Unleash your finance department

Imagine that you couldn’t generate firm operating statistics, exception reports, practice area statistics and billings. Your firm couldn’t strategically plan effectively.

The finance department works diligently behind the scenes on many tasks that keep your company running and growing. But many companies undervalue and underutilize their finance departments and, thus, lack the proper financial information to achieve maximum profitability. Are you taking full advantage of what your finance department can offer your firm and helping it operate smoothly?

At Your Service

Of course, your finance department can provide basic accounting, billing and collection services, and management reports. But it does more than just manage and track finances. Consider, for instance, that some services cost your firm more to provide than others. Let’s say your marketing group’s new campaign is netting a lot of new work for a particular service. That’s a windfall for your firm, right? Not necessarily. If you’re pricing the service too low, you could actually be losing money. Your firm needs to know the break-even point for every service you provide so you can price it accordingly. Your finance department should be able to generate this information and tell you whether you’re making a profit.

But that’s not all this key area can do. Think about this example. You have no firm-wide relational database, and your marketing partner or director is trying to increase cross-selling. Your finance department already has captured some client information that marketing needs, including contact data, billing and payment history, credit reports, and information on parent companies and subsidiaries.

Here’s one more way your finance department can help. Say your partners expected large payouts at year end. But, unfortunately, they didn’t receive them because the firm needed more office space and new computers. Now your partners are crabby. Had they seen a budget earlier, one that specified upcoming expenses, there wouldn’t be any surprises.

Staffing Needs Change as Firms Grow

Marketing, technology, administration and finance professionals are increasingly holding important roles in companies. And all companies, regardless of size, should delegate work, especially in the finance department. But when has a company grown so much that it delegates work and also needs a CFO to work with its partners and outside forensic accounting firm CPAs? Some guidelines:

• Companies with fewer than 25 employees usually need only an accounting manager to handle daily financial responsibilities, and often the managing can oversee most financial analysis. Outsourcing day-to-day financial duties also has become a cost-effective way for smaller companies to manage their finances.
• Companies with more than 25 employees have different needs. For them, a controller and additional personnel, including a time and billing clerk, accounts payable clerk and collections manager may need to handle the volume of financial activity. The controller should be responsible for financial reporting, budgeting, general accounting, financial analysis, payroll and supervising the financial staff. By this point, the manager merely supervises the department and reads the financial reports.
• Larger companies with 75 or more employees usually hire a finance director (typically a CPA) to oversee general finance functions and the department’s staff. In addition to the staff a medium-sized company needs, a larger company’s finance department also will need a cashier supervisor, payroll clerk or supervisor, financial reporting accountant, general ledger accountant, special projects accountant, and a partners’ accounts supervisor.

Invest Wisely

There are countless other ways your finance department can assist your company. It can provide tax planning, more advanced financial modeling, capital structure requirements, new billing programs, methodologies and pricing models (coordinate these items with your forensic accounting firm’s management consultants).

A well-staffed finance department can make your firm run more smoothly and increase profits. The time and money spent in this department is one of the smartest investments your company can make. We can help you determine the best organizational structure or find the right level finance director or manager for your firm. Please call our forensic accounting specialists to begin.

Perform a Finance Department Checkup

Just as employers regularly evaluate their employees, companies should review their departments’ efficiency and profitability -- especially the finance department’s. Review this list, and note where your firm’s finance department falls short. For each item, work with the department to change each process and figure out how your current system affects the firm’s bottom line, with respect to lost profits and productivity, and added expenses.

Does your finance department perform these 10 tasks?

• Develop and maintain accounting systems and procedures for regular accounting and financial reporting that is understandable and useable.
• Prepare annual budgets, quarterly forecasts and other management reports.
• Monitor actual and planned results each month.
• Identify long-term and short-term capital expenditures (capital budgeting for the firm).
• Construct a cash flow plan that minimizes borrowing and maximizes return on investments.
• Outline the ideal capital structure for the firm.
• Define how to increase profitability -- for example, shorten the days outstanding in WIP and A/R.
• Plan to minimize and defer tax, and file all necessary tax returns on time.
• Analyze leasing compared to purchasing options.
• Examine the pros and cons of outsourcing various administrative areas.

Contact our forensic accounting services by email or call us at 1 (888) 875-9770 to look at some ways you can tighten your internal controls to prevent fraud.

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