Investor and billionaire Warren Buffet once said, “Only when the tide goes out do you discover who’s been swimming naked.”

            I think it’s suffice to say that the tide has gone out in our financial world and it’s easy to see who’s been left out to dry. The country has just been shocked out of a 10-year economy boon where money flowed freely and success was effervescent. During that time, problems in your company’s finances were most likely hidden because of the tremendous cash flow that was coming in. Financial statements were not exact and operating budgets were not meaningful – and they didn’t need to be. Unfortunately, times have changed and your company’s financial “pains” are now seeing the light of day.

            As a seasoned chief financial officer (CFO), I’ve found there are five common “pains” business owners feel regarding their financial well-being. Here’s a brief look at what may be ailing your company’s fiscal health in today’s economy:

1. Cash Flow – Companies either can’t produce it or their capital lines have been cut. As a business owner, you probably tend to work in the business instead of on the business, which ultimately hinders your cash flow. Most businesses are not able to forecast their cash flow, which reduces their ability to anticipate shortfalls in the future and correct them.
2. Lack of Timely and Accurate Financial Statements – Often times, financial statements are created by an outside Certified Public Accountant (CPA) and mostly used for tax preparation. Instead, you need meaningful, accurate and timely financial statements that are created with the purpose of helping make business decisions and validating those decisions.
3. Key Financial Indicators – How do you know things are going according to your plan? You need a dashboard, just like your car, to tell you the speed of the company, if you’re close to overheating or if you need more gas. Your key financial indicators will tell you what’s in the pipeline and if your products and sales are doing what they should. In today’s economy, you don’t have the luxury of reaction – you need to be proactive with knowing where you are today.
4. Lack of Operating Budgets – You need a budget that is realistic and meaningful. Your budget is used to drive pricing and profitability. In today’s ever changing environment, you may need several variations of your budget. Your operating budget is your measurement tool for success.
5. Outdated Systems and Processes – Proper systems and processes help tighten everything up and make your company run efficiently and effectively. You need to make the most use of everyone’s time and do things the fastest, most effective and efficient way possible. Many businesses are struggling with uncollected accounts receivables. When was the last time you reviewed vital financial procedures for credit, billing and collection?