| "body"> | | | | financial officer) who specializes in working with a |
| A lack of understanding about the numbers side | | | | number of different smaller businesses. Usually |
| of your business can cause you tremendous | | | | you can get the information you need by hiring |
| headaches. For a case in point, let me introduce | | | | someone to look over your financials once a |
| you to one of my new clients who I'll call John. | | | | month, do some analysis and report back to you |
| John is a contractor who has been in business for | | | | on trends and operating efficiency, and give you |
| more than twenty years. He hired me to come in | | | | solid advice on how to improve your business. Be |
| and clean up a mess caused by 1) his lack of | | | | sure to find someone who understands the ins |
| knowledge about small business finances and 2) | | | | and outs of managing cash flow since this is such |
| his reliance on marginally competent bookkeepers. | | | | a critical challenge for small business owners. |
| It's a classic small business scenario. A business | | | | 5. When you set up your accounting system, get |
| owner who doesn't understand the financial side | | | | professional help. Again call your CPA or CFO to |
| of his business hires a bookkeeper to handle "all | | | | help with this. How you set it up is directly related |
| that". But, because he doesn't understand the | | | | to how useful the information is. Part of the |
| financial side of his business, he doesn't know | | | | problem my client is dealing with is a very poorly |
| what to look for in a bookkeeper and he has no | | | | set up QuickBooks company. The set up was |
| way of knowing whether the bookkeeper is doing | | | | done in such a way that all the useful features like |
| a good job. | | | | bank reconciliation and job costing have been |
| This is the perfect set up for all sorts of | | | | rendered un-useable. Getting it set up right in the |
| unpleasant consequences including inaccurate | | | | first place costs a pittance compared to having |
| financial records and tax returns, missed or | | | | someone come in and spend hours or days fixing |
| inaccurate filings of mandatory forms and | | | | it later. |
| payments, useless financial statements, lack of | | | | 6. Make sure you have internal controls to protect |
| information about how the business is really doing, | | | | your business from theft and fraud. Some |
| and a potential for fraud and embezzlement. | | | | examples: never have the same person who |
| Scary, huh? | | | | signs checks also reconcile the bank statement, |
| So, what's a business owner to do? Here are | | | | always scan through cancelled checks or your |
| some tips to help you stay out of trouble. | | | | bank's check copies for any checks that look out |
| 1. Understand that the numbers side of your | | | | of the ordinary, protect your passwords, keep |
| business is a critical factor in your quest for a | | | | checks (including the ones from your credit card |
| successful and prosperous business. You can hire | | | | company) in a secure place, know the basics of |
| someone else to do the work but you still need a | | | | navigating your accounting system so you can at |
| basic understanding in order to run your business. | | | | least appear knowledgeable, have a trained |
| 2. Know the difference between hiring a | | | | professional looking over your books regularly to |
| bookkeeper and hiring a financial professional. A | | | | deter fraud and to pick up on any clues that |
| good bookkeeper will understand how to | | | | fraud may be happening. |
| accurately enter information like payables and | | | | 7. When you hire a finance person for your |
| receivables, process a payroll, make collection | | | | business whether it's a bookkeeper, a CPA, or a |
| calls, and reconcile a checking account. All those | | | | CFO, find one with experience in a business like |
| are important and necessary tasks. Notice I call | | | | yours. If you are a contractor like my client, find |
| them tasks. Bookkeepers are task oriented. A | | | | professionals who have worked with other |
| professional finance professional may also | | | | contracting businesses. If you are a lawyer, find |
| perform these tasks but their real value is in | | | | one who has worked for a law office or other |
| taking the information that has been entered and | | | | professional service office. Check references. Ask |
| translating it into knowledge about your business | | | | for a few customers/employers you can contact |
| and then communicating it to you in a way you | | | | to find out more about how the person is to |
| will understand. Financial managers are analysis and | | | | work with. Red flag--an unwillingness to provide |
| knowledge oriented. Two different ways of | | | | any information demonstrating their ability to do |
| looking at your financial information by two | | | | the job. |
| different professionals. | | | | My client John now has a plan to move beyond |
| 3. Sometimes you can find someone who can | | | | the days of chaos and stress. He will use a |
| perform both sets of competencies but individuals | | | | bookkeeper to enter his invoices, receive |
| like that are few. Generally, it is more cost | | | | payments, and keep his job folders under control. |
| effective to have a competent bookkeeper | | | | He will use my CFO service on a monthly basis to |
| perform the task oriented pieces of the financial | | | | help him learn about the numbers side of his |
| puzzle--entering vendor and customer invoices, | | | | business, to get the information he needs to run |
| receiving payments, processing payroll, etc. and | | | | his business, and to provide oversight and |
| then use a financial manager to help you | | | | professional input for his bookkeeper. My |
| understand what the numbers mean. | | | | involvement brings the stability and consistency |
| 4. A financial manager can be someone like your | | | | that his business has needed for years. With a big |
| CPA (certified public accountant--they're not just | | | | sigh of relief he is able to say, "Goodbye Chaos! |
| for taxes anymore) or you can use a CFO (chief | | | | Hello smoother sailing. |