Top Five To-Dos for CFOs to Keep Finances in Order
Having worked with a large number of tech startups, we’ve seen chief financial officers for early stage companies struggle to provide timely results – it becomes a fire drill when someone asks the “wrong” question. This may not even come to light until we are brought in to provide a report of some kind on the financial statements. It’s not uncommon for CFOs to play several different roles in a startup, in addition to being the sole person responsible for the accounting.
Here are some things that CFOs should do to keep track of their company’s finances:
Leverage relationships with the company’s outside accounting firm for any unusual or complex transactions and any special tax issues. CPA firms have a much deeper bench of resources, and it’s more than likely that it will be more cost effective and efficient to engage them to do the research and make recommendations.
Close the books on a monthly basis and give yourself a strict deadline for getting this done (i.e., ten to twenty business days after month end). This will ensure the books are up-to-date and, most importantly, provide a better picture of how the company is functioning financially. You can’t responsibly help your company make solid business decisions without knowing where the company is financially.
Prepare a monthly write-up outlining how the company is performing to provide to upper management and/or the board of directors, even if they don’t request it. This can be part of the monthly closing process discussed above. This should include comparing results to plan (you do have a plan, don’t you?).
Be organized. Immediately scan supporting documents such as vendor invoices, bank statements and reconciliations, agreements, and contracts to a secure server, with limited access. Use a filing system that is sustainable, so you can find documents years after they were executed…you may need them in the future.
Document the company’s accounting policies and internal control processes, especially if the company expects to engage in an audit, valuation, and/or round funding in the future. This will provide continuity on the recording of transactions, drastically cut the preparation time for an audit, and provide insight into potential improvements in the company’s internal control process.
It’s always easier to maintain accurate books and records from the outset than recreate them when time is of the essence. You’ll be happy you did!