10 questions for proactive directors to ask about their finance function

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A recent Telegraph article quoted some staggering statistics (from a survey by software company Exact) about missed invoicing and financial mismanagement  in SMEs.  A quarter of respondents saying they didn’t feel in control of their business accounts and finances with 12% having had to delay salary payments as a result of financial mismanagement.

I guess that there will always be companies that suffer/learn from their mistakes, but what should proactive directors be thinking about when it comes to finance and accounting?  The following questions are an extract from one of my White Papers:

  1. are your records accurate and up to date?
  2. is there is an early warning system to highlight potential cash flow problems, that give ample time to take action?
  3. is cash well managed? Eg: is money being collected from customers effectively? is too much money tied up in stock or work in progress?
  4. are you getting a good insight into the dynamics of your business?
  5. do know the margins of your main product lines/customers?
  6. do you know your breakeven point?
  7. are you clear on the company’s overhead structure (eg: the cost of each department)?
  8. do you use key performance indicators (ie: financial and non financial statistics that help you assess performance and trends)?
  9. are you are clear about the true cost of supplying your products or services?
  10. can you can clearly explain past results and anticipated future performance to stakeholders such as the bank (eg: in comparison to your business plan)?

The White Paper, which is about Growing the Finance Function and Working with Accountants, draws on conversations with managing directors of 7 companies.   If you’d like a copy of the full Paper, please e-mail me at mail@camroseconsulting.co.uk or you can subscribe for the full set of White Papers here.

I hope you found this article helpful.  If you feel that your business information and controls could be improved, please feel free to contact me, David Lewis, on 020 3137 2279 or e-mail  mail@camroseconsulting.co.uk .

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