Bank Reconciliations-DAILY

The CFO really needs to stress how important daily bank reconciliations are. The bookkeeper might react something like this: “Not that!! No!!! Why???”

The why is that no matter the economic integrity of the times, the business owner needs to be aware of his cash position daily, and in real time. The only way to do that is to do bank reconciliations every day. If cash is tight or you have full blown cash flow problems, you really can’t afford to find out that a customer’s check bounced 3 days after the fact when the bookkeeper gets the returned NSF check back in the mail. In three days time, you’ve probably already sent checks on that money and risk any number of important checks bouncing. What good is it to find out at the end of the month if an EFT out of your account or a debit card transaction hits more than once due to clerical error by a vendor or bank when you do the month end bank reconciliation? For that entire month, you thought you had money that you didn’t, and now the consequences are all on you. The discipline in implementing daily bank reconciliations needs to come from the part time CFO and cannot be allowed to waver.

Daily bank reconciliations should take less than 10 minutes a day with online access to your banking transactions, and those 10 extra minutes will bolster the confidence of the business owner when they’re paying their bills.

If it warms them up any to the idea, let your book keeper know that all these daily bank reconciliations will make the month end reconciliation a snap!

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The Importance of Preparing Business Plans

I believe business plan preparation is one of the most valuable services I offer to my CFO clients.  One of the key attributes of a CFO who is prepared to make business plans is that they have had prior business ownership experience themselves. With prior business ownership experience a CFO will have a better handle on the operational and marketing components of the plan. This experience will give the CFO the ability to ask the right questions to the business owner and staff. The CFO already possesses the skills to prepare the financial portion of the business plan. The main purpose of a business plan is to put a company on (or back on) the right track. Lots of times business owners say they are headed in a certain direction but as a CFO, as soon as you start to peel the layers away you find that the company is going in an entirely different direction, nowhere near what the Business Owner thought. A solid business plan will help put the business owner in the direction they want to go. In addition, business plans are of vital importance when the company is seeking additional financing. Whether that financing is coming form a bank, an angel, or a venture capitalist, a business plan is a must. Since it is imperative that CFOs offer finding financing as a CFO Service, it only follows through that the CFO should be able to prepare the business plan.

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Payback Associated With The Right Operating System

Included in a CFO’s Duties should be the research of and  ability to identify the right operating system for the business owner. I look at operating systems for my CFO clients is by first identifying which modules are to be purchased for necessity and which modules (if purchased) will produce a payback. For most manufacturing and distribution companies internet based systems allowing sales reps to enter orders from any internet connection including their laptops has a significant payback through saving administrative time and using commission only reps to enter the data and do more of the administrative work. Another module with significant payback offered in most operating systems are web based stores. Once again for manufacturing and distribution business owners web based stores can produce a payback through its communication tools. For example, in a web based store all of the manufacturer or distributors customers can purchase products on line. You can offer special pricing to individual customers, but more importantly you can make them aware of special pricing deals, new product introductions and closeouts. You can also put deadlines on when those special pricing deal offers will end and the system does that automatically. This has a tremendous payback as customers can place orders more conveniently and with more information at their finger tips. You can also put deadlines on when those special pricing deal offers will end. The CFO can really help the client business owner with a more profound understanding of the payback associated with operating systems.

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