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The following is our second part in our series of informational topics on the new Health Care Reform that recently was enacted.  While many of the provisions don’t take place for YEARS, some begin immediately.  Of those, new tax credits for small businesses begin in 2010.

The information below was provided by our colleague Tom Barrett, one of the principals of BBG, Inc.  BBG is a great resource for your company’s health care with their Shared Funding product.  BBG is dedicated to creating customized solutions to contain costs, drive better outcomes and get the most out of your organizations healthcare dollars.  Visit their website at sharedfunding.com to learn more about their approach and their fine company.

2010 health insurance tax credit for small businesses.

Details are starting to emerge.  The 2010 health insurance tax credit is aimed at encouraging small employers to offer and/or maintain coverage. Eligible small businesses can claim the credit starting with the 2010 income tax return they file in 2011.

Here are the key points:

• The credit is available to qualifying small employers that pay at least half the cost of single coverage.
• The maximum credit is 35% of premiums paid in 2010 by eligible small business employers (25% for tax-exempt organizations).
• The maximum credit increases to 50% in 2014 (35% for tax-exempt organizations).
• It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages less than $50,000 per employee per year.
• The eligibility formula is based in part on the number of FTE’s, not the number of employees.
• Owners and family members do not count in calculating either the number of employees or the average annual wages of employees.
• The maximum credit goes to employers with fewer than 10 FTE’s paying annual average wages of $25,000 or less.

ASPIRE partners is here to help you with your questions about the new health care reform.  We help small to mid-size businesses implement an effective strategy to stay compliant with the new reform laws and regulations and to take advantage of the new opportunities such as the tax credits discussed here.  Contact us at info@aspirepartner.com or at 888-689-7772.

The new Health Care Reform is on everyone’s radar these days.  For businesses and business owners, know what it all means will be imperative in the coming months and years.  ASPIRE partners is here to help you with your questions and with implementing an effective strategy to ensure that you are compliant with the new laws and that you take advantage of the tax benefits that are part of the legislation.

The following comes from a colleague, Bill Phelps, founder of Phelps Benefits and Resource group based in Tampa, Florida.  It’s such a good and detailed overview hitting most all of the important topics that we’re sharing it with you.  Thanks Bill!  Be sure and visit mypbrgroup.com to learn more about Bill and his fine company.

IMPORTANT: This document is designed to provide a general overview of the new health reform law. It does NOT attempt to cover all of the law’s provisions and should NOT be used as legal advice for implementation activities. We encourage you to seek any professional advice, including legal counsel, regarding how the new requirements will affect your specific plan.

Overview:

The health reform package is made up of two parts: (1) a bill that passed the Senate on Christmas Eve, passed the House on March 21, and was signed into law by the President on March 23, and a second piece of legislation: (2) the House’s reconciliation bill, which makes changes to the original law, passed both chambers on March 25, and was signed by the President on March 30.

Many of the provisions in the law will not take effect for several years. At the earliest, provisions that affect employer-sponsored health plans will take effect six months from the date of enactment – in late September. Even then, those early provisions will not affect plans until they renew for the next plan year.

The health reform law has thousands of pages and hundreds of provisions. So it’s important to remember that before many of those provisions are put in place, additional laws and regulations will need to be developed. That could be a lengthy process.

Here are some highlights of the major provisions.

Individual responsibility:

Starting in 2014, everyone must have coverage or pay a penalty, which will be enforced by the Internal Revenue Service. The penalties will be phased in over time:

• In 2014, an individual without insurance must pay whichever amount is greater: $95 or 1 percent of income.

• For 2016 and beyond, that penalty rises to $695 or 2.5 percent of income, whichever is greater (the $695 is indexed from 2016 on).

• Families will pay half the penalty for children, with a cap of $2,085 per family.

• There will be exemptions to this requirement, such as in cases of financial hardship and other limited circumstances.

Subsidies to buy insurance in new state exchanges will be available in the form of tax credits and cost-sharing assistance for people above Medicaid eligibility but below 400 percent of the federal poverty level. Medicaid eligibility will be increased to 133 percent of the federal poverty level.

Changes that affect your business and the customers who depend on you.

Employer responsibility:

New employer penalties and obligations.

Starting in 2014, employers don’t have to offer their employees health insurance coverage, but most of them with more than 50 employees will pay an assessment if they don’t, or if they offer coverage that isn’t affordable. Full-time and part-time employees are included when determining whether an employer has 50 employees (based on current full-time employee equivalency rules).

• Employers with 50 or more employees that do not offer “minimum essential coverage” will pay $2,000 for each employee over the first 30 employees if one of their employees gets a tax subsidy to buy insurance under an exchange.

• Employers with 50 or more employees that do offer minimum essential coverage but have at least one full-time employee receiving subsidized coverage under an exchange will pay whichever is less: $3,000 for each employee receiving a premium credit, or $2,000 for each full-time employee.

Employers must provide “free choice” vouchers to employees with incomes below 400 percent of the federal poverty level if the employee’s contribution to coverage is between 8 percent and 9.8 percent of income and the employee chooses to purchase coverage in the exchange. No penalties will be imposed on employers with respect to employees who receive these vouchers.

Employers with more than 200 employees that offer coverage must automatically enroll new full-time employees in coverage. Employees may opt out.

New employer reporting requirements.

• Beginning in 2011, employers will be required to disclose the value of health care benefits on an employee’s annual W-2.

• Employers will be required to notify employees:

– About the availability of the exchange – for new employees, at the time of hiring; for current employees, by March 1, 2013;

– They may be eligible for a subsidy under the exchange if the employer’s contribution to the plan is less than 60 percent of total allowed costs of the benefits;

– If the employee purchases coverage in the exchange, he or she will lose the employer’s coverage contribution.

• In 2014, large employers will be subject to expanded 5500 reporting requirements to include information on the health insurance coverage of their employees.

Small business tax credits.

Beginning in 2010, small businesses with fewer than 25 employees and average wages of less than $50,000 get a tax credit for their contributions to buying health insurance for employees.

The tax credit starts at up to 35 percent and increases to 50 percent in 2014 when the exchange is operational. A full tax credit may be available to small businesses with fewer than 10 employees and average wages of less than $25,000.

Health plan changes.

Under the new law, individuals and employers/employees have the right to keep the coverage they had as of March 23, 2010 and are exempt from many reforms. These individual and group health plans are considered “grandfathered plans.” Collectively bargained plans that were ratified before the date of enactment are grandfathered until the date that the last collective bargaining agreement related to coverage ends.

Health plan changes that impact individuals and employers (both fully insured and self-funded plans unless otherwise noted) over the next few years:

IMMEDIATELY:

• Federal rate review. The Department of Health and Human Services (HHS) will establish a process for federal review of fully insured premium rate increases.

I N  9 0  D AY S :

• Internet portal. By July 1, an Internet portal will be created for consumers and small businesses to shop for health Insurance.

• High-risk pool. $5 billion has been appropriated to create a temporary high-risk insurance pool to help adults with pre-existing conditions get coverage if they have been uninsured for six months. The program will be effective through 2013.

• Reinsurance for early retirees. A temporary reinsurance program will be established for employers providing coverage to early retirees over age 55 who are not eligible for Medicare.

The federal government will provide $5 billion to fund the program. Participating employers or insurers will be reimbursed 80 percent of retiree claims between $15,000 and $90,000.

The program will be effective through 2013.

I N  S I X  M O N T H S :

Effective for new plans and plans renewed six months after the law’s enactment date, unless otherwise noted (includes “grandfathered plans”):

• Lifetime and annual limits. Plans may not impose lifetime limits on the dollar value of essential benefits. Annual limits will be restricted (to be determined by HHS). Restricted annual limits do not apply to grandfathered individual plans.

• Rescissions. No rescissions are permitted, except in cases of fraud or intentional misrepresentation.

• Coverage for adult children. Children may stay on their parents’ policies until age 26 if coverage isn’t available through their work, regardless of their marital status. Any employer contribution toward the premium for a child through age 26 is a tax-deductible business expense for the employer and not taxable income for the member.

• Pre-existing conditions. Plans may no longer impose pre-existing condition exclusions for children under 19 (does not apply to grandfathered individual plans).

Effective for new plans and plans renewed six months after the law’s enactment date (does not include “grandfathered plans”):

• Preventive services. New policies must cover the full cost of preventive care as recommended by the U.S. Preventive Services Task Force, recommended immunizations, preventive care for infants, children and adolescents, and additional preventive care for women.

• Appeals. New minimum requirements for internal and external claims appeals processes.

• Patient protections. Plans that require or provide for a primary care provider (PCP) designation must allow each member to designate any in-network PCP, or pediatrician for children, accepting new patients. Plans may no longer require an authorization or referral to an Ob-Gyn. Prior authorization or increased cost-sharing for emergency services is also prohibited.

• Nondiscrimination rules. Non discrimination rules that apply to self-funded health plans are expanded to group fully insured health plans. Plans cannot base an employee’s eligibility or continued eligibility on hourly or annual salary.

I N  2 0 1 1 :

• Medical loss ratio (MLR). An insurer must publicly report on its MLR and spend at least 85 percent of large group premiums and 80 percent of individual and small group premiums on medical services, or provide rebate payments to enrollees.

• Spending accounts. Health savings accounts (HSAs) and flexible spending accounts (FSAs) may no longer be used to purchase over-the-counter drugs unless prescribed by a doctor.

Increases tax for nonqualified HSA withdrawals from 10 percent to 20 percent, and for Archer MSA withdrawals from 15 percent to 20 percent.

• HHS studies. HHS is required to study the group health plan markets to compare employer characteristics and determine whether the new insurance market reforms are likely to cause adverse selection in the large group market or to encourage small and midsize employers to self-insure. HHS and the Department of Labor must also collect information on self-funded plans. These studies could lead to additional employer reporting requirements.

• Uniform explanation of coverage. Within 12 months of the law’s enactment, HHS, in consultation with the National Association of Insurance Commissioners, will develop uniform standards and definitions for summaries of benefits and coverage explanations. Within 24 months of enactment, group health plans must provide enrollees and applicants with coverage documents that meet these standards.

I N  2 0 1 2 :

• Comparative effectiveness fee. A new fee is imposed on individual and group health plans to fund comparative effectiveness research ($1 per participant through 2013; $2 per participant through 2019).

• Release of Medicare claims data. The private sector may purchase standardized data extracts of Medicare Parts A, B and D claims data to combine with their own claims data to evaluate provider performance measures on quality, efficiency, and the effectiveness of care.

I N  2 0 1 3 :

• FSA contributions. Contributions to flexible spending accounts are limited to $2,500 a year.

I N  2 0 1 4 :

The federal definition of a large employer is an employer with 101 or more employees, whereas a small employer is defined as 1-100 employees. States can modify the definition of a large employer to 51 or more employees and small employer to 1-50 employees until January 1, 2016.

• Pre-existing conditions. Individual and group health plans can no longer impose pre-existing condition exclusions for any person of any age (does not apply to grandfathered individual plans).

• Annual limits. Annual limits on essential health benefits are prohibited (does not apply to grandfathered individual plans).

• Guaranteed issue. Health insurers must accept every individual and employer who applies for coverage.

• Rating restrictions. Rating restrictions go into effect for new individual and fully insured small group plans. Insurance companies cannot base premiums on health status, claims experience or gender. Premiums can only vary by:

– Age (no more than 3:1)

– Geography

– Family size

– Tobacco use (no more than 1.5:1)

• Merged markets. States are allowed to merge the individual and small group markets.

• Clinical trials. Coverage of routine patient care costs is mandated for participation in approved clinical trials (does not apply to grandfathered plans

• Exchanges. State health insurance exchanges are up and running for small businesses and individuals to buy insurance. States can allow large employers to participate beginning in 2017.

• Brokers. HHS will establish procedures, which may include rate schedules for broker commissions, for a state to allow brokers to:

– Enroll individuals in any qualified health plans in the individual or small group market as soon as the plan is offered through an exchange in the state;

– Assist individuals in applying for premium tax credits and cost-sharing assistance for plans sold through an exchange.

• Essential benefits. Essential benefit plan is created, which mandates the level of benefits that must be included in plans offered in the exchange, as well as in the individual and small group markets outside the exchange. Deductibles are limited to $2,000 for individuals and $4,000 for families in the small group market (self-funded plans and grandfathered plans are exempt from this requirement).

• Cost-sharing limits. Cost sharing imposed under health plans is limited to current health savings account amounts (does not apply to grandfathered plans).

• Waiting periods. Waiting periods cannot exceed 90 days.

• Wellness. Expands health plan wellness incentives up to 30 percent of total coverage costs (up to 50 percent with HHS approval).

• Reinsurance. A temporary reinsurance program will be established for the individual market and funded by individual and group health plan assessments ($25 billion in 2014-2016).

I N  2 0 1 6 :

• Health choice compacts. States can form health choice compacts to allow insurers to sell individual policies in any state participating in the compact.

I N  2 0 1 8 :

• Taxes. A new excise tax goes into effect for high-value, “Cadillac” health plans: 40 percent for amounts over $10,200 for individuals and $27,500 for family plans, paid by insurance companies and plan administrators.

Medicare and Medicaid-related provisions:

• Part D donut hole. Provides a $250 rebate for Part D enrollees who enter the “donut hole.” coverage gap (2010 only). Beginning in 2011, there will be a 50 percent brand discount on drugs in the gap. Members will pay less for generic drugs in the gap as well: 93 percent in 2011, which phases down to 25 percent by 2020. The donut hole is eliminated by 2020.

• Retiree drug subsidy. Beginning in 2013, employers may no longer deduct the retiree drug subsidy when offering qualified coverage under Medicare Part D.

• Medicaid. Beginning in 2014, states are required to provide premium assistance and wrap-around benefits to any Medicaid beneficiary who is offered employer-sponsored coverage, if it is cost-effective to do so.

• Medigap. The National Association of Insurance Commissioners will create new model plans for benefit packages C and F that include nominal cost sharing. The new models will be available in 2015.

Other:

• Administrative simplification. The law also requires HHS to adopt a single set of operating rules for electronic transactions to create uniformity (e.g., health claims or equivalent encounter information, eligibility and claims status, enrollment and disenrollment, premium payments, and referral certification and authorization). Group health plans will have to certify compliance with these standards.

• CLASS Act. Creates a new government-run voluntary long-term care insurance program (CLASS Program). Employers must automatically enroll employees and facilitate payroll deductions. Employees may choose not to participate.

Revenue-raising provisions:

• Starting July 1, 2010, imposes a 10 percent tax on tanning services.

• Beginning in 2011, the pharmaceutical industry will pay annual industry fees. The fee will be phased in and will hold steady at $2.8 billion a year after 2019.

• Beginning in 2013, manufacturers of medical devices will pay a 2.3 percent excise tax on sales of medical devices.

• Beginning in 2013, the Medicare payroll tax rate will increase by 0.9 percent for individuals who make more than $200,000 and couples that make more than $250,000.

• A new 3.8 percent tax will be added on income from interest, dividends, annuities, royalties and rents for those at the same income threshold.

• Beginning in 2014, a non-deductible premium tax will be imposed on insurers and third-party administrators ($8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017 and $14.3 billion in 2018. After that, it will increase in an amount proportional to overall premium growth).

You know you can’t ignore the financial statements, but you probably need some guidance in reading and making sense of them.

If you are like most business owners and those in management, you know your “widget” or your core product or service like no one (or few) else.  You also know that the financial reports you run or have prepared for you are very important.  But do you know what exactly they are saying and showing?  Maybe you have a few key numbers that you hone in on.  Are they the right ones for you to be focusing on?

Chances are you are like most business owners, executives and managers that know little about the financial reports that you receive.  We consistently meet owners and execs that are embarrassed to admit that they do not fully understand these reports.  They clearly understand their sales and maybe their operational reports and have the misconception that just because they own or run a business or department that they should now know and understand their financial reports, I guess by osmosis!

Don’t Beat Yourself Up!

Us CPA’s and other financial professionals have been formally trained, have continued our education and have years of experience analyzing and studying financial statements from all kinds of companies in all kinds of industries.  I  certainly don’t know your core business like you do.  My core business just happens to be the stuff that mystifies and is so confusing to you!

Please, don’t be like 90+% of business owners and execs who feel inferior or worse yet, pretend that they do fully understand their reports. There’s valuable information in those reports, you just need help interpreting. Financial statements and other reports and data are important because they can help to both uncover problems and identify corrective action.

It’s in the past…

The core financial statements are historical reports, meaning that the information has already happened.  They are the balance sheet, the profit and loss (income) statement, and the cash-flow statement. The balance sheet is simply a list of the assets and liabilities of the business. The difference between the two is the equity or net worth of the business. The balance sheet answers the questions, “What do we have and what do we owe?” while the P&L answers, “How did we do?” and the cash-flow statement answers, “Where was the cash used?”

And now for the future…

Understanding your financial reports is crucial, but probably even more important from a management perspective is what’s going to happen in the future. Developing both a strategic and reasonable forecast for profit and cash-flow is essential and makes the historical data more meaningful and valuable. With a “living and breathing” forecasting system in place, you’ll be able to figure out what worked, what went wrong and how to correct any problems to maximize your financial performance.

Cash is King!

We all know this saying. Especially now, in today’s new economy, cash is the one item to focus on in your business.  Credit ranges from non-existent to extremely limited. Credit lines, even fully secured ones are being pulled or at best are being reduced to the current outstanding balance.  Remember the old Smith Barney commercial, “We Earn It!”? That is exactly how expansion, new products, R&D and other new and expanding needs are being financed; through internal funding from operations.

Profitability is of course the first focus when analyzing your business or department, but cash profitability and the cash flow statement analysis is more critical now that at most any other point in time in the post-WWII business era. Do you know how to determine your cash needs for the current, short and long term periods or are you like so many who are simply hoping and praying that your A/R comes in so you can pay next week’s payroll or next month’s expenses?

How can I plan and forecast when I can’t predict the future?

Worrying about cash is exhausting, all encompassing and takes your focus away from what you do and know best, your core business. The future, even in the near term, is uncertain.  Some so-called experts say the economy is starting to turn around.  Others say we are years away. And I’m saying to forecast your financial future?  Absolutely!

One thing I can tell you about any forecast that you do (even one where you use ASPIRE partners’ help) is that it is going to be wrong! Predicting the future, exactly what a forecast is, is an art that is based in science. We can help prepare you a reasonable and reasonably accurate forecast but of course it won’t be perfect. Going through the exercise and documenting your goals, also what a forecast is, is the valuable asset that you will receive.

The power of forecasting (aka goal setting)…

A Harvard Business School study found that 83% of the population do not have any clearly defined goals.  14% have goals but not written down.  3% of the population have goals that are written down. The study concluded that the 3 percent that did have written goals were earning an astounding 10 times that of the 83 percent group.  In addition, similar studies have shown that individuals with written goals also tend to have better health and happier marriages than those without goals.

Pretty powerful stuff!  The same holds true for companies that have an established forecasting or budgeting process in place.  If the actual results are compared with the forecast and studied, now we are truly leveraging our information and data to maximize our financial performance, an in turn improving the lives of ownership, management and staff as we are now creating a growing and financially stable company.

Get started for free!

There are lots of free and inexpensive resources available. A good webpage for beginning the journey through financial management is the SEC’s page on Beginning Financial Management Guide.  SCORE’s website is another great resource for basic information.  We have FREE tools and templates and also some inexpensive interactive and customizable ones at www.ASPIREpartner.com.

We are also providing a FREE webinar series and also some live seminars in the Tampa Bay area to help businesses with a variety of issues including this topic of Demystifying Your Financials, Social Media and Implementing in Your Business and 5 Proven Methods to Improve Morale and Profitability.  Visit TeamGearShift.com for more information.

Economic Recovery

The economy IS beginning to rebound.  Is it where we all want it to be?  Not yet.  Will it be back to where it was in the “good old days”?  Yes and probably better!  History has proven that.

This is not the first downturn we have faced and it won’t be the last.  But what has been affected and what needs to change are unique this time around.

Are you confused and nervous about all changes that you must implement to remain successful and take you company to the next level in the new economy?

“Business as usual” doesn’t work

Business as usual, using the same processes and the same business models probably don’t and won’t work in the new economy.  Information (and life!) now change and evolve more rapidly than ever before.

Knowing what to do, how to implement the necessary change and what exactly to target and analyze and having the talents and skills on your team to tackle these challenges is critical.  “On your team” also doesn’t need to mean on your payroll!

The cost saving and value of outsourcing

Outsourcing, or more accurately described as only paying for talent and services when and where you need it, is a powerful tool that more and more businesses are turning to.  The days of measuring your business by the number of employees that you have is now as relevant as “weighing the mail.”  (See P’s Performance Pearls…)

Profitability, EBITDA and cash flow should be the ultimate focus of your business.  Doesn’t it make sense then to have the best talent that you can have for a fraction of the cost of a full-time employee?

Unless you are a very large company you don’t need to have a CFO, a SPHR Human Resources executive or a Logistics Expert on your team as an employee (and at a Huge investment)!  Having access to that expertise from professionals that you can trust when you need itis a powerful tool.

Do-it-yourself help

For those of you who are “do it yourselfers” you can find many helpful tools online to enhance your business.  We even have some available on our website, including FREE versions!

There are many seminars and online trainings that are available as well.  Our upcoming Team Gear Shift is an example of some of the help that is available at a low cost to business owners, team leaders and those in leadership roles that will help you meet the changes that your organization needs to thrive in the new economy.

And of course consultative advise, guidance and help implementing the changes and new methodologies and business practices is key to your success.

Isn’t it time to accelerate performance, profits & persuasion in your business or department and make sure you are poised to capture market share and take your business to your ultimate goals as the economy rebounds?

The Need for Strategy

Was at a great lunch meeting today and the speaker, David Johnson of Epiphany Marketing (epiphanymarketing.com) made the statement that “Strategy is more important to businesses today than ever before.”  I couldn’t agree more!

The days of gold falling from the sky and an endless supply of referrals are gone for most.  We have to work hard now to cultivate our prospects and potential clients.  One way that this is now done in today’s new paradigm is through the Social Media Marketing approach.  David is a great resource to help strategize and actually implement a Social Media Marketing system.  Epiphany delivers measureable marketing results that we at ASPIRE partners can personally attest to!

The approach that Epiphany takes is a strategic and targeted one, not one where stuff is thrown against the wall and we’ll see what sticks.  Most businesses take this approach with not only there marketing but their financial performance as well.  A strategy where reasonable and measurable financial goals are set is a key ingredient to most successful companies and organizations.  Prior to the economic woes of the past couple of years, companies could be quite profitable relying on inefficient and unfocused processes and practices.  This is not the case in 2010.

The economic climate as shifted (Shift Happens as “they” say) and companies need to change and adapt their practices and processes to the new economy.  It’s also overwhelming and confusing on what to do.  What do I need to focus on?  What are the key metrics that I need to monitor?  How do I train my staff on what they need to do?  How do I implement what now needs to be done.  That’s why David and Epiphany and ASPIRE partners are here.  We simplify and take the confusion and stress out of the new economic models that you need to thrive and survive the Shift.

Both epiphanymarketing.com and aspirepartner.com have free tools and information to help you take advantage of the opportunities that the Shift has created.  We just need to constantly be strategic and focused in our thoughts and actions as we embrace the new paradigm.  Remember, change isn’t a four letter word (it’s a five letter one!) and shouldn’t be feared but instead should be acknowledged as necessary and celebrated.  After all, life is pretty boring if not for change!

CFO vs. Controller (vs. Accountant, vs. …)

Often the terms CFO and Controller are used interchangeably.  In most small businesses, the terms get even more clouded as the title is given to whomever is performing the basic accounting functions.  Let’s explore in brief detail what the real differences are.

In many small businesses, there is often a void in real financial leadership.  There is probably a bookkeeper, office manager or accountant who handles paying the bills and maybe the payroll, billing customers and keeping some sort of financial records.  There may be an external CPA who helps with tax work, providing financials for the bank or a loan and who provides limited guidance and expertise.  What is often missing is true financial help and guidance for all of the above plus:  cash flow; boosting profitability; setting realistic and achievable financial and sales goals; negotiating with customers, vendors, banks and insurance providers; and a multitude of other financial and non-financial topics.

The role described above is that of a CFO and the items listed above are a mere sampling of how a CFO can help the typical small and mid-sized business.  “But I’m too small and can’t afford to hire a CFO” is the common thought and comment of the owner(s).  Often the guidance and expertise is not needed on a full-time basis and it doesn’t make sense to hire a full-time resource.  The outsourced CFO is a perfect solution for most small and mid-sized businesses.

“I have a great bookkeeper and my outside CPA handles my tax work and any questions that I have” is another common thought and comment.  That’s great and in some cases that’s all that is needed.  All businesses need someone to handle the bookkeeping and accounting function.  Sometimes it’s the owner, sometimes it’s an accounting team.  An outside CPA is often needed as well, but many times the external CPA is limited as to the amount of help they can provide.  Independence and/or lack of focus on consultative advice are but a couple of the factors that limits the outside CPA’s help.  What’s still missing is the value that an experienced CFO (and better yet one that’s a CPA too!) can bring on a limited part-time basis.  The CFO has the ability to get intimately more involved in the business and thus provide truly customized and value added and driven results.

The Controller function is more focused on overseeing all of the technical accounting issues and activities.  In a nutshell, the Controller function is more focused on day-to-day activities while the CFO function is more “big picture” focused helping with performance goal setting (including budgeting, forecasting and long-range planning), strategic initiatives such as mergers and acquisitions or restructuring, helping with financing, loans and/or investors and negotiations with external (and maybe internal) parties.

Many times in small and mid-sized companies, the CFO and Controller functions can be combined and outsourced as one.  This usually makes the most sense.  Why “buy” a high priced asset that’s really only needed some of the time when you can “rent” one on an as needed basis?  Be sure and make sure that your outsource partner is also a CPA for this role.  The required continuing education and expertise of a CPA can be of vital importance for the client.

Visit www.aspirepartner.com for more information and to see what other ways we can help your business or organization!

HWADI?!?!

Most every organization suffers from the dreaded HWADI.  What’s HWADI you ask?  How We’ve Always Done It!  That’s often the answer we get when we ask Why? of our new and prospective clients.  True, using tried, tested and proven methods and methodologies is good business practice.  But often stepping out of our comfort zones and/or having a set of expert outside eyes look at how we analyze, track and verify our financial processes and results can yield great dividends.

So just how do we hunt the financial HWADI?  Like in most every journey in life, we need some idea of where we want to go.  Even on our spur of the moment, no planned destination trips and adventures (some of the most fun!) we still have some idea of how we will go (plane, car, etc.) and have some ultimate destination (probably home) at some point in time.  So even when we have a completely spontaneous trip, we still have an ultimate destination and time frame.

Many businesses find it hard to forecast and project financial results (note I didn’t use the dreaded B word – Budget) because of the many variables, particularly in today’s economic climate.  “It’s impossible for me to forecast 3 months from now, let alone 3-5 years!” is a common theme we hear.  There’s a HWADI!  It is possible and by setting realistic goals and outcomes and tracking the progress, often the results are attained or surpassed.

Another HWADI we hunt is cost and expense reduction.  “We’ve already cut all costs that we possibly can!” is another common theme today.  While it’s quite possible that that is the case and that a business or organization has reinvented itself and its processes, usually that is not the case and the HWADI is still running wild!  Here’s another instance where an outside expert may be able to reduce your expenses while increasing your revenue.

What’s the HWADI in your business or organization?  Happy Hunting!