It\u2019s that time again \u2013 when thoughts turn to creating new habits that will help us get in shape. Resolutions are made to spend less time staring at digital screens or binge-watching our favorite shows. Those who manage to keep their resolutions all year attribute their success to an accountability partner. This applies not only to our personal life but also to business.<\/p>\n
No one regrets adopting and maintaining a healthy lifestyle. What people do regret is that they waited too long. Again \u2013 this holds true in business. To succeed, businesses should establish and carefully adhere to a set of financial guidelines. What better time to get started than at the beginning of a New Year! <\/p>\n
A recent report by a U.S. bank stated that 82% of all businesses fail, and the reason can be traced back to the mismanagement of cash flow. <\/strong><\/p>\n Let\u2019s focus on ways to keep your business from becoming a statistic and become one that will not only survive \u2013 but thrive. <\/p>\n Budgeting and forecasting provides information that allows you to check the company\u2019s vital signs and assess how decisions impact cash flow. A business may be founded by one person but it\u2019s extremely rare that a person can single-handedly grow a business to reach the 6 or 7 figure mark without assistance. Fractional CFOs have acquired a high level of proficiency, and they understand that digital tools drive success. They tap into their deep technology skills to extract real-time, relevant, and secure data. Business risks are more pronounced today than they were prior to the advent of the digital universe. Innovations have reshaped our world since Benjamin Franklin coined the phrase: an ounce of prevention is worth a pound of cure. Organizational leaders are usually inundated with operations and sales to think long and hard about risk exposure, not only internal but also the potential for third-party supplier risks. If you experience an unfortunate loss, do you have plans in place to act immediately? Two procedures that should not only be on your radar \u2013 but should be implemented are:<\/p>\n \u25cf Pre-Risk Mitigation – setting up right processes and controls <\/strong> \u25cf Post-Risk Mitigation – evaluating the risks to mitigate the litigation. <\/strong> Tax filing season will soon be in full swing which means organizations are already looking for ways to reduce their tax liability. One cash register that\u2019s often overlooked is the one marked: Research & Development (R&D) tax credits. R&D tax credits aren\u2019t the only way to recover revenue; your business may receive a cash flow injection by performing Royalty \/ Licensing and other Compliance Audits. In addition to reducing your effective tax rate, these cash incentives can enhance your ROI and strengthen contractual relationships. <\/p>\n1. Budgeting and Forecasting<\/h3>\n
\nCash flow to a business is like oxygen to a human \u2013 they are necessary for long-term health and survival; without a steady stream of cash, expenses won\u2019t be paid. A budget provides data that illustrates past performance, serving as a tool to help you forecast where you are headed. Accurate forecasting allows you to observe the flow of cash \u2013 whether it\u2019s coming in or going out of the business. Monitoring the circulation process will ensure that everything functions properly. <\/p>\n2. Consider Bringing in a Fractional CFO Advisor<\/h3>\n
\nLeaders typically are focused on day-to-day operations and lack the time and vision to chart a path forward. A fractional CFO advisor can deliver fresh perspectives and new insights; they can see through the haze and isolate what is leading to growth and what may be hindering it. Their expertise is indispensable as they can help ensure that your business will be profitable in the short and long term. <\/p>\n3. Automate Systems and Processes <\/h3>\n
\nBusinesses that haven\u2019t already adopted the latest technology solutions for finance and accounting ERP implementations will lack the agility to respond as needed to keep pace in a competitive market. <\/p>\n4. Risk Mitigation <\/h3>\n
\nConsider the right processes and controls to streamline data, verification, and approvals \u2013 and its accountability. Improve operations, protect assets, and prevent fraud.<\/p>\n
\nRecurring Internal \/ Forensic Audits ensure accuracy and compliance on both the financial and IT side. Having a plan in place to conduct quarterly Accounts Payable and Time & Expense audits will maintain data accuracy and compliance.<\/p>\n5. Have a Plan to Recover Revenue <\/h3>\n
\nIt\u2019s estimated that IRS tax credits save U.S. businesses \u2013 spanning all industries and sectors \u2013 between $10 to $12 billion annually. So why aren\u2019t more businesses taking advantage of these credits to lower their tax bill? Most self-censor: they mistakenly think it\u2019s reserved only for business giants.<\/p>\nHow a Fractional CFO Advisory Team can Help you Chart a Successful 2022<\/h3>\n