Posts Tagged ‘cfo’

6
Jan

Q: Our accountant only does our taxes, what else could they do?

   Posted by: Marty Koenig    in Accounting Department, Cash Flow, General

Q:

I own a small manufacturer, around  $5M in sales. We do all accounting functions in-house on our accounting system except payroll which I have a service for. Our accountants are used only to do our tax returns at year end. The nagging question is: is there something else they could be doing for me? Apparently they have plenty of work to keep themselves busy year-round. But what are they doing that I should be tapping into?

Obviously, I could just ask but I want to go in with some prior knowledge before I do that.
1) What is your accountant doing for you besides taxes?
2) How often are you meeting with them?
3) Do they have direct access to your accounting system?

Whatever insights you could offer would be greatly appreciated.
John

A:

John, this is a great question. I find that many small/mid businesses use very little financial help in ways the can cause their business to grow successfully. I also find that CPAs see the world through tax glasses, which limits their perspective. Every day companies get great value from broader financial expertise. The part-time, contract CFO model is affordable for any size company. I have several $1M – $5M revenue businesses I work with regularly.

Most companies do not rely on their CPA to be proactive in providing strategic, senior level executive experience in management accounting, business, leadership and financial matters. Here’s why: Most CPAs in CPA firms have never been a senior executive CFO or divisional controller at any company. That’s quite different than having a CPA license with tax experience and an accounting degree.

I have seen hundreds of times where companies from $500K to $10M have used their CPA as their only trusted financial advisor for years. The company’s books are mostly setup with tax basis accounting methods, which is useful mostly for the tax people and not very useful to provide the CEO with management level information and decision-making.

I have to spend weeks and months working with the CPA and accountant to clean up the books and move them away from tax basis accounting to methods useful for tracking and running the business. When was the last time your CPA asked you to sit in your office and walk through the monthly financial reports with you, looking for problem areas and problem solving together? How often do you see your actual CPA, especially between the months of January and April? How many times have you been turned down for loans or lines of credit, and you weren’t really sure why? If the lender sees tax basis financial reports, what they can see is limited to, well, tax information. It requires extra work to glean business information from that.

The word “accountant” is so very general because there are so many different functions in accounting and financial management. Many people call these functions their “accountant”: CPA, Controller, Tax Preparer, Accounting Director, Staff Accountant, Bookkeeper, Data Entry Clerk, etc.  Some even call their CFO their accountant.

Independent CPAs and CPA firms need to maintain a certain distance from the day-to-day operations of their clients (thank Enron, MCI, etc.). There is a small percentage of CPAs and CPA firms that engage at a peer level with the CEO on a regular weekly, bi-weekly or monthly basis to perform financial management activities. But a true CFO offers these valuable activities including:
•    Producing timely and accurate financial reports
•    Cash flow analysis and planning
•    Profit improvement
•    Strategic planning
•    Increasing Sales
•    Funding and compliance
•    Exit strategies
•    Working capital and treasury management
•    Overseeing the accounting staff, CPA relationship, business lawyer relationship and
•    Financial modeling and what-if scenarios to make good business decisions

Most small businesses are not exposed to these things, or don’t know how to address problems in these areas. How can you tell if you need help? Call me. 303.995.4523

I hope this helps you get an idea of how the role of an affordable, part-time, contract CFO helps a company like yours grow and succeed.
Best wishes for a successful 2009!

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17
Dec

Obama SBA leader favors cabinet status

   Posted by: Marty Koenig    in Angel and VC, Banking, General, Obama's Government

What does this mean for small business?

Restoring the Small Business Administration to Cabinet-level status would be good for small business.

Raising the SBA to executive level status shows Americans that our government is interested in small business. Having the SBA “at the table” will invite much needed discourse resulting in a new understanding of decisions to be made. Impact analysis would be small business inclusive. That’s a good thing.  The move to Cabinet-level shows us that the government understands small business represents 99.7% of all employer companies. The move shows us the government realizes that small business is the engine of job growth in our economy. The fact is, small companies, not big companies, will play a leading role in our nation’s economic recovery.

Since 2001, the SBA has seen its budget fall 27%, the largest decrease of any federal agency during that time frame. Maybe this will change.

Many lenders find making SBA loans too complex, cumbersome and expensive. Sen. Snowe, who is working to convince Obama to put SBA to Cabinet-level, plans to introduce a bill that would reduce lending fees and train new SBA lenders on how to use these programs effectively. Among other things.

Wall Street has strong constituencies. Main Street should absolutely be represented in the Cabinet.

__________________

Below is a overview is article from bizjournals, but this one is way better: http://tinyurl.com/sbacabinetposition

Business First of Buffalo – by Kent Hoover Bizjournals.com

The Small Business Administration may be restored to Cabinet-level status in the Obama administration.

Fred Hochberg, a leader of President-elect Barack Obama’s transition team for the SBA, makes the case for cabinet-level status in Change for America, a compilation of advice for the new administration collected by the Center for American Progress Action Fund and the New Democracy Project.

As soon as Obama takes office, he should sign an executive order making the SBA a Cabinet-level agency, Hochberg writes. A new SBA administrator should be appointed early as well, he recommends.

That administrator could be Hochberg. He was former deputy administrator at the SBA during the Clinton administration and served briefly as acting administrator. More recently, he was dean of the Milano School at the New School for Management and Urban Policy. Before joining the SBA, he was president and chief operating officer of Lillian Vernon Corp., a catalog and online retailer.

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8
Dec

Do You Know Your Banker?

   Posted by: Marty Koenig    in Banking

Do You Know Your Banker?

Why Not?

Do you know your banker by name (other than the bank’s name!)? When you walk into the bank to make a deposit, does your banker say “hello” and ask how the business is going? If not, you have work to do!

Everyone who owns a small business, or works with small business owners, should focus on the banking relationship. The old adage  when you need money, the bankers don’t want to talk to you and when you don’t, they want to talk to you, is true. So, the time to build a relationship with your banker is now.

Call them today and set an appointment to meet in person. You want to meet with the Business Banker. Take your financial statements, a business plan, and your enthusiasm regarding the prospects for your business. Explain to them what you do, where you are going, and how you plan to get there. Ask them how the bank can help you. Banks today have a vast array of services for the small business. You will be amazed at what they can provide to businesses.

Follow up this meeting every quarter. Show them how you are growing, how you are marketing, and your profitability. When the time comes to apply for a line of credit, or equipment loan, or some other banking service, they will be more aware of you and your business. Your chances of getting their attention will be much greater.

Read this article. It explains even more why the relationship with your banker is vital to your business.
http://chicago.ibj.com/Repository/ml.asp?Ref=SUJKLzIwMDYvMDUvMjkjQXIwMzMwMA==&Mode=HTML&Locale=english-skin-custom

Pick up the phone today. Give them a call!

Make it a great week.

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8
Aug

Is Your Check Engine Light on?

   Posted by: Marty Koenig    in Cash Flow, General

When we drive we take it for granted that our car dashboard is set up to tell us most of the important things we need to know to have a safe trip and arrive at our planned destination. When you look down at your car’s dashboard, you can quickly determine how the vehicle is functioning and receive alerts when something’s not working properly. You would likely be able to get to work or to the mall if your dashboard wasn’t working, but imagine how much more difficult and uncomfortable it would be. When I was in college I had a truck with a broken speedometer. Since I didn’t know exactly how fast I was really going, I managed to rack up a couple of speeding tickets and I also got honked at more than once for going too slowly!

I think we all agree that driving with a useful dashboard just makes sense. If it makes so much sense to drive with a dashboard, then wouldn’t it also make sense to help drive your business with a “financial dashboard”  that gives you concise and timely information about your business? Don’t get me wrong, a financial dashboard does not replace a good set of financial statements and other detailed reports. However, a properly designed financial dashboard will summarize this data into Key Performance Indicators (KPIs). Dashboards are essentially snapshots comprised of charts and tables of your company’s KPIs such as sales reports (daily, monthly, year-to-date), cash on hand, operating cash flow, profitability, profit margin, back orders, inventory levels, days sales outstanding, etc.
Often times when I look at a company’s financial reports, what I find is that income statements run on for two or three pages listing nearly every account in the general ledger. Balance sheets and cash flow statements are also generally not well designed. As a result, business owners are frustrated that they get too much data and not enough information. Think about the KPIs that are vital for your business. Next, have your staff develop a financial dashboard that includes all of these KPIs so that you can quickly see how your business is performing and where you need to focus your attention to help grow your company and improve profitability.

If you think your company would benefit from a financial dashboard, please contact me. As an expert in the field, I can help you structure a dashboard that will meet your needs.

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1
Aug

Nice $105M deal

   Posted by: Marty Koenig    in Angel and VC

British Telecom buys Ribbit in a nice exit. Makes me wonder about if all the hype about no VC backed IPOs last quarter is really that big of a deal. Clearly the darling of VC exit strategies, is an IPO really that great any more? As a CFO, I can relate to how my CFO brethren are leaving public companies in droves, moving towards small and mid-market, privately held or non-public PE or VC backed companies. To blame mostly is Sarbanes-Oxley, and now the prospect of IFRS (International Financial Reporting Standards) and the extra headaches of transitioning.

http://www.siliconvalley.com/latestheadlines/ci_10039612

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25
Jul

What does this have to do with finance?

   Posted by: Marty Koenig    in General

A lot. Creating and maintaining a good online presence can mean the difference between a deal that you win or a deal you loose (this can go for employment as well). Say you are competing for a job and there are two estimates/bids….yours and theirs. Suppose they are very close in price and features, functions and benefits. Suppose both competitors are new to the buying company, so relationships have little influence. What’s the buyer going to do? Google you. Google your company. More and more people are doing that and they should. So, what does the buyer think when he sees you and/or your company with none of the top ten search results on the first page. He goes to page 17 and finds you there. What if he sees your competitor on six of the first 10 results. How do you look in comparison? Not that the buyer will base her entire decision on that, but you get the idea. All else equal, who’s going to win? You or them?

How do you know when Google finds you or your company? Google Alerts!

When the Google bots go out and crawl the sites and finds your name or your company name, Google Alerts sends you and email. You can track your competition this way, too.

You might say, “Online presence, so what.” What does good online visibility get you? It can mean that you are perceived as a national leader, a published expert, that you are bigger and better than the next person. It can mean that people will get to know you and will want to learn more about you and more from you. It can mean you get international recognition as an expert in your field. It can help you compete for the project or the job.

When I win a project because people found me on the web and they liked what they saw, it has a lot to do with finance. It helps them make more money because they hired me, and I get to help them make even more money so they can hire even more super people to take their company to the next level. I get to help business owners realize, track and manage the benefit of winning more business.

You cannot expect to win every deal because of having good online presence, just that every day that goes by and you have a pitiful showing online, more people will turn to those that have a good one.

I have found that even CFOs care about the web. There are both very positive and very negative challenges when a small and mid-market company starts executing on its online strategy. If you wonder why you should have an online strategy, well, you can stop reading now because this won’t matter to you.

If you want to learn how to increase your online exposure see the blog posting at www.ResourceNation.com for a good starter article to get you going.

Benjamin Franklin was a blogger – without a doubt. You think you’re social, read what he knew about social media.

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