At Lavoie CPA, we leverage accounting as a service and cloud-based accounting technology to streamline clients’ accounting, payroll, and analytical processes. Implementing software solutions is critical for improving financial reporting and making businesses scalable over the long term. We work closely with clients to identify the right software solution that supports strategic objectives while making operations more efficient and effective.
Through this partnership, Lavoie CPA and Jirav aim to give clients a competitive edge in their accounting and administrative processes.
Jirav is an all-in-one financial planning and analysis solution that maximizes the collaborative value of forecasting, budgeting, reporting, and analytics so leaders can drive their businesses forward with confidence and speed.
Jirav integrates natively with leading accounting or ERP platforms such as Xero, Quickbooks, NetSuite, and Sage Intacct. With Jirav, you are up and running your forecasts using templates in minutes.
This powerful business planning software helps companies:
Maximize Growth: Model the outcomes of investing in sales, marketing, or other areas. Scenario test to optimize your growth strategy and track results to plan.
Operate With Financial Excellence: A key to growth is having a plan and measuring against it. Manage detailed KPIs and collaborate with owners to keep the business on track.
Focus on Strategy: Finance teams at growth companies lose too much time to spreadsheets and generating reports. Automate the tasks and focus on being strategic.
Founded in 2009, Lavoie has served as a reliable Charlotte CPA firm that specializes in strategic financial and operational planning for businesses of all sizes. By delivering state-of-the-art strategic support, Lavoie’s clients can focus on growing their business and soar to the next level of greatness. In addition to providing customized solutions for clients, Lavoie prioritizes social justice issues and is extremely involved in the local Charlotte community.
Jirav is a comprehensive business planning solution for small and medium companies that maximizes the collaborative value of forecasting, budgeting, reporting, and analytics so leaders can drive their businesses forward with confidence and speed. The all-in-one financial planning and analysis software offers faster implementation and a more intuitive interface, allowing finance leaders to build financial models in hours (not days) and generate financial reports in minutes (not hours). Jirav is headquartered in San Francisco with offices and teams across the world including Seattle, Austin, and Poland. Learn more at www.jirav.com.
Economic uncertainties continue to plague the United States due to the Delta Covid variant. According to a September 2021 Wall Street Journal article, “In recent weeks many economists lowered their forecasts for third-quarter economic growth . . . amid the spread of the highly contagious Delta [Covid] variant.”
For early-stage, high-growth businesses and private equity firms, the challenge of navigating economic downturns has rarely been more prolonged and confusing. Extraordinary supply and demand challenges brought about by the pandemic have made it very difficult for businesses and private equity firms to manage and report their finances as well as to predict future business performance.
One of the solutions many businesses and private equity firms are moving to is an outsourced accounting service. Outsourced accounting services offer highly integrated and technologically advanced solutions for weathering the accounting and finance storms brought about by the current economic downturn.
Here is a closer look at 3 ways an outsourced accounting firm helps businesses and private equity firms during an economic downturn:
1. Providing Reporting and Analytics That Are Up to Date
One of the challenges presented by economic downturns is the speed at which changes occur. Negative surprises brought about by an economic downturn can have immediate effects on business performance and financial results. A difficulty arises in these cases when business and financial reporting is lagging.
For example, if you are a large catering equipment manufacturer and pandemic policies have suddenly closed buffets and catering events, you need up-to-date reporting quickly so that you can forecast how these policy decisions will affect your future revenues. If your financial reporting system typically takes a month or more to complete, you will be left flying blind in your decision-making as to how to react to these policy decisions.
Outsourced accounting firms leverage best-in-class software solutions and integrated, real-time analytics to give you accurate reports fast so that you can make informed decisions for your business. With the cutting-edge technology offered by outsourced accounting firms, your critical financial data is no longer siloed but instead is integrated so that you can see how financial performance in one area impacts all other areas of the business.
2. Allowing Businesses to Focus on Growth
For high-growth businesses and private equity firms, it can be difficult to run accounting and finance operations well and grow revenue at the same time. With an outsourced accounting firm, business owners are freed up to focus on growing their businesses knowing that a highly experienced financial management partner is taking care of managing and optimizing the business’s financial and accounting operations.
In an economic downturn, it is critical that businesses and private equity firms spend more time and effort than normal to generate new streams of revenue for the business. In order to have the extra time and resources needed to grow revenue during downturns, business owners may want to consider an experienced outsourced accounting firm to help them during these turbulent economic times.
Outsourced accounting firms are experts in utilizing the latest accounting and finance technology for the benefit of high-growth businesses and private equity firms. Outsourced accounting firms keep up with all the latest developments in accounting and finance software and how they can be best applied to your unique business. By applying these software programs to the financial operations of your business, your business will be better positioned to scale. With a better scale, you will have more time to focus on growing the sales and customer services operations of your business in order to weather the economic downturns.
3. Offering Access to Professional Financial Expertise
With an outsourced accounting firm, you always have access to a qualified controller or fractional CFOs who can provide you with valuable guidance on financial decisions about your business. Many young, high-growth businesses have dynamic sales leaders, product designers and customer service operations, but they do not have experienced and sophisticated finance and accounting teams in-house.
Furthermore, the cost to hire and develop in-house accounting and finance teams can be expensive and time-consuming. With an outsourced accounting service, you have access to an experienced accounting and finance team from day one. Your outsourced accounting service is not only running your accounting and finance operations day-to-day, but they are also there when you need them for any guidance and insights you need about the financial matters of your business.
These outsourced financial experts can help business owners make the best decisions possible about how to allocate and utilize capital during economic downturns. These experts can also help business owners think strategically and plan for how to weather an economic downturn for the next 12-24 months. When an economic downturn is happening, the stakes are much higher for businesses, and it is very important to avoid making unhealthy business decisions.
For example, if you decide to invest in a capital project at the wrong time and then an economic downturn occurs, your business may be left without adequate capital to continue operating and you may be forced to go out of business. Having an expert outsourced accounting partner who knows the exact financial status of your business is an invaluable asset in these situations by preventing you from making an unhealthy business decision during an economic downturn.
As a business owner or private equity firm, you may be looking for ways to reduce expenses during an economic downturn. One of the largest, unexpected expenses for employers is when an employee leaves the company. According to Gallup, the “cost of replacing an individual employee can range from one-half to two times the employee’s annual salary.” Employee turnover expenses can be especially detrimental during a downturn because they are oftentimes unexpected.
With an outsourced accounting firm, you not only have the benefit of scalable financial operations led by proven experts, but you also receive the added benefit of knowing that you will not have unforeseen turnover expenses from accounting and finance employees who leave the company during a downturn like the Covid pandemic. Instead, you will have the constant support of a dedicated outsourced accounting team that knows the financial status of your business inside and out.
Partner With Lavoie
Our outsourced accounting team is here to offer you an accurate assessment of the current financial health of your business. Our team is also here when you need us the most during an economic downturn. We’ll help you decide the best course of action to take to weather the economic storm and return once again into calm waters for your business. To learn more about Lavoie’s outsourced accounting services, please contact us today.
An organization’s financial strategy is critical to the health and success of the business. A well-crafted financial strategy enables an organization to optimize operations and can present additional opportunities for growth. In contrast, a poor financial plan can hinder an organization’s operations and drive even a profitable company out of business.
Despite the importance of financial planning, the process of building a robust financial plan does not have to be complicated. By following a few simple strategies, an organization can avoid many of the common pitfalls that result in a flawed financial plan and hamper the growth of the business.
Three Important Financial Strategies for 2021
1. Remember That Cash Is Still King
It is vital to remember that a company’s money (revenue) is not the same as the money that a company has been paid (cash inflow). While an organization may be profitable on paper, it could be broke in reality based upon the ratio of revenue to expenses.
Bills can only be paid with the money that a company actually has on-hand, making cash management an essential component of an organization’s financial strategy.
This includes setting the terms of contracts to ensure that they are paid promptly and taking advantage of opportunities to minimize expenses, such as the use of automation to reduce payroll expenses.
2.Keep It Simple
Overcomplicating its financial strategy is a common mistake that businesses make. To optimize its operations, an organization may break expenses into many buckets and independently monitor and analyze each.
While this is intended to increase visibility and optimize expenditures, it can end up costing an organization more money in the long term. Additional complexity and analysis require additional headcount to complete. Since payroll is typically one of a company’s largest expenses, up to 70% of the total, the potential gains made due to increased visibility and optimization are likely to be overwhelmed by the corresponding analysis cost.
A better approach to expense management is to apply the Pareto Principle: 80% of consequences come from 20% of causes. Identify those few things that make up 80% of your expenses (likely payroll, marketing, and rent) and focus optimization efforts on those for maximum impact.
Financial analysis can also be simplified and optimized by the use of automation. By transitioning manual accounting processes to automated ones, an organization can achieve the same level of analysis while minimizing the associated costs.
3. Bring Management Together & Make It Meaningful
One of the most common mistakes made by founders and entrepreneurs is maintaining too tight of control over a business’s operations. By trying to do everything themselves, these leaders end up spending more time working “in” their company (day-to-day tasks, putting out fires, etc.) rather than working on their company (strategic planning, long-term goals, etc.). As a result, the company can stagnate and fail because it lacks a clear path forward.
This also applies to an organization’s financial planning. A crucial part of building a successful business is hiring competent people and handing over control of the tasks they are more fit to manage.
When developing a financial strategy, an organization’s management likely has a better view of the current state of the parts of the company under its direct control than the CEO. Asking them about their departments’ current state, their needs, and potential opportunities to decrease expenses without sacrificing revenue can provide invaluable data for crafting an organization’s financial strategy.
Preparing Your Financial Strategy for 2021
The most effective financial strategies are based upon experience. Optimizing cash flow requires knowledge of how to manage contracts best. Simplifying financial analysis requires an understanding of what is and isn’t important. Reducing expenses via automation requires the ability to select platforms that provide a tangible benefit and return on investment. Crafting a strong financial strategy requires knowing the right questions to ask subordinates and take the right actions based on their answers.
A good starting point for acquiring some of this knowledge is reading Lavoie’s Guide to Strategic Financial Planning.
This ebook provides best practices and tips for developing an effective financial strategy.
However, in many cases, there is no substitute for experience. Lavoie CPA has over 25 years of financial planning experience and can manage your accounting for you, allowing you to focus on running and building your business.
Many CEOs don’t have a background in financial planning yet are expected to develop strategies and make decisions that dramatically impact an organization’s financial health. As a result, CEOs make several common mistakes that can dramatically impact their company’s financial health and success.
Where CEOs Go Wrong
Getting too comfortable with “how you do things.”
Past performance is not indicative of future results. While an organization’s strategies may have worked in the past, situations can evolve, forcing changes to “how you do things.” CEOs must be ready and willing to adapt, not stuck in a rut.
Denying that every decision a business makes has some financial implication
Every decision that a business makes impacts its finances. Everything that a company does affects its ability to operate in terms of additional or lost revenue, productivity, expenses, etc. If nothing else, making the decision to do one thing means that the organization likely lacks the resources to do something else. All business decisions should take into account the associated financial implications.
Making every decision in a vacuum
As the CEO, you will be called to the carpet for every choice you make, financial or otherwise, so it is vital that you justify the decisions you make. Decisions should be made based upon the best data available and incorporate the input of all stakeholders and subject matter experts. Making decisions in a vacuum increases the probability that a poor decision will be made based upon incorrect data or assumptions.
Forecasting based on what is in the bank account at that time
An organization’s current bank balance is a snapshot in time. It can change rapidly and in unexpected ways. For example, something as simple as a vendor depositing a check earlier or later than usual can result in a significant discrepancy between what an organization’s current bank balance is and what it “should” be.
For this reason, an organization’s financial strategies should not be based on projections based on a current bank balance. A range of different factors could affect this and render any projections based on it erroneous and unusable.
No visibility into what you are owed and what you have to payout
Visibility into an organization’s liabilities and receivables is essential for a CEO. For example, do you have more liabilities than what you are expecting in your receivables? You could have 600k in receivables but 800k in liability.
If this is the case, then a CEO needs to develop a strategy to decrease expenses and liability relative to receivables. However, without visibility into the current state of liabilities and receivables, a CEO is unaware of the need to change.
Ignoring investments that don’t show up on the P&L
An organization’s profit and loss (P&L) statement summarizes its revenue, costs, and expenses during a specific period. However, it is not necessarily comprehensive and should not be treated as such.
Investments that do not show up on an organization’s P&L statement should still be incorporated into its financial strategy. While they may not impact long-term revenue and expenses, they will show up in cash flow. Failing to account for them could leave an organization looking financially healthy on paper but broke in reality.
Not considering seasonality
Many businesses have seasonal ebbs and flows. Such as an increase in work for construction workers in summer and increased e-commerce sales in the months approaching Christmas.
For others, the reasons may be less obvious (such as having more sales in summer because customers have more money), but these cyclic changes will still occur and should be incorporated into a CEO’s financial strategy. For example, building up cash reserves going into a dry season may be necessary to cover expenses while waiting for sales to trend upward again.
Planning once and refusing to iterate as things change
A business’s profitability is determined by a number of internal and external factors. While the COVID-19 pandemic and its economic impacts are a high-visibility example, businesses experience smaller changes much more frequently.
Adaptability is a critical component of an organization’s financial strategy. While the company may have certain goals and plans in place, if internal or external factors demand a change, it is essential to adapt rather than insisting on continuing with a course that isn’t working.
Avoiding Common Financial Mistakes
Understanding how financial planning can go wrong doesn’t tell you how to develop a financial strategy correctly. To learn more about this, check out Lavoie’s CEO’s Guide to Strategic Financial Planning.
Developing a strategic financial plan can seem daunting; however, it can be boiled down into two questions: what are you doing now and where do you want to be? This article walks you through the process of answering these two questions, providing a foundation for developing a financial strategy for your organization.
Question 1: What Are You Doing Now?
Every journey has a starting point and an ending point. Before you can implement a plan to achieve your financial goals, it is important to consider where you are now.
Current State of the Numbers
The current state of your organization’s numbers are a good starting point when determining your organization’s capability to meet its financial goals. Some important questions to ask include:
Are you in a position of stability? Financial stability is vital to reaching “stretch” goals. If the organization is not currently financially stable, it is important to identify this fact and develop a strategy for achieving stability as a first step in the planning process.
What is actually coming in/out the door? Knowing the size of the company’s cash reserves is not enough for financial planning. How much revenue is coming into the organization and how much is going out again as expenses?
What is fueling the majority of your expenses? While increasing sales is one way of improving the organization’s financial footing, the ability to do so depends on the market and potential customers. Identifying and minimizing expenses increases profits as well but is less impacted by external factors.
Achieving financial goals requires the support of the entire organization. Take a moment to consider your organization’s culture and if the company has the maturity and ability to meet its goals.
Do your decisions match your vision and mission? An organization’s goals and procedures are important, but actions are even more so. Are your decisions, both recent and historical, helping to move the organization towards its goals?
Would your employees agree? Employees throughout the organization can have different perspectives, insights, and recommendations. Ask those “down in the weeds” how well the company is following its vision and mission and how they believe things could do better.
Question 2: Where Do You Want To Be?
The effectiveness of a strategic plan can only be effectively measured if there are usable metrics. Before starting to build a plan to improve the organization’s financial position, it is necessary to define success and failure.
The first step in defining “success” for a financial strategy is defining concrete targets. From there, the next question to ask is what do you need to achieve your targets?
Human Capital. Does your organization have the human capital necessary to achieve its goals? This not only includes headcount but access to the specific skill sets required now and in the future.
Acquisitions. Does your organization have the capabilities that it requires? Are there areas of your business where things could be done more effectively or efficiently?
IT Investments. The IT landscape is evolving rapidly, and new solutions have the potential to dramatically improve operational efficiency and effectiveness. Are there any IT investments that the organization should make that would help in reaching its targets?
A failure to properly monitor and manage expenses is one of the most common ways that businesses fail to achieve their financial goals. Gaining visibility into past, present, and future expenditures is an essential part of financial planning.
How can you gain more visibility into your expenditures? Visibility into expenditures is essential to identifying opportunities for optimizations and cost cutting. How can you achieve a higher level of visibility into business operations?
Do you have an idea of your cash flow on a daily, weekly, and monthly basis? What level of visibility do you currently have into your organization’s cash flows? Examining cash flows at the daily, weekly, and monthly level can help to identify potential inefficiencies and opportunities.
Beginning Your Strategic Financial Plan
Answering the questions that were asked in this article enables you to lay the groundwork for developing your organization’s financial strategy. To learn about the next steps in your financial planning process, download the CEO’s Guide to Strategic Financial Planning.
The beginning of a new year always signals a time for trend spotting Which financial opportunities, challenges and changes should companies prepare for now? Below are six soon-to-be realities that you should consider for 2019. .
CFOs take on more
The role of the CFO has merged with that of the COO to assume strategy and operations functions. This calls for greater collaboration in business areas such as marketing, procurement, sales and design/R&D in order for CFOs to build sound budget strategies and operational processes. With a team of experienced outsourced fractional CFO professionals, we offer deep expertise and industry-specific insights to support your financial decision-making.
demands disrupt industries.
Think of it as forced evolution. Millennials and Gen Z crowd
are making their wishes known – pushing for greater transparency, asking for more
sustainable products, embracing technical conveniences. Business has no choice
but to respond – re-evolving business models, selling on social media, adopting
finance smarter and faster.
Automation and new technologies are making finance software programs do more with less. This leaves more time for focusing on the organization’s strategic vision.
We’re grappling with uncertainty
From foreign policy to data regulation, businesses are
operating under the strain of uncertainty. Expect another year of having to
navigate a turbulent, highly politicized environment.
Even the workforce is
2019 will introduce a diverse generation of employees with
new expectations and wants. For accounting, the skills gap widens, re-training requirements
grow, and a higher level of contract employees emerges.
New data risks are
Companies will need to have a deeper understanding of General
Data Protection Regulation (GDPR), because there will be a higher level of
concern about data security as more info is created, collected, and stored online
which allows for the possibility of hacking.
As these developments proceed, the role of finance becomes more important and extensive. Many companies are turning to service providers to help them make the transformation. This may entail consulting services, augmenting current staff or even outsourcing the financial and accounting function.