Top 5 Deliverables CEO’s Should Expect From Their Finance Department

Who is “doing your books”? A full-time accountant? A bookkeeper and CPA firm? Several staff and a Controller? Whether your firm is small or large, below are the top 5 things you should expect from your finance function.

#1 Quick and Timely Close

Are your books closed, reviewed by personnel with CPA level experience, and all reports, forecasts, financials, and metrics produced within 7 days of month end? Are deposits and expenses entered into your accounting software at least every other day? If not, you should ask why. In today’s environment you need financial information in real time, and with the modern software available, there is no reason for lengthy delays accessing your financial information.

#2 Accurate and GAAP Compliant books

Is a CPA reviewing the entries and work of whoever enters the base level data for sales and expenses? Is the CPA reviewing accruals and GAAP entries? Is revenue recognition being recorded properly? Are contracts and leases reviewed to ensure correct accounting? If a CPA firm is doing this work, they are likely billing by the hour and doing a very high level review, which is likely not the most cost effective solution.

#3 Complete Report Package

Does your bookkeeper or CPA simply print the Quickbooks financials for you? Your bookkeeper is probably not a CPA or even someone with an accounting degree and will likely not understand or make GAAP entries. Does your CPA do these accruals or does he just print the “cash” basis financials for you? Does your report package include all financial statements (Balance Sheet, P&L, Statement of Cash Flows)? Is there a reconciliation report that ties out/reconciles all major balance sheet accounts to subsidiary documents for accuracy? Are analytics performed for reasonableness and completeness? Are there metrics and dashboards produced? Are AP and AR Agings reviewed? Budget vs. Actual Reports? Do you have a 30 and 90-day cash forecast? Do you get tax projections? Is there a profitability analysis by service or product line? If you have more than one entity or division, do you get consolidated financials? Does your firm have longer-term financial models to assist with banking and investors? Reports are only meaningful if complete, produced timely, and are based on underlying accounting records that are accurately input and GAAP compliant.

#4 A written document of Accounting Policies and Procedures

There should be a very detailed document that outlines all Accounting Policies for each major accounting cycle (such as Revenue, Expenses, Payroll, Equipment, Inventory), job duties of each accountant or bookkeeper, all Internal Controls including segregation of duties, and all Monitoring controls performed by the CFO, CEO, Executive Team and Board. Without this document, (along with the actual procedures being performed as detailed) your firm will have a very difficult time when it comes time for any audit, review, or due diligence in connection with any future financing, lending, new investors, merger, or exit. This is the first thing acquirers will use to lower your valuation if not in place and also will cause you many headaches if your firm is selected for an IRS audit.

#5 Cloud Based storage and access to all company documents and records

If I asked you for all your invoices from March of 2014 or if I wanted to see your articles of incorporation or if I asked for your 2013 Workers Comp Policy, or your Visa statement from May of 2015 or your bank reconciliation for Jan 2012 and on and on, could you email or print this request in less than 5 minutes? Or if I asked you for ALL records for 2013 (invoices, expenses, financials, bank recs, insurance policies, tax returns, etc.) could you email me that immediately? If not, you record keeping is not robust and should be upgraded (part of #4 above would include this set of procedures).

#6 Bonus Reason and The Most Important:

Having A Seasoned, Available CFO on Your Team Is your bookkeeper a CPA and/or do they even have an accounting degree? Does your Controller have skills in capital sourcing, strategic planning, financial modeling, and other CFO skills? Does your “CPA firm” have a true CFO skill set and actual experience founding or working in a real company? Is your CPA firm available to you day in and day out without charging you for every call or email? Does your CPA firm act as a true liaison and communicate with your investors, lenders, and Board? An Out Sourced CFO will be able to offer a fixed monthly fee, daily availability, a deep skill set, a true liaison with your lenders and investors and other service providers, a recurring sounding board for complex decisions, and add credibility to your Executive Team.

Possible Options if You answered “No” to any of the above Questions:

If your department is missing any of these items you should consider bringing in an Out-Sourced CFO who can accomplish all of these and often in a more cost effective manner than what you are using now. I recommend using either a bookkeeper or a full time staff accountant for day-today bookkeeping including entering expenses, recording sales and deposits, doing bank reconciliations, etc. Above that, I recommend a part-time CFO as this is more cost effective than a full time Controller and adds more value with greater skill sets.

The CFO will likely need 10-20 hours a month to review accounting work and financials, review GAAP compliance, produce metrics, 3 and 6 month cash forecast, tax forecast, strategic planning, and liaison with bankers, investors, and legal. I suggest using CPA firms only for tax and audit services, not closing books or providing outsourced CFO as these firms have limited availability, often don’t have true “CFO” experience, and bill by the hour, as opposed to fixed monthly rate.

Andrew Hunzicker,

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