April is a month of reckoning for the business owner. It seems like you just completed your budget for the year, and now the first quarter of the year has passed, and your forecasted financial numbers are under scrutiny by your board, investors, or other stakeholder.

You should have a quarterly board meeting or a general first quarter review coming up soon, where any significant financial issues will be discussed. You’ll be on the spot to present any major deviations from the annual budget, a looming financial miss, or a change to plan.

Before you present to your board, your analysis must first pass the scrutiny of the finance committee.

Here’s a spoiler alert for this article. You want to have a system of monthly financial reviews in place no matter the type, the stage, or size of your business. If you don’t control your numbers, they will control you.


The finance committee is typically the first subcommittee to be created from the main board. Its chair will be a Chartered Accountant, an outside CFO, or a financial investor with deep knowledge of finance and accounting. They will ask challenging questions about your numbers and ensure they are confident in your financials before you can present to the board. In fact, the board will typically defer to the expertise of the finance committee to formally approve any finance resolutions.

Their responsibility is to oversee financial reporting, budgeting, and expenses. They have authority over emergency expenditures and other extraordinary items. They review the audit and have private conversations with the auditor to ensure no mismanagement of finances or fraud is happening.

If this seems like something only a large corporation must deal with, think again. Frequently there is a disconnect between a numbers savvy board and a business owner that’s missing a finance expert. This gap causes frustration and stress for both parties. It’s typically these interactions that force the business owner to hire a financial lieutenant. Although the business owner may have been reluctant to hire this person at first, a skilled financial lieutenant will quickly make him or herself invaluable and facilitate the next stage of business growth.


First, I’d like to discuss the rhythm of financial reporting, specifically focusing on the monthly financial close cycle and how it’s reported to the business owner and finance committee. To begin, it’s important that the business owner’s top financial lieutenant, set the reporting schedule. One example of such a lieutenant could be a financial controller, who is responsible for all accounting activities in a company. For example, the business owner’s controller dictates that the monthly financials close by day 15 of each month. The monthly financial package, which is outlined below, is sent to the executive team and finance committee on day 17 with a presentation of an optional monthly ‘state of the numbers’ call on day 20. This optional ‘state of the numbers’ call is exclusively done with the business owner, controller, and the board. Ideally it is led by the controller and is limited to one hour. A short presentation (less than 10 slides) summarising the key financials, metrics, and any topics for discussion are sent out at least two days in advance.

The main financial package includes the following key documents.  First, the balance sheet will compare last year’s (audited) numbers, trailing 12-month, and current month numbers. Secondly, the income statement will compare the same numbers as the balance sheet above with a final column showing the variance in absolute value and percentage. Thirdly, the income statement will compare the budget with the current month numbers and show the variance between the two columns in value and percentage. Finally, it will include an up-to-date cash liquidity analysis that shows the level of cash the company has remaining at the end of each month for the next 12 months and how the cash cushion has changed since the previous meeting. The cover letter of the package is called the ‘MD&A’, the management discussion and analysis. Your financial lieutenant will write this cover letter and oversee the distribution of the package. With the support of the business owner, he’ll also drive the Q&A that occurs in email, or in a Google document.


If you want more certainty in your business, then you must increase the predictability of your revenues and expenses. I’m working with a company where there are two areas that are causing the revenues to be erratic.

The first source of uncertainty stems from existing contracts with established invoicing schedules. This type of cash flow is called ‘bookings’ and should be highly predictable. Nonetheless, there are several things that can and are derailing the process of timely cash collection. Firstly, the starting date of several projects continues to be pushed out causing the first payment and subsequent future invoicing dates to be delayed. Secondly, invoices for on-time projects haven’t been sent out in a timely manner and lack a predetermined system to keep invoicing on track. Finally, invoices aren’t getting paid on time.

Here are some suggestions for the company to fix these issues. If you have recurring monthly or quarterly invoices, use the automatic invoicing function in Xero or QuickBooks Online. If the invoices need to be sent out on different timeframes and for varying amounts, assign each project team lead responsibility for their respective invoicing. Create one shared Google document where each team lead inputs their information, so you, the business owner, can track all invoicing in one place. If you need to use time tracking software for resource allocation purposes, try using a strong yet simple tool such as getharvest.com for small businesses. It connects to Xero and QuickBooks Online and can directly invoice your customers.

If you don’t control your numbers, they will control you

The second source of the company’s income uncertainty stems from their sales funnel. Their annual budget shows a list of projects with expected deal size, month of closing, and probability of being won, I’ve spoken about a table you could create for this in previous articles. Yet many of the company’s contract closings have been delayed, the value size of each is smaller than expected, and many expected contract wins have faltered. A close analysis of the sales pipeline needs to be conducted to be able to answer questions such as: To reach 1 million in sales by year-end, how many qualified leads must enter the sales funnel and how many sales meetings must my salesperson conduct each quarter? What must the velocity at each stage of the funnel be for a contract to close at the expected time? What are the conversion probabilities from one stage of the funnel to the next from lead to close? The financial controller’s ability to predict future numbers is impacted by how accurate and consistent the sales funnel metrics are for each project in all parts of the funnel.

What the company’s business owner wants from her financial lieutenant is accurate numbers to make insightful decisions and to be her point person with the finance committee. The finance committee wants the finance person to provide clarity into the business every month and to email or call them at the first sign of the numbers going awry. Obviously, the company described above is struggling to control their sales and invoicing processes. However, with a consistent monthly financial reporting structure, both the business owner and the board can detect the problems and immediately address them.