"There are no secrets to success. It is the result of preparation, hard work, learning from failure." ~ Colin Powell
We have extremely tight financial controls, and a financial planning system that tracks every single important aspect of our financial health. THINK: Yes or No?
Accounting... Cash Management... Financial Analysis... Financial Reporting... Loans/Financing... Tax Planning...
Financial Management is about keeping track of MONEY... debit and credits to your checking accounts, credit cards, payroll, etc. It is about creating systems to keep an honest set of books and ultimately to:
Basically, there are just two reasons for financial management:
1) The IRS requires you to keep records of your assets, liabilities, income, expenses and ultimately, taxable profits (How much you owe THEM for all your hard work!);
2) Your ability to make informed financial decisions regarding the best way to deploy capital... producing the highest Return On Investment (ROI)... the highest Economic Value Added (EVA)... and your ability to raise money either privately or publicly... leading to ENTREPRENEURIAL GREATNESS.. I.E. REAL WEALTH!
According to the American Management Association (AMA,) "Financial Management is the process of managing the financial resources, including bookkeeping, accounting and financial reporting, budgeting, collecting accounts receivable, risk management, planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise."
The financial management function is generally concerned with budget procurement, allocation and control of financial resources. Key objectives are...
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Just for clarification...
Remember that everything you do in business has a direct or indirect financial implication. Setting up an accounting system, collecting bills, paying employees, suppliers, and taxes correctly and on time are all part of running a small business.
Excellence At This Function Means You Can Say...
This Golden Function is composed of the following sub-functions and actions — things which must be done to guarantee your success.
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|1.||FIATAM||Study alternative accounting methods and choose one best suited to industry and stage of business.|
|2.||FIATBS||Systematize the creation of a company-wide balance sheet and a policy for reviewing it at least once a month.|
|3.||FIATDP||Maximize depreciation on all company assets.|
|4.||FIATFS||Systematize the creation of a cash flow statement and a policy for reviewing it at least once a month.|
|5.||FIATHC||Hire a company to perform all CFO responsibilities.|
|6.||FIATPL||Systematize the creation of a company-wide profit and loss statement and a policy for reviewing it at least once a month.|
|7.||FIATWA||Hire an accounting company to review the business once per quarter.|
|1.||FICGCC||Measure current cash conversion cycle and implement ways to reduce the time period of the cycle.|
|2.||FICGCF||Identify all factors that affect current cash flow. Find ways to decrease or slow payments out and increase or speed up payments in.|
|1.||FIFABA||Identify, collect and analyze useful business data unique to our company that will assist in making current and future financial decisions.|
|2.||FIFACA||Perform a formal cost-benefit analysis on the top three new business proposals currently being considered.|
|3.||FIFACO||Reduce working capital and improve cash flow, control and optimize costs, and manage risks.|
|4.||FIFADI||Identify, quantify and prioritize discretionary income to create guidelines for the best use of funds.|
|5.||FIFAEA||Perform a break-even analysis on a new proposed area of growth.|
|6.||FIFAFE||Hire a coach, mentor, expert, consultant or company to help perform this function.|
|7.||FIFAFP||Create a financial plan for the next 1-3 years.|
|8.||FIFAFR||Identify critical financial ratios that define growth or decline of business operations and/or company income and expenses.|
|9.||FIFAOC||Analyze current use of funds. Find least productive return on investment. Reduce or eliminate this use to free up funds for a more productive use.|
|10.||FIFARA||Calculate the current cash return on all major assets.|
|11.||FIFARI||Calculate the current return on cash invested.|
|12.||FIFAVA||Determine the Economic Value Added to the company over the last 3 years and project current years EVA.|
|1.||FIFRAE||Prepare company books to facilitate an external audit.|
|2.||FIFRAI||Perform an internal audit to monitor and improve operating results, evaluate internal controls, verify financial records and detect fraud.|
|3.||FIFRAR||Standardize the process for accumulating data and organizing the format for an annual report.|
|4.||FIFRBB||Create budgets for every category of costs. Reduce budget line items down to the smallest reasonable category.|
|5.||FIFRDS||Integrate all financial operations into a single software program.|
|6.||FIFRFP||Perform a thorough financial projection for how a currently reviewed opportunity or difficulty will impact the rest of my company's finances.|
|7.||FIFRFS||Master the procedures for creating pro-forma statements to improve the company's ability to anticipate and take advantage of new possibilities.|
|8.||FIFRIS||Standardize and systemize the accrual of data and the presentation of financial statements that improve the ability to manage.|
|9.||FIFRMM||Develop and update Financial Management Manual for all financial management responsibilities, activities and processes.|
|10.||FIFRPR||Establish dedicated dates for periodic financial reporting and review.|
|11.||FIFRRR||Update investors to current company status and immediate future business predictions.|
|1.||FILFAI||Present the growth plan to angel investors for new funding.|
|2.||FILFBL||Get a bank loan.|
|3.||FILFEL||Perform lease vs. buy analysis of next major capital investment.|
|4.||FILFFA||Investigate the benefit of factoring company accounts receivable to acquire new funds now.|
|5.||FILFFF||Secure financing from family and friends.|
|6.||FILFFI||Make a list of all possible expansion financing and perform a thorough review of each potential source.|
|7.||FILFGP||Hire person/company to write a grant proposal.|
|8.||FILFIO||Sell stock in the company through an initial public offering.|
|9.||FILFLP||Explore the opportunity of leasing company products and services to customers vs. sale.|
|10.||FILFMF||Search out sources for mezzanine financing.|
|11.||FILFNT||Collect ideas from everyone in regard to nontraditional financing to explore every possibility of acquiring new funds.|
|12.||FILFRE||Refinance existing debt.|
|13.||FILFRF||Sell ownership interests in future income streams.|
|14.||FILFSF||Secure financing from suppliers including improved terms for repayment.|
|15.||FILFSL||Get a SBA loan.|
|16.||FILFSM||Get seed money to achieve the first stage concept of proof of the product or service.|
|17.||FILFSY||Investigate the possibility of acquiring needed funds through a syndicated loan.|
|1.||FITXTP||Hire an accountant to advise on tax planning. Schedule to review the status twice a year prior to the end of tax year.|