(3 min read)
As AIS celebrates five decades of business success on our 50th anniversary year, we are sharing business lessons learned. Here are some tips on business finance from our CFO, Chris Bremer.
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. I was feeling pretty good about my new position (not at AIS, by the way). 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. This allowed us to overcome what was a temporary funds shortage. This experience 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 both our financial position and cash requirements.
Managing Cash Balances
This experience occurred years ago. Now, fully automated accounting systems and online banking resources should provide your accounting staff with the tools they need to manage and report on cash balances. Bank accounts should be reconciled and trued up to weekly cash reports within a week of month end close. You should also be receiving accurate and timely reporting from your staff. If you’re not, reach out to your CPA firm or other business finance consultants to provide guidance in this area.
Understanding Your Balance Sheet
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 because it tells us if we made money, how much, if we hit our budgeted or forecasted results, etc. These are all very important. However, you shouldn’t letÂ your balance sheet be overlooked. Are you collecting your receivables on a timely basis? Do you have any impaired assets on the balance sheet? Are your liabilities recorded correctly? Are you paying your vendors too quickly? Again, your accounting staff should also be able to answer those questions for you.
This aspect of managing a business is certainly not glamorous. But it is critical nonetheless. If you need to seek outside financing, if you’re contemplating the sale of your business, or if you’re going public, then you need to be knowledgeable in these areas. Potential lenders, investors and other partners expect a business to be well managed financially. They also expect an executive leadership team that understands and can explain the financial status and projected future results of the business.
See the previous article in our series written by our CEO, Mark Ribisi: B2B Tips for a Successful Business: Direction and Vision. Follow us on LinkedIn for more business-related topics.