(3 min read)
We continue our series on B2B Advice for a Successful Business. We’re sharing lessons learned with other businesses as we celebrate AIS’s 5 decades of business success on our 50th anniversary year. Here are some tips on business finance from our business to yours. We hope you find this advice valuable.
Chris Bremer, CFO at AIS, on Business Finance
Reflecting on my early days in the world of accounting and finance, I have to chuckle (now) when I think back to my first position as Controller for a medium-sized business. I was 32 years old, fresh from several years working in the audit department of a national CPA firm and feeling pretty good about my new position (not at AIS, btw). It took me about a week to realize that the company was going to run out of cash in about 60 days. With over 200 employees and substantial financial obligations, this was not a good thing. Luckily, we were able to secure funding and managed to overcome what was a temporary funds shortage. This taught me a valuable lesson. We often say “cash is king” but in the business world, understanding a company’s current and future cash position is exceedingly important. We immediately implemented a weekly cash reporting forecasting system to understand our financial position and cash requirements.
This experience occurred years ago and now fully automated accounting systems and online banking resources should provide your accounting staff with the tools that they need to manage and report on cash balances. Within a week of month end close, bank accounts should be reconciled and trued up to weekly cash reports. If you don’t feel that you’re receiving accurate and timely reporting from your staff, reach out to your CPA firm or other financial consultants to provide guidance in this area.
“Understanding a company’s current and future cash position is exceedingly important.”
This is an ideal segue into another important area – understanding your balance sheet. As business owners and finance professionals, we tend to focus on the income statement – did we make money, how much, did we hit our budgeted or forecasted results? All very important, but sometimes the balance sheet can be overlooked. Are you collecting your receivables on a timely basis, do you have any impaired assets on the balance sheet, are your liabilities correctly recorded, are you paying your vendors too quickly? Again, your accounting staff should be able to answer those questions for you.
This aspect of managing a business is certainly not glamorous but critical nonetheless. Particularly, if you need to seek outside financing, are contemplating the sale of your business or going public, you need to be knowledgeable in these areas. Potential lenders, investors or other partners expect a business to be well managed financially and to have an executive leadership team that understands and can explain the financial status and projected future results of the business.
For tips on high-level business administration, see the previous article in our series written by our CEO, Mark Ribisi. Read B2B Tips for a Successful Business: Direction and Vision.