CFO TIP – Data & Assumptions – A FINE BALANCE
Business decisions are only as good as the the data and assumptions they are based on. As CFO’s we want to ensure that the balance between data and assumptions is more heavily weighted on the “data”.
To be able to do this however data needs to be:
To achieve this you want to put measurable metrics in place. Consider the following:
- Revenue & Receivables – The sooner invoices go out to the customers the sooner the “collection clock” starts to tick. Get your invoices out daily or at the least weekly.
- Expenses & Payables Invoices are to be entered daily and no later than 2 to 5 business from the date received
- Inventory – perform frequent inventory counts when there are high levels of stock on hand with a lot of movement. Don’t have time to count them all? Consider partial or spot counts that are systematically selected.
- Cash – Reconcile your bank accounts weekly and monthly to ensure all transactions are captured in your data. This is where the tracking value for Capital assets, Debt and Shareholder activity originate.
- Month End Close – Close your books monthly and do it fast. The sooner your month end is completed the sooner you know if you are on track.
By implementing these metrics your data will be Timely, Accurate, Complete & Consistent, providing you with the basis to make better business decisions.
Have you templated your month end closing process? What about tying employee compensation to these metrics? That’s where Leverage Consulting can help.
Leverage Consulting Group provides financial & strategic planning services along side accounting & administrative support.
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To develop business strategies for growth & sustainability,
Through leveraging resources and easing commitments.
Peter Teunissen, CPA (ca)
Founder & CEO
– Leverage Consulting Group –