What's on Your Finance & Accounting Calendar for June?

By Dave Costello, TCV Growth Partner -

Here we are in early June. Is it sort of a shoulder month for you? Beyond the first quarter but not yet halfway through the year? Time to take a break or get busy? Thinking about planning for your vacation? There are always operational, production, or sales projects going on, but what about financial management opportunities?

Oh, yeah, there’s plenty of things to make progress on in finance and accounting!! Want to know what some of them are? Here you go!

The first effort is to get the books closed for May in a timely manner. Make sure your accounting group does a pretty good job of getting good cutoffs for inventory accounting, accounts payable and other significant accruals (if you are on the accrual method). While not a quarter end, five months of history is a good period to review for trends that may be starting to show.

Next step is to do a strong review of actual to budget comparisons. Where are sales compared to budget? Is your gross profit margin improving, at budget, or below budget? How about expenses? Are they above budget and if so do you know why? Did you not pay attention up until now or was there an unusual occurrence that caused it?

How about your net income for the first five months? Are you below budget? Isn’t this part of your income and if its below budget that means you aren’t making as much as you wanted to, at least according to your budget? What is causing that and is that an acceptable position for you?

There’s no need to wait until you are halfway through the year to take action to improve the direction of negative trends you are seeing.

If sales are below budget, here’s a few things to look at:

1. Is it a rate issue or is it a volume issue?

2. Are you charging what you should for your product or service?

3. Has the mix of products changed from what you expected if you sell more than one product or service?

4. Is your sales team not performing?

5. Is your shipping area falling down on getting product out the door so you can bill for it?

6. Are you having trouble purchasing inventories and getting delivery on a timely basis for resale to customers for some reason?

Don’t wait until NEXT month to address these possible issues. Take action NOW!

If your margin is not where you wanted it to be, there could be a few reasons as follows:

1. Is your inventory cost higher than you expected? Are you pricing your product to customers correctly? This is the follow up question.

2. Is your service delivery less efficient than you expected, that is, service delivery is taking longer and therefore more costly than you expected?

3. Is the mix of products you are selling different than expected? That is, you are selling more low margin items and fewer high margin items? Work with your sales team to get the mix back on target.

Don’t wait until NEXT month to address these possible issues. Take action NOW!

Coming down the home stretch. Is your net income where you budgeted it? Take a look at this list:

1. Make sure you address the items under sales and gross profit margin above.

2. Are there any operating expenses out of line with your budget?

3. Did you hire more people than in your budget? Did you give higher salary increases?

4. Did you open a new office/facility/property that wasn’t in the budget? What is the expected benefit and when will it kick in? If this was in your strategic plan it should have been in your budget.

5. Did you incur any unexpected costs that weren’t in the budget? Legal, consulting, marketing, etc.? These can add up quickly if you are not careful.

Again, don’t wait until next month to address issues. These should be addressed now and possibly you can fix them by next month, or at least get them moving in a positive direction for your business.

A couple of other questions to think about!

Are you making more than you expected but don’t have the cash to show for it? Look at your balance sheet. Your answer probably lies therein. Are your accounts receivable or inventory up over the last few months? Are your payables way less than at year end? Did you buy any expensive equipment? You might want to think about doing a cash flow forecast, or having it done for you. These are great tools to help you manage cash and to understand where it went.

Another task I harp on with my clients is to collect your receivables. Don’t be the bank for your customers and finance their business. Make sure you have a process in place to follow up on receivables that are outstanding beyond 30 days, beyond 45 days, beyond 60 days, each with a more stringent message.

Don’t forget that estimated tax payments are due June 15th! This will require you to estimate what your full year net income will be using five months of experience. Part of the reason you should try to achieve a good cutoff in the May close. When estimating your full year taxable income don’t forget to factor in any seasonality in your income stream. You should be able to see this over the last couple of years if you have good monthly financials.

Did you think June was going to be easy? Why? There’s always something to work on or plan for, especially for small and medium sized businesses.

Think you need some help? Reach out to me at dave@tcv-growth.partners. If it’s a financial question I’m happy to have a conversation to see if I can help or provide some guidance for you. If it’s an operations or sales issue I have some partners that are experts in these matters.

Hey, the good new is that five months of the year are in the box!! You only have seven months to go!! You’ll get there, and TCV Growth Partners (www.tcv-growth.partners) is happy to assist you along the way.