Introduction: Dispelling Misconceptions
In the world of accounting and finance, there’s a common misconception that everything must align to the penny, that precision reigns supreme, and that all accountants share a singular personality type akin to our meticulous friends in the actuarial profession. However, this couldn't be further from the truth. As CFOs, we find ourselves in a multifaceted role, often juggling an array of responsibilities with limited resources at our disposal.
The CFO's Multifaceted Role: Beyond Number Crunching
Our role extends far beyond mere number crunching. Yes, ensuring the accuracy of financial records is crucial, but it's just one piece of the puzzle. We are tasked with defining and implementing robust accounting systems, establishing effective controls, managing accounts receivable and accounts payable, and steering our organizations towards revenue growth. Yet, our responsibilities don't stop there. We collaborate with the CEO to devise strategies for penetrating new markets, mitigate risks inherent in our operations, and secure appropriate insurance coverage to safeguard our assets.
Prioritization: Guiding the Team
Amidst this whirlwind of responsibilities, a fundamental aspect of our role emerges: prioritization. With finite resources and an expansive to-do list, we must guide our teams in determining where to allocate time, effort, and resources. However, contrary to popular belief, this doesn't always entail pinpoint accuracy or meticulous precision. Instead, it requires a nuanced understanding of our organization's objectives and a willingness to embrace a concept we like to call "between the goal posts."
Operating Between the Goal Posts: Embracing Flexibility
What does it mean to operate between the goal posts? Picture a football field. The goal posts serve as a target, representing our desired outcomes or objectives. Yet, just as a kicker doesn't always nail the ball dead center between the posts, we, too, recognize that perfection isn't always attainable or necessary. Instead, our aim is to navigate within the boundaries of the goal posts, striking a balance that aligns with our organization's overarching goals.
Flexibility and Adaptability: Key Attributes
This concept of operating between the goal posts allows for flexibility and adaptability in our approach. It acknowledges that in the dynamic landscape of finance and accounting, circumstances can change, priorities can shift, and resources may fluctuate. Rather than striving for unattainable perfection, we focus on achieving outcomes that fall within an acceptable range, effectively managing risk while maximizing efficiency.
Cultivating a Culture of Innovation
Moreover, operating between the goal posts fosters a culture of innovation and agility within our organizations. By empowering our teams to take calculated risks and explore new opportunities, we position ourselves for continued growth and success in an ever-evolving marketplace.
Conclusion: Navigating Success
In conclusion, the role of a CFO extends far beyond numerical precision. While accuracy and attention to detail are essential, so too is the ability to navigate the complexities of our responsibilities with agility and pragmatism. By embracing the concept of operating between the goal posts, we can effectively prioritize tasks, manage resources, and steer our organizations towards success in an unpredictable world.
The Authors
Tim Journy is a Partner at the Florida CFO Group and a seasoned professional, with a proven track record of implementing best practices, enhancing internal controls, and driving financial success across diverse industries. Tim has significant experience in the financial and risk management areas having served as Chief Financial Officer for multiple companies, including General Auditor for a Fortune 50 international organization and Audit Partner for a Big 4 firm. You can also visit Tim’s LinkedIn Profile for more information.
Don Noble, a distinguished Partner at the Florida CFO Group and a technology expert, boasts an extensive background in financial leadership and advisory roles. Leveraging his wealth of experience, he collaborates with businesses to optimize their financial and technological strategies, fostering growth and resilience in the dynamic marketplace. You can also visit Don’s LinkedIn Profile for more information.
Contact Us
If you have any questions or would like to have a discussion in your organization’s goal posts, please give the Florida CFO Group a call. We are here to help you navigate your financial challenges and achieve success.
The conclusion of the financial year is a pivotal juncture for every business owner. It marks a time for scrutinizing financial performance, orchestrating tax returns, and strategizing for the times ahead. However, these multifaceted tasks can be formidable, especially without a dedicated financial expert in your team. This is precisely where the role of a fractional CFO becomes indispensable.
Defining the Fractional CFO
A fractional CFO, essentially a part-time Chief Financial Officer, offers financial services to businesses on a contractual basis. Combining the experience and expertise of a full-time CFO without the hefty costs and long-term commitment, a fractional CFO can be a game-changer in your financial planning.
Closing Your Books: Precision and Compliance
One of the primary roles a fractional CFO plays is in helping you close your books seamlessly. They aid in reconciling accounts, recording transactions, and preparing financial statements. Beyond these, they identify and rectify discrepancies, errors, or issues that might impact your financial reporting. With a fractional CFO, rest assured that your books will be accurate, complete, and compliant with accounting standards and regulations.
Preparing Your Taxes: Strategic Optimization
Navigating the intricate landscape of tax preparation is another forte of a fractional CFO. From federal to state taxes, they assist in preparing and filing returns. Moreover, they optimize your tax strategy, minimizing liabilities, and identifying opportunities for tax credits or deductions. Should you face tax audits or notices from authorities, a fractional CFO can guide you through the process.
Planning Your Budget: A Roadmap to Success
Looking towards the future, a fractional CFO aids in creating and monitoring your budget for the upcoming financial year. They assist in forecasting revenue, expenses, cash flow, and profitability. Aligning with your business strategy and vision, a fractional CFO ensures that your budget reflects your financial goals, be it boosting sales, cutting costs, or enhancing margins.
Analyzing Your Performance: Data-Driven Insights
Beyond numbers, a fractional CFO delves into analyzing your financial performance. They identify strengths and weaknesses, measuring and enhancing key financial ratios like liquidity, solvency, efficiency, and profitability. Benchmarking against competitors, industry standards, or best practices, a fractional CFO empowers you with insights to make informed decisions based on your financial data.
Advising Your Strategy: Navigating Challenges
The strategic prowess of a fractional CFO extends to advising your financial strategy and direction. Whether it's evaluating opportunities or assessing risks like market expansion, product launches, customer acquisition, or capital raising, they offer valuable insights. Furthermore, they assist in preparing for financial challenges or changes such as economic downturns, regulatory shifts, or technological disruptions, guiding you to navigate the financial landscape and achieve your business objectives.
In conclusion, as the financial year draws to a close, the involvement of a fractional CFO can be transformative for your business. Their expertise not only ensures a seamless year-end process but propels you into the future with strategic financial planning and data-driven decision-making. Embrace the power of a fractional CFO and witness the positive impact on your financial stability and business trajectory.
Unlock the potential of a fractional CFO as your indispensable business ally. Seamlessly conclude your financial year and confidently pave the way for the next chapter.
The Authors
Don Retreage a Partner at the Florida CFO Group has a proven ability to establish and manage financial operations and execute operating strategies. He has a long history of improving financial information, implementing controls, and helping businesses to better monitor their operations. Check out his LinkedIn profile at www.linkedin.com/in/dretreage.
Don Noble, a Partner at the Florida CFO Group and a technology expert, boasts an extensive background in financial leadership and advisory roles. Leveraging his wealth of experience, he collaborates with businesses to optimize their financial and technological strategies, fostering growth and resilience in the dynamic marketplace. Check out his LinkedIn profile at www.linkedin.com/in/donaldnoble.
Contact Us
Have questions about anything discussed in this article, or are interested in what valuable insights a CFO has for your business? Conversations are free, so do not hesitate to reach out at info@floridacfogroup.com, and let us explain how our services could be the right fit for you.
The Corporate Transparency Act: A Regulatory Quagmire for Small Businesses
Introduction
Small businesses, the backbone of the American economy, are facing yet another challenge on their journey to success – the Corporate Transparency Act (CTA). Enacted by Congress in 2021 with the aim of bolstering anti-money laundering efforts, the CTA places a significant burden on small enterprises. Under this federal dragnet, millions of small businesses may soon find themselves entangled in onerous reporting requirements and subjected to fines for noncompliance.
The Corporate Transparency Act
The CTA entrusts the Treasury Department's Financial Crimes Enforcement Network (FinCEN) with the task of identifying shell companies utilized for illegal transactions. To achieve this, FinCEN is mandated to create a registry of businesses falling under specific criteria: those with less than $5 million in annual sales and fewer than 20 employees. While the intentions behind the CTA are undoubtedly noble, the repercussions for small businesses could be severe.
Impact on Small Businesses
Possible Solutions
Conclusion
While the Corporate Transparency Act seeks to strengthen anti-money laundering measures, its impact on small businesses cannot be ignored. Striking a balance between regulatory scrutiny and the facilitation of entrepreneurial growth is crucial for the overall health of the economy. As the small business community navigates this regulatory landscape, policymakers must remain vigilant in addressing the concerns and challenges posed by the CTA to ensure a fair and sustainable business environment for all.
The Author
Don Noble, a distinguished Partner at the Florida CFO Group and a technology expert, boasts an extensive background in financial leadership and advisory roles. Leveraging his wealth of experience, he collaborates with businesses to optimize their financial and technological strategies, fostering growth and resilience in the dynamic marketplace. Check out his LinkedIn profile at https://www.linkedin.com/in/donaldnoble/.
Contact Us
Have questions about anything discussed in this article, or are interested in what valuable insights a CFO and former franchisor/franchisee has for your business? Conversations are free, so do not hesitate to reach out at info@floridacfogroup.com, and let us explain how our services could be the right fit for you.
Executing a successful risk management program for an organization is a collaborative effort that necessitates the commitment of the entire organization, particularly the C-suite. While the CEO holds ultimate accountability for the assessment of risk, it is the Chief Financial Officer (CFO), who pulls it all together. This article delves into the multifaceted responsibilities of the CFO during a risk management assessment, where they often take on roles such as Communicator, Conductor, and Collaborator.
Numbers and Narratives:
The CFO's involvement in risk management extends beyond traditional financial responsibilities. While overseeing financials and operations is paramount, the CFO also takes on aspects of a Chief Risk Officer (CRO). The CFO aids the CEO in telling the organization's story to various stakeholders, ensuring alignment between narrative and financial metrics, such as EBITDA and cash generation.
Conducting the Orchestra:
Functioning as a conductor, the CFO manages the financial implications of different operational workstreams, providing the CEO with the necessary data to present a compelling narrative. The CFO anticipates potential financial, reputational, and operational risks. This proactive approach allows for the identification of risks in advance, enabling the implementation of mitigation measures to ensure the assessment of risk is successful and produced. The CFO, like a Conductor of an Orchestra, pulls in special effects like Legal, IT, Insurance, and other outside advisors, as deemed necessary.
Navigating Complex Risks:
Today's risks are intricate and competitive, requiring CFOs to leverage various tools and strategies. Private equity owners demand quicker and more substantial returns. The CFO must explore every avenue, addressing multiple levers to unlock the full potential and identify and quickly mitigate risks.
Stakeholder Management:
Effective stakeholder management requires subtlety. The CFO must comprehend internal dynamics without impeding functional leaders while strategically communicating externally. While financial acumen is essential, a well-rounded CFO embraces a 'jack-of-all-trades' mindset, emphasizing communication, collaboration, and team building.
Conclusion: Support through Challenge, Collaboration, and Communication:
The CFO's role related to risk management extends well beyond assessing the balance sheet and income statement. Ultimately, the CFO contributes significantly to delivering financial results, however, a major benefit that the CFO provides behind the scenes is the assessment and mitigation of risk to the organization. A value for all stakeholders.
The Authors
Tim Journy is a Partner at the Florida CFO Group and a seasoned professional, with a proven track record of implementing best practices, enhancing internal controls, and driving financial success across diverse industries. Tim has significant experience in the financial and risk management areas having served as Chief Financial Officer for multiple companies, including General Auditor for a Fortune 50 international organization and Audit Partner for a Big 4 firm.
Don Noble, a distinguished Partner at the Florida CFO Group and a technology expert, boasts an extensive background in financial leadership and advisory roles. Leveraging his wealth of experience, he collaborates with businesses to optimize their financial and technological strategies, fostering growth and resilience in the dynamic marketplace.
Contact Us
If you have any questions or would like to have a discussion in your organization’s risk assessment, please give the Florida CFO Group a call. We are here to help you navigate your financial challenges and achieve success.
More than 30 million small companies will soon find themselves subject to a new reporting requirement set to take effect in 2024, and it seems that many of them are still in the dark about it. This new rule, born out of the Corporate Transparency Act (CTA), applies to most non-financial companies operating in the United States with less than $5 million in annual sales from U.S. sources. At first glance, it may seem like a minor bureaucratic hurdle, but the implications are far-reaching.
The Aim of the Corporate Transparency Act
The CTA's main objective is to enhance corporate transparency and, in doing so, crack down on illicit financial activities conducted through shell companies or other opaque ownership structures. It has garnered the attention and support of the Treasury Department's Financial Crimes Enforcement Network (FinCEN), which oversees the enforcement of this legislation.
Understanding the Reporting Requirements
So, what exactly does this new reporting requirement entail for small businesses? In essence, it compels these companies to provide fundamental information about their "beneficial owners," individuals who either exercise substantial control over the business or own at least 25% of it. The details to be reported include the beneficial owner's legal name, birth date, home address, an identifying number from a driver’s license, state ID, or passport, and an image of the document from which that identifying number is derived.
Lack of Awareness among Small Businesses
A recent survey conducted by Wolters Kluwer, an information services company, highlighted a striking lack of awareness about this rule among small businesses. Of the 669 U.S. companies surveyed, 51% were subject to the rule, yet a staggering 74% of those businesses admitted that they had only become aware of this requirement when surveyed. The situation is not much better among law and accounting firms, with 46% of the 328 participating firms claiming they were unaware of the rule.
Consequences of Non-Compliance
The consequences of non-compliance with the Corporate Transparency Act can be significant. Failure to report can lead to civil penalties of up to $500 for each day of noncompliance, alongside a fine of up to $10,000. In cases of willful failure to comply, businesses may face even more severe criminal sanctions, including up to two years of imprisonment.
A Paradigm Shift for Small Businesses
Historically, many small U.S. businesses have operated with a level of anonymity, organizing themselves without the obligation to disclose their ownership or management information. However, the CTA marks a paradigm shift, and FinCEN estimates that approximately 32.6 million reporting companies will be affected by this rule in 2024 alone.
Compliance Deadlines
Companies that existed before the enactment of the CTA have until January 1, 2025, to file their initial beneficial ownership information report. On the other hand, companies created on or after January 1, 2024, will have 30 days to file their reports, starting from the time the company receives notice that its creation or registration is effective or after a secretary of state or similar office first provides public notice of its creation or registration, whichever comes first.
A Transformative Legislation
The implications of the Corporate Transparency Act go beyond mere compliance. It will transform how small businesses operate in the United States by fostering a culture of transparency and accountability. This legislation will make it significantly harder for bad actors to exploit shell companies for illegal activities or to benefit from ill-gotten gains through opaque ownership structures.
Embracing Compliance and Accountability
For small business owners and entrepreneurs, it is essential to familiarize themselves with the requirements of the Corporate Transparency Act. Ignorance is no excuse when it comes to compliance, and the potential penalties for non-compliance are not to be taken lightly. As we approach the implementation of this legislation in 2024, small businesses should prioritize understanding their obligations and taking the necessary steps to ensure they meet the reporting requirements of the CTA.
In Conclusion
In conclusion, the Corporate Transparency Act represents a pivotal moment for small businesses in the United States. By shedding light on the ownership and management of these businesses, the CTA aims to create a fairer and more transparent corporate landscape, where illicit financial activities are more challenging to conceal. Small businesses should seize the opportunity to become informed and compliant with this transformative legislation, ultimately contributing to a more accountable and honest business environment in the U.S.
Don Noble, a distinguished Partner at Florida CFO Group and a technology expert, boasts an extensive background in financial leadership and advisory roles. Leveraging his wealth of experience, he collaborates with businesses to optimize their financial and technological strategies, fostering growth and resilience in the dynamic marketplace.
In the ever-evolving landscape of business, the mergers and acquisitions (M&A) sector stands out as a dynamic arena where strategies, trends, and market forces converge to shape the destiny of companies. A closer look at the M&A industry reveals a fascinating tapestry of developments, challenges, and opportunities that are steering businesses toward unprecedented horizons.
At the heart of contemporary M&A trends is the omnipresent force of digital transformation. The technological revolution has not only redefined the way businesses operate but has also become a catalyst for M&A activities. As companies strive to stay ahead in the digital curve, strategic acquisitions of tech-savvy startups and innovative enterprises have become the norm.
The report emphasizes the prominence of digital integration as a key driver in M&A decisions. As businesses recognize the importance of staying competitive in the digital realm, we witness a surge in deals focused on acquiring cutting-edge technologies, intellectual property, and digital talent. The M&A landscape is, therefore, evolving into a breeding ground for innovation, where the union of diverse capabilities sparks the creation of synergistic powerhouses.
In an era where the world is increasingly interconnected, the M&A landscape is not confined to national boundaries. The report sheds light on the trend of cross-border transactions, illustrating how businesses are eyeing global opportunities to fuel growth and diversify their portfolios.
As companies seek new markets and customer bases, cross-border M&A deals present a strategic avenue for expansion. This trend not only reflects the pursuit of untapped potential but also underlines the importance of cultural intelligence and adaptability in the success of cross-border transactions. Businesses are realizing that understanding and respecting diverse markets is not just a courtesy but a crucial factor in the sustainability and profitability of global M&A ventures.
The M&A landscape is not just about financial transactions; it's increasingly becoming a stage for ethical considerations. The report emphasizes the growing significance of Environmental, Social, and Governance (ESG) factors in shaping M&A decisions. As societal expectations evolve, businesses are recognizing the need to align with ethical and sustainable practices.
ESG considerations are no longer mere checkboxes; they are integral components influencing the valuation and success of M&A deals. Companies are scrutinizing the environmental impact, social responsibility, and corporate governance practices of potential partners. This shift toward responsible capitalism reflects a broader recognition that long-term success goes hand-in-hand with a commitment to ethical business practices.
In an era marked by volatility and uncertainty, the M&A sector is not immune to the challenges posed by unforeseen events. The report underscores the importance of resilience and adaptability in navigating the uncertainties that come with economic, political, and global events.
Successful M&A strategies involve not only thorough due diligence but also the flexibility to adapt to changing circumstances. Whether it's geopolitical shifts, economic downturns, or global health crises, businesses engaged in M&A must have the agility to recalibrate their strategies and make informed decisions amidst uncertainty.
In conclusion, the M&A industry is a dynamic ecosystem where businesses are not merely exchanging assets and liabilities but are actively shaping the future landscape of commerce. The trends outlined in the report highlight the industry's evolution toward digital integration, global expansion, ethical considerations, and resilience in the face of uncertainty. As businesses navigate these trends, they find themselves at the crossroads of innovation, responsibility, and strategic growth, defining the future of M&A in the process.
If your business includes manufacturing products to sell to customers, you must have a sales and operations planning process in place.
Sales and Operations planning, often called S&OP is a cross-functional process that involves various departments in your company, including sales, operations, finance, and supply chain management. The goal is to create a comprehensive plan that integrates all these functions to ensure that your company can supply products to your customers on time, while not carrying too much inventory and ultimately meeting your financial goals.
The first step is Demand Planning which means you must forecast customer demand. Ideally you have a good understanding of the demand based on historical data and more importantly firm orders. I’ve seen many startups get overzealous in their assumptions about demand and buy way too much material inventory and produce way too much product that ultimately sits on the shelf or in the warehouse.
The second step is Supply Planning which means determining the organization production capacity and available inventory to meet the forecasted demand in step one. It’s important that you understand the lead times from order to delivery of materials as well as the production time for each product and total manufacturing capacity. This is where a good manufacturing engineer can determine how much time it takes to set up and produce each product on the machinery and equipment available. This will also help with understanding total capacity. Note in some cases, organizations can use multiple shifts to utilize machinery 24 hours to increase capacity.
The third step is Integrating the Demand and Supply Plans to identify gaps and opportunities and create a balanced plan. Ideally you will understand your customer demand in detail including expected delivery dates based on your promises. Integrating production output with customer expected delivery dates is critical. Understanding the timing of material delivery to production scheduling to finished product ready to ship is crucial. A balanced plan will provide production schedules by quarter, month, week and day including their resulting output.
The fourth step is Execution and Control which includes implementing the S&OP plan, monitoring performance to ensure the plan is on track and making necessary adjustments as needed. Identifying the data needed and actions required for each step in the S&OP process is important as well as roles and responsibilities for each department in the process. Ideally an Executive S&OP meeting is held monthly so that Senior Leadership is very involved in the analysis and decision making. There are many metrics to consider but my favorites are on time delivery to customers, forecast accuracy and adherence to plan.
The bottom line is every company is in business to satisfy customers and if you are in the manufacturing business, making good on your promise for on-time delivery is key.
Get more advice on Sales and Operations Planning from Marylean Abney
