Nonprofit Accounting Blog – Page 21

Finding a Good Fit in an Accountant for your Business

Entrusting your company’s most valuable asset—your finances – to someone else is certainly not something to be taken lightly. High expectations are good! Whether you are a new business just starting out and looking for help with the financial side of things or you’ve finally come to the conclusion that you can’t do it all and need an expert to oversee the finances, you’ll want to make an informed decision about which Certified Public Accountant (CPA) is best suited for your company and what they have to offer. While we cannot choose an accountant for you, Beck and Company’s Certified Public Accountants and Business Advisors can give you additional insight and guidance when it comes to the search for someone who is best for your business. Here are our general recommendations:

Characteristics to Look for in a Potential Accountant

What, exactly, characterizes a good accountant? When looking for an accountant to manage the financial side of your organization, you’ll want to consider some important general CPA traits. These include finding someone with a basic understanding of your specific industry and a desire to always learn more about it. They must have a thorough understanding of the company’s big picture and a commitment to the overall business. You’ll need someone who is attentive to details, communicates well, is adept at using a computer, understands proper job costing, and is a person of follow through. To dive into these traits further, visit here.

In addition to these general characteristics, you’ll want to look for someone who has strong leadership or leadership potential. When someone is making decisions that impact the entire organization and relate to financial assets, they’ll need to be someone who considers the interest of all and is a team player. Finally, determine the specialized needs you have within the position and the reasons you will be hiring someone (tax prep, financial system overhaul, expert to answer questions and give guidance, etc.). This will make securing the right person easier and will make the interview process clear for both you as employers and for the potential employees themselves.

Securing the Right Person

Once you have a good idea of what you are looking for in the person you want to hire for the position, you will need to go through the process of securing just that. If you are unsure where to begin, start by asking around within your network to find out who others use for their accounting service needs. It is recommended that any accountants you consider have at least 60% of their businesses coming from businesses similar to yours in order to know the laws and systems well. As another starting point, Beck and Company CPAs also offer many client accounting services that you can explore.

Interview Tips

Next, you will need to schedule interviews and be prepared with questions that pertain directly to the specifics you are looking for. Be sure to include conversation about rates, their preferred accounting software program, and their hours of operation to confirm if the person is a good fit and if there is mutual compatibility. Also, find out if they are part of a corporation or work individually. Working with corporations could mean you’ll be getting answers from whoever answers the phone instead of always having direct access to one person with whom you’ve built a relationship and trust. Your preference will depend on the level of general help versus individualized attention you need.

Choosing the best accountant for your business has the power to transform your accounting processes and give you the guidance you need to remain successful. Beck and Company CPAs can offer more individualized guidance into the important process of deciding on the accountant that is suited to meet your business’ needs. Please contact us for more information.

Methods of Strengthening Safety and Security in your Business

Your business’ safety and security can take on a variety of forms and range everywhere from physical security on the premises of your office to the more subtle need for online safety of important business information. Strengthening security of important documents is essential both in a physical sense with management of paper documents (locked filing cabinets, shredding information when no longer needed, etc.) and data stored electronically and/or in the Cloud. For more information on data security, visit here.

Finding methods of strengthening security for business is not always as easy or obvious as it may sound. Beck and Company’s Certified Public Accountants and Business Advisors know the importance of maintaining and strengthening safety in your company. We offer consulting services to help clients improve processes and get access to critical business information in a secure way including proper documentation processes and selecting systems that will set you up for success. We also offer technology services that can streamline data to make it easier to manage and secure. Learn more about our technology and consulting services here. In addition to the specialized services we offer, here are some general guidelines for strengthening security within your business.

1. Start with a Risk Assessment

The safety process starts with identifying where you are most vulnerable. Perhaps you are already aware of where your business has been the victim of crime before, but that might not tell the whole story. Carry out a thorough assessment of the premises for more general safety concerns and an electronic assessment of how data may be vulnerable. This assessment will give you a starting point for what needs to be addressed. Involve a team in this process to be sure nothing is left unnoticed and all avenues of potential risk have been explored.

2. Educate your Staff

Train your staff to recognize suspicious behavior or activity. This means both in a physical sense (are files readily accessible to all who enter or secured and out of reach?) and electronic sense (are employees being asked for information that should not be shared or noticing people have access to what they should not?). Not only should employees know what to look for, but they should also know how to properly and efficiently report possible threats to information or resources.

3. Secure your Equipment

Carry out regular property and equipment audits and allocate responsibility for particular items to individual employees. Tag computers and record details of serial numbers. Consider securing expensive equipment to floors or walls. Secure electronic devices by encrypting them to prevent data access without a password. Inform all employees about expectations for properly locking up equipment and not leaving it out unattended.

4. Work to Prevent Electronic and Online Information Theft

This takes on a variety of forms including establishing strong passwords, having strong firewall protection and antivirus software, and performing regular system backups. Be sure employees know the risks of links and attachments so they are only clicking on items related to the job at hand and not getting viruses that compromise computers and information on them. Use access controls on computers to restrict entry, and regularly review who has access privileges.

5. Be Vigilant in Monitoring Security Over Time

While an initial assessment and response to areas of risk is so valuable, strengthening security is an ongoing process that will require regular reviews. As technology changes and advances, the criminals are keeping up with it as well. It is your duty to do the same to protect against information crime.

Beck and Company CPAs are here to help you with business practices and technology solutions to strengthen safety and security at your company. Please contact us for assistance.

Effective Financial Reporting and other Keys to Preventing Fraud

It seems to be a common occurrence to hear about fraudulent activities occurring throughout the business world in the news. Unfortunately, even nonprofit organizations fall victim to fraudulent activity and commit fraud in a variety of ways. Within nonprofits, much of this activity stems from dishonest or improper financial reporting. It can take the form of payroll or billing schemes, undocumented funds, fabricated or invented expenses, and more. When it comes down to it, fraud is a violation of trust. It is essential to be vigilant in preventing fraud within your organization to maintain the trust the public has in nonprofits and to keep the trust throughout the organization. Your organization’s financial transparency can help prevent fraud.

Here are three tips for preventing fraud in your organization:

1. Use internal controls and financial audits to detect fraud. It is easy for nonprofits to rely on external audits to provide recommendations and evaluate internal controls while also identifying fraud risk. Beck & Company’s Certified Public Accountants and Business Advisors offer auditing services that can provide you with an extensive examination of financial statements to give you a closer look at possible areas of fraud. These nonprofit financial audits are truly essential to maintaining the organization’s health, but they are not the sole means through which fraudulent activity can be discovered. There is no substitute for strong internal controls to both reduce the opportunity for fraud and to detect fraud more quickly if it occurs.

2. Educate your staff about fraud through training. Staff members should be trained and educated on what actions constitute fraud, how fraud can harm the organization and its mission, and how to report questionable activity. This training has minimal cost and is highly effective.

For starters, educate employees on the three common forms of fraud:

Asset misappropriation– an employee steals or misuses the organization’s resources. Examples include, but are not limited to, theft of cash or checks, false billing, vendor fraud, and inflated expense reports.
Corruption schemes– an employee, for their personal benefit, misuses their influence in a business transaction in a way that violates their duty to the employer such as through bribery and conflict of interest transactions.
Financial statement fraud– an employee intentionally causes a misstatement or omission of material information in the organization’s financial reports. Recording fictitious revenue, understating expenses, and reporting artificially inflated asset values are all part of this. Effective financial reporting is essential to your organization’s reputation. Visit here to find out more about how to ensure proper reporting and internal controls are in place at your nonprofit.

3. Remember that the board plays a role as well. Don’t overlook the board. The board of directors is still responsible to help monitor and supervise finances and operation even if they are not present on a daily basis. They have an important say in financial control procedures and policies. They also have a responsibility to act if fraud is detected by investigating, creating action steps, and reporting the incident. Board members are responsible for acting with due care and putting the best interests of the organization first. In some cases, board members have been held liable when it was determined they were negligent in fulfilling their fiduciary duties of care, loyalty, and obedience.

Understanding More about the Threat of Fraud:

Both damaged trust and damaged finances can result from fraud and therefore cause a substantial issue for nonprofits. What is even more striking is that, generally speaking, most organizations that fall victim to fraud do not recover any of their losses. Where does this fraud come from in the first place? Employees of varying ages that receive varying salaries are all susceptible. However, fraud committed by managers or executives takes twice as long to detect as compared to non-management employees. It is important to be on the lookout for fraud at all levels and assume no one is exempt.

Beck and Company CPAs are passionate about helping nonprofits get their financial reporting in order so they reduce the risk of fraud. Please contact us by calling 703-834-0776 x8001 to learn more about all of the nonprofit services we offer.

Personal Principles that Relieve Accountant Stress

For accountant stress management to be effective over the long haul, the key is to not only learn and use certain stress management tips that we discussed last week but to also learn to live your life and see your world in a way that makes distress less likely. Stress management is a process that includes more than just healthy living tips but honing and applying personal principles to your overall life as well. If you find the main sources of your stress come from current accounting practices that could use an overhaul or adjustment, Beck and Company Certified Public Accountants and Business Advisors are here to help. Please contact us for a consultation about your accounting needs.

Here are some principles that, when practiced consistently, can help you manage your stress and keep your distress at a minimum:

Take responsibility for yourself, your life, your behavior, and your stress.

Consciously or sub-consciously, if you don’t take responsibility, you effectively delegate it to someone or something else. This means you are handing over control of your life and your stress level to someone or something else.

Identify your principles, values, and goals. Live by them, too.

Decide what’s important to you and what you want out of life, and make your behavior consistent with this. For example, if a strong family life is most important to you yet you repeatedly take on tasks that make it impossible for you to be with your family, you will feel distress. The more your behavior matches your values and principles, the less distress you will experience.

Make sure your principles, values, and goals apply to you and your behavior. If your values are centered on everyone else in your life acting fairly and appropriately, you set yourself up for frustration. People will not always act in accordance with your goals. Make sure your principles, values, and goals are flexible enough to allow you to still be human. If it is important to you to be perfect and never make mistakes, you will live your life in a constant state of distress.

Learn to practice a measure of acceptance in your life.

Things will not always go the way you want them to. Focus more of your attention where you have influence and less of your attention where you have little or no control.

Don’t take yourself too seriously all the time.

At least once a day, do something just because you enjoy it no matter how small or ridiculous it may be. Find some humor in your day, and in the process, get a change in perspective.

Conduct an inventory of yourself and identify your own personal internal stressors.

Identification is half the battle to resolution. Are you a people pleaser? Do you have a hard time saying “no” to people or opportunities? Are you a perfectionist? Does every mistake take another notch out of your self-worth? If you need help dealing with these issues, get it.

Identify your own personal cues that signal when you are distressed. Do you tense up? Do you get headaches? Do you become irritable, angry, or defensive? Do you feel confused? Do you have a more difficult time than usual making decisions? Create strategies to lessen or eliminate these tendencies all together.

Think outside of yourself, and give back to others.

One of the quickest and easiest ways to put stress in perspective is to walk a mile in someone else’s shoes and realize that your life might not be so bad after all. By serving and giving away time and resources to others, you get fulfillment in the process of fulfilling the needs of others. Decide how you want to give back, and go do it!

Although you won’t always do all of these things right, stay focused on the daily process of stress management and living by your personal principles. Over time, you will begin to notice that the times of distress become fewer and further between. Even though the accountant responsibilities and pressures of your accounting job still exist, you will be able to cope better with them. If it is your accounting practices that are causing you the most stress, contact us here at Beck and Company CPAs so we can assist you with these.

Accountant Stress Management Tips

Addressing accountant stress requires a holistic approach to deal with the overarching impacts it has on many facets of life. Last week, we took a look at factors that cause stress in the workplace. Once those are identified, it is important to deal with each stressor individually. Unfortunately, those can be mitigated to some degree but will likely not be solved completely nor will they stay isolated to the workplace alone. Therefore, stress management must also address physical, psychological, social, and environmental factors both now and for the longer term. Beck and Company Certified Public Accountants and Business Advisors personally understand accountant stress and can help you alleviate them through assistance in improving accounting practices. Let us help you address your specific accounting needs.

Here are a variety of tips for holistically managing accountant stress both at the workplace and outside the workplace:

Have a personal and professional social support network

Developing a good social support network and spending time with friends and family away from work is helpful for managing stress. Work teams need to spend time doing other things like team building every so often to develop some social bonds and not just associate each other with work and its stressors.

Maintain a healthy diet

This is so much more than simply watching your portions and intake. It also means intentionally not indulging in unhealthy foods thinking they will relieve stress and reducing the intake of things link caffeine, alcohol, and unnecessary over-the-counter medications.

Exercise regularly

Exercise is a great stress management technique that also has endless health benefits. Non-competitive forms involving mindfulness are especially beneficial. Exercises that are done outside and in nature, such as golf and hiking, are great, too.

Sleep well and get sufficient sleep

It may be common sense, but getting enough sleep benefits stress levels. You can’t cheat your own biological system and get away with it long term. Although it seems like having more time in your day may be beneficial, less is not more when it comes to sleep.

Practice deep breathing and use relaxation techniques in moments when stress hits hard

Tense your stomach muscles, shoulders, fists, eyes, jaw, and all the other muscles of your body while holding your breath. Release and relax. Put your hand on your stomach just below your belly button and breathe slowly and deeply so your hand moves out as you breathe in. Breathe in through the nose and out through the mouth. Repeat.

Laugh and play more

Laughter is something we can all afford to engage in more regularly. The most stressful professions often use humor as a healthy coping mechanism. Additionally, a little playfulness even in the workplace will actually boost productivity and help staff stay happy and healthy. By lightening up you will not only live longer but, contrary to fears, get more done.

Reframe your thinking and attitude

Often just changing the way you think about something will make it less stressful because stress really results from perceived difficulty. You can always change your own viewpoint to a more effective one and find ways to stay positive.

Now that we have addressed many tips to help any accountant holistically deal with accountant stress, we will take a look next week at the personal side of managing stress. We will address personal principles that, when practiced on a daily basis, can help you personally manage your stress and keep your distress at a minimum. If you need more assistance with increasing your accounting practice efficiency or other factors that may be influencing your stress, contact Beck and Company CPAs.

Workplace Factors that Cause Accountant Stress

It is a universal problem that comes with the territory. Yes, all accountants experience stress. Hopefully this gives you hope that you are not alone. Although this fact of universal stress is known, the common causes might be less known and a bit more subtle. To manage stress well, it is important to know specifically where it originates from first. Only then can those factors be dealt with effectively because they can be addressed individually. It is much more meaningful and productive to deal with individual stressors instead of simply seeing stress at a collective level and therefore be overwhelmed by it all. Beck and Company Certified Public Accountants and Business Advisors know all about accountant stress that impacts all of us and can assist you with this and with your specific accounting needs that may be one of the factors causing you worry.

What are the factors causing accountant stress in the workplace, and how can they be dealt with?

Role Ambiguity

This stress is created because an individual does not clearly understand what is expected on the job. It might be worth a conversation to get this sorted out or to ask for a list of responsibilities complete with deadlines and explanations of each.

Role Conflict

This stress is created because an individual is presented with conflicting demands or an unclear chain of command. Most organizations likely have organizational charts detailing who reports to who and who should be doing what. Ask for this document for clarification purposes or find a time to meet and clarify things with the co-workers who may be requiring opposing responsibilities without even realizing it.

Overload—Quantitative

This stress is created by the perception of too great a volume of work to accomplish in the allocated time or the job scope and depth. Figure out what your focus should be and prioritize tasks accordingly. Set time frames and parameters for yourself so you don’t get bogged down by menial tasks instead of essential ones.

Overload—Qualitative

This stress is created by job requirements which exceed the individual’s ability or skill level. Albeit awkward, have a conversation with your boss if you feel some of the expectations put in front of you are not correlated well to your expertise. You likely won’t be able to hand off all of that work to someone else, but you can educate your boss on your skills so future assignments are more aligned to your skills.

Career Progress

This stress is created by not having enough perceived opportunities to advance or learn new skills and techniques. Just like educating your boss on what skills don’t suit you, also inform him or her about your interests and ways you would like to grow as an accountant.

Time Pressures

This stress is caused by the perception of unreasonable deadlines and time demands. Although some of this is just the nature of accounting work, see if any work can be shared or if there is a way to spread tasks out more evenly. Consider ways to organize yourself better so deadlines don’t sneak up on you.

Personnel Tensions

Stress resulting from lack of trust in co-workers or dealing with challenging differences in opinion and/or work style. For more information on this and to help in developing strategies for coping with difficult staff member situations, visit here. The article details how to establish trust in the workplace, tips for communicating with others, recommendations on avoiding the troublemakers, and the importance of verifying rumors.

Take a look back through the list, and do a quick personal assessment of what the top accountant stress factors are for you personally. Take small steps in trying to alleviate what you can. Stay tuned over the next few weeks to discover or refresh yourself on some important stress management tips that go beyond the workplace. In the meantime, if you have realized there is one or more factors from above that you could use some help in addressing or for more assistance with your accounting practices, Beck and Company CPAs can help. Please contact us for a free consultation to find out how we can help you address your accounting needs.

Improving your Non-profit’s Public Perception and Transparency

Generally, transparency is considered as something required of entities that are asking for something whether it be politicians seeking votes, companies seeking to build new plants, or non-profit organizations seeking money. Donor transparency can be a useful means of fundraising for these organizations. On the other hand, a lack of transparency can be extremely costly because donors can choose to give their money elsewhere to organizations that are being more transparent. The public is desirous to engage in and give to causes they care about, but this only happens if your organization’s perception is positive and there is honest transparency. This honest transparency works both ways by allowing the potential donor to be transparent and by responding back honestly and transparently as an organization. Beck and Company Certified Public Accountants and Business Advisors offer many non-profit financial and accounting services to assist you in being truly transparent when it comes to your finances.

Donor Transparency

The process of receiving financial support for your non-profit begins by allowing potential donors the freedom to be transparent themselves. Donor transparency means supporters talking candidly about their reasons for considering giving.

This includes:

How important is it for a donor to get personal, public recognition for their generosity? It could be extremely important or something to avoid at all costs.
Whose approval is necessary before a sizable contributions can be made?
The deeply personal motivation behind a gift – which is different for everyone.
The kind of connection the donor wants to have with the organization. Some people want to be consulted regularly; others want anything but that.
The larger role played by the charity in the donor’s life. Many people become philanthropists because of a life-changing experience.
The worries the donor might have about giving. Many donors have concerns about spending, competence, or realistic chances for success, but they are often reluctant to voice them.

Financial Transparency as an Organization

The final point above is extremely important for your non-profit to address with donors. Financial transparency starts with effective and accurate financial reporting. Visit here to find out more about important tips for maintaining financial accountability in your reporting. These include tracking that raised funds were only used for their intended purpose, communicating openly in both good and hard times, maintaining practices that won’t hinder future networking opportunities, and having an infrastructure in place to manage finances well. If potential donors worry that the organization’s spending or financial competence is not up to par, this can be costly in losing the potential donation or future donations from current donors. On the contrary, having updated and accurate financial statements while being honest and open about common practices your organization follows can create needed trust.

When it comes down to it, transparency means trust. Your organization must be financially in good standing with sound business and finance practices in place to be able to secure donations and continue receiving more. Tell the truth to donors and potential donors about your organization, your partnerships, and your goals. Disclose who benefits from your services, how much they receive, and how and when funds are both raised and then disbursed.

In conclusion, no partnership between donors and non-profits can truly get off the ground until both sides have put all of their cards on the table in an honest manner. Donors need to state clearly what they can provide to the campaign and express concerns openly. Organizations need to prove what will be done and gained through these donor provisions. Transparency and positive perceptions will surely strengthen partnerships and cultivate needed trust. Transparency leading to partnerships can only be possible with sound non-profit practices. Please contact Beck and Company CPAs for assistance in making this a reality for your organization.

Financial Management Necessitates Acting on Key Performance Indicators

Your business financial management will only be successful if you know your key performance indicator facts and act based on what they are telling you. Over the last few weeks, we have discussed the importance of having a business/financial plan for your company and how to use this as a tool for ongoing planning using rolling forecasts and fine-tuning. The key performance indicators are aspects that should be an integral part of both your business’ plan and ongoing planning processes.

The key performance indicators discussed below should be viewed as a reference or guide. Essentially, they are like a checklist that will ensure that both your plan and ongoing evaluation truly do consider and respond to the essential components that make up a business and its success. Beck and Company Certified Public Accountants and Business Advisors are experienced in helping customers with their accounting and business practice needs. Please contact us so we can assist you in these processes.

Key Performance Indicators (KPIs) to Consider and Evaluate:

A key performance indicator or KPI is a type of performance measurement that organizations use to evaluate overall finances or a particular business activity’s success. When you evaluate KPIs, it is essential that you compare them to both your general business plan AND to your prior year’s results to get the best overall picture of where you are and what direction you are likely heading in. Here are ten important KPIs to evaluate within your organization.

New Business Bookings Monthly Recurring Revenue (MRRs)- income from new customers that a company has reasonable assurance will occur at regular intervals in the future
Net Business Bookings (after attrition)- a combination of income resulting from existing and new customers
Recurring Revenue of Invoiced Customers– income from customers that a company has reasonable assurance will occur at regular intervals in the future
Gross Profit Margin– profitability ratio that measures how much of every dollar of revenue is left over after paying for the cost of goods sold
Operating Expenses– expenditures a business incurs to engage in any activities not directly related to production of goods and services
EBIDTA– Earnings Before Interest, Taxes, Depreciation and Amortization
Headcount– the total number of people employed in the organization
Capacity Utilization Rate or Operating Rate– a measure of the rate at which potential output levels are being met or used that shows efficiency versus slack in the business economy
Cash Balances and Debt Ratios
Accounts Receivable Days Sales Outstanding (DSO)- a calculation that estimates the average collection period to illustrate how well a company’s accounts receivable (AR) are being managed. An equation for this would be= AR/Revenue X # of days

In addition to these top ten KPIs, there are many others that are also important. When it comes to customers, consider these KPIs: the cost of customer acquisition, the average revenue/billings per customer, the attrition value and percentage of recurring revenue from customers, and customer survey results. With regards to the business and employees, these KPIs should be addressed as well: the revenue and cost per employee, the number of months it takes to break even on sales and marketing costs, the current ratio of assets versus liabilities, average selling prices, the return on investment for both sales and service personnel, and the break-even point in revenue.

If you are a part of a non-profit organization instead of a for-profit business, you may need more specific guidance with regards to your organization’s financial management. In addition to the topics we have discussed regarding these best practices for businesses that are still applicable to non-profits, you can find more specific information for non-profits effective financial practices and reports by visiting here.

Our goal is that the financial management best practice information and tips over the past three weeks have benefitted and assisted your company. For more assistance related to your specific business, Beck and Company CPAs offer free consultations to assist you with any accounting needs you may have. Please contact us for more information, and we look forward to the opportunity to assist you.

Financial Management Requires Continuous Planning and Fine-tuning

The fundamental aspects of business finances need to undergo continual planning and fine-tuning as a means of helping to make important business decisions and improvements. Last week, we took a look at business and financial plans. Once these plans have been created, they must be modified consistently. The easiest way to make the distinction is to think of the business “plan” as fixed and to envision the fine-tuning as an ongoing process of “planning” that should always relate back to the plan. In essence, the plan remains the same while planning continues on revolving around that plan. Beck and Company Certified Public Accountants and Business Advisors have vast experience helping clients with their financial business planning needs and would be pleased to offer a complimentary accounting consultation. Let’s take a closer look at how to go about planning and fine-tuning business finances.

Rolling Forecasts: Planning for what is ahead

The ongoing planning that results from your business and financial plan is essential to sound financial management. You must take constantly changing circumstances and situations into account. Your planning process evolves along with these changes. Rolling forecasts act as this sound financial roadmap. Essentially, these rolling forecasts create an ongoing cycle of planning, evaluating, and updating organization-wide operations such as finances. The goal is to have this process help you understand problems, challenges, and trends sooner. The predictions made in rolling forecasts allow you to make changes before predicted outcomes are actually observed that ultimately save your company money and time. In its simplest form, it is a more “live” version of a budget that is also simplified so it can be generated and applied much quicker than a traditional budget could.

A rolling forecast provides many benefits to an organization in terms of reaction time, alignment of operations, and timelines. Management can better focus on making decisions that truly matter and have far-reaching implications that propel a business toward its strategic goals and overall plan. If a rolling forecast is done correctly, it will provide a competitive advantage in a rapidly changing business climate.

Here are five core components that make up a rolling forecast:

Extends beyond the calendar/fiscal year or baseline set by the budget to be aligned to the actual business cycle regardless of its length
Updates on a regular and pre-determined basis to keep a consistent rhythm that can be planned for and accommodated. Keep in mind that the number of forecast periods is dictated by real business drivers such as business cycle, competitive forces, price sensitivity, vendor reliance, and technology adaptation.
Emphasizes key business drivers which are business decisions or influences that impact numerous areas and ideally link revenue and expense activities
Rapid forecast creation by only focusing on key decisions not translating all business decisions into financial terms. Ideally, a rolling forecast solution will be able to generate an organization-wide forecast focused on a specific outcome in less than one business day.
Blends actual performance along with the updated forecast by using the most recent actual data. The majority of effort should be spent on updating periods that were previously forecast and not on the new periods being added to the forecast because those are more variable and less controllable/predictable.

Fine-Tuning: What is working and what isn’t working?

Consider the following aspects that need to be continually fine-tuned no matter the type of business. In the process, assess the risks and then work to mitigate them.

-Required and Generated Cash

A few questions to ask yourselves: Are we burning cash? Are we generating cash?

-Revenue

Factors to consider: sources of revenue, predictability of revenue, other competition

-Profitability

Questions to reflect on: Are we profitable? How can we be more profitable? Have we prioritized correctly if our goal is profitability?

-Costs

Aspects worth assessing: Are we capital efficient? Have we prioritized?

The process of planning and using rolling forecasts in addition to fine-tuning essential business components can have a vast and positive impact on the way finances are managed within your organization. For more assistance with financial management, please contact us here at Beck and Company CPAs.

Financial Management Best Practices Start with a Business and Financial Plan

Business financial management starts with a plan. If “business” can be summarized as the prioritizing of limited resources, how you manage those resources can make or break your business. What, then, are the best practices when it comes to managing your business’ finances? It starts with a look at your company’s current reality and creating or reviewing your business and financial plan to be sure it is complete. In a sense, this process is aimed at creating a culture of financial management that is essential to business success. Beck and Company Certified Public Accountants and Business Advisors can help you with these financial plans. Feel free to contact us and request a free consultation.

Current Reality: How do you manage your business today?

A financial plan can only be truly accurate and applicable if you first determine how your business is currently managed. By knowing what gaps exist or what elements need more attention, you know which parts of a financial plan need the most attention. Consider the following questions and how many can be answered affirmatively for your business.

– Do you have a formal planning process?

– Do you know what the drivers are behind historical trending and forward looking plans?

– Do you know if resources are aligned with your revenue and profitability goals?

– Do you know which employees are more effective than others?

– Do you know which customers or sources of revenue are more profitable than others?

If you cannot answer yes to some of these questions, you’ll need to put your focus on those aspects initially when you make or add to your plan. Then, all you need to do is fine-tune the other aspects of your business that are already in place in your plan. Stay tuned next week for a deeper look at fine-tuning key aspects of your business’ finances.

Business Plan: An overview of what to include

Now that you know more about your current reality, you are ready to take a look at your existing plan or create a new one. If you have an existing one in place, be sure all essential components are included or add where necessary. A business plan should include the following: an executive summary of your company’s overall objective, mission statement, and keys to success. This should be followed by a company summary of ownership, history, and locations. Next, you’ll need a description of products and/or services that you offer. A market analysis summary of your target market, needs, trends, and growth in addition to industry and competitor analysis is another important part of this plan. You will also need a summary of strategy and implementation for pricing, promotion, distribution, and sales. Two other important elements of your business plan are a web plan summary including website marketing strategies and a management summary of the organizational structure and management teams. Finally, your business plan will need to include a financial plan. Let’s take a closer look at what this should include.

Financial Plan:

A financial plan is one of the most important elements of your overall business plan. All of the other elements of your overall plan that we just discussed should correlate to the finances. The plan creation or revision also encourages your business to be financially transparent and open. To learn more about the importance of financial transparency, visit here.

Within a financial plan, you’ll need to address important assumptions to ensure clarity and agreement. These should include timing (when to do your plan- calendar or fiscal year), prioritization of new initiatives, run rate versus new business mix, competition and cyclical variations and their impact, employee utilization rate, and fixed plus variable cost structure.

After the assumptions are laid out, then you’ll need to include other elements in your plan such as key financial indicators, break-even analysis, projections of profit and loss, projected cash flow, business ratios, and a long-term plan. These financial aspects combined with the business plan components comprise your overall plan.

If you are in need of support with your business and financial plan, please contact Beck and Company CPAs for a complimentary consultation.