Finance & Accounting

Preparing for the Future- Why Succession Planning Matters

Written by Stephanie Ford

Introduction

Throughout my career, I’ve had the privilege of guiding organizations as they navigate the critical process of succession planning and leadership transition. One of the most important lessons I’ve learned is this: preparing for an eventual exit isn’t just about the leader stepping aside—it’s about protecting the legacy, culture, and integrity of the entire organization. Failing to prepare risks leaving the company vulnerable; thoughtful and deliberate planning helps establish stability, confidence, and long-term success well beyond a leader’s departure.

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Scenario-Based Budgeting- Navigating Uncertain Times

Written by Helen Dow

Introduction

Regardless of your line of business, it is likely that you are feeling a degree of uncertainty in how your operations will be economically impacted over the next year or so.  Change and its impact seems to be on everyone’s mind.  This article will focus on how to survive and even thrive through downturns and losses, along with opportunities and growth, which can be just as dangerous if mismanaged.

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Prevent Scams- Protect your business

Written by Alexander Milenbachs

As we all know, fraudulent attacks are widespread, with bad actors appearing everywhere, from phone calls to emails and links on websites. Scam websites aim to deceive users into sharing personal and financial information, downloading malware, or buying nonexistent products. Scammers can go as far as creating realistic fake websites with fake reviews, fake addresses, or even the address of a real business. Given the high sophistication of these con artists, this article outlines key strategies to protect your business from fraudulent attacks.

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Efficient Audit Preparations: Key Steps for Success

Written by Jill Swinger

Financial audits are a critical part of many companies’ annual processes, often required by banks, donors, lenders, vendors, customers, investors, or potential acquirers. While a CPA firm may quote a standard price for an audit, the actual cost can rise significantly if the company isn’t well-prepared. Inefficiencies can lead to out-of-scope work, making the process take longer and cost more. To avoid these pitfalls and ensure a smooth audit, focus on the following six strategies.

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The Value of a Fractional CFO –why consider fractional c-suite expertise

Written by Stephanie Ford

For those not familiar with the concept of fractional leadership, it is an efficient and cost-effective model for businesses to outsource functions when they do not have the expertise in-house or are going through a transition. A fractional CFO is a part-time financial executive who works with your organization on an as-needed basis. They offer an objective perspective and can guide businesses when faced with challenging decisions. Their role is to be your trusted advisor, lead through change, and provide unbiased advice.

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Written by Lea Rasmussen

Proactive Strategies for Year-End Financial Readiness- prepare NOW for a seamless 2024 close

As many finance and accounting professionals are taking a breather after completing their year-end close in December, this pause allows us to reflect on how to make this process smoother for this year’s 2024 year-end close. Whether your fiscal year ends on December 31st, June 30th, or any other date, preparing for a seamless close requires a proactive approach to financial readiness. Successfully navigating the year-end challenge hinges on meticulous planning and consistent execution. The key lies in proactive strategies, such as regular monthly and quarterly assessments, to transform this annual task into a streamlined process. This article shares actionable steps that, when consistently applied, pave the way for a stress-free and well-prepared year-end close.

Monthly Tasks:

• Reconcile your bank accounts. The significance of monitoring cash and cash flow cannot be overstated. Cash is a pivotal asset in financial management. Pay attention to 60-90 day outstanding checks; follow up with vendors to address discrepancies.
• Perform a thorough review of the balance sheet and profit & loss statement while the information is fresh.
• Compare actual results with the budget and the previous year to pinpoint any unusual variances.
• Reconcile balance sheet accounts; this is crucial to minimize the need for year-end corrections and provide stakeholders with accurate monthly financial information.
• Conduct a detailed review of Accounts Payable and confirm all the invoices are current.
• Determine whether new vendors will potentially need a 1099-NEC or 1099-MISC form by carefully reviewing the W-9 form and ensuring the proper selections are made in the accounting software.
• Analyze the Accounts Receivable Aging Report and take appropriate action based on the status of outstanding balances.
• Review all general ledger activities for classification errors, accuracy, and completeness.
• Safeguard financial records by creating copies of all capital purchases, consolidating them either in a capital expense line item on the P&L or categorizing them under fixed assets on the balance sheet.

Quarterly Tasks:

• Reconcile your wages paid to the 941 Employer’s tax form to confirm that all taxable wages paid are accurately reflected on the 941.  If adjustments are needed, they can be corrected before the annual W-2 Wage and Tax Statements are filed for employees.
• Approve and file board and committee minutes required for annual audits.
• Review the status of your debt covenants during this period to ensure compliance.

Annual Tasks:

• Assess payroll adjustments required for inclusion for employee’s W-2, covering additional taxable income.
• Verify federal identification numbers for vendors receiving 1099’s and review changes in reporting requirements.
• Schedule an annual inventory count– outline and disseminate procedures for a seamless process.
• Review your fixed asset listing for any items disposed of during the year.
• If undergoing an external audit, proactively request a document checklist from the firm ahead of fieldwork.

Ongoing Tasks:

• Routinely assess and enhance internal control procedures to safeguard the integrity of financial data year-round.
• Foster continuous training for accounting staff, ensuring they stay abreast of industry trends, changes in accounting standards, and optimal use of accounting software. Ongoing education enhances process efficiency.
• Emphasize regular communication with stakeholders, including auditors, bankers, and investors. Keeping everyone informed throughout the year minimizes surprises and builds trust.
• Share practical advice for crafting a realistic and adaptable budget. A well-structured budget serves as a performance benchmark, helping to identify and resolve variances.
• Recommend benchmarking against industry peers to pinpoint areas for improvement. Understanding how your financial performance compares to industry standards guides strategic decision-making.
• Advocate for scenario planning, particularly in uncertain economic climates. Evaluating different scenarios empowers informed decision-making and facilitates adjustments to financial strategies.

Conclusion:

The proactive strategies shared in this article will not only streamline the year-end process but also position your business for continued growth and prosperity in the ever-evolving financial landscape. The journey of year-end financial planning can be transformed into a proactive and manageable one. Here’s to a successful financial year ahead!

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Our accounting and finance professionals offer an efficient and effective solution to financial management. We work on an ongoing, part-time, fractional basis to provide a cost-effective way to supplement your finance function and build for the future. To learn how Warren Whitney can support your business, contact Stephanie Ford at sford@warrenwhitney.com or 804.282.9566. We do not charge for the initial call. We want to learn about your business needs.

MAKING POTENTIAL HAPPEN.

Written by Helen Dow

Part III: Evaluating and Strengthening Processes

Rules of the Road

This is the third and final installment to the series Keys to Great Financial Management.  Part I was Identifying Key Financial Drivers. Part II was Establishing a Financial Management Roadmap.  Each of these sections can stand on their own, but I encourage you to read them to gain a comprehensive perspective.

The third part covers the rules of the road- internal controls and execution broken down into three sections: Separation of Duties, Key Controls, and Transparency. While I do not want to over simplify a complex situation, my hope is this will help with the evaluation to strengthen your internal processes.

Separation of Duties

The first is what we hear so much of … separation of duties. You may not have had this explained to you this way before, but it is about separating the role of authorization, execution, and reconciliation.

It is often separated by person, but not always. Think of the role of the person or the function of the action. For instance, the board may authorize a budget, or a CEO authorizes a contract, or a manager authorizes a purchase.

Authorization is the approval to initiate a purchase, spend, contract or simply the rules around transacting (for example, the rules and protocols around issuing credit to a customer).

Execution is the action(s) that is required to complete that authorization. Often, we think of payments … it could be a credit application, or submission of payroll.

The third area of separation is that of reconciliation. This is validation that the execution was within authorization, such as bank reconciliation, or an account reconciliation. It can be financial statements and variance reporting. It could also be confirming that a payment was properly approved or if a spend was within budget.

In a perfect world these three would always be separate, but the reality is that for a number of reasons, this isn’t always feasible. Often it is because of the size of the organization. But it could also be due to the system or internal process.

If two are combined, you can see at the intersection of the Venn diagram, that there should be a review function added. For instance, if a manager has a credit card and is purchasing something, they are authorizing and executing payment. There should be a review by their manager. The CEO should have the CFO review their expense reports. Another common overlap is when an accounting manager is submitting payments and reconciling the bank account and preparing financials, there needs to be review steps inserted.

Key Controls

With any financial process there are key controls. Think of key controls a little different than separation of duties in that they are points where failure can happen. They enhance controls. For instance, opening the mail should be designated to a person independent of transactions or validating and controlling vendor changes should be done by someone outside of accounts payable.

Transparency

Lastly, I’ll mention transparency. This can be a challenge based on confidentiality and smaller organizations. Know and have cross training for all major job functions. Share everything you can and have shared goals.

Your Team

Just as with the pit crew, we are all aware of the importance of the team. Each has their part and when working together their abilities are limitless.

The team is watching many data points that roll up into a number on a report. With the right systems and streamlined processes, the organization can work together to create the least friction. For the team and your organization’s benefit, invest in supporting efficient and transparent processes.

Conclusion

In this series, we covered (1) identifying the drivers and the importance of dashboards,  (2) establishing and being disciplined when monitoring financial measures, and (3) setting up the controls and systems to allow your team to operate efficiently and effectively.  My hope is that you were able to find value, something new or even be reminded of the best structure to ensure great financial management.  I welcome any discussions or questions and feel free to contact me.

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Helen Dow is a Director of Warren Whitney with more than 30 years of experience helping companies improve their financial performance and enhance all finance and accounting functions. She works with clients on overseeing financial analysis, improving operational efficiencies, and system implementation. Helen generally serves Warren Whitney’s clients in the role of Fractional CFO/Controller. To learn how Helen or our other consultants can support your business, contact Stephanie Ford at sford@warrenwhitney.com or 804.282.9566.

Making Potential Happen.

Written by Helen Dow

Part II: Establishing a Financial Management Roadmap

Roadmap

The best way to set your destination and to stay on course is with a roadmap. It is the foundational path of good financial management. Your job as a financial leader of your organization is to establish and set the discipline of its use with your team.

Below are six important tenets of financial management. To remember the tenets, use the mnemonic of vowels; AEIOU and sometimes Y.

1. Authorize – establish financial measures
2. Expect – set expectations and goals
3. Instruct – teach your team what and why
4. Observe – review results
5. Understand – knowledge of variances and drivers
6. Y-Axis – know your trends

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Written by Helen Dow

Part I: Identifying Key Financial Drivers

Summary

Good financial management is evidenced by identifying, giving attention to, and supporting the activities that drive success and achieve the goals of your business. To do this, you will need to know the performance drivers for your business, set and track progress on goals, include your partners, and get your team’s buy-in.

It includes building controls and systems to safeguard assets and increase efficiency. It’s about knowing the points to jump in and, sometimes more importantly, when not to.

This is about taking ownership of the financial management of your organization. You will need to lead the way. You must initiate, request, and insist on delivery. Like learning to drive, much attention needs to be given to the smallest of things. Once established, it is easier, and the focus can stay on the important parts of operation and navigation.

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