Internal Controls Support Banking Relationship

First published in Platinum Bank's Winter 2009 NewsletterOne of the first thresholds of business growth is an awareness that your internal bookkeeping processes are not keeping up with daily operations. The time it takes to do your billing and financial reporting starts to lag. You as the owner can’t obtain the data you need for timely business decisions or regulatory reporting.If you are aware of your financial growing pains, it’s time to alert your advisors and start working on solutions. Business owners who consult regularly with their CPA, banker and other advisors can keep up with transitions and focus on the core needs of their business. Here are some suggestions to work with your CPA to improve some controls and your banking relationship:

• Perform a “proof of cash” analysis. For business owners that need to get more comfortable with their cash controls, a CPA can look at the bank activity and compare that to what’s recorded on the general ledger. When bankers perform their review of statements, loans or lines, they know that there has been some professional oversight on these activities.

• Timely bookkeeping. If your financial information is not available on a current basis, then you may have outgrown your accounting needs.  To catch up, you may need more personnel or outside consulting. Your banker would agree that timely reporting is one of the key characteristics of a business that they want to keep doing business with.

Financial statement services. Invite your CPA to your meeting to deliver financial statements to the bank.  Your banker wants to know your CPA; a meeting with these professionals together can help establish and maintain strong ties with your primary source of business financing.

• Seek solutions to challenges. Your CPA, banker and other advisors can support you best if they know what’s going on. Keep them informed.  A couple hours a month with your CPA can help you plan for opportunities and be prepared for unexpected activities.

Take the long view. Sloppy accounting prevents you from creating a sustainable strategy for your business. When your accounting environment is established with proper policies and procedures, you will have more time to focus on operating your business.Start leveraging the knowledge of your CPA and banker to establish proper controls, protect your hard-earned assets and focus on what you do best – running your business. Bryan Bornhoft, CPA, is a shareholder with HG&K, Ltd., a public accounting and business advisory services firm in Minneapolis. Contact Bryan at (952) 979-1153 or bbornhoft@hgkcpa.com