Asking, “How can a financial assessment help us?” is the first step to getting a better handle on your organization’s finances.
A business assessment is a financial checkup that evaluates the efficacy of critical financial functions like reporting and forecasting while analyzing people, processes, and tools. The findings that result can serve as a roadmap for the organization’s strategic planning initiatives.
Let’s look at why conducting a financial assessment is such an important component of business planning. The top 8 reasons for hiring a consulting company to perform a business assessment are to:
- Offer an Impartial Analysis
Bringing in someone to assess the organization’s financial position, activities, and deliverables is a great way to get an impartial analysis of how well the company is doing. While technically an assessment can be done by any experienced finance personnel internally or externally, it is typically best performed by a third-party to ensure that the analysis is wholly unbiased. When an external source is preparing the financial assessment, management can have confidence in the analysis being provided, knowing it’s reliable enough to support critical budgeting efforts and strategic planning initiatives.
- Improve Reporting and Forecasting
A financial assessment will evaluate the reporting that’s provided internally to management, owners, investors, and the board (where applicable) as well as externally to government authorities and other regulatory bodies. By examining the organization’s key financial reports and filings, an assessment provides an opportunity to correct any errors or omissions that may be present to ensure more accurate future reporting. However, an assessment’s evaluation of reporting will not simply look at the accuracy of things like financial statements and tax filings themselves. It will also focus on people and processes by involving accounting and finance personnel in the discussion to examine methodology and improve reporting procedures moving forward. This, in turn, will aid in ongoing forecasting efforts, leading to improved accuracy of business projections.
- Increase Efficiency
While accounting activities like shareholder reporting will receive a detailed analysis, other bookkeeping and accounting functions will be reviewed as well, such as A/P, A/R, and payroll. The goal is to evaluate how well these activities are being executed and overseen to provide recommendations on how to increase efficiency. This typically also includes a review of the tools and platforms being used to determine if they are meeting business needs, or if better solutions exist. Depending on the company’s industry there may be an operational focus to consider as well related to topics like inventory management and revenue recognition.
- Strengthen Risk Management Efforts
Additionally, a financial assessment will identify opportunities for improvement as well as validate where the company’s current risk management efforts are being successful, which is crucial for strengthening the company’s ongoing risk strategy. By proactively identifying risk factors the organization can not only be better protected from costly threats but also make itself more attractive to future investors and partners by reducing its risk profile.
- Aid in Growth Planning
As organizations grow and evolve, they need periodic check-ins to ensure their performance is aligned with their strategic goals. A financial assessment allows them to stop and analyze where they are relative to where they want to be and make course corrections to keep them moving along the business growth curve. For organizations that are stagnant or experiencing decline, a financial assessment can equip them with the critical information needed to propel them into a positive growth position.
- Review Staffing Needs
A financial assessment will also focus on evaluating relevant personnel. Staff across the areas of bookkeeping, accounting, and finance will be looped in to create dialogue around accounting systems, policies, and processes to look for pain points and identify opportunities for improvement. Senior management and board members (where applicable) will also be interviewed to identify, define, and document financial goals and expectations. The goal is to gauge the organization’s ability to meet its current and future business needs.
- Secure Business Funding
Independently validated business numbers and accurate financial reports are typically required by lenders and financers before they are willing to explore investing in an organization. That alone makes doing an assessment a key component in securing business funding from a bank, VC firm, or private investor. However, the benefits do not end there! An organization that can demonstrate efficiency and mitigate risk will always be more attractive to a wider range of investors because those areas add credibility to the business and speak to its future ability to scale. For these reasons it’s clear to see how a financial assessment can aid in growth planning by unlocking additional funding options for growing organizations.
- Test the Waters
When the financial analysis is being done as a potential steppingstone to working with an outsourced CFO company, it allows you to test the waters before committing to the relationship. This can assuage business owners who are nervous about undertaking the more considerable cost of investing in an ongoing fractional financial leadership arrangement. Having a consulting company conduct a financial assessment gives you a chance to test the company’s proficiency, reliability, communication style, timeliness, and professionalism.
Large organizations will typically have the resources needed to conduct a financial analysis of this sort in-house, although they may still prefer to bring in a consulting firm to offer impartiality. However, small-to-mid sized businesses will almost certainly need to utilize third-party financial consultants to provide this kind of thorough financial assessment.
If you’re looking for an actionable financial assessment, we can help! Our experienced CFOs can provide a financial assessment that covers the following areas:
- Internal Reporting
- External Reporting
- Financial Projections
- Systems and Tools
- Processes and Procedures
- Staff Personnel and Senior Management
- Bookkeeping Responsibilities
- Financial Goals
- Operational Focus
- Risk Management
- Financial Models and Assumptions
Our findings and recommendations will be presented in an easy-to-understand executive summary that we will review with your management team at the conclusion of the assessment!
Find out more and schedule a free consultation today!
But our commitment to you doesn’t just end there! Unlike some of the big-name accounting consulting firms, we don’t just deliver a large binder full of advice and then walk away without any practical follow-up, leaving you to make the changes needed to improve on your own. After we review our findings with you our highly qualified team of consulting CFOs can also execute the recommended actions and undertake any follow up activities if your team needs help. It’s this kind of dedication to your ongoing success that sets us apart!
Contact us today to find out whether a business financial assessment will benefit your organization!
