively run your department. Do your best to work with accounting to submit invoices and information within their deadlines so they can process the data into information that you can review and use to communicate effectively with the leaders of the organization.
Try to manage potential budget cuts made throughout the year so the troops can stay focused on driving the overall strategy of the business.
Think of it like this great example in the Netflix series House of Cards (spoiler alert if you have not begun your binge watching of the series – sorry).
In this episode, Frank becomes President and wants to take funds from FEMA to fund a jobs program to put people to work. The head of FEMA does not resign and tells his colleague he is not going to resign, as he is the only one who can manage the reduced funds and help those in need if a hurricane does hit after Frank took all the budget money. While the drama is critical for a successful Netflix series, you don’t want a similar drama playing out in your company!
Good luck with your relationship with the budget. Use my advice to help manage your fiduciary responsibility to the organization, as well as your duty to manage your career. Avoid the many aspects of “marital irritation” I have discussed by correctly managing Budget-to-Actual variances.
If you would like to discuss your relationship with your budget directly with me, please sign up for a complimentary 30-minute session through the contact link here.
One of the changes affecting private businesses in 2019 is ASC 606, Revenue Recognition.
Danielle Moga provided the insights below about what ASC really means to you. She is an associate of Barker Associates with a wide variety of accounting and finance experience with non-profit and public companies.
ASC 606 What it Means to Private Business
Contributed by Danielle Moga
Public companies had to adopt the standard in 2018 and what we’ve learned is that the process to implement was not a straightforward exercise. Many companies underestimated the complexity of the change and did not have the appropriate time, resources or processes in place to implement seamlessly.
The new standard changes the way companies need to record and recognize revenue from their contracts. The goal of the new standard is to enable users to understand better and consistently analyze revenues across industries, transactions, and geographies but the disclosure requirements are comprehensive, and the changes to the nature and timing of revenue recognition can be significant.
The good news is that you don’t have to be an industry-specific guru to implement the changes, as FASB opted for a more principles-based approach. The challenge is, those preparing financial statements and disclosures will require more judgement.
ASC 606 breaks down the analysis of contracts into a 5-step process that is intended to help preparers wrangle the chaos of details but the task to determine revenue recognition can be daunting depending on the volume and types of contracts that exist.
Identify the contract(s) with a customer
The contract must be fully executed, clearly identify the good/services to be transferred and specifically outline the payment terms.
Determine the performance obligations in the contract
All distinct transfers of goods or services must be identified. A good or service is distinct if 1) the customer can benefit from it on their own, or with resources they already have, and 2) can be transferred independent of other performance obligations.
Determine the transaction price
The amount of consideration the company expects to be entitled to in exchange for transferring the promised good or service.
Allocate the transaction price to the performance obligations in the contract
Performance obligations in the contract need to be separately identified priced or estimated.
Recognize revenue when (or as) the entity satisfies a performance obligation
The timing of recognition of revenue is dependent upon the time frame in which satisfaction of the obligation occurs. Point in time vs. variable over time.
The five steps are handy but don’t realistically help to manage the complexity of the project or the time it will take to meet the looming deadline.
We recommend a 3-phase approach:
Analyze contracts and systems
Ensure you have the right resources on hand with the skills and time necessary to lead and organize the project; or hire those resources externally for support.
Outline all components of the contract(s), as denoted in the 5-step process.
Decide if the retrospective or cumulative method will be utilized.
Document the existing methods and systems used to report revenue streams.
Determine the necessary changes to process and systems to implement and control the new recognition methods.
Document judgements made where clarity is needed.
Outline historical journal entries and the new ones necessary for compliance.
Determine differences and the impact on revenue, KPI’s and other material items.
Begin the conversion process and maintain parallel systems to ensure accuracy.
Schedule internal assessments of reporting and systems to ensure ongoing compliance.
Assess the skills and time of the internal team designated to safeguard this process to establish if additional support is needed.
Even with steps and a process, companies must set aside the time necessary to transition. Companies with minimal impact may only need a few months to go through the process of outlining and documenting. Companies with complex revenue streams and required system changes could take six months or more to transition and implement.
Don’t get caught in the 11th hour, start now! If your internal team is seasoned enough to handle this change then there are many resources available to educate and plan. Alternatively, leverage outside talent to minimize the chaos and challenges that come with significant change.
Placing paper checks in the mail to vendors places your company at risk if you are placing them in the mail without Positive Pay.
Why don’t you just play Russian roulette with a full chamber or ride a motorcycle without a helmet? That may seem a little over the top, but the paper check is a risky way to submit payments to vendors.
What Can Happen?
A client contacted me recently to help unravel the mystery of the missing payment to one of his vendors. By researching his automated AP system and conferring with his third-party print vendor, we confirmed that the check had been produced and picked up by the post office for delivery. The check was eventually presented to a bank in Chicago for payment. The vendor was in North Carolina.
The bank in Chicago eventually released a photo to the FBI (yes, they had to get involved) of the person trying to cash the check. We had the chance to view the photo to confirm the person was not an employee of my client’s company. Thanks to using Positive Pay, they did not lose out on the amount of the check.
The incidents of check fraud are so frequent that law enforcement officials such as the FBI aren’t that interested in pursuing the “little guys;” they want to go after the big fish. Even though the check my client had cut was over $20,000 – big to him – it wasn’t worth pursuing just that instance to the FBI.
Seventy-five percent of organizations that were victims of fraud attempts/attacks in 2016 experienced check fraud, a 4% increase over 2015.
Positive pay continues to be the method most often used by organizations to guard against check fraud, used by 74 percent of organizations. Other methods include:
Segregation of accounts (cited by 69 percent of respondents)
Daily reconciliations and other internal processes (64 percent)
Payee positive pay (41 percent)
Lack of positive pay (cited by 23 percent of respondents) and clerical errors (18 percent) were two primary reasons for financial loss due to check fraud.
As the statistics show, checks continue to be the payment method most frequently targeted by those committing or attempting to commit fraud. One method companies use to fight check fraud is converting to electronic payments. In addition to the fraud prevention benefits, ePayments provide benefits such as:
Ability to quickly process last-minute bill and payroll payments.
Take advantage of early payment discounts, while paying closer to the due date.
Improved client-vendor relationships due to rapid, more efficient payments.
Eliminate the cost of printing and mailing paper checks, which can be as much as $9 per check.
Often implemented as an add-on to your existing financial system, the selection of vendors offering B2B ePayment solutions is huge. Barker Associates has seen the “deer-in-the-headlights” look that clients get when trying to sort through the options to choose the best solution for their company.
I have had the opportunity to work with creative, tenacious entrepreneurs who add disruptive technology and new functionality to our world. I understand that as these wonderful people are creating, they do not always think about the best way to maintain the sales and customer infrastructure they need on the back end. A new court ruling could have implications for their business.
To help you all understand how the new sales tax laws could impact your business, I have deconstructed the new rulings to give you the bottom line on the fundamental requirements you must have in place to sleep peacefully, knowing you have the financial clarity to be prepared.
My experience working with the sale of a business, capital raise due diligence and audit prep gives me an understanding of complying with the new out-of-state sales tax requirements. I can see the look on your face when you ask your tax person, “What information do I need to understand my exposure to the new sales tax law, and they say, “It depends…”
Are Your Customers Out-of-State?
The recent ruling of the U.S. Supreme Court in the South Dakota v. Wayfair, Inc. case (June 21, 2018) has garnered lots of attention from business owners and finance professionals alike. The new law in South Dakota – if you sell a minimum of $100,000 in sales OR 200 transactions to South Dakota customers from anywhere in the US, you must collect and remit that sales tax based on South Dakota’s laws. There are thousands of technical tax issues and caveats that follow suit, with legislators expanding states’ legal ability to collect sales tax on sales executed anywhere in the United States; this should be more than enough to make you think it has got to be 5 o’clock somewhere.
Don’t be distracted trying to learn all the technical aspects of what is required; instead, work with tax professionals at a CPA firm or similar services. When you muster the courage to ask how to prepare for an impending sales tax audit, the person you are talking to is going to say – It depends.
Your tax person will ask many difficult questions, which you can’t answer to off the top of your head. I have worked with hundreds of companies going through audits at a national accounting firm, and I have been the CFO of both large and small entities. The wide range of systems and information about sales and customers that I have seen has been lackluster; in my estimate, a mere 15% of companies have the correct data on their customers organized in a way they would be able to answer questions when the tax professional says – It depends.
Be Ready for It Depends…
You can quickly feel overwhelmed just thinking about being subject to a sales tax audit for each state that you ship your product to. I’ve compiled the following list as a comprehensive guide to strength-testing your customer database, to see how it will hold up when this sales tax issue inevitably affects you.
1. Can you produce data that shows sales by customer that will reconcile with that year’s tax return submitted to the IRS? Or are you the type of business that does not consistently keep sales data that matches the corresponding financial data? Companies that are not subject to Sarbanes-Oxley, State regulatory filing requirements, or an annual audit do not keep sales data that matches their summary financial documents. In the case of the sale of the business, this becomes a due diligence issue, as the acquiring firm or investor cannot substantiate and analyze the sales to comfortably know what they are buying.
2. Can you dig into your customer data by state and by transaction? Can you determine the number of transactions by state? South Dakota’s new law states that if you have 200 transactions, you are subject to the collection and remittance of sales tax. There is NO dollar limit, or requirement on the 200 transactions. You could make 200 hair bows in your garage then send them to South Dakota, and you will still have to collect and remit sales tax.
3. Do your customer records consistently distinguish between billing and shipping addresses, and how easy is it to report? Is there a clear business rule and process that makes the shipping address distinct from the billing address?
4. If your business model is subscription services, but includes the sale of a product at the beginning of the relationship, can you segment the sale between product and service? For example, if you are a software-as-a-service, (SaaS), company and you sell hardware to run the service at the beginning of each sale, can you produce records that agree with the information in #1, to distinguish between product and service?
5. If your revenue is generated from maintenance and/or installation of items are you able to distinguish customer sales records between the sale of the product and the labor to install? The tax on labor for maintenance and/or labor in each State that charges Sales Tax is different, and you must be able to distinguish the difference between Labor and Parts in your operations, sales, and billing systems. Examples, where this applies, are large long-haul trucks, machinery, or pipelines used in construction, all of which include a sale followed by installation or maintenance.
Be Prepared with a Solid Infrastructure
Strategy discussions with your CPA must include an analysis of how to manage through these new regulations that are inevitably going to make their way through your state’s legislature. Politicians in states other than South Dakota are eager to push similar bills through their system, and it will be a popular but non-controversial pursuit. How exactly will each state implement such sales tax laws? My crystal ball says that only time will tell.
The bottom line is that, once again, I am giving another example of the cost of having the wrong infrastructure in your business. The costs related to sales tax compliance in this new world will be substantial. The good news is, with a solid data capture and reporting infrastructure, you can use the same data for analysis, reporting and audit preparation. Let’s work together to get you running your business with the financial clarity to know where you are headed!
I frequently see struggling businesses feel comfortable engaging a CPA to perform an audit, or use a bookkeeper to handle the financial processes of their company and provide monthly finance reports. As we delve deeper into the client’s concerns through probing questions, I often discover that neither the CEO nor the Board fully understands the monthly financial reports that were dutifully distributed to their emails.
Don’t mistake your CPA, who is preparing your tax return or an audit, as the financial strategist for your business. The CPA’s focus is compliance-driven, not future-focused. The tax return and audited financial statements are products that show the financial results at a specific point in time. It is unrealistic to expect your CPA to include ongoing consulting in their services.
To describe in sports terms, think of the CFO like the defensive coach on the field, helping to manage the organization’s financial moves, calling plays in the financial world.
The outside CPA is like the scorekeeper, up in the booth, keeping the score. It is unfair to blame them when you miss a goal or miss the opportunity to score a touchdown.
Consider adding a CFO to your leadership team to bring a financial, future-focused view to your organization’s decision-making process.
Barker Associates, CFO Strategists, works with entrepreneurial growth companies, established corporations and nonprofits to develop positive cash flow and increase the value of your company. We can be contacted at firstname.lastname@example.org or 904.728.2920.
Organizations both large and small can get frustrated with the timeliness and quality of the information they receive from financial systems. Often, snap decisions are made to purchase a new system to solve the problem. Many times old processes are transferred into the new system. The new system then doesn’t work the way it was envisioned, costing the organization time and money. All of this could have been avoided with proper planning.
As a Financial Strategist, I am often brought into organizations to review their systems and conduct due diligence for the purchase of a new one. In many instances, my evaluation has resulted in recommendations for improvements and enhancements for the existing system. By addressing process improvements, I have helped organizations avoid a new system purchase and provided immediate relief to pain points of information accessibility.
A bad process forced into a new system can result in potential disasters, such as delayed reporting and non-compliance. For example, I assisted an organization that was being fined for noncompliance in sales tax reporting. This company had recently implemented a new system, but the financial staff could not obtain accurate information for reporting because of incorrect data entry. Meanwhile, the fines and penalties for not reporting were adding up as the staff attempted to create the required information in an Excel spreadsheet.
Had this company conducted a thorough review of their current system and processes, even engaging the software vendor to learn if there was more they could be doing with their system, some of the delays and fines could have been avoided.
Mindy’s Tip: Review your current process or have a professional do it and make sure you actually need a new system before you make the decision to purchase. If you decide to purchase a new system, make sure you roll out the improved version with a strategic plan, so you do not interrupt the flow of your business.
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@example.com, 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.
Each month end, financial reporting packages are prepared in companies across the nation and promptly filed…somewhere. In most cases, the accounting team has prepared these analyses and turned them over to a senior leadership team who really does not understand how to use them to run the business. Reams of paper reports stand in piles, creating more of an environmental concern due to the use of paper, than the financial concern needed to effectively run the business.
Even though the accounting department has included a tremendous amount of information that may help them prepare for the annual audit, have they contributed information relevant to the management of the business?
By implementing accounting best practices, such as streamlined processes and standard, relevant reporting, work effort can shift from processing to high value activities that invest in the business, such as special projects and guidance on improving the bottom line.
Time is money, and time spent to prepare irrelevant information is wasted. Month end packages should be concise and provide information about the relevant Key Performance Indicators identified by Management. Contact Mindy Barker & Associates to find out how we can guide your leadership team to discover, report and track monthly Key Performance Indicators that help you make timely and informed decisions in running your business.