Bookkeeper vs Controller vs CFO: What Do They Really Do?

Bookkeeper vs Controller vs CFO: What Do They Really Do?

Many business owners often ask what differentiates a Bookkeeper vs Controller vs CFO and why may it make sense to utilize the services of a CFO. Oftentimes, these owners become confused when identifying the role of their top financial person or what qualifications they should be looking for when hiring that person.  Let me begin with the traditional roles of the top financial person in any business.  For simplicity, this article will assume the financial roles are within privately held Companies and not a Public Company which has very specific reporting requirements to the SEC.  There are five basic functions that need to be addressed. 1. The first and most recognized function is the ability to develop accurate, timely and complete set of historical financial data.  This includes (but is not limited to) monthly financial statements (balance sheet and profit and loss statement), tax reporting, flash reports which are typically Key Performance Indicators (or Metrics) established by management, and any other operational reports needed to run the business. 2.Internal Controls are the internal policies and procedures that protect the assets of the Company.  As public Companies have learned, these internal controls have their own compliance requirements and are subject to Sarbanes Oxley definitions.  However, in the smaller privately held company, internal controls define specific roles and individual requirements of each employee with the intent of preventing errors, theft and embezzlement.  It becomes the balance of responsibilities or a segregation of duties so that no one person will control a process and be able (either intentionally or by accident) to falsify financial information. 3. Forecasting….whether to determine future cash requirements...
Does Franchising Work?

Does Franchising Work?

Does Franchising Work? – Preface As a B2B CFO® partner I have worked with a lot of smaller growth companies and it’s always interesting to learn a new business model and see how an entrepreneur makes money. I am frequently asked “What are the most profitable businesses, or what is the best way to grow a business”. As I see the proliferation of frozen yogurt stores in my neighborhood, I thought it would be interesting to take a look at the franchise business model to see how it works. I have enlisted the help of Jim Deitz aka The Franchise Doctor.  Jim has consulted on franchise operations for more than thirty years and is a recognized authority on creating, buying and selling franchises. Franchising is typically the right to sell or distribute goods or services under license, using a common branding and advertising, while the franchisor retains a degree of control over operational procedures. I asked Jim how big the franchising business was. In fact, franchising accounts for 11 million jobs and at $1.3 trillion is just over 5% of national output. There were over 900,000 individual franchised establishments in 2005. Jim said that while Fast Food, Hotels and Automotive sectors are the most well known, there is a diverse range of business models from Janitorial, Hardware, Real Estate, Auto Rental, Learning, Personal Care, Schools, Construction and Maintenance. Does Franchising Work? – Franchisee Investors For many franchisee investors (ZEEs) and potential franchisors (ZORs is franchise-speak for business owners who use franchising to expand their business), the costs and potential profitability are the key issues. Jim says that license fees can vary...
Steven Covey – If Your Company Was A Soccer Team

Steven Covey – If Your Company Was A Soccer Team

Steven Covey – Harris Poll Steven Covey in his book The 8th Habit, which I highly recommend, quoted the results of a Harris Poll of 23,000 U.S. residents employed full time within key industries and in key functional areas as follows: Only 37 percent of those polled, said they have a clear understanding of what their organization is trying to achieve and why. Only 1 in 5 was enthusiastic about their team’s and organization’s goals. Only 1 in 5 workers said they have a clear “line of sight” between their tasks and their team’s and organizational goals. Only half were satisfied with the work they have accomplished at the end of the week. Only 15 percent felt that their organization fully enables them to execute key goals. Only 15 percent felt they worked in a high-trust environment. Only 17 percent felt their organization fosters open communication and better ideas Only 10 percent felt that their organization holds people accountable for results. Only 20 percent fully trusted the organization they work for. Only 13 percent have high-trust, highly cooperative working relationships with other groups or departments. Steven Covey – Soccer Team Analogy Covey goes on to equate these results to a soccer team by describing the team as having only four of the eleven players on the field knowing which goal was theirs. Only two of the eleven would care. Only two of the eleven would know what position they play and know exactly what they are suppose to do. And all but two players would, in some way, be competing against their own team rather than the opponent. The...
Accounts Receivable Management

Accounts Receivable Management

 Accounts Receivable Management – Definition Just as a physician would not prescribe a patient’s treatment without first diagnosing the condition, companies should not propose changes in the company’s credit policies and procedures without thoroughly evaluating the present situation.  There should be a thorough evaluation.  Although an organization may intuitively suspect problems exist, the danger is that other troublesome areas are being masked and will be overlooked without a more thorough diagnosis.  In addition, companies should conduct such an evaluation periodically to enforce and evaluate continuous improvement strategies in the management of the accounts receivable function. Accounts Receivable Management “includes establishing a credit and collections policy for your credit accounts, including aging accounts receivables and whether to sell on credit at all” (Bizfinance, http://bizfinance.about.com/od/Accounts-Receivable/) Change is a constant companion in today’s business world.  However, change does not have to become a major issue or project if handled properly.  The first step in handling change is to determine where the company, and more specifically its accounts receivable function, is currently headed.  Once a company has determined the status of the receivables system, they can plan for changes and manage those changes.  This is a far better approach than making changes without prior planning, which can create continual turmoil and widespread resistance to new changes.  Companies should also be wary of failing into accepting the present without seeking improvements.  This may require periodically looking at the entire process.  Such a major undertaking involves careful planning as to both the goals and the procedures to be followed.  Goal setting for both the final and interim positions with specified continuous improvement steps is important....
Using Excel for ERP Reporting

Using Excel for ERP Reporting

ERP Reporting – Background ERP systems are very powerful software systems and I find they are often badly implemented in smaller companies. This often happens because the vendor or the customer underestimated the implementation cost, or because the customer has few sophisticated users, or time and money simply run out. Sometimes this results in a broken system, or just an expensive GL system or no system at all. Being a B2B CFO® partner, with my extensive background in financial management and systems, I am often called upon to try and help make sense of the situation. Reporting is often a clear area of frustration for the smaller company. Often they have been used to the flexibility of report design in QuickBooks – which I believe is world class – and have no internal skills to deal with products like Crystal Reports, or proprietary ERP reporting tools. My approach is generally quite simple. Everyone knows Excel. If we can get the data to Excel then everyone is on the same page, and we start using information to build corporate value. I recently developed several very interesting reports for a Distributor using Excel and simple database techniques to find and grab my data directly from the underlying ERP tables. This technique allows me to quickly build some very useful management reports. While the initial set up is a little tricky, maintenance and updates can often be done by the client. The resulting reports focus on understanding monthly performance and identifying weakness in the major customer/ vendor relationships. ERP Reporting – 1st Indicator: F9 for Financial Reporting 1. F9 for Financial Reporting...