CFO gone? Now what?

One of the nightmares that business owners experience is the unexpected departure of their controller, chief finance officer or bookkeeper. But, this sort of occurrence in not unheard of and the wise CEO will make sure a contingency plan is always in place.

Whether due to illness, injury or an unexpected decision to depart suddenly with no notice for a transitions plan can occur at any given time!

Let’s look at the risk areas associated with the sudden departure.

• Cash Integrity: Financial staff often have direct access to and control over bank accounts and other liquid assets. An abrupt departure may carry the risk of not having access to your hard-earned cash or even the passwords for banking purposes.

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• Records Integrity: In smaller companies where there is only a single keeper of financial information, an unplanned departure can leave the CEO vulnerable with respect to key financial metrics, ranging from accounts receivables to accounts payable, contracts and other various vital documents.

• Payroll Integrity: Payroll is the direct and sole responsibility of the departed and no one is cross-trained to process the payroll. Issues collecting and processing time cards, paying employees and taxes can be at risk.

• Employee Morale: The unplanned departure of staff can easily be interpreted by employees as an “abandon ship” signal.

Here is a checklist for avoiding such potential nightmares:

• Banking-processes documented. This information should be reviewed at least monthly and kept up to date. Managing this process proactively can be done by the business owner, with a trained CFO consultant or your CPA firm.

• Payroll-process documentation. Look for ways to use technology so that you can automate and streamline to create efficiencies and decrease administrative time.
n General-ledger documentation. Do you know what entries are made and the frequency required? Consistency and knowing this information are critical to ensure your reporting is accurate on a monthly, quarterly and annual basis.

• Accounts Receivable. Is your process clearly documented to ensure cash is collected in timely fashion and systematically followed up on? Are you applying best-practice tips for your business to reduce time to collect? Are your sales contracts up to date and do you maintain collection records for easy follow up or transfer to a collection agency?

• Accounts Payable. Use technology to control as much as you can for vendor payments. Clarify roles, responsibilities and document approval processes.

• Month-end Requirements. What is required at the end of the month? What is needed for entries, analysis and timing of these processes?

Finally, a company should not wait until an unplanned departure occurs before evaluating where it can source interim financial-staffing help.

Firms such as mine maintain a ready roster of experienced financial professionals at all levels. It is well worth the time to be familiar with these sources ahead of time to avoid a rushed decision.

When your company interviews interim staffing firms, here is a quick list of capabilities that you should be sure the company has:

• Does the firm have the same level of expertise to quickly fill the gap with the same or higher level of your current staff?

• What is the tenure and training for the firm’s staff?

• Will the firm provide you with scheduled deliverables and project objectives?

• Will the interim team be able to fill the position quickly and assure timely month-end close, preparation of the board or meet banking reporting?

With a little planning and documented processes your company can be prepared to avoid the potential nightmare scenarios of unplanned staff departures and keep the business running smoothly. •


Michelle Antonucci is director of business solutions at Accounting Management Solutions in Waltham, Mass.

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