Show Me the Money – SMB’s Act Big

CFO, Controller, Bookkeeper, CPA – these are titles that litter the finance and accounting functions of Bigs, those firms we all look up to.

For small to mid-size businesses (SMB), now, more than ever, cost accounting is not a choice, it is a requirement. Where’s the money coming from? What is it’s best use? What is our cash forecast? As if that isn’t enough for us to worry about, we need to serve our customers, who are needier than ever.

There is an enormous gap in many of our SMB accounting functions. We know we didn’t open our businesses to do accounting work. Our CPA would love to help if they had the time and we had the money. The bottom-line (pun intended) is we have limited resources, which leaves us limited choices.

Here are a few tips will definitely help you leverage your time so you can make more money and manage it more effectively:

This is not a commercial, but you can get online and subscribe to QuickBooks for as little $8/month. Getting your accounts receivable, accounts payable, payroll, and basic expense management organized is a must. If it’s a mess start with your bank statement from two or three months ago build it.

It might be time to accelerate your accounts receivable. Think about how often you are sending invoices and consider using a higher frequency. If you’re currently invoicing at the end of every month, consider sending them weekly, or bi-weekly to smooth out and speed up your receivables.

The best way to lose a customer is to be too aggressive with your accounts receivable. The best way to lose business is to be too lax with your accounts receivable. Find your zone. You deserve to get paid for the work you do, act like it, but do it with professionalism and touch. By touch, I mean polite persistence. When the time is right, ask politely for payment information on invoices, while giving an appropriate amount of time for a response, send polite reminders; send them regularly.

Our days are full. Many days it feels like you just can’t keep up. But, if you go weeks or even days without taking action on the money side of your business, the money side of your business will dominate your days, causing major disruptions to your customer and people engagement.

Do every day’s accounting each day. If you take action every day, you’ll spend less time and improve the quality of your accounting and finance systems. Block out a time each day to focus on the day’s accounting transactions. If you stay with it, it will often take minutes, rather than hours.

Add It Up!
Best practices in the accounting function require quality inputs that can be reconciled and reported for deeper understanding and use. Inaccurate or missing inputs will often mislead you, causing you to make lower-quality decisions. Quality inputs add up at the end. Celebrate the perfect reconciliation, ending each month with solid accounting information and reports.

Create key performance indicators that will give you instant information on your cash flow and trends. Each day write the numbers on a board, or put them in an excel spreadsheet, or create a QuickBooks report.

What you measure will get better. Better is always good. Some examples:

  • The total value of accounts receivable
  • Percentage accounts receivable past due
  • Rolling 30-day revenue, each day
  • Rolling 30-day expenses, each day
  • Percentage of expenses to revenue, rolling 30-day, each day

If it’s not too much to ask, be sure to align your products/services, and/or your strategic market segments to your accounting and measurement systems. Measure percentages of revenue, profitability, and significance that will help you make better, more strategic decisions… fact-based decision making.

APTUS is a full-service financial and managerial accounting practice. We supply the talent, technology, tools, and processes that deliver on-time, quality reporting, and advisory services. Our solution is designed to give organizations better financial information, in a performance management system that enables them to make faster, fact-based decisions.