What We Did
Our company is a CPA firm, a leading accounting, auditing, and tax services firm based in Princeton, NJ. We worked closely with small businesses, including community banks, during the recession and we believe that companies who relied on strict internal audit controls, whether through an outsourced or in-house department, were the most successful at fighting closure. The current administration is moving toward a focus on consumer protection. Because of this, community banks face an increased risk of regulatory action so internal controls are increasingly important.
About Our Company
Most small businesses who survived and thrived during the recession can attribute their success to a solid business plan. By charting out where their business stood, in terms of financials, and where they envisioned it to be in the future, they had an increased chance of staying on track and meeting (even exceeding) their financing goals. The best business plans will give you a clear sense of capital burn - what is needed for the company to survive and what is needed to invest back in order for it to grow. This information goes a long way in helping you prepare for tougher economic times. What may be considered the most important element of the business plan, financial statements provide necessary information to make key decisions and offer details about the financial health of the company, including expected income, balance, and cash flow and expenditures over the next several years.
A simple and proactive tactic small businesses could have implemented to keep them from failing during the recession includes examining how to do better with less and ensuring proper internal audit oversight to deter fraud and improve reporting. Small businesses could identify operational opportunities and lower risk by taking several steps. These include examining internal policies such as how long does it take to turnaround products and services? Are you taking full advantage of vendor payment terms to help increase working capital? Are you producing your product or service in the most efficient manner possible so as to speed up billing and collection of sales?
Small businesses should have tried to increase profitability and improve cash flow by ensuring that customers were creditworthy at the outset and taking advantage of upfront deposits.
Controlling your cash was of utmost importance. Cash is the very thing keeping your business running so it is crucial that you have strict controls over it. From keeping track of receipts to recording disbursements, appropriate oversite and segregation of duties is key. Review monthly bank reconciliation for unusual transactions.
Making sure your billing statement were timely was important. While it seems like a no-brainer, if you have less staff during a recession, you have less time, so important billing processes could be delayed. You may be able to speed up your collection process by 15-30 days just by issuing timely billing statements.
Tips and Tricks
- Cash is king! Track your cash receipts and disbursements.
- Review your monthly bank reconciliations.
- Make sure your billing statements are sent out in a timely manner.
- Check the creditworthiness of your customers at the outset.
- Take advantage of upfront deposits and retainers.
- Revisit and revamp your reporting processes for accounts receivable, accounts payable, customer satisfaction, and more.
- Revisit vendor options. Pricing terms have changed dramatically and more vendors may be an option for you.
- Keep your bookkeeping up-to-date and up to snuff.