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The basics framework for financial compliance is a company’s recordkeeping or bookkeeping.  Over my career I have been fascinated and surprised by how this is accomplished or not by some companies.

We work with a multitude of different clients in a number of industries.  All of them are unique; even those within the same industry.  The owners and their staff have created a corporate culture to meet the goals of the organization.  Whether they are creating something from thin are, manufacturing something from base materials, or just delivering something from point A to point B. They are trying to create and follow their own path to greatness.

All of these companies have their great strengths and weaknesses.  Unfortunately the most common predominate weakness seems to be financial in nature.  A surprising number small and even some mid-sized businesses do not have reliable recordkeeping tools that they use and rely upon. The goals being effectively run their businesses.

There are still some clients who run their companies out of their checkbooks.  The reconciliation of the checkbook is also in question. They approach all spending based upon the immediate cash available online with their bank.  At year end they give us their information, well after the fact making us their historians rather than a member of their management team monitoring the business on a contemporary basis.

We have another client that uses Excel spreadsheets to assist in running a $1.5 – $2MM operation. So with the Excel spreadsheet along with their checkbook; they feel that they have a solid handle on their finances.  Again until we prepare the tax return do they find whether they made or lost money?  Again we are historians for the company.

One client uses an accounting package to prepare check only.  They invoice out of Word and they keep track of the coming and goings of their cash on paper and sticky notes all over their office.   They also co-mingle personal expenses with business expenses.  We have counseled them to consolidate all information streams and have work off of a single system and notified them of how to properly post expenses.  It does not seem to be taking.

Finally we have a client who seemingly is doing a bit of all of the others.  They process checks and invoices from a software program.  But they do not enter payroll information.  Nor do they enter the deposits.  The income is tracked on separate sheets.  The payroll information is also kept separately.  The client does not want the staff to know too much about the business.  Nor apparently themselves either.

Businesses need up to date with contemporary data/ information and not just ancient history.  We recommend an accounting system – Quicken, QuickBooks, Sage One, Zoho, FreshBooks, Xero or Wave.  We don’t endorse one over the other.  They all have strengths and weaknesses, not to mention costs.

Data matters and timely correct data will help you make the right decisions to move your business forward.  Financial statements can be a handy tool for any for running a business.  You can compare one year to the next to see if there is sales growth or sales erosion.  You can compare costs to budget or the prior year.  You can look and measure your financial metrics on your financial dashboard.  If you wanted to you could check your data to your peers and industry standards.

Or at a far more basic level you can see if you are meeting your goals and objectives and managing your business to the best of its ability.




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