By Lisa Purichia
Partner, Director of Accounting Services & Retirement Plan Services
Cash flow is the lifeblood of any business. That’s why the cornerstone of any company is an efficient accounting department and a financial reporting system that promptly measures and details the results of your operations. As the business owner, are you getting the data you need on a daily, weekly or monthly basis? Most business owners are very good in many aspects of their business, but many times finance and accounting is not one of them. They become very dependent on their bookkeeper or controller and not cognizant of whether their trusted employee is giving them all they need to manage their business.
Financial statements should be prepared on a regular, systemic basis, around the middle of the month. Timely, accurate information is essential to your management team. Even daily “Flash Reports” of critical operating data are not uncommon. Consistency of practice is crucial.
Is your accounting department meeting these demands? Failure to manage cash flow or to take advantage of early pay discounts, paying invoices late and incurring late fees, or not delivering accurate, comprehensive reports can severely harm your company’s reputation and result in decreased credit worthiness, issues with your suppliers, etc. Lack of consistency, planning, transparency and oversight can also quickly lead to untimely financial reporting and poor management information systems. The risk of fraud is also increased in an undisciplined accounting environment.
As a business owner, it’s vital that you determine the people, processes and discipline necessary to make your accounting function run as smoothly as possible. Your management team should be reviewing your financial statements and key performance metrics on a regular, MONTHLY basis! Your accounting department should be reaching out to other operating departments within your enterprise to make sure they are receiving the financial data they need to manage their respective areas. Any business not following this practice is setting itself up for hardship, which could ultimately result in failure.
If you’re experiencing accounting issues in your company, it’s time to step back and determine the source of the problem. Is it your people? Is it your systems or lack thereof? Or do you simply not know? If you need a fresh set of eyes on your accounting function, Sponsel CPA Group can help! Whether you’re seeking consultation or thinking about outsourcing your accounting and finance needs, we can offer support and counsel TO MAKE YOUR OPERATIONS BETTER!