Assessment

Financial and Business Assessment

Having a Fractional CFO as your trusted strategy and business advisor can change everything! Utilize this FREE financial and business health check to identify challenges within your company.

Name

Does your company have the following in place?

A leadership team with defined roles, level of authority and reporting structure?(Required)
Internal controls for accounting, operations and sales.(Required)
Processes to ensure accuracy of transactions ranging from writing a check, creating a sales quote, recording daily production, set up new vendors or customers, etc. These controls function to minimize risk, protect assets and ensure data integrity for reports.
Strategic plan (3-5yr) providing clear direction for company growth and success.(Required)
Outlines long term goals, key priorities and actions needed to achieve. Often includes vision and mission statements. Goals should follow S.M.A.R.T. Specific Measurable Achievable Relevant Timely
Annual budget (can be static or rolling) and is reviewed at minimum on a quarterly basis.(Required)
A budget is a good tool to ensure resources are allocated to support the strategy and goals of the company. A budget is used to monitor if revenue and expenses are on track and to focus on solutions.
Cash Requirement Report or dashboard(Required)
Typically best if updated weekly and projects cash in from accounts receivable, loans and shareholders. Outflows are from accounts payable, debt payments, asset purchases, etc. A very useful tool to plan for upcoming cash issues.
Integrated system for accounting, sales, CRM, and operations.(Required)
Often companies that run on multiple spreadsheets that require manual input, and/or managed by different departments, have reports with errors, critical information is missed and more. The same is true if company uses several software apps that do not integrate and require manual input or consolidation.
Operating processes and procedures documented(Required)
All processes in all departments are documented and updated as changes occur. Often companies that are experiencing growth will not keep SOPs current and that is when mistakes occur that can be costly, lead to loss of customers and chaos.
Financial statements that are "bank ready" and reviewed monthly.(Required)
The balance sheet is a snapshot that summarized the assets, liabilities and equity of a company. This report conveys the financial stability and viability of the company. The income statement shows for a date range the revenues, expenses and net income. Do you feel confident that transactions are being recorded using accounting standards? Is there a monthly checklist of accounts to review, validate all transaction are posted, etc?
Do you have inventory i.e. items that are purchased and expensed as sold or used in production?(Required)
Is inventory updated as transactions occur and there is a process to validate accuracy of inventory balances and value?
Process and standards for hiring staff, managing staff, etc?(Required)
Do you have job descriptions for each position? Do you know what qualities and skills makes a person a right fit for a position? Have a employee onboarding and annual evaluation process? Organizational chart that is maintained and understood by all?

Are you tracking or using the following?

Measuring trends, tracking budget versus actual?(Required)
Trends and budgets can be used for revenue, expenses, labor, overtime hours, etc. Helpful to identify need to hire or reduce staff, find alternate vendor or materials, improve efficiency, etc.
Doing a ROI (return on investment) analysis before purchasing new equipment, adding new product, or expanding?(Required)
Key questions to consider are: Will increase in sales and/or profit justify the use of cash? Improve safety of employees and/or efficiency? Decrease rejects? Ex: Net profit increase of $50k / $200k Cost = 25% ROI and 4 years to recoup cost $200/$50k = 4
Use and track financial ratios for: liquidity, leverage, profitability, efficiency?(Required)
Liquidity: ability to pay vendors and debt Leverage: Amount of capital from debt Efficiency: How well are assets and/or labor being used Profitability: Ability to generate income; Revenue – Expenses
Analyzing sales and profits by project, product, customer and/or customer type?(Required)
Projects: Labor and material within budget? Product: Have sales declined? No longer competitive or viable? Customer: High maintenance? Need to rebuild relationship? Type or Sales channel: Retail, wholesale, commercial? Discounts too steep for a segment, customer mix is unbalanced?
Are you confident in the data, reports and dashboards?(Required)
Is there often confusion about results of reports? Is data often missing or incorrect? Do customers complain about errors? Is pricing model always changing due to unclear costs? Employees complain about payroll errors? Labor estimates rarely correct?
Do you have clear customer payment and collection policy that is enforced?(Required)
Are past due invoices monitored and/or collection calls made? Are payment terms and collection policy consistently applied? Is the amount of 60+ days past due exceeding 10%?
Uncertain if have the right structure for accounting department?(Required)
Are you using an outsourced bookkeeper that can no longer keep up with growth in company? Have a bookkeeper who does great with entering transactions but doesn’t have skills or expertise to provide analysis of data? Wondering if it is time to hire a controller or CFO but not certain can afford?

The Numbers…

Is your gross margin 40% or higher?(Required)
Gross margin/profit must be high enough to cover administrative costs AND leave enough for net income! Revenue less COGS (cost of goods sold or manufactured) = gross profit/margin Admin costs are costs that occur with or without any sales. Examples are: Rent, utilities, insurance for property/liability, advertising, office supplies, software costs, etc.
Is your quick ratio at least 1:1 or even better 2:1?(Required)
Current Assets less inventory less prepaid expenses / current liabilities = ratio of liquid assets to each dollar of liability. Ratio of 2:1 is $2 asset to $1 liability
Is your company over leveraged i.e. debt exceeds assets?(Required)
Debt can help grow a company, but if not managed well can impact ability to cover expenses and debt burden. Total Debt/Shareholder Equity= Debt to Equity Total Debt/Total Assets= Debt to Asset Should be less than 1
Do you know what company EBITDA is?(Required)
EBITDA is: earnings before interest, taxes, depreciation and amortization. In Simple terms is earnings before non-cash expenses. Often bank loan agreements will require EBITDA to be remain at or above a certain amount.
Do you know what your customer acquisition costs (CAC) are?(Required)
Does the cost of acquiring a customer consume too much profit? Costs are all money spent on marketing, advertising, sales staff, print material. Total amount spent / Total customers acquired Typically should be where cost to acquire is 3x lifetime value (estimated total sales for life of customer)
If you have inventory, do you know what is the total landed cost per unit purchased?(Required)
With inventory it is important that all costs are included so that the sales price and gross profit are correctly calculated. Landed costs include: shipping, taxes, insurance, import fees or other costs specific to inventory item.
Are standard accounting principles and processes being followed by accounting (whether in-house or outsourced), to ensure financials are accurate?(Required)
Using accrual based accounting (matching principle) – meaning transaction are recorded when revenue is earned, liability is established 3-way Match – documentation for for receivable and payables. PO’s, packslip and invoice are all matched Regular end of month reconciliations are done for accounts such as bank, petty cash, customer deposits, sales tax, debt, etc Pre-paid account is review for additions, monthly entries, and reconciles to balances remaining for items