How to Hire a Part-Time Controller

An experienced controller can provide considerable benefits for a business, but they often come with a high salary range. If your company needs the financial guidance and support from a controller, but you also need to save money, a part-time controller is your answer. Hiring an outsourced controller or CFO for the first time can be difficult to navigate if you are unsure what to look for in a controller. Keep reading to learn the top tips for hiring a part-time controller.  

 

Understand the role of a controller

It is important to understand exactly what a controller can offer your company. When employed in a full-time role, a controller often leads the accounting or finance departments of a business. Both accounts payable and accounts receivable fall under their jurisdiction. If your company has a CFO, the controller reports directly to them.

 

When searching for a controller, freelance or full-time, there are certain credentials he or she should hold. Narrow your search to controllers with a degree in fields such as accounting, business administration, or finance. They should also hold a certification as a Certified Public Accountant or a Certified Master Accountant. If your company needs an experienced financial advisor, look for professionals with ten or more years of experience. The level of responsibility the controller will have in your organization can help determine how much experience is needed for the role.  

 

How does a controller contribute to the business?

A controller takes on many responsibilities in an organization within the finance and accounting departments. From financial planning and reporting to administrative tasks and financial managements, the responsibilities of a controller will depend on your business needs. Common roles and functions include the following.

 

·       Management responsibilities: If you have not had a controller or CFO in the past, a part-time controller can help establish the policies and procedures of your accounting team. A controller can select accounting software, establish financial benchmarks for the organization, and manage control systems. These management duties can set your team up for success, even when the outsourced controller is not on the clock.

·       Financial reporting: A controller can manage financial statements and reports, including annual updates, reconciliation, budgets, and more. They can provide detailed reports to a board, executives, and investors. Based on reporting, the controller can provide valuable insights into the health and future of your organization.

·       Company transactions: Accounts payable and accounts receivable report to the controller, and payroll falls under their duties as well. If you have not had a controller in the past, your part-time controller can establish and maintain the general ledger for your company as well as a filing system.

·       Compliance needs: If your company is publicly held, you must complete filings with the Securities Exchange Commission (SEC). A controller can file these reports and ensure compliance on behalf of your organization or CFO. During the auditing process, the controller manages documentation.

 

Tips for hiring a freelance controller

If you are looking to save money without sacrificing expertise, hire a freelance or part-time controller. You only pay for services when they are needed instead of committing to a full-time salary. Freelance controllers also tend to have considerable experience across industries and company types, from startups to large organizations.

 

Set clear expectations

The specific role and responsibilities for a part-time controller will depend on the needs of your organization. Small businesses and startups cannot often afford the full-time services of a CFO, so a controller takes on that role. If a CFO is currently on staff, a controller can help manage the direction of the accounting department.

 

Before you search for a controller, determine the needs of your business. If your team consists of experienced accounting staff members, you need a controller who can fit in seamlessly with the existing team. If your team is relatively small or inexperienced, a controller may need to step into a leadership position.

 

Decide on a budget

Outsourced controllers can work on a project or hourly basis. When you are looking for a part-time controller, consider your budget and scope of work. These factors can help you narrow down your search considerably and provide potential candidates with relevant information. If you are hiring a controller for a specific project, an experienced controller can help estimate the hours needed to complete the work. 

 

Look for relevant experience

Limit your search to controllers who have worked with companies within your industry. Industry experience means that they are familiar with the policies and procedures necessary to run your business. They can also offer guidance for your finances based on the current state of the industry.

 

Your controller should also have experience with companies similar to the size and structure of your own. This experience will help them fit seamlessly into your organization and better understand your needs. Financial best practices, benchmarks, and reporting will also be specific to the size of your company, and prior experience ensures the controller is up to speed when they join your team.

 

Align software experience

If your company already has a preferred accounting software in place, you need to hire a controller that is skilled with that software. Hiring based on this criterion can save both time and money when it comes to training someone on your software and getting them up to speed. Freelance controllers can also provide valuable guidance on best practices for software and how to maximize your efforts with the resources you already have.

 

Consider company dynamic

Your freelance controller may not spend every day with your team, but it is important that they work well with your staff. Someone who fits in with your team can save time by avoiding unnecessary friction or miscommunication. When interviewing controllers, it may be beneficial to introduce them to your team or ask your team’s opinion on various candidates.

 

Rely on a contracting service

Professional controller services can provide top-notch controller services that meet the needs of your business. With multiple experienced controllers on staff, we have consultants that already know your industry and work with similar companies. Contact us today to learn how K-38 Consulting can provide you with the part-time controller services your organization needs.

Reducing Operating Costs for Your Startup During COVID-19 Is Essential for Longevity

Cash flow management is already a challenge for startups, but COVID-19 is not making matters better. With unemployment rising and people spending less money on certain goods or services, startups are likely to suffer during this time. However, reducing operating expenses can help a startup stay afloat until operations are back to normal. 

Reducing overall operating costs can certainly impact your bottom line, especially as the impact of COVID-19 is felt. Also, reevaluating the budget and allocating funds to different operations can keep essential parts of your business going. Keep reading to learn more about how to reduce the operating expenses for your startup while staying productive during COVID-19. 

Review your budget with a new lens

When you created your budget for the year, the coronavirus was not likely to be on your mind. And, with updates and changes happening so fast over the last several months, 2020 can feel like one big game of catchup. Now that shelter-in-place ordinances are lifting and people are venturing back out into the world, it is a good time to reevaluate your operating budget.

 Revenue projections are likely in need of an update, and your outlook for 2021 is different now than it was a few months ago. From lower sales numbers to higher churn rates, the priorities of your budget need to be evaluated. However, it is important to avoid simply slashing your budget. Wisely evaluating the numbers may indicate that some areas of your business are actually improving during this time.

 Renegotiate contracts

The impact of COVID-19 is being felt across the country. If your business has shifted, it is likely that others connected to you have done the same. You may be able to renegotiate terms or contracts during this time to give yourself some breathing room. From reducing office costs to eliminating subscriptions, there are some measures you can take to prevent waste.

 Office Space

If your company has shifted to remote work, you are likely paying for empty office space. Your landlord may be willing to negotiate your terms due to the unprecedented circumstances. In some cases, shelter-in-place orders may prohibit you from working in the office altogether. Review your contract to see if there are any provisions for a situation when the office space is not usable.

 Subscriptions

Your startup likely has multiple active subscriptions. Whether you rely on monthly professional services, like IT support, or SaaS licenses to run your business, there might be some room for cuts. Try negotiating with your partners or vendors to reduce subscription costs. You may have licenses that you are no longer using or termination fees that can be renegotiated.

 Deferred Payments

In cases where you cannot reduce operating costs in numbers, ask for deferred payments. Lengthening the payment cycle can improve your cash flow temporarily and get you through a rough patch.

 Eliminate nonessential tools

When you reevaluate your budget, you may find that it is skewed in one area. Go line by line to review the various tools and services used by your business, determine which are essential and which items can be cut. Reviewing financial statements is a great way to visualize where your budget is going, instead of assuming. You may have duplicate tools, tools that are no longer in use, or items that can be replaced with a less expensive alternative.

 Cut Unnecessary Licenses

Reviewing all the tools and services used by your team could also highlight which services have too many licenses. Are all licenses being used, or can some be eliminated? Also, you may be paying for additional functions that you could go without, at least for the time being. Dropping your subscription tier or reducing the number of licenses could help lower operating costs.

 Cut Out Paper

While it may seem small, going paperless can help your bottom line. Businesses spend quite a bit on paper, printers, and ink every year. If your team is working remote, there is even less reason to use paper. When you return to the office, you can continue the habits formed during quarantine to reduce the overall paper usage of your business.

 Stay flexible

Things are likely to continue changing as we learn more about COVID-19 and its overall impact. There may be unlikely opportunities to reduce your operating expenses over time. The unpredictability of COVID-19 combined with the changing nature of startups makes it important to stay on your toes. You may find yourself considering new or innovative ideas that you would not have previously thought of.

 Evaluate More Frequently

Periodically evaluating your budget and outlook can help you stay more agile and flexible. As your startup changes and evolves, your operating costs need to follow. Set up more frequent evaluations to stay on top of your operating costs and adjust as needed.

 Pause large investments or projects

For many startups, cash flow is limited. COVID-19 is putting major purchases and projects on hold until businesses can stabilize. Instead of considering these pauses as losses, pay attention to the money you are saving and the cash you are making available.

 New Equipment

Were you planning to upgrade everyone’s laptops this year or purchase a new phone system? COVID-19 may not be the right time to make major investments like purchasing new equipment. Instead, stick to only buying what is necessary. Look for refurbished or second-hand items when possible to save on operating costs.

 Marketing Initiatives

Unless your marketing initiatives are seeing a positive ROI, it may be time to pause big projects. Instead of rolling out previously scheduled campaigns, reevaluate your marketing calendar to determine what will move the needle for your business. If your customers are pushing off on buying decisions, now might not be the time to invest in sales and marketing.

 Utilize Free Trial Periods

If you absolutely must purchase a new service or equipment, take advantage of free trial periods. Ensure the vendor is the right partner for you by testing their product or service ahead of time. In some cases, vendors will negotiate on the trial period if you are serious about buying.

 Reduce payroll

Finally, reducing payroll can help lower operating costs. Many startups see this as a last resort because it greatly impacts your operational capacity as well as the individual lives of employees. However, in some cases, it is a necessary measure.

 Implement a Hiring Freeze

You can make steps towards reducing operational costs by implementing a hiring freeze. Avoid filling positions unless necessary. Your team may be stretched thin, but you can avoid eliminating current positions this way.

 Contract Out

Instead of hiring for new positions, contract out when possible. For example, you may need financial guidance during COVID-19. You can contract with a freelance CFO to work part-time at a lower cost than hiring an executive-level position. Firms like K-38 Consulting provide services from top-notch financial advisors, and you only pay for services when you need them.

Important SOX Compliance Internal Control Considerations During COVID-19

To say that COVID-19 has impacted the way we do business would be an understatement. For many businesses, the effects of the coronavirus pandemic will be felt in waves. One such wave will be felt as accounting teams prepare to close the financial quarter and adhere to SOX compliance. Reporting issues, changes in operations, and increased scrutiny for public companies will all bring new challenges during 2020. This will make SOX compliance even more of a challenge in today’s business environment.

 As operations are altered and supply chains disrupted, it is important to evaluate the reporting and accounting processes for a business. Shifts to remote work have caused major disruptions and require considerations for internal controls and SOX compliance.  

 

Recognize the Key Impacts on SOX Compliance

The impacts of COVID-19 are far reaching and continue to develop in real-time. Recognizing the key impacts of the virus on a business is an essential first step for examining internal controls and accounting processes. To make the necessary evaluations and modifications, you must first understand what has been altered.

 For many businesses, production has been interrupted, supply chains are disrupted, and typical personnel is unavailable. From remote work practices to entire production halts, the exact impacts are different for every organization. These changes may have led to a decrease in sales and earnings, a reduction in productivity, or closure of facilities.

 

Inability to Perform Control Duties

Absences may lead to an inability to perform control duties, which severely impacts SOX compliance. Employee illness or caring for a sick relative are typically covered as paid leave, especially as companies expand their leave policies to account for COVID-19. Office closures, layoffs, or furloughs can also result in unavailable individuals who typically perform certain control duties.

 Review current internal controls and determine if the necessary personnel are in place to carry out control duties. If individuals are not available due to COVID-19 implications, it may be necessary to reassign control duties or modify current internal controls.

 

Impact of Lack of Information Required For SOX Compliance

COVID-19 has a global impact, making processes more difficult for international organizations. If a business has office locations, retail stores, facilities, or key contacts in other parts of the world, they may not be available at this time. A lack of information can impact the ability to operate controls, especially as offices around the world close or move to remote work. Sudden and constant changes in operations can lead to significant gaps in information. If essential information to effectively operate an internal control is not available, an alternate control may be necessary.  

 

Ability to Complete Reports

The timeliness of control operation is likely to be impacted by COVID-19. It is necessary to evaluate the close calendar and prioritize essential activities. Activities that are not considered essential can be postponed until a more appropriate time. The calendar may also need to be adjusted to account for missing information or delays in gathering information and data.

 By evaluating the timeliness of control operation, you can determine whether SEC report filing extensions are necessary and plan for the domino effect of changes. As some items are prioritized and others are pushed back, the close calendar and internal controls will be impacted.

 

Adjust Current Controls to Meet SOX Compliance

Controls that require manual approvals may be difficult or impossible to execute during this time. COVID-19 has required many organizations to shift to remote work, so individuals are not readily available to provide signatures or review hard copies. The approval process for controls that require manual approval must be altered to accommodate these changes.

 Implement digital approval processes to maintain current internal controls while working remotely. Incorporate digital signature capture into the approval process and set up approvals via email communication. Consider creating a template for document review and approval to make sure that all necessary data is captured, review steps are properly followed, and applications are consistent. Approval emails can help maintain documentation and ensure the entire process is tracked from start to finish.

 

Identify Alternate Controls

New controls may be necessary if existing controls cannot be adapted. Digital signatures or processes may not be realistic for all controls with remote work. In these cases, determine if other controls can be added or reclassified as key to compensate for the missing controls.

 

Document Changes

Documenting changes and deviations to controls is essential for reporting and documentation. Deviation lists can be used to compare with the control environment and assess the impact of changes due to COVID-19. In many cases, documentation of changes to internal controls is necessary for reporting and filing. This documentation can help support disclosures that are required for changes to internal controls.

 

Engage with External Auditors on SOX Compliance Issues

Communication and regular engagement have never been more important than it is now. The close process is likely to be difficult when conducted remote, especially for the first time. This process can be made a little smoother with open lines of communication. Make sure to communicate regularly with your team and external auditors to ensure everyone is on the same page and prevent disconnects within your team.

 

Seek Outside SOX Compliance Support

COVID-19 has brought new challenges for all businesses. For many, remote work is a new environment and causes major disruptions to internal controls. You can support your accounting processes and financials during this time by relying on outside experts. At K-38 Consulting, our financial consultants are ready to guide you through the challenges of COVID-19. With experience in a wide range of industries and SOX audit services, you can receive the best information to navigate these uncertain times.

 

How a Part-Time CFO Can Resolve 8 Common Business Cash Flow Problems

Most professionals understand that to be profitable, money coming in must be more than money going out. Cash flow is crucial to the success of a business, but it is often a sore subject for business owners. A whopping 82% of small businesses fail because of cash flow issues, making it the number one reason small businesses fold. But cash flow is far from simple because it can cover a wide range of problems. Keep reading to learn about the eight most common business cash flow problems and how a part-time CFO could help you solve them effectively. 

Why Is Cash Flow Important? – Positive cash flow enables you to grow your business, investing in new ventures or hiring new employees. Negative cash flow means that more money is going out than coming in, which ultimately leads to failure. Cash flow is the lifeblood of your business, ensuring that payments are made for inventory, salary, rent, and additional operational costs. If your cash flow is suffering, a part-time CFO can help identify the problem, which is the first step towards finding a viable resolution.

1. The Cause of the Problem is Unkown – Identifying that you have a cash flow problem is usually not difficult. When spending exceeds available cash, it is obvious that a cash flow problem is present. If you want to tackle the issue, though, you will have to identify the cause. For many businesses, a cash flow problem can arise without an immediately clear source.

Planning and organization are crucial to understanding your cash flow. Start by categorizing your spending and noting the percentages for each category. If the current distribution of cash does not make sense for your business goals or operations, you may be overspending in one or more categories. Focus your efforts on reducing spending or making adjustments in the higher categories first.

A financial professional, such as a part-time CFO, can provide valuable insight for your cash distribution. They can offer expert advice on the current state of your cash flow distribution and suggest improvements. Also, by hiring a fractional CFO, you can benefit from financial expertise without committing to a full-time executive salary.

2. The Books Are Not Organized – Entrepreneurs and business owners are busy, so bookkeeping often takes a backseat on the priority list. Unfortunately, disorganized books can cause a headache in the future. Inconsistent invoicing, a lack of payment records, and disorganized billing can result in money lost and serious cash flow problems.

Organizing your books takes time, but it can help you identify unpaid invoices or other inconsistencies that lose you money. Putting an accounting system in place can help ensure your books are always up to date. This system can also generate reports that provide insight for both you or your accounting team on the financial state of your business. If your team does not have the necessary talent to maintain sufficient accounting records,, a fractional CFO may be a worthwhile addition to your team.

3. Cashflow Benchmarks Are Not In Place – Are your budgets based on data? Allocating money without a clear goal or reason is dangerous and often leads to cash flow issues. It is easy to start a cycle of overspending, which makes it more difficult to cut back later. Researching your industry and the spending of similar companies can help provide a benchmark for your cash flow. Make sure to identify companies in a similar lifecycle stage for the most accurate benchmarks.

This is another area where a financial expert can be valuable. Part-time CFOs have a wide range of experience with many companies. They can offer guidance based on their experience, especially when it comes to benchmarking your cash flow.

4. Expenses Are Too High – A lot of companies deal with this issue from time to time. Expenses can easily climb over time, often going unnoticed until a cash flow issue arises. To combat this problem, it is important to scrutinize your expenses on a regular basis. Understand the expenses your company pays on a consistently and determine which items can be cut or renegotiated. After you complete your benchmarking, you may notice that you are overspending compared to your competitors or industry. This information can be used as leverage to renegotiate contract terms for large expenses.

5. Bad Debts Are Piling Up – If a small business does not have a credit control system in place, bad debts can pile up quickly. When customers owe money that cannot be recovered, cash flow issues are bound to occur. Once you have organized your books and put an accounting system in place, adding a credit control system is a simple next step. From email reminders and letters to working with a debt recovery firm, there are many ways to reduce bad debts.

6. Credit Terms Are Out of Sync – The periods for paying your suppliers should align with the terms for your customers. By syncing your credit terms, you can better control your cash flow. When credit terms are out of sync, unexpected expenses have the potential to ruin your business or seriously cripple your cash flow.

Renegotiate terms with your suppliers and customers if necessary to bring your credit terms in sync. This may be a large and time-consuming project, but it is ultimately worth it to even out your cash flow.

7. Cash Flow Is Tied Up In Inventory – If your cash flow problems are not related to overspending, your inventory or sales cycle may be to blame. Housing inventory for long periods of time ties up your assets, reducing your available cash and storage space. You should have the necessary amount of inventory on hand to fill orders while holding items for the shortest time period you can manage. It may even be necessary to analyze your sales and determine which products or services have reduced margins.

Your sales cycle can also help predict your cash flow. Understand your sales cycle fully to accurately forecast your inventory needs and cash influx over time. It is also important to identify seasons of flux for your sales cycle, so you can prepare in advance. A part-time CFO can assist with this task by compiling various models and forecasts based on your company and industry.

8. Growth Is Happening Too Quickly – While growing your business is typically a positive thing, uncontrolled growth can lead to cash flow problems. Hiring extra staff or increasing your supplies in anticipation of more business may leave you with wages or bills you cannot pay. Uncontrolled growth results in higher expenses before you receive payment from customers, and these cash flow problems can cause your business to fail.

If you are interested in growing your business, a financial advisor can offer valuable insights. With a wide range of experience, part-time CFOs can guide you through the process of growing your business at a steady rate that is sustainable over time.

Part-Time CFO Services From K-38 Consulting – If your business is experiencing cash flow problems, a part-time CFO can help identify and resolve the issue. CFOs from K-38 Consulting offer an affordable way to get the advice and insight your business needs, without hiring a full-time financial executive. You only pay for services when you need them, and your professional CFO provides expert support for your business. Schedule a free consultation with K-38 Consulting today and start tackling your cash flow problems!!

Part-Time CFO Services Can Help Your Company With Financial Forecasting

Part-time CFO services may be what your business needs to navigate today’s complex business environment. Business leaders and CEOs are busy. With little precious time, it can seem impossible to add one more thing to your plate. Financial forecasts may be common knowledge, but few CEOs actually have the time to build a financial forecast for their business. From lack of time to a shortage of resources, there are many reasons you may not have a financial forecast already.

However, this simple tool can work wonders for the future of your business and provide the competitive advantage you need to succeed. Keep reading to learn why a financial forecast is important and how to build one without wasting your time. 

What is a financial forecast?

Financial forecasts are most commonly used to predict the financial outcomes for a company. The expenses and income for a business are estimated over a certain period of time, typically one year. Historical data, including accounting and sales, as well as external data from the market or key economic indicators can be used to develop a financial forecast.

Companies utilize financial forecasts to set expectations for the future and determine what is realistically possible for a business. Financial forecasts can also be specific to a certain area of the business. For example, a company may develop a financial forecast for sales.

Why should you consider having a part-time CFO to create a financial forecast?

As a CEO or entrepreneur, your time is valuable. Much of your focus and effort is spent on seeking new business opportunities, investing in marketing and sales, and looking for new avenues of growth. All of these pursuits are worth your time, but they leave little room for much else.

Financial forecasts get shoved to the backburner all too often. While business leaders recognize their importance, and even intend to create forecasts, they are overlooked due to more pressing matters. A financial forecast may not help you instantly move the needle in the same way other executive moves can, but it will set your business up for long-term success. Financial forecasts provide more than just a simple outlook for the future. They offer a roadmap for your business to follow, setting goals and measuring success along the way. A part-time CFO may be exactly what your company needs to assist you with your forecasting needs.

A part-time CFO can help you gain a clear direction for the future

You likely have sales targets, revenue goals, and growth strategies in plan for the foreseeable future. Reporting for each month, quarter, and year is common among businesses. In fact, it is so common that it often turns into a routine. Have you stopped to think lately about why you project the numbers you do, or what the overall goal is for your business?

Without a clear direction for the future, you are left setting arbitrary goals. Creating a financial forecast forces you to put concrete plans and expectations down on paper. A one-year financial forecast based on the current path and trajectory of your business is a great place to start. Pay attention to where your business will end up if things continue as they are. Is that where you want your business to be in one year? Are you moving towards your big-picture goals?

A financial forecast provides a visual representation of the future of your business, so you can decide if things need to change. Approaching your business goals with intention, instead of falling into old patterns, can breathe new life into your company. Also, taking purposeful steps can make you more likely to reach your goals than wondering aimlessly. The cost of hiring a part-time CFO to assist your company with forecasting can be well worth it.

A fractional CFO that knows your business can adjust early and often

In business, companies that can pivot are able to survive. Businesses that cannot make adjustments as needed will quickly fall behind the competition. Thankfully, a financial forecast can help position you to make adjustments quickly and often. Even the most thought-out plans hit roadblocks from time to time, so preparing for change is essential.

When you build a financial forecast, you set a target or a goal. Over time, you may find yourself moving towards that target too slowly or faster than expected. You may also realize that the initial target you set no longer makes good business sense. Whatever the case, having a financial forecast enables you to line up your expectations with reality.

The sooner you can identify mistakes or notice when things go off-target, the faster you can make the necessary adjustments to get back on course. Instead of reviewing your company’s performance at the end of the year, when it is too late to make changes, use a financial forecast to provide accountability along the way.

Part-time CFOs focus on the right KPIs

You likely have countless reports and files of data sitting on your computer. As a business leader, analyzing your company’s performance is a key part of your job. However, there are likely some numbers or metrics you value above the rest. By creating a financial forecast, you can highlight the key performance indicators that make the most sense for your business and cut out the rest of the clutter.

By focusing your attention on the KPIs that move the needle for your business, you can more accurately determine your progress. You can also recognize shortcomings earlier because they are no longer buried under mounds of unnecessary data. Dialing in on your KPIs provides an added level of focus for your business, helping you gain an edge over the competition. A part-time CFO that knows your industry and company can help you develop appropriate KPIs.

Plan for multiple scenarios

Ideas, big and small, are what keep businesses running. However, tackling a new idea can be a great risk. Investing time and money into a project that does not bring about results can drain your resources, and so can successful ventures that are not planned properly. Financial forecasts can help you work through what-if scenarios, determining what the result might look like if an initiative succeeds or not.

With the numbers from your financial forecast, a part-time CFO can help you more accurately predict what the outcome of a scenario would mean for your business. How will it impact the rest of your organization? Financial forecasts enable you to test your theories and walk through ideas without taking a major risk or wasting resources.

Part-time CFOs help you work smarter with a financial forecast

Financial forecasts might sound all fine and good, but what do you do if you do not have the time or resources to build your own? Business leaders can work smarter by contracting out their financial forecast. You do not have to invest in hiring a full-time employee, and you leave your schedule open to focus on running your business.

A part-time CFO can develop your financial forecast, providing an unbiased look at your data. You can work with a CFO only when necessary, paying a fraction of the cost of an in-house executive. Experienced consultants, like those at K38 Consulting, bring industry specific expertise to help you realize your growth potential and build financial forecasts.

Contact us today to learn how we can assist your company with forecasting needs to better help you navigate todays complex business world.

Raleigh, NC Part-Time Controller - What are the Benefits?

Financial expertise is essential when managing the daily challenges of running a business in today’s competitive market. A part-time controller may be exactly what your business needs to get a handle on its finances and excel. What exactly does a part-time controller do, though? Essentially, a controller manages the current state of a company’s finances and is responsible for the day-to-day financial operations. 

Typically, a controller will report directly to the company's chief financial officer, but for smaller businesses, the CFO and controller roles may be rolled into one, in which case the controller will report to the CEO. The controller role plays a major part in your company’s finances from overseeing the accounting and finance department to report creation and compliance coordinator. Below is a more detailed explanation of what a controller is responsible for handling at a company.   
Processes

The controller decides the procedures and processes which will be used by the accounting team. It’s important for the controller to choose the policies and procedures that best fit the company as they’ll determine how the financial departments operate. This can include everything from the type of accounting software used to benchmarks and report creation. 

Financial reports

When it comes to financial reports, the controller is largely in charge of producing these documents. The reports are created by the controller with the assistance of the accounting and finance staff, but it is the responsibility of the controller to ensure these reports are on-time and follow generally accepted accounting principles. These reports must also closely reflect the organization’s most current financial status. 

Financial decisions

The controller also has a large say in the company’s financial decisions since the position has in-depth knowledge of the organization’s financial status. When the leadership team discusses potential changes to the company, such as adding a new product or changing services, the controller determines the financial risk involved in the decision and determines whether the organization can financially support the change moving forward. 

Budgets

A lot of the decision-making information is based on the company budget, which the controller is also responsible for creating. Depending on the company’s needs, a controller will create a budget for the year or by quarter. After the budgeted year or quarter passes, the controller then makes a budget-to-actual report showing an analysis of how much actual money was spent during the period and how much was budgeted. The company can make adjustments to the budget moving forward once it knows these numbers. 

 Payments

The controller is responsible for ensuring all payments are on-time. The position oversees the accounts payable and receivable staff to ensure suppliers are receiving payments as scheduled and to also make sure clients are paying for their services. Timely payments are essential for a smoothly operating company. 

This is true not only when dealing with customers and vendors, but when paying employees, as well. In addition to client and supplier payments, the controller also has to make sure payroll is accurate. The controller does this by monitoring tax deductions and insurance payments to ensure the right amounts are being withheld so paychecks are accurate. Without accurate paychecks, employee satisfaction can drop, which is another reason why the controller role is so vital to an organization. 

Compliance

Financial departments face a lot of scrutiny, especially after the financial scandals of Enron and WorldCom followed by the financial crisis of 2008. Businesses must now put up with a whole host of regulations dictating how they handle their finances and how they report financial information to the public. 

A controller takes on the task of ensuring a company is compliant with all applicable financial rules and regulations. This means interacting with stockholders and reporting accurate information to build and maintain client and shareholder trust. It also involves helping prepare documents for the audit officer during a routine audit. When a controller prepares the documents and assists the auditor, the process runs much more smoothly. Afterward, the controller will handle any changes the auditor required for compliance. 

Taxes

In addition to handling audits, the controller also files the company’s taxes. If the company decides to hire a third-party business to handle taxes, the controller is still responsible for providing records and reports that will be needed to accurately file the tax documents. 

Ultimately, a controller oversees the financial stability of a company. The controller can effectively accomplish this task because the position requires years of experience. By working through the ranks from a basic accounting or auditing position, the controller is well aware of the decisions needed to effectively manage the financial departments of any firm. 

If you think your business could benefit from the expertise listed above, then consider hiring a part-time controller. A part-time controller is ideal for your business because you’ll get the financial consulting your company needs without the cost of hiring a full-time employee. You’ll have more time to focus on providing services to your customers, building new customer relationships, and digging into core business issues when you have someone you can trust managing finances. 

Our part-time controllers have at least 15 years of experience in overseeing, protecting, and improving the financial side of business.  Contact us today to learn more about how our part-time controller services can assist your company.

SUMMARY OF SBA 7(a) LOAN GUARANTY PROGRAM (the PAYCHECK PROTECTION PROGRAM)

SUMMARY OF SBA 7(a) LOAN GUARANTY PROGRAM (the PAYCHECK PROTECTION PROGRAM) 


On March 27, 2020, the President signed into law the next phase of action being taken by the federal government aimed at providing financial relief to the American people and businesses in response to the economic fallout from the COVID-19 pandemic. This “thirdphase” piece of legislation is called the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).

One of the core pieces of the CARES Act is the provision of $349 billion for small businesses through federally backed loans under a modified and expanded Small Business Administration (SBA) 7(a) loan guaranty program called the Paycheck Protection Program. Congress has designed the program to make funds available to qualifying businesses quickly through approved banks and nonbank lenders.


KEY POINTS:

· Under the CARES Act, qualifying businesses include businesses with up to 500 employees or which meet the applicable size standard for the industry as provided by the SBA’s existing regulations. Most small businesses will qualify.

· Loans will be provided through SBA and Treasury approved banks, credit unions, and some nonbank lenders.

 · Borrowers can borrow 2.5 times their monthly payroll expenses (during the 1-year period before the loan is made (see page 18) ), up to $10 million.

 · Applicable uses for the loan proceeds include: (1) qualified payroll costs; (2) rent; (3) utilities; (4) mortgage interest and other debt obligations; (5) group health care benefits including medical insurance premiums; (6) interest on any other debt obligations that were incurred before the covered period (February 15, 2020 and ending on June 30, 2020). (see page 10 re. covered period)

· Loan forgiveness is available for funds used to pay 8 weeks of payroll and other qualified expenses.


What Businesses Qualify For The Paycheck Protection Program?

Generally, any business in operation on February 1, 2020 with less than 500 employees is eligible.


What is the Maximum Loan Amount That a Business Can Receive Through the Paycheck Program?

Each business can receive the lesser of $10 million or the sum of 2.5 times the average total monthly payroll costs for the prior year.


What Can a Business Use Program Funds For?

 Businesses can use funds from the Program loans to cover expenses including the following:


· Payroll costs, including compensation to employees that would include payments for severance, payments required for group healthcare benefits (including insurance premiums), retirement benefits, and state and local employment taxes.

· Interest payments on any mortgage or other debt obligations incurred before February 15, 2020 (but not any payment or prepayments of principal).

· Rent.

· Utilities.


However, the money cannot be used for compensation of individual employees, independent contractors, or sole proprietors in excess of an annual salary of $100,000; compensation of employees with a principal place of residence outside the U.S.; or leave wages covered by the Families First Coronavirus Response Act (H.R. 6201) that has already been passed and will be effective as of April 1, 2020.


How Are Loans Made Under This Program Different From Traditional 7(a) Loans?

Unlike traditional SBA 7(a) loans, no personal guarantee will be required to receive funds and no collateral needs to be pledged. Similarly, the CARES Act waives the requirement that a business show that it cannot obtain credit elsewhere. In lieu of these requirements, borrowers must certify that the loan is necessary due to the uncertainty of current economic conditions; that they will use the funds to retain workers, maintain payroll, or make lease, mortgage, and utility payments; and that they are not receiving duplicate funds from another lender for the same uses.


Payments of principal, interest, and fees will be deferred for at least 6 months, but not more than 1 year. Interest rates are capped at 4%. The SBA will not collect any yearly or guarantee fees for the loan, and all prepayment penalties are waived.


The SBA has no recourse against any borrower for non-payment of the loan, except where the borrower has used the loan proceeds for non-allowable purposes.


What Are The Loan Forgiveness Requirements?

Borrowers are eligible for loan forgiveness for 8 weeks commencing from origination date of the loan for payroll costs equal to the cost of maintaining payroll continuity during the covered period; (Note: Eligible payroll costs do not include annual compensation in excess of $100,000 for individual employees); payment of mortgage interest: rent; and utilities.


The amount of loan forgiveness may be reduced if the employer reduces the number of employees as compared to the prior year, or if the employer reduces the pay of any employee by more than 25% as of the last calendar quarter. Employers who rehire workers previously laid off as a result of the COVID-19 crisis will not be penalized for having a reduced payroll beginning February 15, 2020 and ending on June 30, 2020).


Borrowers must apply for loan forgiveness to their lenders by submitting required documentation and will receive a decision within 15 days. If a balance remains after the borrower receives loan forgiveness, the outstanding loan will have a maximum maturity date of 10 years after the application for loan forgiveness.


How Does A Business Apply For A Loan Under The Paycheck Protection Program?

We expect additional guidance from the SBA regarding how to apply for Program loans, including additional resources on the SBA website about how to find a qualified lender. Borrowers who have existing relationships with banking institutions may wish to contact these individuals to inquire about applying for loans under the Program.


Does The CARE Act Affect Any Other Loans Available to Small Businesses?

Yes. The maximum loan amount for an Express Loan is increased from $350,000 to $1 million.

The CARE Act also expands eligibility for borrowers applying for an Emergency Economic Injury Disaster Loan (EIDL) grant. Emergency Economic Injury Disaster Loans are available for most small businesses, sole proprietors, or independent contractors.

Additionally, the Act waives requirements that (1) the borrower provide a personal guarantee for loans up to $200,000, (2) that the eligible business be in operation for one year prior to the disaster, and (3) that the borrower is unable to obtain credit elsewhere. The SBA is also empowered to approve applicants for small-dollar loans solely on the basis of their credit score or “alternative appropriate methods to determine an applicant’s ability to repay.”


What Are the Terms of an EIDL?

Up to $2 million


Interest Rates: Fixed at 3.75% for small business


Term: Term loans up to 30 years, structured with a 12-month principal and interest deferral


No prepayment penalty


Collateral: Required if the loan is over $25,000. Real estate is preferred but a loan will not be declined for lack of collateral. However, all available collateral will be required.


How Do You Apply for an EIDL?

EIDL’s are handled directly by the SBA. The business can submit either a paper or online application. The on-line application can be submitted at the following website: https://disasterloan.sba.gov/ela.

Additionally, the business can call the SBA Customer Service Center at 1-800-659-2955 or mail disastercustomerservice@sba.gov for further information on the program or for details on submitting a paper application.


Most significantly, for borrowers seeking an immediate influx of funds, borrowers may receive a $10,000 emergency advance within three days after applying for an EIDL grant. If the application is denied, the applicant is not required to repay the $10,000 advance. Emergency advance funds can be used for payroll costs, increased material costs, rent or mortgage payments, or for repaying obligations that cannot be met due to revenue losses.

Borrowers may apply for an EIDL grant in addition to a loan under the Paycheck Protection Program, provided the loans are not used for the same purpose.


Is Relief Available For Businesses With Pre-existing SBA Loan?

Yes. The SBA will pay the principal, interest, and associated fees on certain pre-existing SBA loans for 6 months.


Conclusion

There are a lot of moving parts to the CARES Act and its SBA disaster relief programs which will continue to evolve with more clarity over time. Talk has already begun on Phase IV of stimulus relief due to COVID-19.

Contact Us today to learn how we can assist you with filing an application.