MONEY
By Ted Rose
I
n the current market environment, compa- restrictive covenants.
nies can not afford to leave their success to
chance. As the velocity of business begins to An inadequate accounting and financial infra-
slow, an organization has the ability to catch- structure can result in loss of the company’s
up on internal projects that may have been de- credibility with customers as billing issues arise
ferred during busier times. One of the areas or even strained vendor relationships as a result
that many firms neglect is their accounting and of late payments. Employee relations can be
financial infrastructure. This neglect can mani- strained if the company experiences persistent
fest itself in a number of different ways. payroll issues or delays in issuance of expense
reimbursements. Most of these issues can be
• Inadequately designed chart of accounts avoided through the maintenance of a proper-
• Lack of senior level supervision of the ac- ly functioning accounting infrastructure.
counting and finance department
• Incomplete, inaccurate, and infrequent fi- Companies can take immediate steps to im-
nancial and management reporting prove their accounting infrastructure.
• Poorly designed, inefficient, and ineffective
financial procedures and processes • Maintain monthly financial statements on
an accrual basis
During a downturn, the importance of a prop- • Implement a consistent monthly closing pro-
erly functioning accounting and financial infra- cess
structure is critical. Management needs accu- • Ensure financial statements are prepared by
rate and relevant financial and management a senior level accounting professional
reporting to ensure that it has enough time to • Ensure accounting functional support, in-
react to changes in the market and the compa- cluding accounts payable, billing, and pay-
ny’s corresponding financial performance. Late roll follows a consistent routine process
and incomplete information can lead to heavi- • Ensure that each accounting process has ad-
er losses than would have otherwise been ex- equate reviews and an appropriate level of
perienced. In this circumstance, a company internal controls
with significant bank debt could have their cost • Redesign the chart of accounts and depart-
of borrowing increase, their line of credit can- ment structure to properly reflect the cur-
celled, or their line of credit renewed with more rent business structure and practices
0 ThinkBusiness
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40