Asking These 3 Questions Will Improve Your Small Business Financial Management

Small Business Financial Management: What’s Holding Up Your Books?

What does financial management at leading, growing businesses look like — right now? Today’s fast growth businesses often require CFOs to work closely with the controller to ensure that the organization gets the full benefit of the controller’s talents and knowledge and, the controller’s office is operating at the highest levels of efficiency and accuracy. As the office of the controller becomes ever more strategic — creating higher levels of financial visibility to help drive growth and profitability — the organization’s relationship to the controller role must evolve as well.

Boost your Small Business Financial Management with these Questions

  • How long does it take to close our books? The best measure of controller efficiency is how quickly and accurately the team closes the books. Start with strong planning and preparation, such as handling all billing and expense issues prior to the period end. Automation is also essential — it provides the desired speed, efficiency, and accuracy without increasing staffing levels. A fast close enables the accounting and finance team to move beyond merely reporting results and into forward-looking activities that can shape future outcomes. You and the executive team need financial information as soon as possible to make any necessary course corrections. This information includes traditional financial statements (income statement, balance sheet, and statement of cash flows) as well as operational reports and detailed analyses of business results. In addition to tracking the number of manual journal entries, monitor the number of expense reports, accruals, bills, and invoices that your finance team must process. Consider creating a simple scorecard to measure your progress and to understand where the bottlenecks are occurring. Keep in mind, in general, manual entries and workarounds are red flags for auditors because they are an open invitation to policy deviations. Automated processes enforce your accounting policies—while also increasing closing speed and reducing errors.
  • Are we still using Excel? If so, why? Excel can be a valuable tool for specific, limited purposes.While there are many reasons to limit Microsoft Excel use in corporate accounting — such as its inherently breakable models, security issues, and lack of share-ability — it can still be useful to controllers in certain situations. Love it or hate it, Excel has been — and will likely remain — one of the go-to components in every accountant’s toolkit. Just make sure you’re clear on why you are using it. Some of the best practices for using Excel include isolated tasks, ad hoc reporting and ancillary reporting. For instance, multi-user corporate accounting systems have their own native reporting facilities, but sometimes controllers prefer the familiarity of Excel for reconciliation reports, creating flash reports at period end, modeling various forecast scenarios, and similar forward-looking reports.
  • How are we managing our operating metrics? Can we integrate our financial information and our operating metrics? Because many financial systems can now accommodate analyses of operating metrics to create a richer, fuller picture of the business, the controller is assuming a role as the provider of financial visibility — once the domain of financial planning and analysis (FP&A) teams or the CFO. Keep in mind, implementing a single reporting system to eliminate unproductive reconciliation time. Merging financial data and operational metrics could help your organization in several ways, such as identifying opportunities, emphasizing operational metrics, such as product shipments, raw-material inventories, delivery performance and customer acquisition, as well as reporting revenue for GAAP, sales compensation and more by leveraging a single, merged reporting system — with everyone on the same page. An excessive number of manual journal entries needlessly extend a closing period — and can also be a leading indicator of lurking problems. They can conceal anomalies and errors that actually have broad, systemic roots. You may be plagued with variable accounting processes — or a level of complexity that calls for revised standards.

When it comes to financial management, growing businesses suffer with issues ranging from scalability, and visibility to limited accounting software functionality — often facing the realization that they require a deeper vision into real time analytics to fully support growth. Fortunately for today’s fast growth businesses, there exists an array of technologies — from advanced accounting software solutions to cloud based ERP systems, fully equipped to  overcome the limitations of more fundamental financial management alternatives … including QuickBooks.

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Angela Nadeau Angela Nadeau is CEO of CompuData, an award-winning business technologies leader. Angela maintains a deep knowledge of the trends driving businesses today to be more productive and profitable by leveraging technology. With more than 25 years of expertise, she has advised thousands of businesses on effective ways to leverage technology to increase productivity, profitability and efficiency – guiding businesses of all sizes to new levels of market success and corporate growth.

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  1. It is interesting how a business how a different approach to financials by simply asking questions.