Do You Have The Right Financial Expertise To Support Your Business?

When looking at your business, do you have the financial expertise to be strategically supporting the business, or are you just reacting to the historical results?  

Many businesses that we work with are lacking strong financial acumen within their business.  This usually occurs when the business has grown in sales but operations and finance haven’t grown to meet the increasing demands and expertise required of the larger business.  In these situations, the individual that has supported the day to day accounting functions doesn’t have the expertise and or capabilities to shift into a more strategic financial role.  

When this happens, we’ve seen businesses experience the following:

• The accountant becomes overwhelmed with the increasing demands of the business.

• Monthly financial reporting becomes later and later in the month, and in many cases become months behind.

• Cash flow becomes an issue as there are no cash projections being prepared to look ahead on the consumption of cash to support the growth, and the business starts experiencing tight and/or negative cash positions.  

• There is no visibility into the business because access to the financial information becomes so delayed and/or non-existent.

Usually, these symptoms become big issues before the business owner either identifies this shortcoming and/or experiences a crisis within the business.  This crisis can be driven by the bank because they are no longer receiving timely financial information, the line of credit balance continues to increase with no corresponding pay down, and/or the accountant struggles with articulating the need for assistance and frustrations increase with the lack of performance.  

Does this sound familiar?  One of the most critical partners a business owner has is a strong financial person to be looking ahead in both forecasting/planning, and strategically identifying opportunities for improved performance.  However, much of the time, the business doesn’t need this expertise on a day to day basis, but needs this level of expertise on an interim and/or part-time basis to come alongside the owner/management team and internal accountant.  

Remember back to 2009-2011 when the Great Recession hit?  What was the most critical role within your businesses that was lacking?  For many, what was lacking was the financial acumen to quickly respond to the crisis, planning to cut back to reduce the impact of the loss of business that occurred, and the ability to provide financial insight and expertise to build as the economy began to strengthen.  

For many business owners, the financial role is considered purely an overhead position.  However, when you don’t have the tools in place to not just report the financial performance of the business but to strategically plan for and make decisions based on the financial forecasts/scenarios/budgets, the business is walking blind.  

Strong accounting support within your business is not just important when you’re growing, but when you’re looking to exit.  Do you have good internal controls, processes and procedures, predictable budgets and performance, or are you just reacting?  When you bring in the right expertise and/or supplement your internal expertise with some part-time or interim CFO or Controller level strategic thinking, you as the owner and the management team will see the impacts of what you’ve not been getting.  This doesn’t mean that you don’t still need the day to day functions that your accountant has been providing, but bringing in this expertise can not only develop your internal staff, but provide another level of strategic financial thinking.  

Just a few examples of where we have seen this has come into play:

• Business A is a family business that had a bookkeeper/accountant that had been working for the business for the last 15 years.  During this time, the business had grown and began to add different products and services.  As the business became more complex, the bookkeeper became overwhelmed with the financial accounting that needed to be done.  They got behind in generating financial statements by almost six months.  The year-end audit was still not completed 9 months later.  The business continued to grow and the bookkeeper kept getting behind, but never asked for help.  The owner had no visibility in the business and cash flow became a significant issue.  

• Business B is a sole proprietorship that grew rapidly over the past four years.  The amount of daily transactions along with the many investments the business was making became too much for the accountant.  This resulted in incorrect accounting and reporting resulting in poor decision making by the owner because of this bad information and almost resulted in the business going under.

Don’t underestimate the need for strong financial expertise within your business.  It can mean the difference between success and failure.  Also, don’t assume you need to hire this support full-time, but consider a part-time or interim basis to support/develop your internal staff and/or assist you through a growth and/or transition. 

Journey Consulting has provided this support to many organizations and has helped to save many businesses by getting them out of critical situations.  Do you have the financial expertise to support your business?

Jayne McQuillan, CPA, MBA, CEPA is a strategic management consultant, and the owner of Journey Consulting, LLC, in Green Bay