Running a successful company requires more than just a great product or service. As a small business owner or CEO, you must learn how to strategically manage the money coming in, while putting up ironclad defenses to keep it from slipping away.
To truly protect your business finance, you need to master two critical areas: building a trusted, multi-lens financial team and implementing strict day-to-day financial controls.
Part 1: The Three Voices on Your Financial Team
As a CEO, you should have three trusted advisors on your financial team: your banker, your CPA, and your CFO. They have all got your back, but they are all looking at your business through a slightly different lens… and with slightly different priorities.
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The CFO: A good CFO is helping you maximize cash flow and profitability. Their number one priority is figuring out how to make more money easier and faster.
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The Banker: A banker has got your back, but remember, they are also your lender. Because of that, the question they are asking about your business is: “How wealthy is this business, and will it be able to pay back our debts reliably?” They are deeply focused on the overall wealth and stability of your company.
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The CPA: Lastly, your tax preparer, your CPA, operates through an entirely different lens. Their main question is: “How can we reduce taxable income?” They look for the many ways and strategies to structure the business and its activity so, at the end of the day, you owe Uncle Sam as few dollars as possible.
These roles are all important and highly strategic. However, as the leader, you need to know that these three different viewpoints exist. Sometimes, you are going to have to decide whose voice you want to listen to depending on your current business goals.
Part 2: Safeguarding Your Wealth with Financial Controls
Once you have the right voices advising you on how to grow your wealth, you must protect it from internal risks. This brings us to a very important accounting concept: financial controls.
Financial controls are the mechanisms, behaviors, and processes that you put in place in your accounting system to ensure that no one is stealing from you: none of your customers, and more importantly, none of your employees.
If you are a solo entrepreneur, your financial controls are pretty much taken care of, because you are not going to steal from yourself. But if there is more than just you on the team, you want to make sure of a couple of common-sense things:
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Protect Your Outflow: If you are a small business, you should be signing every single check. You should be the exact person that hits the submit button on payments. In other words: no one but you should be able to move money in and out of your bank account.
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Divide and Conquer: If you have several people working in your accounting department, you want to distribute the responsibilities. Someone should be handling the money coming in, such as the billing, and a completely different person should be handling payroll and paying the bills.
The Ultimate CEO Superpower
The more you can distribute and separate tasks, the greater your financial controls will be.
By balancing the strategic insights of your CFO, banker, and CPA, while executing strict internal safeguards, you position your business for massive, secure growth. Financial controls and team alignment are absolute prerequisites for any business owner, because at the end of the day, you want to scale your revenue and completely avoid the unpleasant surprise of embezzlement.