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Part 1 of 3: Building a Stronger Financial Management Process

August 4, 2020 By CFO Consulting Partners

A strong finance team is critical to the success of any company.  Sometimes, however, financial results are late, incorrect, or not issued at all due to problems in finance processes.  For a smaller business, with just a few accounting and finance resources, staff turnover can instantly highlight any process weakness.
This is the first of a series of three short newsletters on how to stay ahead of finance process issues and prevent these challenges from becoming more significant problems.  Each newsletter will address a different aspect of these challenges: Producing Data, Consuming Data, and Preparing for and Managing the Audit.

PRODUCING DATA

 

Challenge — Difficulty Getting the Books Closed

The team can become so shorthanded and/or overtasked that the work becomes overwhelming, resulting in a loss of discipline in the closing process including confusion on roles and responsibilities and inadequate time for a reasonable review of work performed.  In these cases financial reports are sometimes prepared using estimates of revenue, accounts which are “booked to budget” or unreconciled, and other data points from outside of the accounting records.

Action Plan — Fill Resource Gaps and Re-introduce Closing Discipline

  • Plan for an adequate level of resources as a better alternative to late reporting and reporting errors, by either hiring additional staff or enlisting operations and other resources to contribute as a regular part of the closing process
  • If temporary resources are used, integrate those resources into the full-time team and make sure regular communication is taking place among the extended team members
  • Make sure roles and responsibilities are well defined, in writing, including review responsibilities
  • Develop a closing calendar with input from all affected team members;  the focus should be on what is achievable, and expectations on timing of deliverables should be set realistically
  • Communicate the timing and nature of deliverables to senior management

Challenge — Integrating Information from Outside the Financial Process

This problem is directly related to the overall difficulty in closing the books.  For example, an operations team can be responsible for initiating revenue transactions, revising those transactions, and forwarding the transaction information to Finance (via an automated or manual process).  It is easy for this handoff to break down, causing delays and inaccuracies in recording revenue.  This can be particularly hard to fix If the finance function is already experiencing some challenges, with finance and operations teams blaming each other for the problems.  The good news is the recurring pain of dealing with this challenge should make the case for process improvement.

Action Plan — Regularly Reconcile Estimates with Actuals and Improve Critical Processes

  • Reconcile estimates to actuals regularly (at least quarterly), to avoid a year-end crunch that will delay year-end reporting and raise concerns from auditors or investors and directors
  • Get representatives of the operations and finance teams together to for a process improvement project. This can be a high-level gap analysis – an honest assessment of the current process vs. desired process and agreement on how to fix the issues. The detailed approaches of the Six Sigma, LEAN, or Continuous Process Improvement (CPI) methodologies are also useful.

Challenge — Little Staff Development, Communication, Documentation, and Training

When a senior member of the finance and accounting staff leaves the company, gaps in process management and training quickly become apparent.  The team may not be clear on roles, closing steps, how to prepare board financials and other key analytics, and may have been performing tasks without knowing why.

Action Plan — Formalize Annual Finance Team Development and Back-up Plans

 
  • The Chief Financial Officer (CFO) should create a succinct written plan for the closing process. The document should address role descriptions, critical processes performed, and the back-up person for each critical process.
  • Review the plan with the finance team and senior management to ensure that critical processes are not overly concentrated with one person, especially the CFO, revise as needed and ensure that plans are made to close any skills gaps.
This planning process will provide an opportunity for development, preparation for assuming greater responsibility, and perhaps greater job satisfaction as the team understands the purpose and critical importance of the various tasks they perform.

NEXT – Part 2 of 3: Building a Stronger Financial Management Process: Garbage In, Garbage Out

Written by Paul Karr, Director (pkarr@cfoconsultingpartners.com) and Rob Milrod, Director (rmilrod@cfoconsultingpartners.com)

Filed Under: Featured, Newsletters, Paul Karr, Rob Milrod

NYBB Group Webinar – Exit Planning Primer

August 3, 2020 By CFO Consulting Partners

We are pleased to share that Director, Jeff Appleman, participated in a webinar with the New York Business Brokerage Group on May 29, 2020.

Click HERE for the full recording of the webinar.

Click HERE or more information on the webinar and the NYBB Group.

Filed Under: Featured, Jeffrey Appleman, News & Events

Turnaround and Restructuring Services

July 27, 2020 By CFO Consulting Partners

Turnaround and Restructuring Services Managing your business during and after COVID-19

The Turnaround and Restructuring Services group of CFO Consulting Partners can provide its expertise to your crisis management team with a roadmap that can define and identify cashflow and cash management needs. We’ll work with your team to develop agility and improve decision making to address key issues resulting from the Covid-19 crisis. Additionally, our services would include detailed financial planning, an assessment of operations and processes, and assistance in the areas of communications to employees, customers / clients, the board of directors and other key stakeholders.

Our experienced team of senior-level financial professionals can provide independent, objective support to business owners, BODs, CEOs and CFOs on funding, liquidity, tactical execution, and other issues to improve cash flow and financial performance.

Funding and Liquidity

  • Evaluate liquidity position
  • Prepare cash flow projections: best case, expected case, worse case
  • Assess working capital including vendor and customer management
  • Evaluate long term financing for potential loan restructuring
  • Provide introductions to new sources of financing
  • Utilize bankruptcy protection via our legal partners as a last resortTactical Execution: restructure to right size your business
    • Streamline business processes and eliminate non value-added work
    • Evaluate overhead structure including human capital
    • Assess project, product and customer profitability
    • Support renegotiations: contracts, vendor agreements, leases, utilities
    • Identify and implement cost reduction and margin improvement opportunities
    • Develop KPIs and executive dashboards including cash for better decision makingStrategic Assessments
  • Budgets, forecasts and 3 to 5 year business plans
  • Capacity and facility rationalization, location strategy and operating leverage
  • Evaluate information technology platforms and opportunities
  • Evaluate competitive environment and opportunities
  • Guidance on the strategic positioning of your company via M&A activity.
  • Buy-side or sell-side support
  • Introduction to private equity, investment banks, venture capital and wealth manager

 

For more information, please contact David DeMuth ddemuth@cfoconsultingpartners.com or Allan Tepper atepper@cfoconsultingpartners.com, or call David at 609-309-9307 x700

Filed Under: Allan Tepper, David Demuth, Eric Segal, Featured, Resources

XPX Connecticut Summit 2020

July 23, 2020 By CFO Consulting Partners

CFO Consulting Partners is a proud sponsor of the XPX Connecticut Summit scheduled from July 27 to July 30, 2020. Please click the following link for summit information.

XPX CT SUMMIT – July 2020

Filed Under: Events, Featured, News & Events

XPX Philadelphia – Considerations in Investment Banking Engagement Letters & Forecasting for 2020 and 2021

July 21, 2020 By CFO Consulting Partners

On July 15th, 2020 David DeMuth Co-Founder & Senior Managing Director of CFO Consulting Partners led a discussion regarding best practices for financial forecasting and modeling post COVID 19 for 2020 and 2021. Michael Plunkett of Plunkett Law Group led a discussion regarding key terms and considerations of investment banking engagement letters from a client perspective. Steve Economou provided an investment banking perspective to the discussion.

Filed Under: David Demuth, Featured, News & Events

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