- Getting the cash you need to grow, or
- Boosting your confidence in your numbers and how you talk about them.
This list includes fraud, corruption, misuse and mismanagement. The most dramatic problems come in the wake of mistakes made by owners, staff, or outside advisors that aren’t paying enough attention. Regardless of how it happened, the outcome is almost always more expensive than the good management practices that would avoid them. So consider a CFO or another outside advisor as a shield, security blanket (or sun filter) that can help you look and see the hidden risks in your business.
10 Things An Experienced CFO Can Help You Avoid
- When being cheap gets expensive...When your start-up has an interested investor and you need a clean set of financials. Too bad you haven’t kept your books up to date and now you have to pay someone to get it all straightened up in a hurry.
- Where’s the Beef? I mean bills!... When your balance sheet shows a zero balance for Accounts Payable but you know cash is tight, and it turns out the person paying bills is keeping overdue notices in a folder so they don’t show up on your Accounts Payable list.
- #time for a new tax advisor...To avoid peak season tax preparation rates your company traditionally files an extension on April 15th; until the IRS fines you for not paying taxes on time.
- That time your computer died and 20 years of accounting work wasn't backed up properly...
- Run to the bank...When your company is struggling for cash and you find an unopened envelope with a $20,000 check from 3 weeks ago.
- Communication fail...When you can't answer an investor's questions during a pitch because the slides don't match the projections.
- Ouch...When you take on a loan without fully understanding the terms; and the lender takes daily payments from your checking account and charges obscene interest.
- When your trusted, long-term employee who does payroll has been giving herself extra days off with extra pay.
- When keeping inventory on a cash basis makes your margins look better than they really are and your projections are way off from reality.
- When a recently fired employee files a whistleblower complaint and a new audit shows that a key staff person used the company credit card to pay for an affair (hotels, liquor) with another employee. TIP: Switch your audit firm every few years.
Do you have any financial horror stories? I’d love to hear about them and how you recovered! Contact me and let me know what experience has taught you.