Throughout my years in business, I have learned that one of the most important things you can do to set yourself up for success is to surround yourself with people who are great at what they do, or a select group of trusted advisors.  Once you have the right “subject matter expert” in your sandbox how do you hold that person accountable?  I have learned that having good processes to manage all the financial activities helps to optimize cash flow and maximize profitability.  At Centennial Revenue Management, we have created the following checklist for you and your team to keep you, the CEO, focused on all the right components that will help you achieve peace of mind.

Bookkeeping

  • Request bank reconciliation with bank statements (including credit card reconciliations). how often?
  • Always sign your own checks. It is okay for the bookkeeper to cut checks, but should not sign them.
  • Avoid doing online bill pay out of your business bank account. Although it can be convenient, it is a way for someone to pay bills without your authorization (unless you are diligent about reviewing your bank statement and online banking history).

CPA

  • Get clarity on the role your CPA will play in helping you with cash flow strategies. Remember: your CPA is looking in the rear view mirror – cash flow is about a proactive, future view of your financials!
  • Budgets are stagnant (a snapshot of a hope and desire) – cash flow is about the constant movement of money.
  • Before you sign your tax return, have your CPA explain how your business income (net profits), W2 Wages, and Dividend payments affects your personal return(If you are a Sub S, your business most likely will not pay taxes, but you do from your personal return.

Accounts Receivable

  • Create a process to collect your money on a regular basis: Weekly invoicing, monthly statements, credit card on file.
  • Identify who owns this process Is it your bookkeeper, office manager, you?

Accounts Payable

  • Create a process for entering vendor invoices and paying bills on a routine basis.
  • Pay your bills in conjunction with making payroll.
  • Do not rely on your online banking status to tell you how much money you have to pay your bills. Look to your Balance Sheet; that will tell you what you are left with if the checks all clear the bank.

Business Financials

  • Net profit does not equal cash flow. Have your bookkeeper/CPA show you what money is posted to your balance sheet to show how much money affects monthly cash flow (Loan payments, credit card payments, etc.).
  • Ask your bookkeeper/CPA to define your monthly cash outlay. This will give you a clue whether this trusted advisor has a good handle on your cash flow or not.
  • Figure out what numbers are important to you (payroll % to revenue, how much is cost of goods sold?) and have your bookkeeper/CPA change your Profit and Loss to make sense to you from an owner’s perspective.
  • Review your financials with your bookkeeper on a monthly basis – this includes Profit and Loss, Balance Sheet, Accounts Receivable and Accounts Payable reports.
  • Have your CPA review your Balance Sheet with you so you understand your assets, liabilities and equity.

Debt

  • Create a strategy with your bookkeeper/CPA for servicing your debt.
  • Develop a relationship with your banker to get a line of credit or business loan to replace credit card debt and/or help with cash flow.

 

If you would like more information on how to create this team, we can help!  Call us today at 303.835.7992 or email me directly at debra@centennialrevenuemanagement.com.  There is still plenty of time to make 2015 the best year for your business yet.