If you are like many business owners, reading, managing, and making use of your financial statements is a challenge. Adam Boatsman presents a process for managing your internal accounting function, including the daily, weekly, monthly, and annual activities you should be doing in order to ensure you have accurate, bank ready financials each and every month.

1. My Records are a Mess – Why?
3/23/2011

2. How Did I Get Here?
• Monthly – or Interim Reporting:
• Emphasis is on TIMELINESS not ACCURACY
• Annual Reporting:
• Emphasis is on ACCURACY not TIMELINESS
• Biggest Cause of Problems – meaning ‘bad financials’
• Emphasis on accuracy – people spend too much time in the weeds
• No emphasis on anything – meaning nobody is actually reconciling or closing anything
• Desire to go backwards to be ‘accurate’
• No analytics
• Bad starting point (not reconciling to annual financials / tax returns)
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3. The Basics
• Every good ‘controller’ (whether you are the CFO filling the controller
role, the owner filling the controller role, or an external service
provider) should have a schedule.
• Daily (sales, COGS depending on nature of the business)
• Weekly (bills, routine transactions such as payroll)
• Monthly – Close the Books!
• Take a ‘Balance Sheet’ approach, not an ‘Income Statement’
approach (but don’t forget the income statement)
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4. Basic Routines
• Daily
• Enter sales, point of sale system cost of goods sold
• Receive payments
• Check bank accounts / credit card accounts for odd transactions
• Weekly
• Enter / relieve payroll transactions (e.g. accrued wages, payroll taxes – assuming weekly payroll)
• Enter bills
• Bi-Monthly
• Pay bills
• Update WIP schedule
• Monthly
• By 5th of the month – reconcile against physical inventory counts and internal balance sheet balances (e.g. billings
in excess, work in process); perform cursory review of P&L
• By 10th of the month – reconcile each balance sheet account (e.g. reconcile cash, reconcile loan balance /
principle, reconcile to physical inventory counts)
• Designed to eliminate redundancy / duplication of effort
• Everyone pitch in to fill gaps that currently exist
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5. Basic ‘No Nos’
• Negative Asset and Liability Accounts
• Negative expenses (unless explainable by a credit – emphasis on
timeliness)
• Significant other income / expense items
• Loan payments include principle and interest
• Auto loans booked to ‘vehicle expense’
• Owner distributions (including tax distributions) on P&L
• Expensed assets (look in repair / maintenance)
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6. Advanced Routines
• Weekly
• Calculate basic key metrics (e.g. A/R days, gross margin, sales / cash trends)
• Perform accruals (e.g. pre-paids)
• Book inter-company transactions (e.g. unpaid rent)
• Monthly
• By 5th of month – analytics
• KPIs
• Evaluate P&L for ‘issues’ (variances from budget, variances from prior year)
• Evaluate and explain variances
• Recommend corrective actions
• Advanced ‘No Nos’
• ‘Missing’ transactions (e.g. routine transactions that aren’t there, like incorrectly
booked rent, insurance payments)
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7. What Can You Do?
• Insist upon a monthly packets (or produce one – if you’re it)
• Come up with five to eight KPIs that help you run the business –
demand that these get produced every month
• If you don’t like doing it – get some help (but use guidelines below to
budget what you should expect to pay)
• Don’t discount the time / cost involved – but if you demand excellence
you’ll see the results
• $1m - $3m – likely a ¾ to full-time job including all bill paying
• $3m - $5m – likely need a part time assistant or ‘help’ (receptionist multi-task) if any
advanced moves are going to take place.
• $5m - $10m – 2 to 3 person team and likely someone in the more advanced role of
experienced controller or CFO (good CFO – handles banking relationships, heavy
controller / light CFO can prepare everything so that you can manage bank
relationships)
• $10m and up – team approach
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8. Why Should You Care?
1. More likely to detect problems in the business as they are occurring
2. More likely to detect / prevent fraud
3. Lower your tax compliance bill
4. More reliability with lenders / finance partners
5. PEACE OF MIND!
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9. Questions?
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