Financial management is about your performance, the results you produce, and the numbers you use to quantify your activities. As the financial manager of your company—whether you are the CEO, the CFO, the VP-Finance or Treasurer—you are going to interact with all other areas of the business: operations, personnel, marketing, production, and administration.
You will play a key role in setting goals and measuring progress towards achieving those goals. If the company fails to meet its corporate objectives, you will be called upon to help understand what went wrong and to suggest solutions to fix the problem.
Best practices would dictate that you review your cash position at least once a week, and that you review your assets and profitability positions at least once a month. You probably already have a routine established where you review the financial status of your company on a regular basis.
On a day to day basis, though, you may be crunched for time as you race around putting out fires. So it can be useful to have a checklist to refer to as a quick reminder to make sure that the important activities are not ignored completely. The list will vary to a degree depending on the needs of a particular business, but some basic items will always need to be present.
My basic list, which I call the Financial 14, is below. Review the list and, if necessary, add additional questions so it is more relevant to your company’s activities and objectives.
- Do you have good cash management?
- Are you building cash?
- Is your company’s financial condition improving, deteriorating or unchanged?
- Do you have timely and accurate financial information to review?
- Is the data you have sufficient to make good decisions?
- Do you need more financial data than what you currently receive?
- Do you actually review all of the financial data you receive each month?
- Do you regularly talk with suppliers about obtaining better prices or terms?
- Are your internal financial controls adequate? How do you know? Do you review them regularly?
- Is your pricing appropriate and competitive?
- Is every product line or service offering profitable?
- Can you identify which customers meet or exceed your minimum profitability requirements?
- What do you do to minimize the amount of cash tied up in receivables and inventory?
- Do you plan for increases in, or additions to, your facilities, capital equipment and personnel?