Managing segregation of duties (SoD) is essential. This key internal control is necessary for reducing the risk of financial errors and fraud, but it’s also one of the most difficult to implement and maintain without a sound strategy. When the time comes for SoD reviews, particularly when an ERP system is involved, accounting organizations often struggle to know with certainty that SoD conflict risks are being kept to a minimum.
Imagine a break room in a corporate office. The fridge is stocked with a special treat and a jar is next to the fridge asking for employees to place a dollar in the jar to cover the cost. It is midday and it is busy in the breakroom. How many employees do you think will place a dollar in the jar after taking the treat? Now, imagine a quiet time when no one else is in the breakroom. How many employees would you expect to place that dollar in the jar? Being alone and doing the right thing takes integrity. When opportunity exists and no one is watching, integrity is tested.
Let’s go over what SoD is, why it’s important, and what to consider when conducting SoD reviews.
What Is Segregation of Duties?
The basic concept: No one person should have complete control over a transaction, from beginning to end, or else you run the risk of this person being able to both perpetuate and conceal an error or fraudulent actions. The primary goal of having proper SoD controls is to protect company assets, reduce fraud risk and, in turn, protect the integrity of the financial statements.
For internal controls to be effective, there needs to be an adequate division of responsibilities among those who perform accounting procedures or control activities and those who handle assets. Ideally, separate employees will perform each of these duties:
- Having custody of assets
- Authorizing or approving transactions involving those assets
- Recording or reporting those transactions
- Reconciling and handling related control activities
Keeping such duties separate avoids potential conflicts that can arise, such as:
- One person approving a transaction and keeping the asset that results from the transaction
- One person receiving a payment and approving its issuance
- One person performing bank reconciliations and tracking the transactions in the accounting records
In general, the flow of transaction processing and related activities should be designed so that the work of one individual is either independent of, or serves to check on, the work of another. Such arrangements reduce the risk of undetected errors and limit opportunities to misappropriate assets or conceal intentional misstatements in the financial statements.
While the lines between such responsibilities tend to be clearly drawn within mature organizations, customizable access management and system administration capabilities in ERP systems can inadvertently lead to SoD conflicts.
How ERP Systems Create SoD Conflicts
ERP software enables companies to manage their core business processes on one platform, from accounting and operations to procurement, human resources, and supply chain. ERPs are customizable at a very granular level. The upside is adaptability to fit a company’s unique needs. This open configurability and use across multiple functional areas comes with a downside. The flexibility can create opportunities to commit fraud hidden from plain view.
Finding the empty breakrooms in your organization requires a thorough understanding of the fraud risks and the opportunities that exist. Access within an ERP is very granular. Each screen, field or even a checkbox can be the difference between creating an opportunity or preventing a slip in integrity. Often employees and their managers don’t know the full access they have been granted. This may lead to the logical conclusion that there is no issue. Unfortunately, lack of knowledge does not cure the problem. The existence of a material SoD conflict is sufficient to require disclosure.
Bringing Attention to SoD Risks
How do you effectively review SoD for conflicts? Typically, companies create an SoD matrix to map duties and individuals with access to perform the duties, and identify any conflicts where an individual can perform conflicting roles, such as initiating a transaction and approving it. In most cases, the company’s ERP system can generate a listing of all the tasks, roles and responsibilities as a starting point.
From there, the company will want to add in any customized roles, and then put roles and tasks into groups, and evaluate whether any users are involved in more than one phase of any transaction. Are there scenarios where conflicts of duties could occur?
Managing Segregation of Duties in ERP Environments
In more complex environments, a helper application within the ERP can be the most effective solution. However, these applications require significant effort and time to accurately configure to avoid a large volume of “false positives.” We have found that deeper dives performed at least annually and regular monitoring with less complex tools can effectively pinpoint excessive access so it can be removed before problems arise. These tools coupled with a sound strategy can reduce SoD exposures within an ERP to an acceptable level.
In effect, companies can proactively strengthen their internal controls over their ERP, mitigate fraud risks and foster greater confidence among investors.
See how RoseRyan helped a biotech company manage their segregation of duties risks in this case study.
Ken Roberts is a RoseRyan consultant who works with companies of all types in our Corporate Governance area. He’s an expert in SOX and internal control testing, and he’s held CFO, controller and internal audit roles. He also has experience with M&A integration work and operational accounting. Ken previously worked at Ernst & Young.
Segregation of Duties Reviews: Why They Are So Challenging Yet So Necessary
Managing segregation of duties (SoD) is essential. This key internal control is necessary for reducing the risk of financial errors and fraud, but it’s also one of the most difficult to implement and maintain without a sound strategy. When the time comes for SoD reviews, particularly when an ERP system is involved, accounting organizations often struggle to know with certainty that SoD conflict risks are being kept to a minimum.
Imagine a break room in a corporate office. The fridge is stocked with a special treat and a jar is next to the fridge asking for employees to place a dollar in the jar to cover the cost. It is midday and it is busy in the breakroom. How many employees do you think will place a dollar in the jar after taking the treat? Now, imagine a quiet time when no one else is in the breakroom. How many employees would you expect to place that dollar in the jar? Being alone and doing the right thing takes integrity. When opportunity exists and no one is watching, integrity is tested.
Let’s go over what SoD is, why it’s important, and what to consider when conducting SoD reviews.
What Is Segregation of Duties?
The basic concept: No one person should have complete control over a transaction, from beginning to end, or else you run the risk of this person being able to both perpetuate and conceal an error or fraudulent actions. The primary goal of having proper SoD controls is to protect company assets, reduce fraud risk and, in turn, protect the integrity of the financial statements.
For internal controls to be effective, there needs to be an adequate division of responsibilities among those who perform accounting procedures or control activities and those who handle assets. Ideally, separate employees will perform each of these duties:
Keeping such duties separate avoids potential conflicts that can arise, such as:
In general, the flow of transaction processing and related activities should be designed so that the work of one individual is either independent of, or serves to check on, the work of another. Such arrangements reduce the risk of undetected errors and limit opportunities to misappropriate assets or conceal intentional misstatements in the financial statements.
While the lines between such responsibilities tend to be clearly drawn within mature organizations, customizable access management and system administration capabilities in ERP systems can inadvertently lead to SoD conflicts.
How ERP Systems Create SoD Conflicts
ERP software enables companies to manage their core business processes on one platform, from accounting and operations to procurement, human resources, and supply chain. ERPs are customizable at a very granular level. The upside is adaptability to fit a company’s unique needs. This open configurability and use across multiple functional areas comes with a downside. The flexibility can create opportunities to commit fraud hidden from plain view.
Finding the empty breakrooms in your organization requires a thorough understanding of the fraud risks and the opportunities that exist. Access within an ERP is very granular. Each screen, field or even a checkbox can be the difference between creating an opportunity or preventing a slip in integrity. Often employees and their managers don’t know the full access they have been granted. This may lead to the logical conclusion that there is no issue. Unfortunately, lack of knowledge does not cure the problem. The existence of a material SoD conflict is sufficient to require disclosure.
Bringing Attention to SoD Risks
How do you effectively review SoD for conflicts? Typically, companies create an SoD matrix to map duties and individuals with access to perform the duties, and identify any conflicts where an individual can perform conflicting roles, such as initiating a transaction and approving it. In most cases, the company’s ERP system can generate a listing of all the tasks, roles and responsibilities as a starting point.
From there, the company will want to add in any customized roles, and then put roles and tasks into groups, and evaluate whether any users are involved in more than one phase of any transaction. Are there scenarios where conflicts of duties could occur?
Managing Segregation of Duties in ERP Environments
In more complex environments, a helper application within the ERP can be the most effective solution. However, these applications require significant effort and time to accurately configure to avoid a large volume of “false positives.” We have found that deeper dives performed at least annually and regular monitoring with less complex tools can effectively pinpoint excessive access so it can be removed before problems arise. These tools coupled with a sound strategy can reduce SoD exposures within an ERP to an acceptable level.
In effect, companies can proactively strengthen their internal controls over their ERP, mitigate fraud risks and foster greater confidence among investors.
See how RoseRyan helped a biotech company manage their segregation of duties risks in this case study.
Ken Roberts is a RoseRyan consultant who works with companies of all types in our Corporate Governance area. He’s an expert in SOX and internal control testing, and he’s held CFO, controller and internal audit roles. He also has experience with M&A integration work and operational accounting. Ken previously worked at Ernst & Young.
Can your team see through you? Become transparent now: a “How To” Guide
In a 2022 global survey of the Most Transparent Countries*, participants rated the 78 nations assessed according to several measures, including transparent business and government practices, well-distributed political power, and trust and corruption.
Finland was ranked first — not surprising for a country with an annual practice of radical civic transparency, when on November 1st each year every Finnish citizen’s taxable income is made public, dubbed by the New York Times: “National Jealousy Day”!
What does transparency mean, and why is it important?
“Speak the truth. Transparency breeds legitimacy.” ~ John C. MaxwellThere are several facets to transparency. One is the quality of being able to see through something, such as glass. In relationships it refers to being open and honest. For either definition, it’s important that transparency applies to both sides.
In business, transparency is based on trust: there is mutual faith that being open will contribute towards common advantage, rather than someone being taken advantage of. Too often leaders feel employees can’t be told something because it may damage morale, or that revealing certain information might be used against a company.
As RoseRyan President Dave Roberson points out in an article for Chief Executive, ‘Why We Need to Lead with Transparency’: “As CEOs, we struggle with transparency because it might reveal we don’t have the answers, but ultimately, it’s the best thing for the company — and for us.”
Let your team members see through you
RoseRyan has a uniquely inclusive and collaborative culture. We’ve found that openly and honestly sharing information with people shows them that they are respected and valued, and worthy of being trusted. The other part of transparency is an employee’s willingness to state their feelings or thoughts without concern about negative consequences. The discussion of different ideas and approaches in the open makes for stronger decisions and helps any company perform better, as no one can know everything.
Says Roberson: ”…adopting a culture of transparency will greatly contribute to people wanting to work with you and move with you — while making them feel empowered to speak up if a roadblock is ahead or a detour should be explored.”
Indeed, RoseRyan is proud to have been chosen by our employees to receive a San Francisco Chronicle 2023 Top Workplace Award for the 9th year in a row! One of the reasons for this honor is our transparency: something that we continually work on improving with all our team members.
Find out more about our company culture here, and to read Dave’s Chief Executive article about the importance of corporate transparency (and more), visit our Knowledge Hub.
*Most Transparent Countries
The secret to finding good help? You need to stop looking (in the usual ways)!
Like many organizations nowadays, your business might be having trouble finding the right people to be able to thrive and grow: recruiting—and retaining—high-quality talent in today’s labor market is challenging.
According to a recent comprehensive HR trends study by Gartner*, almost half of HR leaders surveyed reported that recruiting is a top priority for their organizations; yet more than a third of them say that a common problem for them is that their existing sourcing strategies are insufficient for finding the skills they need.
Employee recruitment teams are grappling with the reality of low supply in traditional talent pools; and low retention in today’s hybrid- or remote-driven labor market: top candidates are harder to attract and convert. Sound familiar? Maybe you need to update your recruitment strategy.
Tap into versatile, future-focused recruitment expertise
If you’re looking for new ways to attract and keep your human resources, calling on expert guidance to bridge your talent gaps might be the best route. That’s where we can help.
Besides the tailored on demand, interim and fractional outsourced Finance and Accounting solutions that RoseRyan has been providing to clients for 30 years, we now offer broader Search and Placement services through our parent company ZRG Partners, a Global Talent Advisory Firm. But why should you revamp and prioritize your company’s HR approach?
Match your HR planning to today’s realities
Based on the Gartner study, the top five priorities for HR leaders in 2023 are:
Driving these concerns is the fact that organizations face uncertain and confusing times, with HR leaders having to weigh many trade-offs, and new employee expectations impacting retention and attraction.
The study prescribes the need for a new approach that unlocks novel strategies, making workforce planning congruent with today’s context. It recommends that HR leaders need to start:
Executive Search: Senior level
Together with RoseRyan’s savvy on demand Finance and Accounting solutions, ZRG’s wider people solutions pack a punch, with their practice focusing on placement of:
Recruiting for functional specialties from Sales to Finance, from Human Resources to Technology, and from Investor Relations to Corporate Communications, ZRG also searches for new Board of Director members, ensuring that your corporate governance is in sync with your business practices, and that your shareholder value is maximized. ZRG believes that intrinsic company success stems from diversity and inclusion, which are core to the company’s founding principles.
ZRG can provide you with the flexible people solutions your organization needs, including:
Contact us to find out more about our savvy on demand talent solutions out of Silicon Valley.
*Top 5 HR Trends and Priorities For 2023 | Gartner
Data Protection Best Practices for Accounting
Keeping data safe is a key responsibility for everyone within a company—but perhaps especially in the financial organization, which deals with a company’s most sensitive data. Financial information in the wrong hands can, of course, financially harm a company and hurt its reputation. Data security in accounting is a regular, ongoing concern with risks that multiply as a company expands, systems change, and hackers get smarter.
Data protection best practices can keep your sensitive financial data as safe as possible, but know that security threats always exist and continue to increase. Here are some points to keep in mind:
Know who has access to your data. Access is a big issue, as anyone subject to SOX compliance knows. At the company level, there are individuals who have different levels of access to some applications and have different levels of permissions, depending on whether they can only view something or manipulate it. Outside of the company there are those who may need access but have roles that could change at any moment (i.e. contractors). And then you also want to consider your service providers (i.e. your cloud provider) and how much access they have to your data.
Educate your employees. Most data breaches are due to human error, and many of those errors can be tied back to employees or third parties working on behalf of the victim company. Employees need to be kept up to date not only on the company’s current protocols and technologies but what to do when they suspect something has happened—how do they communicate a potential problem (i.e., a phishy email or an outright obvious breach?), and what is the chain of command in processing that information? Periodic training on security awareness can help to keep the team vigilant and updated on the latest threats facing your company’s data.
Test out the systems you have in place to avoid data breaches. Some companies send out fake emails occasionally to see if employees will interact with them and whether the email recipients follow the company’s best practices for reporting the questionable messages. Other methods or systems your IT organization could use include proper backups of its information and exploring the reliability of those backups; regular encryption of sensitive data; firewalls; and anti-malware solutions.
Experiment with new technologies but always be vigilant. To be nimble and competitive, companies need to be efficient, but ways of being more efficient can come with their set of risks. Operating in the cloud, for instance, can be a much quicker way to keep information updated, but that’s also where breaches are known to occur (45% of breaches occurred in the cloud, according to a 2022 study data breaches by Ponemon Institute and IBM). While it makes sense to be open-minded to new technologies, it’s also wise to proceed with vigilance and to understand, from the perspective of finance and accounting experts who are in the field, how to proceed carefully, with eyes wide open.
Data Security in Accounting
Protecting the company’s financial information and ensuring the security of accounting data is a top challenge and it’s a must—not only for ethical and legal reasons, but also for protecting employees and customers. It’s an ongoing effort, with regular testing and evaluations, to ensure that the boundaries you have set up around your company will hold up and explore whether another solution needs to be explored.
Finance and accounting experts can help assess whether updates to your accounting data security are necessary, as they can bring a fresh perspective and their expertise working with hundreds of companies to explore any risks of a data breach along with your company’s internal control risks. For insights from internal audit experts and an understanding of some of the risks your company should be aware of today, see how RoseRyan consultants can help.
The Different Types of Audit Support Services Available
Potentially messy and often time-consuming, any type of audit can be a distraction to the core finance and accounting team. Outsourced audit support services experts make the experience less onerous and less stressful, while preparing the company for the audit and being there throughout the entire process, as needed. By bringing in expertise they do not have on staff and being ready for the scrutiny of auditors, companies can minimize the overall time and costs involved in their audit and keep any risk to their financing compliance requirements to a minimum.
What Are Audit Support Services?
Audit support services primarily fill a temporary yet essential need—outside experts who can represent the company as a liaison with the auditors. Experts who can jump in and become a part of the team learn the ways and needs of the company quickly and can fill this role seamlessly. Ideally, they are brought in before the audit process begins, to assess how ready the books and records are to support an audit and prepare for any questions that are likely to arise.
How Can Audit Support Services Benefit Your Company?
Audit support services primarily ensure that the audit process will go as smoothly as possible, by making it so someone with the right level of knowledge and experience can answer questions on the company’s behalf and get the answers to the auditor as efficiently as possible. With this essential role covered, the rest of the finance and accounting team can focus on their main responsibilities and not become distracted by an audit that could be prolonged.
Whether you are nearing an audit of a financial statement or just getting started on a first-time audit for an emerging growth company, you want it to be done right. Audit support experts who have helped similar companies in similar situations will ensure that appropriate supporting documentation is in place, audit schedules are prepared correctly and any questions are properly addressed.
Audit support services experts start by getting to know the company client and understanding what their external auditors are going to expect. They will anticipate any troublesome issues that may come up and work on solutions for addressing them before the auditors start their inquiries. They may take a close look at journal entries, technical memos, accounting policies—any area that opens up the risk of a messy audit and potentially could be buttoned up ahead of time. It’s better to fix any issues beforehand, to minimize auditor hours, disruption, and surprises.
Key benefits of using audit support services include:
Different Types of Audit Support Services
When looking into audit and compliance services, experts with specialized skill sets and experience help in anticipation of an audit, and during and after an audit, as needed:
How to Find the Best Audit Support Service for Your Business
Much like an auditor of any discipline is going to ask you thoughtful questions, you want to be prepared to ask a potential audit support service provider questions that will help you understand the level of their consultants’ expertise, the process involved, and how much of the lift they can take off your team’s shoulders. What types of audit services do they offer? Do they seem genuinely curious about your company? Can they share examples of other companies like yours that they have helped? How will they communicate with you if there are any issues that arise before or during the audit?
The audit support services experts at RoseRyan are ready to answer these types of questions and more. To properly prepare for your next external audit or a SOX audit, or to take on an internal audit project, see how RoseRyan can help.
Corporate Governance Best Practices for Startups
Startup corporate governance is not at the very top of every company’s priority list, and it’s understandable why: Developing the product, establishing a new brand, hiring employees, gaining traction in the marketplace often take precedence over establishing the innerworkings of the company—even though doing so can lead to improved efficiencies and minimize the risk of errors or wrongdoing amid a busy and lean staff.
Emerging companies with a long-term view, however, are better positioning themselves for a bright future, one of integrity, if they consider startup governance models and start building up their startup governance structure.
What Is a Startup Governance Structure?
When talking about startup corporate governance, some people may be focused on building up the startup governance structure—deciding on the makeup of the corporate board, what their priorities will be, and selecting potential board members to appoint.
There’s another way to think about startup governance, when it comes to one of the areas that corporate board members are particularly interested in—financial integrity, or having financial statements that are complete and accurate. Without the ability to produce complete and accurate financial statements, a company can be set up for problems ahead, including a messy audit process when the time comes, a lack of awareness of its risks, and a lengthier process for getting the company IPO ready, for example. Worst case, it could be setting itself up for a lower valuation with unreliable financial information, as well as the risk of fraud.
A Main Point of Tightening Up Startup Governance
When running on all cylinders, focused on getting a product to market or developing a potentially life-saving device, startups in technology and the life sciences and other industries may have a narrow outlook. The everyday focus is on gaining traction, in the marketplace or in terms of R&D. But eventually, if progress moves in the right direction, the time comes to reveal to others what is happening within the company. Investors value transparency—it’s how they form their opinions and analysis on a company, yet transparency is only as valid as the integrity behind your numbers. Are your financial reports valid and timely? Can they be trusted?
The Importance of Corporate Governance for Startups & Best Practices
Spending time on corporate governance early on in a company’s growth journey is an investment in its future. When your company is ready to seek funding and if it has any plans to go public, credibility is going to matter.
Many companies find that outsourcing the design of or testing of internal controls is a highly efficient (in terms of both cost efficiencies and effectiveness) way to build integrity into their financial reporting systems.
Financial integrity experts who have worked with hundreds of companies like yours will meet your company where it is at this point—and will not try to push processes or systems that are more appropriate for a larger company.
RoseRyan consultants get to know the companies they work with so that they can tailor their guidance and work to the company’s size, culture and complexity, all while taking into account the company’s goals. They can work closely with the team to develop controls that are appropriate for the company, and help the company not only set up their startup governance structure but show the team how the can properly conduct reviews and make adjustments as the company grows, employees are added on, new systems are adopted, and so on. Operating with financial integrity and preparing for SOX compliance requires some adjustments along the way as the company gets bigger and more complex.
Ready to review or develop your startup’s corporate governance structure? Reach out to RoseRyan’s experts today—we help companies at every stage of growth.
Wake up & smell the coffee! How strong is your company culture?
A 2021 MIT Sloan Management Review/Glassdoor Culture 500 index found that 97% of employees rate coffee as a top workplace perk*. But a complimentary corporate caffeine kick is just one small part of the big culture picture.
With 2023 so far seeing ongoing economic uncertainty and continued workplace transformation being top of executives’ minds, let’s look at why organizational culture matters more than ever in the post-Covid era, and how you can shape it for better results.
Transforming organizational culture: clarity, inclusivity and collaboration
Organizational culture has changed hugely since the Pandemic, becoming a major factor in operational considerations and strategic concerns. In a rapidly changing world, a new model—in which everyone in the organization is responsible for culture—is becoming the norm.
Top-down culture practices are passé: most businesses must now be more adaptable and flexible than ever before. Culture has become less of a code established by leaders, and more of a toolkit for everyone in an organization to draw from and contribute towards.
How can you build a strong culture for success?
First, a company’s Board of Directors should actively help guide and develop its desired culture. The Board should prioritize evaluating, assessing and measuring results to determine if culture is well integrated and responsive to the needs and values of the organization’s people.
Further, each level of a business should support the clearly defined and communicated cultural values and norms of the organization:
Signs that a company’s culture is working well are that it has measurable results, driven by innovation and happier, more productive and loyal employees.
Is your organization keeping up with the times?
Culture drives performance, and both require hard work, commitment, plus the willingness to do uncomfortable things. But without change, excellence can’t be guaranteed.
So, do you have clarity about your company’s culture? Does your team have the discipline, rigor and camaraderie required to set up a strong and effective culture? What changes do you need to make to transform your organization’s culture?
The RoseRyan team’s ‘secret sauce’ is our uniquely inclusive and collaborative culture. And we bring this ethos to all our client engagements to help drive their excellence and performance. How can we help guide your business to greatness? Connect with us today and let’s find out!
*2021 MIT Sloan Management Review/Glassdoor Culture 500 annual index and research project
How to Get an Investor to Say Yes
Chances are, you are passionate about your company and its growth prospects, and you think everyone else should be too. Companies embarking on their first round of pitches to investors go in with this attitude and may be surprised when investors don’t say immediately yes. The roadblock in between winning over investors often lies in the pitch itself. Here are some common pitfalls of investor presentations and what yours should include.
How to Get Funding From Investors
“It’s all about who you know” is true when it comes to seeking funding and learning how to get investor funding. The timeline from putting your company out there for the very first time and actually getting an investor to say yes can take several months—but getting another yes after that first one usually becomes much easier. In the meantime, you’ll need to spend time building your network and letting everyone know what you’re up to and why your company matters.
Doing this effectively requires being able to talk about your company confidently and succinctly (i.e., even if you’re not prone to riding elevators these days you’ll want a compelling elevator pitch). Building your network should go far beyond your LinkedIn account, and it’s something your trusted advisors can help you with—when you partner with reliable service providers who themselves have wide networks, your own circle widens.
Preparing for Getting Investors to Pay Attention to Your Company
Before you have the opportunity for any meet-and-greets and elevator pitches, take an inward look at your company. You want to ensure that your financial operations are strong, that the information you are sharing can be relied upon and is up-to-date, and that you’re meeting your obligations.
Can you talk at length and with confidence about your business plan and how you’re keeping others around the company accountable to that plan? How will you be flexible with the plan if unforeseen issues arise or market conditions change? Do you have a good story to tell, with strong key players (investors want to know about the talent that makes up your company) and a marketable product or service? Investors are looking for growth potential—it’s not just enough to have the potential but to have a plan for scaling and a way to discuss that plan effectively.
Some of this information can be reflected in your investor presentation, but of course you want to know what to say to investors ahead of time.
Pitfalls of Investor Presentations
Here’s how to avoid some of the common pitfalls of investor presentations:
How to Get an Investor to Pay Attention
Investors want a compelling story—if you have one and can get a moment of their time, they’re more likely to perk up and listen to what you have to say. You may find that you are too close to this story, however, to articulate it without some help. Consultants who have experience putting investor presentations together and helping to present to investors can be invaluable for knowing how to get an investor to pay attention, helping you speak the language of investors, presenting a captivating case for your company, and then going out with it. When you’re too close to something, you may not realize what the key points are that are going to win over an investor.
Do you have clear objectives and how you are going to meet them? Is your decision-making based on solid information? Do you have a clear sense of your customers (the core demographic) and how you will market to them successfully? How well do you know your product, innovation, or prototype and its potential? How good are you at hiring the right people, for creating the type of company that will thrive with loyal talent, and not burn anyone out? And, of course, how will you use the funds you are seeking, and how will you scale the company?
Winning over investors largely involves knowing what questions they are likely to ask. When this isn’t something you do every day, experienced consultants can help you anticipate those queries and how best to approach them. They can help you tighten up your company’s financial operations, assess your marketing efforts and plans, and prepare you for this big step in your company’s journey—the next round of funding.
Looking for guidance on getting investors to say yes? Let’s go over any materials you have and help you tell a compelling story. Reach out to RoseRyan today to learn more.
Ways to Mitigate Liquidity Risk
There’s perhaps no worse feeling of dread than being short on cash. Even worse than not being able to cover the check at a restaurant is not being able to pay next week’s payroll or meet loan obligations. For companies facing a real liquidity risk, there are proactive steps and liquidity risk mitigation strategies to follow, to reduce the risk of getting in such a situation.
Know the Different Types of Liquidity Risk
What does it mean to have liquidity risk? Another way to ask this is: How could your company end up in a situation where its funds are tied up and it’s not able to meet its many obligations? Here are some situations that can arise, which helps to know when devising risk mitigation strategies:
How Do I Mitigate Liquidity Risk?
Mitigation of liquidity risk can start with a complete understanding of the ratios you are monitoring, those you should be monitoring, an assessment of your financial planning and analysis efforts, and perhaps more frequent forecasting of cash flow. Experts in cash flow management can take a look at your processes, including those with payables and receivables, to see if any improvements should be made, along with contingency plans if liquidity becomes an issue. To understand your company’s current liquidity risk and ways to mitigate it, see how RoseRyan can help.
4 Ways a Financial Controller Can Help Your Business Grow
Controllers hold an integral role within the finance function as they raise the level of expertise with their knowledge of accounting and technology, and their financial leadership. While they are often associated with the more immediate financial management and accounting needs of the company, they can influence the company’s growth prospects as well. By helping to make the company more efficient, by helping to clarify how the business is performing, and helping senior leadership to understand all that as well, the decisions the growth-focused company is about to take will be rooted in timely, reliable information.
What Does a Controller Do in a Business?
The best controllers seem to know practically everyone at a company. They want to know the inner workings of the business, and that often requires asking a lot of questions to understand what’s happening, who is responsible, and taking notice. Controllers take a comprehensive, unique view of the business that is rarely replicated by anyone else, besides maybe the CFO. They use a wide lens to understand how the business operates—across every department.
At many companies, the role of the financial controller requires both technical and soft skills, as they deal with many people and are expected to have accounting expertise. They may have been an accountant in a previous life and are now in a leadership position and oversight role as they work on improving efficiencies in the company, while setting up and managing proper finance and accounting systems and processes. At smaller companies, controllers may fill many of the traditional responsibilities of a CFO, until the company is at the point where it needs CFO leadership.
Financial controller roles and responsibilities often include:
Ways a Financial Controller Can Help Grow Your Business
Building up a true understanding of the business: By ensuring the company is able to produce and analyze accurate and timely financial statements, the financial controller is in effect ensuring that any decisions made at the highest level are based on facts and not guesswork. The controllers’ monthly financial reports to management can help to explain and bring light to why the company is performing one way and what would need to change to see different results. All of this contributes to informed decision-making.
Freeing up strategically minded executives to focus on the business: When the financial operations are working smoothly and the information coming out of the finance function can be relied upon, with proper controls in place, the CEO can focus on running the business and the CFO can focus on pursuing growth strategies, such as taking the company public or considering an acquisition.
Uncovering inefficiencies: By understanding where the money is going, being tech savvy, noticing waste, and realizing cost efficiencies, the financial controller can help open up resources, time, and room in the budget to enable growth pursuits.
Bridging the gap between the finance function and everyone else: Experienced controllers become bridge builders, by establishing tight relationships and bringing the needs and perspectives of the finance function to others around the company and understanding others’ needs, such as those in HR, IT, and customer service, and that of suppliers, who do their part in helping to keep the company running smoothly.
Reasons to Consider Outsourcing a Controller
When thinking about financial controller roles and responsibilities, and the benefits this role brings to a company, another consideration is that the controller role can often be outsourced. Particularly for smaller and emerging growth companies, an interim controller can do all the duties of a controller for a business yet often at a level of expertise that goes beyond what the company would acquire at this point in its growth stage. On a part-time, interim, or fractional basis, such a financial controller can become a key part of the team and help the business grow, whether you are in between controllers or not yet ready to fill the role at a full-time set of hours. Exploring your options for a controller? See if RoseRyan’s Interim Controller Solutions could be a fit for your company.