Becky's Bytes: Have your ducks aligned with CFO-level service

The National Federation of Independent Business (NFIB) is among a number of resources that suggest outsourcing as a direct means of boosting your bottom line rather than denting it. The role of Chief Financial Officer is one that comes up often as you can see in this related article from the NFIB.

 

Beef up your success quotient by adding an outsourced CFO's time to your own available time, and you will, by default increase the amount time spent on income generating activities...

success = total time - time managing cash flow - time managing risks

                generating revenue time

The CFO for a business manages cash flow: The accounts payable and the accounts receivable. Cash is king and cash flow is critical to businesses small and large. Lying beneath cash flow are the essential tasks of maintaining budgets, taxes, records, insurance, payroll, and liabilities. Consider how much time is gobbled up just in the first third of the year on these responsibilities before tax filing. A full-time CFO works year round so the 'ducks are in a row' prior to tax season, leveraging the best ways to cut expenses, pay bills on time, and keep production going. When a business owner is the CFO because a full-time one is financially out of reach, then it's the producing revenue part that falls to the second priority… behind the ducks.

If you've been behind ducks, you know it's cleaner walking ahead of them.

 

Imagine now that while acting as CFO, you got yourself into an audit. That's a whole flock of ducks you don't want on your beach. This isn't to say a full-time or an outsourced CFO will avoid an audit 100 percent of the time, but it one came up, they – not you – would be spending the time on it, and you could stay focused on the revenue-generating.

Outsourcing buys you an available assistant – available as you need – without the full-time headcount you might not yet need for the business. A way I look at it is that the assistant assists you with having more time with paying customers… and less time with ducks.

 

Photo by Serge Villa, used with permission.

Five reasons EVERY small business owner needs an office professional

Every business owner and every business – no exception – can be money ahead thanks to the skillset of an office professional who knows bookkeeping, taxes, insurance, HR, and payroll.

1.   TAXES – This is one area that is so time sensitive that you can’t afford to treat it lightly.  Not understanding the law doesn’t waive penalties or late fees and they accumulate very quickly.  Someone needs to track that all things “tax” because you know Federal and State revenue departments do.

2.   INSURANCE – By definition, insurance is a “transfer of risk.”  Why on earth would you take a chance of not having the right insurance in place for your business risks? Someone that can take the time to review renewals and evaluate risk by asking critical questions is very important.  Do you know if you have already or need E&O, or a BOP, or an Umbrella, or Work Comp?  There are so many types of insurance that are imperative to protecting your business (and you personally) that this shouldn’t be left to “chance.”

3.   REGULATIONS & COMPLIANCE – This might vary greatly depending on your industry. Regardless of the regulations coming from a local municipality, county, state or Federal Agency, the cost of non-compliance can be staggering.  Do you really understand your obligations under OSHA, Unemployment, Work Comp, DFI Filings, EPA Standards, Building or Fire Codes, etc.?  If you don’t have time to master all these areas yourself, you need someone to help, before it’s too late.

4.   EMPLOYEES – From payroll to HR and timesheets to training logs...  Having employees opens a special can of worms.  Training, hiring, firing, unemployment, new tax forms, child support payments, wage garnishments are just a few of the many things that start to suck away your available time once you become an employer. And that’s what it all comes down to…

5.   TIME!  Your time is worth something. Spend it generating REVENUE.  Unfortunately, running an office is OVERHEAD, not revenue generating.  In theory, you went into business because you had a service, trade, skill, idea, or product that other people want or need.  That’s what is generating sales, income and profits.  Running an office isn’t likely what you first goal was.  

 

The person managing the things that keep the business part of the business give you time to sell/create/build. Running to business part may be done more efficiently and cost effectively by someone that makes less than you do, and by someone that already understands these things.  Why re-create the wheel and burn your valuable time?  Hire, train or outsource, regardless of how you get these things done, in the long run you’re money ahead.

 

Photo by Slavoljub Pantelic, used with permission.

Can I dump any of these old tax records yet?

Photo: Patpitchaya. Used with permission.

You and I are in the full-on, tax-season sprint between Groundhog Day and the filing deadline. The big question pops up as you try to find a place to store the newly ended year's financial receipts while you're staring at a room full of boxes of prior years' money records, 'Can I get rid of any of this old stuff yet?' Other versions of the same question:

• How do I know how long to keep records?
• Why do I need all this paper?
• Can't I just shred it?
• Can I just convert it to digital images?
• It's all in my QuickBooks, so I don't need the receipts any more, right?

All the questions and....so many rules. The simple answer from an office management point of view is that it is less expensive to store it then it would be to re-create in an audit. You throw out an old box and you could be throwing away hours or days – or longer – tracking down a duplicate somewhere. So, err on the side of caution. If you are ever in the position to try and find room in the budget to pay attorneys and accountants to defend an audit, the storage bill won't even compare!

Audit's are time consuming and expensive, especially if you end up in a position of defending a position that you can't prove. An auditor can do his/her best to create an estimate of what happened based on their best assumptions, and it's up to you to prove it differently.

For example, if you move money between accounts, they possibly could be viewed as two deposits , not a deposit and a transfer of the same money. The end result if the transfer isn't clear is that it could be counted as unreported income. The paper trail, even in the digital/paperless age, is still important! Just because it's entered into your software doesn't mean you won't need that dead-tree receipt (or at minimum an image of that receipt) in the future.

My general rule of thumb – always check with your CMA or CPA as they know your specific business situation – but generally, if in doubt, keep records at least seven years. Minimum. If you signed it, definitely keep it. There are some things like prior audits, prior returns, property transfers, and other vital documents, you keep forever! There are record types which generally are not audited after four years, but unless you hear it from the CPA, keep everything an extra couple years. You'll avoid headaches in the unfortunate event of an audit.