In the midst of a changing industry, area specialists offer their views on ways to take new account of your business.

In recent years, more than ever before, accounting firms have adjusted to their changing marketplace. Once considered merely a stodgy group of “bean counters” reluctant to adapt, those in the industry are increasingly viewed as essential partners in complete business operations, providing an array of consulting services that extend well beyond P&L statements.FirstMonday taps into some of the region's leading accounting firms to offer a glimpse of those services while delivering practical business-building insight.

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Cash Flow Management

Averett Warmus Durkee
by Thomas Durkee and Randall Wilson

In a world where “cash is king,” cash management is vital to every business. It is important for business managers to adjust their cash flow management policies to current economic conditions.

In a good economy, cash flow management policies should allow for the business to fully optimize the benefits of its available cash. A business may hold just enough cash to meet its current liabilities and invest the remaining amounts in a series of investments with staggered maturities and at various risk levels. In a bad economy, however, cash flow management policies are even more critical and should be structured to allow for unexpected financial challenges. A business will want to be sure that it has enough available cash to sustain financial challenges with the least impact.

In a bad economy, business managers should consider the following:

• Keeping a reasonable amount of emergency cash reserves available to meet financial challenges without compromising the business's credit standing
• Limiting the company’s exposure to credit risk to customers with a good credit history
• Offering discounts to customers for early payment of invoices
• Reducing the timespan for sending outstanding accounts receivable statements to expedite collections
• Maintaining only a reasonable amount of inventory to respond to customers' demands
• Holding off on any capital expenditures that are not immediately necessary Taking advantage of vendor discounts to reduce total expenses
• Paying all invoices timely to ensure the business's credit standing with vendors
• Reducing superfluous expenses

In either economy, good or bad, business managers need to be sure that cash flow management policies are in place to respond to the current conditions. If they do not, the business will forgo taking advantage of opportunities in a good economy or suffer exponential consequences when met with financial challenges in a bad economy.

Tom Durkee is a founding partner with Averett Warmus Durkee and has serviced his clients' needs in a variety of industries for more than 30 years. Randall Wilson is a manager with Averett Warmus Durkee and has serviced his clients' needs in a variety of industries for more than 10 years.

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Information Technology Assessment and Strategic Implementation

Vestal Wiler
by Jim Cavendar

Planning efficient growth and measuring success in today’s economy is difficult at best. To assure that your organization is making the best decisions in the IT arena, you must begin with an accurate assessment of its needs. With today’s software and its ability to push problem solving to innovative heights, coupled with hardware advancements that appear to be driven by a bullet train, it can be confusing to decide which way to turn when determining when or if it’s time to replace hardware and software.

An evaluation of your current technology platform may show that although you've made the right choice of product, like many companies you may be using only a small percentage of its total capabilities. Through this evaluation process, you may also find that your company may be in danger of incurring potential fines and possible litigation because you don't have the appropriate seat licenses for the employees currently utilizing software.

If new technology is the right choice, there are other potential potholes in the road. Your company can invest in the fastest hardware, load the newest software, and without a strategic plan for implementation of all those new goodies, your business and your employees may suffer the consequences.

Technology can make employees more efficient at their job and, in some cases, allow them to take on more responsibility. On the other hand, if you provide employees with new equipment, loaded up with new software and you miss the mark with training, they won’t be able to get their job done much less take on anything else.

Jim Cavendar is the director of technology services for Vestal Wiler, which provides technology consulting, innovative business solutions and accounting services.

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Operations and Profitability Improvement

Martinez, Olson & Associates CPAs
by Jorge L. Martinez

In today’s hectic financial and economic times, typical business owners focus too much time on putting out fires and too little time on improving their overall operations. Streamlining accounting, human resources, product delivery, manufacturing and other major aspects of your business are often viewed as important agenda items, but not urgent enough to be seen as immediate priorities.

If someone told you that improving and streamlining your operations could lead to greater profitability in the immediate future, and would help with increasing the long-term value of your business, would you take immediate action? Most of us would surely say yes.

Here are a few simple steps we can all take in working toward greater profitability:

First, identify the three most important functions of your business. Second, look at the way those functions affect your ability to make money (generate profits and cash flow). Third, quantify the way improvement of performance of those functions will improve your customer service and profitability via using technology; reorganizing the delivery of products or services; outsourcing the functions that you are not good at performing or that don’t need to be performed by your employees; and incentivizing your staff for creating new and better ways to deliver your products or services. Finally, get paid for your hard work by applying for tax credits from the federal government for improving your operations and making significant changes to your business.

It is imperative that you, as a business owner, use all the resources you have at your disposal to streamline your operations so that you can survive these difficult economic times and, most importantly, thrive and grow to a much higher level of profitability. Don’t be afraid to ask for help from your trusted advisors and from your customers and staff. I think you will be surprised by the positive feedback you will receive.

Jorge L. Martinez is the managing partner of Martinez. Olson & Associates CPAs, with 20 years experience in accounting, tax and consulting services.

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Fraud and Forensics Consulting

RSM McGladrey Inc.
by Paul Dumm

Can your business withstand the loss of 7 percent of its revenue, every year? The fact is, this may already be happening.

Based on a survey of its members, the Association of Certified Fraud Examiners, in its 2008 Annual Report to the Nation on Occupational Fraud and Abuse, estimates that organizations lose 7 percent of their annual revenues to fraud, which translates to a loss of approximately $994 billion for U.S. organizations. The report also indicates that small businesses are especially vulnerable to occupational fraud and that the typical fraud scheme continues for years before it is detected.

As long as there is motive — a financial need created by an addiction, for instance — and opportunity, along with a trusted long-term employee, no separation of duties and few financial controls, companies will be exposed to the threat of fraud.

An incident of fraud can have a severe impact on the state of a business. Not only is there the potential for significant loss of money from the fraud itself, but the business could lose its best customers and its good reputation; it could also be pulled into major litigation or even collapse entirely. And fraud, whether or not it’s detected, happens in the best of companies.

So, what can you do to help prevent fraud?

For starters, don’t rely solely on an audit to uncover a scheme. The scope of an audit often doesn’t call for testing and analyzing transactions at the level where a fraud is occurring, at least until it becomes material.

Also, consider the use of forensic accounting. To perform their work, forensic accountants combine their knowledge of business information and financial reporting systems, and accounting and auditing standards and procedures, on the one hand, with an understanding of evidence gathering, interviewing and investigative techniques, and litigation processes and procedures, on the other.

A forensic investigation is a more focused engagement than a financial statement audit. It may involve dissecting bank statements and accounting records, tracing money and assets through various entities and helping present to law enforcement and the courts the paper (or electronic) trail that leads from the fraud to the assets and/or the fraudster.

Paul Dumm is a manager in the Valuation, Forensic Accounting and Litigation Services practice in the Orlando office of RSM McGladrey Inc. Dumm is a certified public accountant and holds a Certified in Financial Forensics designation from the American Institute of Certified Public Accountants and a Certified Fraud Examiner designation from the Association of Certified Fraud Examiners.

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Compensation Management

Cross, Fernandez & Riley LLP
by Lee Ricci

Consider your staff a part of your office landscape — your human capital/garden.

You may have started the company with lean staffing, and now it has grown to a robust organization. Your human garden is an important part of your daily operations. But now, the economy has shifted. With these facts in consideration, some human resource professionals are recommending that now is the time to “correct” the inflated salaries earned over the past years of economic boom. You are wondering how much fertilizer you need to keep the garden productive and the company thriving.

Here is the bottom line. If you starve your garden, it will turn to weeds or your finest plants will seek sunnier climates.  During times like these, you need to focus more intensely than ever on the primary employees who shape and mold the landscape of your company. Your superstar employees will provide the strength to get your organization through tough times and will be there to provide yield during the good times. Take care of them.

You may have employees who could be weeded out. In reality, this should be done regardless of the economy, and not just because of a recession. Do not misuse the economic environment to do dirty work.

An honest gardener who lives off his/her garden will eat less, rather than overharvest. If you have to adjust pay down, management should take the hit first and then strategically parse out adjustments to staff. Your garden may suffer, but it will still be there when the good times return.

In times of economic adversity, an organization requires the leadership of a gardener with vision and the proper tools. Call on your human resource director to dig into the numbers; dig into your industry trends; dig in to look hard at your landscape with a long-term perspective. Have your HR director explore the SHRM Labor Market Outlook for Q3 2009 at www.SHRM.org for trends.

Compensation adjustments during this turbulent time may be appropriate. But make adjustments with the health of your human garden in mind.

Lee Ricci is director of human resources for Cross, Fernandez & Riley LLP, overseeing internal human resources, job recruitment, staff development and training.