But even the most successful acquisition can stretch a finance organization’s resources to breaking point, and the road to harmonious integration, like the road to true love, seldom runs smooth. Before you plunge into an M&A deal, it’s worth asking: Will your finance people, processes and systems be able to handle it?

Here are three questions for CFOs eyeing an acquisition, and some pointers that can help you find the right answers.

1. Does your transition lead have deep M&A experience? Checklists and written procedures are important, but they’re no substitute for hard-won, hands-on experience. Steering an acquisition calls for a leader with a broad understanding of finance processes and the various forms they can take in different companies – not just the particular company that he or she happens to be working for. It calls for someone with business acumen as well as finance know-how.

While many large businesses can afford an experienced M&A staff, small and midsize firms don’t have that luxury. They may be doing a purchase for the first time. Chances are, they don’t have the right expertise on staff. Or if they do, they’re underutilizing it (and so overpaying for it), because acquisitions tend to be few and far between.

2. Can you handle the operational side of due diligence – and execute after the handoff? You have to do your homework, and it doesn’t end at the purchase date.

Can you move fast enough to get all the info you need from the exiting finance team? Key personnel at the acquired company tend to head for the doors, often before the purchasing company can get a clear picture of how current processes work. It’s a good idea to lay down clear mandates and guidelines for the transfer of this know-how and offer a completion bonus if goals are achieved.

As you head into the integration cycle, inadequate due diligence can result in inaccuracies in the financial statements, tax complications, audit hassles, cash flow leakages, and unplanned working capital infusions. Review your list of vendors and service providers to make sure you don’t get stuck with unnecessary payments. Keep in contact with customers so that there are no delayed or misplaced receipts, and there’s no slowdown in collection activities. Inform the relevant state, federal, and statutory authorities about the change of ownership to avoid fines and penalties. Review the pre-acquisition financial statements to get a handle on goodwill and tax in the post-acquisition period.

3. Can you figure out where your operational processes will easily mesh – and where they won’t? M&A is all about synergies, and your focus naturally will be on creating value by combining business strengths and merging processes. But you can’t afford to overlook areas where synergies don’t exist, or where the acquired company’s processes are very different from yours; for example, it may have a unique set of processes around invoicing. Such areas will likely be the biggest challenges for integration. Documentation is crucial; you’re going to need it when you start mapping and meshing these processes into your current systems.

Companies that lack robust finance and accounting systems are at a distinct disadvantage here. If your accounts payable process, for example, entails a manual paper-based workflow, you could be looking at some real headaches when it comes to adding invoice volume from the acquired entity. If you have a scatter of loosely connected tools, or a system that can’t support a multi-entity structure, pulling data from the acquired company’s systems – which may be every bit as disparate as yours – will be a challenge.  Evaluating your own operational systems before acquiring and attempting to integrate a new entity that might break them is a wise course of action.

Even if you’re not in the market for an acquisition right now, it’s worth planning ahead for the day when you find a bargain that you can’t pass up. When you think about it, what kind of organization is best positioned to make the most of M&A? One that’s not tethered to a fixed-cost structure, one that’s agile enough to grab the opportunities, one with a strong foundation of people, processes and systems enabled for growth.

Is your organization there yet?

Timely, reliable financial reports are the eyes and ears of effective decision-making. Without good data, it’s impossible to hammer out a winning business strategy. You can’t be sure that your company is truly creating value, the only ticket to long-term growth and prosperity.

Of course, every organization produces statutory reporting, if only for tax purposes. But that’s not going to answer the questions that really count – especially the big ones around profitability. Which products, services, or projects are the most profitable? Which locations bring in the most revenue? Which customers are your most valuable? And how do these profit variables interact?

These are vital questions, yet at many small and midmarket companies, effective management reporting remains patchy or non-existent. What’s going on here? The following are some financial reporting challenges that may be hobbling your business, and some ways forward:

1. Your people don’t have the time, the skills, or the business perspective to deliver the information you need. Small and mid-market companies have limited budgets for G&A, including finance, and staffers’ hours are typically consumed with paying bills, invoicing clients and meeting statutory reporting requirements. They may have only limited knowledge of the spreadsheets and other finance tools they use for their day-to-day tasks. And, chances are, they lack the high-level view of the business that would enable them to quickly “get it” when an exec needs fast answers to strategic questions.

As a result, the exec ends up delving into the nuts-and-bolts data and compiling the results himself or herself. Not a great use of an valuable resource, and not even a reproducible process for the next time a big-picture question comes up.

What you can do: Consider upgrading the skill sets available to your business. Top performing companies find ways to reduce their transactional processing costs so they can afford higher level financial leadership and allocate time towards more granular reporting and analysis. Free up your top talent from endless multitasking and micromanaging low-value data collection processes.

2. Your finance systems can’t provide multi-dimensional views of your data. Immature systems may lack robust reporting capabilities. QuickBooks, for example, is a great small company accounting package and offers some basic functionality, but once a company grows beyond a single product or location, its limitations quickly become apparent. It can’t easily give you a detailed view of, let’s say, expenses for multiple projects and by location.

At many SMBs, disparate, poorly integrated systems – accounting, time tracking, billing – are the rule, so data has to be manually assembled, manipulated and formatted. Large organizations can compensate for system deficiencies by dedicating skilled financial analysts to reporting tasks, but smaller firms don’t have that luxury – see 1, above.

What you can do: Consider investing in higher-end finance systems that give you more ways to slice and dice your data and develop consistent, reproducible reporting processes. New cloud-based financial management and accounting packages offer powerful functionality without a massive upfront investment, and the vendors are increasingly positioning these products to meet the needs of small and midsize organizations. They’re definitely worth investigating.

3. Your systems are not set up to support high-value reporting. The old IT maxim “garbage in, garbage out” certainly applies here. If you want visibility into revenue by product or project type, you’re going to need a front-end coding process that supports that breakout. Is your chart of accounts set up to capture the information that’s most useful for decision-making? If not, you’ll face a real challenge in trying to recapture it at the back end.

What you can do: Before implementing a new finance or accounting tool, think carefully about the reporting needs of the business. Review your chart of accounts for any discrepancies with your intended end-use. Don’t assume that the way you’ve always done it is the best way.

Whatever combination of people, processes and technology you shoot for, a considered approach to financial reporting will always beat the ad hoc, knee-deep-in-data approach hands down. In the long term, having real financial data on which to base your decisions is the only way to keep your company on the path to value and growth.

Look around the offices of the finance department, and you’ll find plenty of evidence to back that up. Everyone is busy, no question, and staffers will often tell you they’re stretched to the max to get everything done.

But activity is one thing, productivity is another. How do you gauge the effectiveness of all that activity? In other words, how do you measure the efficiency of the finance and accounting (F&A) function?

Here are some tried-and-true, widely used metrics that can help you gain that crucial insight:

1. Finance department cost as a percentage of revenue. This is a measure of all the human resource expenses and systems costs associated with the finance function (including allocations for items like benefits, facilities, and supplies).

The companies with the best scores on this metric achieve finance costs of 1.2 percent of revenue or less. The range of performance is wide, with world-class organizations operating at a little over half the annual cost of run-of-the-mill finance departments and with less than half the staff, according to research by The Hackett Group. Performance varies by industry, too. In manufacturing companies and organizations with significant materials or contractor costs, finance department cost can be as low as 0.4 percent of revenue.

This is a critical metric, and clearly finance leaders should strive to keep their costs low, but it’s important to view this data in conjunction with the other measures described below. A low-cost, bare-bones finance operation doesn’t serve a company well if it’s ineffective, and it may not seem such a great bargain once you consider all of the indirect expenses.

2. Cost per vendor invoice. This is a measure of the total monthly cost of payables personnel, allocation of systems maintenance associated with payables processing (such as ERP and workflow tools), costs of payments (e.g., wires), and material expenses (checks, stamps, envelopes and so on).

Companies that perform poorly on this metric can find themselves paying anything from $10 to $15 per invoice, and some may range as high as $20. In contrast, the top performers hold down per-invoice costs to around $5.

3. Days sales outstanding. DSO measures how effective finance is at collecting cash. This key indicator of the health of working capital tends to vary across different sectors of the economy, so it’s important to use industry-specific benchmarks. Alternatively, a company can compare its actual days sales outstanding to its ideal DSO (i.e., the DSO that would result if all customers paid on time per their contract terms).

4. Forecast and analysis production. Here’s an informal metric, or rather group of metrics, that seeks to answer a simple question: Is management getting the data it needs to make informed decisions? For example, do executives receive a monthly forecast along with a variance analysis comparing forecast versus actual results – two reports that are pretty much table stakes for a productive finance function? How timely is the production of this information, and how much of finance leaders’ time does it consume?

While the detailed construction of this measure will obviously depend on each company’s specific situation and practices, here’s a useful benchmark: at high-performing organizations, CFOs spend 20 percent of their time or less on compliance, reporting and other tactical accounting issues, and 80 percent or more of their time on strategy and business analysis.

A comprehensive view of a finance function’s performance would combine all four of these measures, carefully weighing each one against the others. Doing so can throw a highly revealing light on what the function is really achieving. Sure, everybody’s busy. But are they effective?

If Mencken had been a CFO he might have observed that when it comes to improving the finance functions of small and midsize businesses, every complex challenge has a traditional solution that’s obvious, intuitive — and totally self-defeating.

Here are three common challenges for SMB finance departments, and the traditional responses:

1. You’re not getting the timely, accurate financial reporting and analysis you need, so you hire a highly qualified finance pro to deliver the goods. Fingers crossed, this new person will bring a wealth of experience that can benefit your organization. But how do you know that this experience was gained in applying industry best practices, as opposed to participating in established company-specific routines? Chances are, your new hire will simply replicate whatever procedures were standard in his or her previous role.

Consider also the 80/20 rule, a.k.a. the Pareto Principle. This handy rule-of-thumb which tells us (among other things) that 80 percent of your profit comes from 20 percent of the things you spend time on certainly applies here. In the SMB, the new hire will spend 20 percent of his or her time on work that requires a high level of skill – the work you hired them for – and 80 percent on tasks that could be performed just as efficiently with a more basic skill set. Trouble is, you’re paying just as much for the 80 percent as for the 20 percent. In effect, you’re overpaying for the skills you need.

True, you could hire someone with just the lower level of skills and pay less. But then your new employee will be qualified for the 80 percent of the work that’s routine, but under-qualified for the crucial 20 percent that demands advanced knowledge and skills. So you’re back where you started.

2. Some of your processes generate endless headaches and manual work, so you invest in a software package to solve your needs. Sounds good … but typically companies struggle to leverage the full capabilities of the system due to only basic understanding of the solution. Assuming the right investment and the best case result, you may overcome the immediate challenge, but the next problem is always waiting in the wings. What happens then? Often, another software purchase to solve tangential problems. Will the first system be able to talk to the second, or the third or fourth? Or will your staff end up shunting data manually from one tool to another? Acquiring a bunch of disparate systems can limit your visibility into key indicators, introduce errors into your financial data, and hobble your company’s growth.

3. You need to focus on the strategic decisions that drive revenue and growth, so you try to pull out of the more tactical types of work, and rely on your staff to pick up the slack. The pressure is on for finance to demonstrate its value-add. CFOs at companies of all sizes struggle with this mandate, but the challenge is especially acute in the finance departments of smaller businesses, where processes and controls are just not mature enough to sustain themselves without constant intervention from the CEO or CFO. Paper- and email-based processes provide minimal visibility into revenue and payment streams, leaving businesses vulnerable to inaccuracies, unbilled revenue, reporting delays and even fraud.  Processes are critically dependent on single “owners” who, let’s not forget, can walk out the door at any time, taking crucial operational knowledge with them. The executive’s role is not so much that of corporate strategist as that of number cruncher, trainer, and process troubleshooter.

One solution to these problems proven to work is an outsourcing partner with a comprehensive span of capabilities. It’s an approach that many large enterprises have long relied on, but which has only recently become available to small and midsize organizations. An SMB-focused outsourcing partner can provide:

* The right finance and accounting expertise. On-demand staff with the level of skills you need, right-sourced from a global personnel pool, can give you higher quality management and deliverables within a low variable cost structure.

* Scalable, integrated technologies. A vendor’s established software-as-a-service F&A platform can help you automate accounts receivable and payable processes as well as provide greater transparency into the finance function. Leveraging an established platform allows you to avoid the common implementation pitfalls of doing it yourself, at a fraction of the total cost, and with much shorter implementation times.

* Best-in-class processes and controls. Best practices drawn from an entire industry – not just one or two companies – enable you to accelerate reporting; guard against lost revenue, overpayments and fraud; and find the time to make strategic contributions at the highest levels of the organization.

It’s not the traditional approach, nor perhaps the most obvious one. But it’s certainly the solution that’s clear, simple … and right.

Can your back office financial operations support this growth without falling apart and adding non-scalable costs?

Consider what happens in most small and midsize businesses when they start to push up against the limits of QuickBooks and Microsoft Excel. As particular processes become unmanageable, they invest in specialized point solutions to ease the current bottleneck: a customer relationship management (CRM) system to track opportunities and clients, for example; perhaps a purchasing database to help manage vendors or a time entry tool to track hours.

By and large, these solutions do the job they’re intended to do, but their limitations soon become apparent. They don’t talk to each other, so data has to be transferred manually between systems. The service firm now finds that billable hours are tracked in the time system, but salary information and other costs associated with its people are recorded in the accounting system. So now if managers want to find how much it cost to complete a given project, they have to haul data out of both systems (and perhaps others) and assemble and format it. How many hours did each person spend on the project? What was their billable rate? Were profitability goals met at the department, project and even employee level? Finding the answers can be an exhausting process.

Each manual entry point for the data is a bottleneck in your work flow, a source of staffing cost and inefficiency, and an opportunity for errors. The name of the company may have been typed slightly differently in the accounting system than it was in the CRM, resulting in confusion when looking between systems to calculate commissions. Or let’s say a customer changes their address — somebody has to remember to update the info in the CRM system and the billing and accounting systems.

As the company grows, the problems and costs grow too, and in linear or even exponential fashion, resulting in a classic non-scalable-growth model: If you do two million dollars’ worth of business (for example), you need one back-office person for a particular process; if you do $4 million you need two people or more, $6 million you need four or five. It’s a replication mentality.

Is there any way around this math? There is, for companies that decide to stop replicating and start integrating.

Just a few years ago, migrating to a truly integrated, growth-ready system meant a major upfront investment — often in the high five- or even six-figure range — in hardware, licensing and technology setup.

Today, though, the explosion of software-as-a-service (SaaS) options has placed sophisticated enterprise systems well within the reach of many SMBs, enabling them to build a rock solid foundation for growth without the sticker shock of a server-based model. If you haven’t investigated this market recently you might be surprised at the depth of functionality SaaS finance technologies can offer. In particular, take a good look at:

* Enterprise resource planning systems. These transaction-crunching systems are the foundation of  integrated, companywide financial information, with functionality ranging from a general ledger, to purchasing, to order processing, to revenue management, to business intelligence. SaaS vendors are fighting tooth and nail for the SMB space, which is very good news indeed for smaller businesses. According to the 2011 ERP Report from software analyst firm Panorama Consulting Group, “the scope of SaaS functionality has broadened significantly, and companies have responded in kind by increasing their adoption rates of SaaS offerings.” Nearly one in five survey respondents reported using SaaS for their ERP solutions in 2010 — a massive increase over the previous year’s 6 percent. Panorama predicts heavy adoption of software-as-a-service models by SMBs in the next twelve months: “Assuming SMBs and start-ups lead us out of the economic doldrums as they have in past recessions, they will look to [SaaS] enterprise software to provide their business foundations for growth.”

* Document management and workflow solutions. When nearly every step in a process has to be communicated and tracked via paper or email exchanges, as traditionally happens in the invoicing process for example, it’s inevitable that some information is going to be invisible. You’ll always have questions like: Where is the document in the process? Has it gone to the client or is it still in the approval process?

SaaS document management tools deliver the visibility that email lacks. With the documents saved to a central location and available online, authorized users can easily find the information they need from anywhere via a Web browser. Automated workflow notifications ensure that processes run smoothly, with minimum delays and interruptions. SaaS document management also eliminates the need to save important files to a local hard drive or server and do constant backups.

Integration and scalability are two faces of the same coin, and the beauty of SaaS model is that it helps you ensure that both sides are polished and efficient, with just a moderate investment of time and money. It’s a tremendous opportunity for SMBs to lay the groundwork for growth well into the future. So … what are you waiting for?

It might be an exaggeration to say that smaller companies are “drowning in paper.” But, no question, an overreliance on hard copy creates an obstacle to the healthy, efficient functioning of their finance departments.

Take accounts payable, for example. More than 84 percent of all invoices are still received on paper or via email and faxes (which then become paper), according to a just-released survey of some 300 A/P pros by analyst firm PayStream Advisors Inc.* “The biggest invoice management challenges remain an overreliance on people- and paper-based processes, and the high number of discrepancies and exceptions associated with such a system,” the report notes. “Emerging concerns include discount capture and visibility of spend.”

Indeed, visibility into paper-based systems is so challenging that many organizations don’t even know what it costs them to process an invoice, but PayStream estimates the average cost at small businesses at $15.58. This is  about 40 percent higher than at midsize and large firms, which have seen the benefits of automation.

Of course, a paperless back office is no guarantee of efficiency. But it is the foundation of efficiency.

A glance around the A/P desks at a typical small business reveals why that’s so. Here’s a tale of two invoices, one processed in a paper-based system, and one paperless.

Paper-based: Terri, the office manager, opens the envelope, sees that it’s a bill from a vendor, and walks it over to Peter in accounts payable. Peter decides that it’s an invoice for marketing services and takes it to Andrea, the Marketing Manager, for approval. But wait, she’s at a conference, so Peter scans a copy, emails it to Andrea and puts the original in a basket on his desk where he keeps all invoices that need follow-up for approval. A few days later Peter sends a follow-up email, but Andrea responds that she can’t find the original and asks Peter to resend her a copy, which he does.

While this is in progress, the invoice is noted in the accounting system. But only Peter, with his pile of papers, can tell you where it is in the process.

After the approval comes the payment process. Peter scans a copy of the invoice, cuts a check and staples it to the copy, and brings it over to you, the CFO, for your signature. After you sign the check, Peter goes back, prints an envelope, stuffs the check into the envelope, applies postage, mails the check and files copies in the A/P file drawer.

In many small companies, Peter may be the single person who approves invoices, and who also sets up new vendors and releases payments. What’s to stop him from setting up his brother’s firm for payments? Well, he’s just not that kind of person … right?

Paperless: All invoices arrive electronically in a workflow queue for Peter. Peter receives notification of a new invoice, and he logs in and clicks a drop-down box on his screen to select the correct person for approval, Andrea in this case. Andrea receives a notice from the system that there’s an invoice awaiting approval; if she’s at a conference the document will stay queued up, and she’ll get reminders. Once it’s approved, Peter receives a notice from the system; he logs in, sees Andrea’s electronic approval and queues the invoice for payment. Anyone with proper access can log in at any time to find where in the process the invoice is currently sitting.

Each payment cycle, you, the CFO, get an e-mail from the system that shows images of the invoices and details of the payments. You log in from any location (office, home, etc…) to a secure web based portal, click a button to release payments, and out they go without printing or envelope stuffing.  The supporting document images are then linked with your accounting system for easy reference for internal staff or auditors.

There’s no backtracking, no need for “gentle reminders,” no lost or missing invoices and no need to hunt around on staffers’ desks or dig through filing cabinets.

What there is instead: efficient workflows; clearly defined responsibilities; built-in protection against fraud; and, most important, deep insight into A/P at any point in the cycle, giving you the financial information you need to make the big decisions.

The PayStream Advisor study notes that “while the adoption of A/P technologies has been limited to larger companies until recently, we are evidencing this trend trickling downward to small and medium-sized businesses,” for a variety of reasons including cost reduction, liquidity pressures, and the evolution of software-as-a-service delivery models.

Migrating accounts payable from a paper based to a paperless process can often be fairly simple step … what are you waiting for?

*PayStream Advisors: Invoice Automation Adoption Survey Report, Q3 2011

There’s a massive change under way in companies’ strategic orientation, as business leaders turn from navigating the later stages of recovery to pursuing outright growth. According to Deloitte’s most recent CFO Signals research (based on Q1 2011 data), CFOs have shifted their strategic focus toward revenue growth and away from cost reduction: “Revenue growth is now their dominant company challenge. … Nearly 30 percent of CFOs say they are focused on M&A activity, and 40 percent expect revenue from recently or soon-to-be acquired entities to be higher within the next year than it was before the recession.”

At this critical economic juncture, CEOs more than ever need their finance team to fulfill the role of provider of actionable insights backed with solid data. That means providing timely, accurate reports; a deep understanding of profitability drivers; and a clear view of where potential problems might arise.

The reality is that many SMBs find themselves caught in a tangle of poorly aligned skills and work roles and inefficient technologies that makes any significant increase in advisory value difficult to attain.

Do any of the following sound familiar? If so, chances are your finance function isn’t contributing as much value as it should:

1. Executives view finance as a function that pays bills and keeps the company compliant. SMBs generate huge volumes of potentially useful financial data, but much of it goes no further than reports aimed at meeting bank covenants or satisfying the demands of regulators. Of course, compliance activities are crucial, but it’s unfortunate that smaller businesses so often fail to leverage their information assets.

2. Your systems don’t talk to each other. You’ve got your G/L data in one system, operational metrics in another, your A/R info somewhere else, and nothing is integrated. The same information is maintained in multiple places or is dispersed across these resources, making it almost impossible to decide which products, customers, or projects are profitable and which are not. You’re aware that you need to improve your systems to aggregate the data, but you blanch at the thought of starting from scratch or investing in a costly ERP system.

3. Your best people are up to their eyeballs in tactical work. Finance leaders in SMBs may pride themselves on being team players who are always available to their staff, but do you really want these highly compensated resources spending their time on things like helping a staffer track down an invoice? The value that your top performers should be contributing at the highest levels of the organization is being poured into routine (often compliance-related) tasks.

4. You don’t receive management financial reports and analysis to make better decisions. Do you receive reports that track your key performance indicators? Do you receive reliable forecast information? Does anyone study day’s sales outstanding to get insights into reducing working capital? Even if some of these reports are generated, producing them is one thing, but analyzing the information, understanding what drives it, and leveraging it to improve decision-making and generate action — that’s where real value is created. If you lack high-value people, or you have them but they spend most of their time compiling and manipulating data rather than using it to create action plans that could actually impact results, your finance organization is providing less than its full potential value.

There are tried-and-proven ways to unpick this tangle and get more of a contribution from finance. Start with a close examination of your people, processes, and technology. To maximize the value of personnel with higher-level skill sets, consider distributing tactical work to lower cost resources. Leverage industry-wide best practices to tighten up processes and controls. Instead of that expensive ERP tool or systems overhaul, investigate software as a service (SaaS) products that can provide rapid ROI and paperless workflow.

With the benefit of some well-designed improvements and (fingers crossed!) a more expansive economic environment, this could be the perfect time for SMBs to scale up — and for finance to show its true worth.

Like most successful executives you want to be more strategic, so what stops you?

More than likely you fight one or several of the issues below:

* Your time is consumed in driving day-to-day finance related deliverables
* You fight resistance to change within the finance organization to better support the business
* You are bogged down with staff attrition & management headaches and systems and IT challenges
* Your finance team lacks the skills to generate reports required for doing real business analysis and driving accountability

Many CFOs deal with these problems month after month hoping it will just get better. Other CFOs decide they need to seek help in proactively driving change to break this cycle for the business and their own careers.

Take the case of one small/mid-market company CFO who decided he needed things to change to become more strategic and:

* Engaged consulting services to serve as “change agents” in optimizing business processes
* Moved all F&A systems to the cloud to offload maintenance costs & headaches
* Leveraged mid-market focused F&A firm to handle all tactical F&A activities and reduce local low-value headcount
* Used dollars saved through outsourcing tactical activities to get higher level skills to support management reporting

The result?

Within 3 months, and with no disruption to business operations, F&A processes were optimized, more value was being created from the F&A function for the same spend and the CFOs time was successfully addressing critical strategic initiatives for the business.

- Scott Bonnallie, CEO – Dannemiller Inc.

For many executives of small and mid-market companies, trying to run the business with little to no accurate and timely financial data or performance metrics is just a way of life. Decisions are made with outdated accounting data from prior periods and through “back of the napkin” calculations for upcoming periods. For those executives who recognize the value of financial metrics and forecast data, this process provides insufficient visibility and handicaps their decision making ability which can lead to:

* Misuse of short term cash

* Squandering of essential resources on non-profitable clients

* Investment in the wrong projects or products

* Inability to see & respond to operational problems in the business

Basic financial modeling and forecasting can allow growing companies to avoid these pitfalls. A proper finance support function is able to provide the critical periodic performance metrics & forecast data needed by executives to see what is happening in the business and make more informed decisions. These metrics and data include.

* A weekly cash forecast – based on historical trends and revenue and expense forecasts

* A weekly or monthly financial performance dashboard – critical financial and operational metrics and trends

* Monthly “actual to plan” reporting and analysis – how did the company do against plan (budget or forecast) and what were the causes of any significant variances

* Fine grained P&Ls – customer, product and/or project level profit and loss statements

Executives without this data operate on assumptions, best guesses and manually created estimates which may or may not be leading them to take the right steps in moving the business forward.

Executives with this “financial toolkit” have a clear picture of the financial health of their business, where they need to focus on operational improvement and which customers or products are driving money to the bottom line. These executives can confidently decide where they should be making future investment.

Poor financial controls can create significant waste, fraud, or decreased credit rating – yet it happens to thousands of businesses every year.  A sound internal control environment is the foundation from which a corporate finance function can be relied upon to protect and report on the company’s cash and general financial position.

Unfortunately many small and mid-market companies have completely inadequate controls due to the perceived expense and skill-set required to establish a strong internal control environment proper ones, leaving them exposed to several risks including:

* Lost revenue

* Over-payments

* Wasted spending

* Internal fraud

* Unavailability of credit

Improper controls in any of the different areas of the finance function can lead to the issues above. These include:

* Mistakes in the invoicing process (over billing, under billing or unclear billing) can cost the company money and/ or damage the company’s credibility stance in the marketplace with customers.

* Errors in the payment process (late payments, missed payments or over-payments) can damage a companies credit rating, can cause business disruptions through vendor credit holds or cost the company money as many vendors are not going to return cash that was overpaid to them.

* Lack of controls in the cash payment process or general accounting area open the company up to fraud that would be difficult to detect see.

* Incorrect or incomplete financial reports can adversely affect business decision making and can lead to the inability to get obtain financing, or to increased audit costs

Take the Consero Financial Performance Assessment

Nine Questions executives must ask to improve financial controls.

Invoicing

1) Do I have an invoicing process that I am confident yields consistently accurate invoices to clients?

2) Do I have the ability to automatically verify that ALL billable expenses (time, materials, sub- contractors, etc…) were passed back through to clients?

3) Are my revenue recognition practices compliant with US GAAP?

Accounts Payable

1) Does my current process ensure that invoices are received and can be tracked through all the way to payment?

2) Do I have a purchase requisition process to ensure that all material payments of any significance to be pre-approved?

3) Do I have separation of duties so that no one person in my accounting function can 1) create a vendor 2) setup a payment to a vendor 3) initiate/authorize a payment to a vendor?

4) Does my accounting system prevent entries from being deleted after a check was printed or a payment generated?

General Accounting and Reporting

1) Are bank reconciliations done each month to verify that the accounting system accurately  reflects bank account activity?

2) Are the people doing bank reconciliations separate from the people who have the ability to generate payments?

While all companies like to think things won’t happen to them, if you can answer “No” to any of the questions above, you are likely exposed to the risks outlined at the beginning of this note.

Contrary to common perceptions, proper financial controls for small and mid-market companies do not have to be expensive to implement and can have an extremely positive ROI in savings…not to mention peace of mind.