Strategies for Business Owners in an Inflationary Environment

Strategies for Business Owners in an Inflationary Environment

Even with the best strategic planning and forecasting, no one could have predicted the economic ups and downs of the past few years. As the economy comes weaving back from the pandemic, finance and accounting leadership is faced with the rising costs associated with inflation, a looming threat of recession, and continued (though lessening) supply chain issues.

The world was never “normal” so getting back to that state is impractical at the very least. So, what is a business owner to do to prepare for an uncertain future?

According to a recent analysis by Deloitte, the gross domestic product in the United States is poised to boom well beyond pre-pandemic numbers. What do a higher GDP, increased inflation, a recession, and falling unemployment numbers mean for business owners? Let’s explore:

What is Inflation and How Does it Affect Your Business?

Inflation is an economic environment in which the cost of goods and services increases rapidly. Inflation can be triggered by a shortage of services or products; this, in turn, leads to increased prices which trigger a cycle of rising costs, short supply, and long wait times, making it harder for businesses to keep margins profitable.

Forbes has a straightforward definition of inflation. “Inflation is identified by a rise in prices and a decline in the currency’s purchasing power over time.”

Reduced purchasing power means that businesses will have fewer products to sell, potentially lowering profits. Lower profits can mean a decreased ability to grow or invest back into the business.

As many companies with fewer than 500 employees were founded using the owner’s savings, inflation fallout puts small business owners at significant personal, as well as corporate, financial risk.

Effects of Inflation on Small to Medium Size Businesses

Being knowledgeable and prepared is the best defense in cases of economic uncertainty. Business owners and finance and accounting leaders need to consider the following three elements concerning inflation and the surrounding economic environment.

Erosion of Purchasing Power

Inflation negatively impacts the purchasing power of a currency as prices of goods and services go up. Historically, prices go up quickly during inflation but come back down much more slowly.

Shortages of Finished Products in the Market

The effects of inflation are not linear; they ripple through an economy affecting businesses in unexpected ways. One of the most immediate impacts is the shortage of supplies preventing the completion of finished goods.

When manufacturers are unable to get the raw materials they need to produce finished products, the impacts are far-reaching. While Just In Time (JIT) manufacturing was developed to address this problem, the inter-connected market leaves many entrepreneurs’ funds tied up in inventory-in-process, accumulating losses and driving demand and prices higher.

Inflation Raises the Cost of Borrowing

During periods of inflation, the cost of money goes up. In these periods, banks raise the criteria to qualify for loans just as business owners find themselves strapped for cash. The age-old conundrum is exacerbated in an inflationary environment, when you most need a loan most, you are least qualified to get one.

As a business owner, it may be beneficial to consider alternative lenders during a time when sourcing a bank loan may be challenging. Talk with your banker, CPA, financial advisor, or outsourced accounting experts to find out what options might be available.

How Businesses Can Manage Post-Pandemic Inflation

No matter what industry you are in, your business must make well-informed strategic decisions in a time of inflation. Here are five steps your business can take to mitigate the effects of inflation in 2022.

Evaluate Product Revenue Mix

Analyze product or service streams, compare performance over time, and consider different geographical markets, client types, and distribution channels.

Now is the time to streamline your business, cut costs, and improve margins. You may need to shift production to focus on higher-margin products and services.

Analyzing the potential short and long-term effects of the shift and understanding how it will affect the future of the business is essential before making these kinds of seismic shifts. Be proactive, thoughtful, and strategic, not reactive.

Adjust Your Pricing

The prices of almost every product go up during inflation. Your business may have to raise prices to stay in alignment with the rising costs in the market.

Before increasing prices, analyze the competition, be upfront with customers about increases and why they are necessary, and be clear on your long-term goals for returning prices to their pre-inflationary rates or accepting the new status quo.

Transparency will help customers adapt to the new pricing without negatively impacting their loyalty to the business.

Evaluate Risks to Your Supply Chain

Over the last few years, business owners have seen the effects of having their supply chain solely dependent on one supplier. When imports were halted due to the ongoing pandemic, business owners couldn’t keep up with demand. The result? Revealing the faults in many business owners’ supply chain strategy.

These events forced business owners to start strategically assessing the risk of their supply chain. Some of these risks can include:

  • Over-dependence on a single supplier
  • Using long-lead-time suppliers, such as importers
  • Heavy, bulky, hazardous, or perishable products that are hard to store
  • Materials that are passed through a JIT supply chain

There are steps you can take to mitigate supply chain-related risks in your business in a time of inflation, including:

  • Setting up an alternate supply chain – not merely finding an alternate supplier
  • Stockpiling critical supplies that have a low holding cost
  • Putting in place an expedited supply strategy
  • Reviewing stock levels at every stage of the JIT supply chain

Understand Your Inventory

When prices start going up, a robust inventory can be a competitive advantage. By the same principle, it is a better policy to maintain lower inventory when prices are low.

Understanding your inventory and keeping it in line with market demand will help you maximize profitability. It also helps to improve internal accounting control, business oversight, and inventory management processes so the data you rely upon to make those critical business decisions is accurate, relevant, and timely.

Cash Flow Management is King!

If your business engages in proactive scenario planning and forecasting, you will have a worst-case scenario plan at the ready. This scenario planning can help you anticipate wage increases, higher material prices, or unforeseen disruptions in the supply chain. A well-executed financial forecast addresses the amount of cash on hand your business needs to get through economic fluctuations.

They say, “Cash is king”, so do your best to keep cash available, have a strong banking partnership in place, and take steps to mitigate cash-flow risks. Beware of customers who use your business as a bank. Especially in inflationary environments, unpaid AR adds risks to a business if those receivables become uncollectible.

Read More: 10 Tips To Help Improve Your Company’s Cash Flow

Prepare your Business for Success

Regardless of the economic environment, a well-run business needs efficient accounting systems and processes to drive greater visibility into its financials. With accurate and reliable data, you can act fast and stay ahead of the competition. The real question is, do you know your numbers?

No matter your industry, you need a solid financial and operational strategy to evaluate the risks to your business and put measures in place to minimize them. Contact Signature Analytics and let us help you create and implement a successful accounting and financial strategy to help drive your company forward regardless of the economic times.


 

Do you know your numbers?

Signature Analytics Named One of San Diego Business Journal’s 2022 Best Places to Work

Signature Analytics Named One of San Diego Business Journal’s 2022 Best Places to Work

Signature Analytics is honored to have been named a 2022 ‘Best Place to Work’ by the San Diego Business Journal, and to be recognized amongst so many great companies in San Diego.

Each year, the San Diego Business Journal’s Best Places to Work Awards program recognizes outstanding companies whose benefits, policies, and practices are among the best in the region.

Now more than ever, companies have to be more thoughtful, creative, and purposeful about keeping their employees engaged and motivated. Companies that have made the 2022 list have done exactly that.

CEO, Peter Heald says, “We are so honored to have received this award as one of San Diego Business Journal’s Best Places to Work in 2022, marking the third year we have received this accolade. I am grateful to our entire team for their hard work, dedication, and continuous improvement in making Signature Analytics such an incredible place to work.”

How Is a Company Deemed a Best Place to Work?

Each year, San Diego Business Journal partners with Best Companies Group, which manages over 50 Best Places to Work Awards programs on the regional, state, national, and international levels.

Best Places to Work is open to all public and privately held companies for both for-profit and nonprofit to be eligible for consideration. To qualify, however, companies must have a facility here in San Diego as well as a minimum of 15 local employees.

The Best Places to Work Awards program includes 100 San Diego companies. Each San Diego company that applies to be recognized encounters a two-part assessment process, which considers an anonymous employee engagement survey (75%) and the benefits a company offers (25%).

Why is Signature Analytics One of the Best Places to Work?

At Signature Analytics, we pride ourselves on our strong company culture and dedication to our employee growth. Hear it best from our team.

Anthony Sands, Senior Vice President Business Development and Regional Manager at Signature Analytics says, “Working at SA is exciting, engaging with co-workers across multiple clients allows us to be connected in a virtual workspace. The flexibility continues to be a benefit, as our accounting experts work remotely to support clients’ needs. Of course, connecting in-person, during quarterly events contributes to building the culture at Signature Analytics.”

Nancy Wilson, Accounting Manager at Signature Analytics says, “I love working at Signature Analytics because of the flexibility and the support. I work from home, but I don’t work alone. The team is engaging, and I know I always have someone to reach out for help. I am regularly asked by leadership if there is anything I need or any way I can be better supported so I can succeed.”

About Signature Analytics

Founded in 2008, Signature Analytics was created to fill a critical function for CEOs and business owners in small to mid-size companies.

Jason Kruger, Founder and President of Signature Analytics, recognized that many companies required more sophisticated accounting and financial planning services, but not their own full-time accounting staff or full-time CFO.

Signature Analytics provides outsourced accounting solutions that work with businesses’ existing accounting resources to guide leadership and support increased profits and productivity.

Signature Analytics works with a variety of companies with specific expertise in these industries:

  • Non-Profits
  • Professional Services and B2B Service Companies
  • Technology
  • Manufacturing and Distribution
  • Life Sciences
  • Rehab, Recovery, and Wellness Centers

Learn more about Signature Analytics.

What is Outsourced Accounting?

What is Outsourced Accounting?

Managing the accounting function and financial reporting in a small or medium-sized business is an enormous undertaking for a growing team. Outsourcing your accounting needs gives you expert-level financial service and support to achieve your business goals.

When you identify the need for a partner in your financial department and begin the accounting outsourcing process, your business agrees to let a team of trusted experts come in and help you evaluate everything you currently do. Doing this can maximize your company’s potential whether you’re in a growth or transition period.

What does an outsourced accounting team do?

The experts you outsource should help you define, develop, and achieve your business goals. To begin that process, some firms will assess your current situation. For instance, we like to review four major pillars of your business which are your people, processes, technology, and reporting.

We’ll also take some time to outline your business goals. If you haven’t gone through this process before, a good financial expert can help guide you through various Q&A sessions with the company stakeholders.

From there, it’s essential you bring all of those elements together and design not only a roadmap for improving your accounting function, processes, and financial reporting but ensure that the right metrics, analysis, and KPIs are developed in relationship to the overall business goals. Whether that be raising capital, improving profitability, scenario planning, or managing hypergrowth. This is really bridging the gap between the day-to-day and the big picture stuff.

Free Download: Discover how outsourced accounting can provide more visibility into your business

The onboarding approach your outsourced accountants use may include:

  • Structuring goal development and building a roadmap
  • Validating your information and process optimization
  • Structuring your financial reporting and conducting deep analysis
  • Managing the day-to-day accounting function
  • Focusing on business advisory & forward-looking activities

Structuring your company’s financial and overall business goals is an essential first step in creating alignment between your business and your outsourced experts.

Goal development and building a roadmap to achieve them

Although your outsourced experts are accounting and financial gurus, they are new to your business even if they have previous industry experience. To develop business goals, they’ll start by reviewing and understanding your business by doing an assessment.

This may be looking into your:

  • Industry
  • Business goals and major drivers
  • Current business concerns
  • Immediate needs and priorities

With the combined industry and business knowledge under your outsourced team’s belt, they can begin gathering information and validating your current processes.

Understanding your information and processes

One of the advantages of accounting experts at your business is evaluating all of your current accounting processes and your financial reporting (including accuracy and consistency), so you and your team don’t have to think about it. Additionally, this allows a new team to come in and see things from a fresh, unbiased perspective and make an impact.

The reason they do this is to:

  • Understand your team’s roles, current capabilities and skills, and development goals
  • Review and validate your existing information and structure
  • Perform data clean up to ensure historical accuracy
  • Validate processes, make recommendations for optimization, and implementing new ones where needed
  • Refine how they integrate with your existing team and where they need to fill the gaps

After this evaluation, the experts can seamlessly integrate into your company, your current team structure and are then able to set a foundation for accurate, relevant, and timely reporting.

Delivering sound financial reports and analysis

Now that your business leaders have had an opportunity to build trust with the experts and have reviewed their recommendations, the next step is to give you the information you need to make sound financial decisions.

That information is typically provided in the form of:

  • Expense management
  • P&L statements
  • Accounts receivables and payables
  • Cash flow management and reporting
  • Month-end closing
  • Financial metrics, reporting, and KPIs
  • Business and financial analysis
  • Board meeting support

Not only will your outsourced experts provide the above reports regularly, but they may also take this reporting one step further by providing business modeling and deeper financial analysis to help you reach your business goals.

This reporting may include:

  • Utilization analysis
  • Breakeven analysis
  • Margin analysis
  • Client profitability
  • Annual budgeting & benchmark reporting
  • Business-specific metrics & KPIs

With this measurable data provided consistently, you will create additional value by taking actionable steps to improve your business.

Supporting your day-to-day needs

Not only do your outsourced experts help you achieve your financial business goals, but they also support your day-to-day accounting and financial operations.

Some of that support includes:

  • Payroll processing
  • Manage A/R and A/P
  • Month-end close
  • Workflow documentation
  • Staff mentoring and supervision
  • Inventory process development and setup
  • Bank and credit card reconciliations

Whatever daily accounting operations help your business desires, your outsourced experts are there to ensure everything is getting done on time and there’s a clear delegation of duties and responsibilities, so you don’t have to.

Why would you need to outsource?

Outsourcing your accounting may be a need because of:

  • rapid company growth
  • cashflow has become a challenge
  • you’re not getting the reporting you need
  • you may have just lost a valuable member(s) of your financial department
  • you’re not quite ready to take on the financial risk of employing a full-time accountant
  • you’re having issues getting financial backing from a bank or investor

These are all valid reasons. Whatever the case is, enabling expert accounting, financial, and advisory help in your business – takes some of this burden off your plate. This team truly partners with you and your business leaders so you can focus on other areas of your business.

It’s a classic case of allowing you to start working on your business again instead of working in it.

Free Download: Discover how outsourced accounting can provide more visibility into your business

Outsourcing for growth

As your revenue increase, so do your daily business demands. As a result, your financial needs or the complexities of your finances will also increase. When you’re scaling your business, it’s often helpful to outsource specific back-office operations, such as your finance and accounting department.

Doing so allows you to hire a team of consultants who specialize in going beyond the numbers and meet your growth needs. As a result, this may include implementing new processes, reporting methods, or technology to match your scaling business needs.

Outsourcing due to turnover

When a prominent part of your financial team, like a senior accountant, controller, or CFO, leaves your business, it can be challenging to fill their shoes immediately, and doing their work on top of your own in the interim could lead to burnout.

Additionally, hiring a replacement may not solve the issues that ultimately led to them leaving the company. Many common reasons we see:

  • they feel unsupported by management and have no career path
  • they tend to have too much on their plates and are feeling burned out
  • they are constantly burdened by either doing too low level or work or even too high-level beyond their skillset

By outsourcing, you’re able to fill these gaps with vetted experts who are in the right role because financial experts hired them.

Even if these employees haven’t left your company, we’re able to come in and provide supplemental support, oversight, training, and career path development for your team.

And as you grow, you may eventually need to hire more in-house employees full-time, and your outsource team will still be to support the onboarding or transition of duties when necessary.

Outsourcing because you desire flexibility

If your accounting needs are becoming more complex, you might find yourself spending a lot of time managing them, taking away from other parts of your business. You may also feel uneasy about taking on the financial risk of building out a finance team or are unsure if it’s the right time to do so or who you should hire next.

By outsourcing to a team of experts, you gain the same benefits of having a full finance and accounting team that you usually see are a larger company; however, you pay for fractional support instead of paying for full-time salaries.

And as the business grows or contracts, so can the flexibility of your team. The model is designed to work for your business based on its needs, unlike a full-time staff or staffing agency.

If your business needs accounting and financial expertise and could use a trusted partner as an advisor, consider outsourcing an ideal solution.

Over the years, we’ve worked with several types and sizes of businesses and have seen so much success using this model – that, in many cases, we’ve made lasting relationships as a result.

Contact us for a free consultation and to learn more about outsourcing.

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Discover how outsourced accounting can provide more visibility into your business

Your Guide To Financial Modeling And Scenario Planning

Your Guide To Financial Modeling And Scenario Planning

Strong leaders are always thinking about the future. Forward-thinking is an essential part of business leadership to guide your employees and steer your company in the right direction.

In uncertain times, it is important to understand many different outcomes that could take place. Trying to build a model based on multiple possible outcomes is challenging.  You may find that you need help.

Finance and accounting leaders within an organization frequently need assistance predicting their cash needs, drawing a mental picture of potential profitability, and learning how to make better data-based decisions for the company.

To plan for the future effectively, a leader must develop a financial model whose aim is to forecast a business’s results over a set time frame.

Read More: Financial Tips From Successful Leaders

Given the current environment, we recommend creating a nine-month cash flow forecast to support your business through whatever comes your way.

We recommend keeping three possible business scenarios in mind:

  1. Your original plan
  2. A probable case based on current data
  3. The worst case

To help you, we suggest brushing up on those Excel skills to create more elaborate and complex financial models. These models will enable you to modify assumptions giving you the ability to see the outcomes immediately. If you are not an Excel guru, don’t worry, even a simple financial model will provide you with better insights into your business.

3 Scenarios And What They Tell You

  • The original plan scenario should be your current strategic business plan and budget for the year. If you do not have a budget, you can create this model, as outlined below. This scenario acts as the baseline for the other two scenarios.
  • The probable case scenario is what you expect to happen based on current information. For some businesses, this could mean growth, and for others, it may mean a reduction in revenue.
  • The worst-case scenario should depict what the business would look like if revenues drop, are delayed, and/or unforeseen expenses occur. This scenario reflects the most serious or severe outcome. In this scenario, forecasting in this way is critical, so preparations can be made to ensure the business can still operate under adverse circumstances.

Read More: How to Develop a Strategic Financial Plan for Your Business

Original Plan Scenario

The best approach to building these scenarios is to start with the original plan. Your original plan scenario should be the easiest to forecast, and you might already have it if you created a strategic business budget for the year ahead. The numbers used in the original business plan will act as the baseline for creating the other two scenarios.

A quick way to get started building the financial model is to calculate a monthly average of the last 12 months for each expense category. At Signature Analytics, we recommend companies break down their expenses into categories or buckets to understand their business expenses better.

Once you have that data, use this average as the baseline amount for each expense account. Then ask yourself, is this baseline still a reasonable estimate to help forecast for the next nine months?

Depending on your income channels, revenue can be forecasted using the 12-month average. If you have more accurate data, then, by all means, use it. For both revenues and expenses, look back at the same months in the previous year to see if any seasonal patterns or trends should be reflected in the forecast and make adjustments where necessary.

Lastly, if you never created a strategic business plan and budget for the year, there’s no time like the present to get that started, so you are not flying blind over the next several months.

Read more: Download our Strategic Budgeting eGuide

Probable Case Scenario

Once the Original Plan has been created, determine what percentages (these would be increases or decreases) of revenue and expenses should be applied.

Manual adjustments can be made to any of the monthly numbers based on knowing future activities within the business. Think through possible disruptions to your employees, your supply chain, and your clients.

Worst Case Scenario

The final scenario is weighing in the negative impact of disruptions to your employees, your supply chain, and your clients. You might approach this as a broad decrease in revenue (15%, 25%, or even higher) to understand how that would affect your business and your liquidity.

Scenario planning should bring to light any warning signs that can trigger major strategic pivots to decrease a company’s risk.

One other helpful tool in scenario planning is to utilize storytelling. The Wall Street Journal reports that “data-driven stories enable a team to picture the various futures the organization might face; strong narratives challenge conventional wisdom and management’s assumptions, but should be logical and plausible.”

Remember, forecasts by nature are not factual; but, having the ability to use available forecasts to develop scenarios can provide some relief.

Final Thoughts: 

Simple scenario analysis allows you, as the business leader, to work through the assumptions and influences that directly affect your business. This creative and focused thought process can support you in times of high stress when making thoughtful, yet data-driven decisions for your business beyond that “gut feeling.”

If you need help with creating different financial models to support various scenarios, Signature Analytics has a full staff of CFOs and accounting experts to support you and your business. When you are ready, contact us to get started.

10 Tips to Help Improve Your Company’s Cash Flow

10 Tips to Help Improve Your Company’s Cash Flow

As a business owner, you run the risk of bankruptcy if you’re not on top of cash flow management. A full 82 percent of business failures are caused by poor cash management, according to a US Bank study.

So, is it easy enough to bring in more money than your business is spending? Although it sounds simple in theory, having a positive cash flow encompasses much more than profitability. Even if your company is currently profitable, it is still at risk for negative cash flow. One common example of this is if you have obligations for future payments that you cannot meet because you’ve mistimed incoming funds.

By maximizing your company’s cash flow, you can help your company receive profits faster, meet targets in a shorter time frame, and lower your operating expenses. Wondering how to improve cash flow in your small business? These 10 tips can help you improve cash flow for your company.

1. Anticipate and Plan for Future Cash Needs

Keeping accurate, timely, and relevant (ART) accounting records allows you to build a forecast for your business based on historical results. At the very least, businesses should be reviewing their cash flow monthly.

Being proactive with your cash flow enables you to forecast your anticipated funds and help prepare for historically painful periods or seasonal trends.

For example, if you find that you are anticipating a future need for extra cash, you may want to start talking to lenders about a bridge loan to help pave the way for future financing. Similarly, if you can anticipate large expenses ahead of payout, you’ll be able to plan your other obligations accordingly to avoid cash flow surprises.

2. Improve your Accounts Receivable

By actively managing your accounts receivable, you can stay on top of outstanding invoices and decrease the time it takes to get paid.

One way you can do this is by encouraging customers to pay early. For example, if your payment terms are net 30 days, consider offering a slight discount for customers paying net 10 days.

Are you currently waiting for checks to arrive? Offering a variety of payment options will make it as easy as possible for a customer to pay you, such as ACH or credit card payments. While these options may come with processing fees, getting money faster is better for your business if cash flow is tight and eliminates time & labor spent on collection. These options can help prevent you from stacking up credit card debt to cover expenses.

3. Manage your Accounts Payable Process

Establishing and organizing your accounts payable process will be essential to improving your company’s cash flow. If your accounting department doesn’t already use software to help manage your accounts, it is a good idea to invest in one. Next, you should communicate with your team which invoices are most important so they can be paid first. Remember, do not let unpaid invoices slip through the cracks.

Another tip? Try to get to know your vendors and extend payment terms as long as possible. Most vendors will ask businesses for net 30, but once you build up a positive relationship, they may be more inclined to offer net 45 or net 60. After all, the longer you have to pay, the more time you have to get money in. You can use a simple payment agreement template to help you when creating your financial contracts.

4. Put Idle Cash to Work 

Another way to improve business cash flow is by putting idle cash to work. Your idle cash is money that is not earning any income.

Chances are if you have large balances sitting in non-interest-bearing accounts, you can find a better place for them to live. You could consider moving them to an interest-bearing account that may earn .5% or 1% APY. Another option is to invest the money in expanding your business, use it to decrease your debts and lower your interest payments, invest in new technology, or prepay some expenses.

Read more: 5 barriers of growth every company hits and how you can break through them

5. Utilize a Sweep Account

Most commercial banks offer a sweep account, a type of account to help maximize earnings on your income by automatically transferring money from your business checking account to your savings account. The sweeps happen at the close of business each day, and you can set the amount, typically in $500 increments.

Should your checking account dip below your minimum requirement, the funds will be automatically transferred back into your checking account to cover the outlay. This risk-free option makes it easy to build your savings for a rainy day or your next major investment.

6. Utilize Cheap and/or Free Financing Options

If you are looking to invest in your company through low to medium-cost purchases such as upgrading your computer system, buying new furniture, or replacing your company vehicles, you should take advantage of financing options that have low or no interest for the initial period of the loan.

Using this strategy for a business loan will help you save money by cushioning the cash hit to your business. If you pay off the full loan upfront before the interest rates kick in, you will save even more, therefore, making the most of your investment.

7. Control Access to Bank Accounts

To maintain positive cash flow, it is crucial to protect your assets. The best way to eliminate fraud and unauthorized use of your company bank accounts is to make sure the proper safeguards are in place.

Common safeguards include keeping the number of people who can access these accounts to a minimum, securing your IT infrastructure, frequently updating passwords, protecting your credit and debit card information and bank accounts, and using a dedicated computer for banking.

8. Outsource Certain Business Functions

It’s not necessary to hire full-time employees for every business function. You should evaluate your business needs and identify areas where it may be more cost-effective to outsource. IT management, human resources, accounting, payroll, and marketing are all functions that could be outsourced.

There are many firms, including Signature Analytics, that specialize in providing experienced professionals to handle specific business functions and manage cash flow issues. Outsourcing can save your business money, offers a flexible staffing model during the ebbs and flows of your business cycle, and it can also increase your efficiency.

9. Renegotiate Existing Service Contracts

Another tip to increase business cash flow is to review service plans and contracts regularly. Start by looking at your internet, phone bills, copiers, software support, and janitorial/building maintenance contracts to pinpoint opportunities to save.

Improved technologies and increased market competition have driven prices down on many services, so it’s worth taking the time to shop around for a better deal.

10. Maintain a Weekly Rolling Cash Forecast

A rolling cash forecast is a good practice for improving cash flow overall. You don’t need expensive programs to do this; Excel will easily allow you to project a weekly rolling cash forecast. You should include all estimated inflows, such as customer receipts, and outflows, such as vendor payments and payroll. Record this data on a weekly basis at least.

Your rolling cash forecast will help you plan staffing needs, commit to new vendors, and ensure funds will always be available to make payroll and vendor payments. As a bonus, your forecasting will help you estimate and understand your company’s sales cycle.

Read More: The Top 5 Financial Reports Every Business Owner Should Review

How Signature Analytics Can Help Your Company 

By implementing these strategies when managing cash flow, you will quickly get the upper hand on your company’s finances and learn how to increase cash flow within your business — so you will soon reap the benefits.

At Signature Analytics, we have a team of expert accounting and financial professionals including accountants, controllers, financial analysts, and CFOs; all dedicated to providing the best level of service at a price that makes sense for your business.

For additional assistance with cash flow management, developing detailed financial projections, or identifying capital requirements, contact Signature Analytics today for a free consultation.

When Should You Consider Outsourcing Your Accounting Operations?

When Should You Consider Outsourcing Your Accounting Operations?

  • Do you spend late nights and weekends struggling to keep up with your company’s accounting records? Or worse, does this time intervene with the time spent running the operations of your business?
  • Are you unable to assess the profitability of your business or perhaps have difficulty understanding the cash requirements for the next 60, 90, or 365 days?
  • Do you feel your margins could be improved but aren’t sure how to evaluate them when looking at your financial statements?
  • Would some assistance in projecting your business operations over the next few years help you establish priorities with your employees?

If you answered yes to any of these questions, then you are in good company. Many business owners and executives feel the same way and there are ways you can get the support you need to move your business ahead.

Free Download: Discover how outsourced accounting can provide more visibility into your business

The first step is acknowledging that, although operations are the most key aspect of any business, accurate financial information is vital to making important business decisions. Having visibility into cash flow and knowing where your margins can be improved will enable you to take your company to the next level.

Now the next step is determining if hiring a full-time accounting resource to get your company’s financials in order makes sense from a cost and expertise standpoint.

  • Is there enough work for a full-time accountant? For many companies, a 40-hour a week accountant would be in excess of the time required to perform the basic accounting functions they may need, e.g., monthly close process, issuing invoices, entering and paying bills, performing payroll, etc.
  • Is there too much work for your current full-time resource? And are you asking them to do things beyond or below their skill set? This is a very common occurrence with any role in a growing business. This is a lose-lose situation for everyone involved and can lead to internal turnover.
  • What level of experience will they need to have – CFO, controller, staff accountant? If you are not in a position to support the costs of more than one accounting resource, will you hire a CFO and then over-pay them to do basic staff-level accounting? Alternatively, you could hire a staff accountant and task them with CFO responsibilities; however, both of these options can cost your company significantly and lead to ineffective decision-making.

If your company needs the resources of a complete accounting team but is not in a position to support the costs and management time of that entire, full-time team, then outsourcing your accounting functions is a very viable, flexible, and turn-key option for your business. 

Read more: 3 Ways Outsourcing Accounting Can Improve Your Business

Outsourced accounting companies such as Signature Analytics provide you with flexibility in terms of the number of hours of service to receive, provide a higher level of experience through oversight by more senior-level individuals, and ensure efficient service by experienced accountants (staff accountants through CFO level expertise). The accounting teams at outsourced accounting companies work with multiple clients so they have identified time-saving methods that allow them to complete challenging tasks in significantly less time than a typical bookkeeper.

In addition to acting as the financial arm of your business by providing the resources of a highly experienced accounting department on an outsourced basis, there are a number of other situations in which hiring an outsourced accounting company to handle your financial information might make sense for your business:

Preparing for a financial statement audit or review

Many business owners believe that a financial statement audit is a healthy process for their business and provides confidence to their investors in the financial information; however, most do not realize the resource drain that an audit can have on their business due to the significant number of requests for supporting information and the technical accounting expertise which must be applied to the financial statements. Due to independence restrictions, audit firms cannot assist in performing the accounting functions at the companies they audit and therefore must rely on management to determine proper accounting rules. These issues tend to cause significant overrun bills from the audit firm due to the inefficiencies experienced and can be extremely costly for a business. Engaging an outsourced accounting company can provide management with the peace of mind that they have a team of accounting experts – most of which have previous experience performing audits – that understand what audit firms are asking for and know how to produce that information in a timely manner.

Investors requesting financial projections

Investors love to see what the future of their capital will produce so that they can assist in both financial and operational decisions; however, many business owners do not have the expertise to prepare financial projections and therefore may provide information at a level not detailed enough for the purpose or may be missing significant costs which need to be considered. Outsourced accounting firms that provide support with cash flow management and projections have CFO-level experts who are experienced in understanding a business operation in a very timely fashion and can translate such information into the future potential results of the organization.[gap height=”10″]

Missing out on potential tax savings

When a tax provider receives your financial information they may not search into all of the accounts to find tax deductions. If transactions have been classified to incorrect accounts, tax preparers may not be aware of their existence and therefore not consider simple deductions. A simple example would be meals & entertainment expenses, often a deductible expense, in which some transactions may end up recorded in office expense categories or supplies or miscellaneous. Unless the tax preparer knows that such expenses may be improperly classified, the deduction will go unreported resulting in higher income tax. An outsourced accounting company can organize accounting information and work directly with tax professionals to help identify as many tax savings as possible.

Looking for capital investment from financial institutions

Perhaps you have a capital requirement in the near future and plan to approach different financial institutions. Providing financial information with obvious errors, inconsistencies, or lack of organization could severely impact your ability to raise capital as it may be challenging for the lenders to truly understand the results of the business without transparent financial information. When hiring an outsourced accounting company, you can be confident that the financial statements are timely and accurate. Furthermore, they will provide you with a high-level financial resource that can assist in preparing analyses of the financial information in a professional manner making the lender proposal process less arduous. These statements may be used as a resource to assist in conversations with those providing capital assistance to ensure a complete understanding of the business’s results of operations.

Free Download: Discover how outsourced accounting can provide more visibility into your business

If you think your company could benefit from outsourcing your accounting services, contact Signature Analytics for a free consultation.

 


 

Discover how outsourced accounting can provide more visibility into your business