Financial Operations Reviews

Is there transition in the air at your firm?  Are you ready?  Maybe you need to consider an AMS Rapid Diagnostic^TM before you make any changes in your finance and accounting departments.

Exits are opening up all along the economic highway with initial public offerings, mergers and acquisitions all seeing a revival.   And there’s a ripple effect with more activity up and down the entire business food chain.  As Dan Davis, Accounting Management Solutions’ director of life sciences consulting practice, likes to say, “Everyone’s more comfortable playing in the sandbox when they know there’s a way out. “ (What he means is that investors are more interested in investing because they see a path to profits through an increasingly active IPO and M&A markets.)

New projects or transitions that may have been previously stalled are now beginning to occur with increasing frequency.  If you are seeing the same thing, you may be tempted to dust off your own plans for organizational change.  But (to mix a few metaphors) before you hit the ground running you need to make sure all your ducks are in a row, especially your finance ducks.

Every organization has its own finance “architecture” comprised of its financial policies, processes and procedures, systems, internal controls and staff capabilities.  There are known industry best practices (often vertical industry specific) and a review of the organizational specifics (like the AMS Rapid Diagnostic^TM) can help chart a path to an optimized and integrated financial strategy.  This is a cost efficient project that has the potential to yield a high return.

An internal financial operations review, especially one tailored to your organization, can provide a roadmap to success, helping the accounting and finance areas perform at the appropriate level.

(Note:  IPOs and M&A aren’t the only organizational transitions  which should trigger a finance operations review.  A review is helpful during and in response to senior staff turnover, due diligence, management changes, new business opportunities or for when an organization is seeking new financing or credit.)

A finance operations review should assess the organization’s current status and its ability to maximize the resources available.  When applicable, this assessment should also address an organization’s ability to scale in the future.   AMS Rapid Diagnostic reviews are most often done at the behest of the CFO, but frequently they are performed for  a board, an investor or potential investor (venture capital, bank, private equity firm or angel), or for a new member of the senior management team.

Here are a few key points around successful implementation of a finance review as a precursor to major organizational change:

• Assess and understand the key areas of risk and exposure to your organization; this helps you prioritize.
• Break down the overview into small bites.  Focus on a particular area, department or function versus the whole organization.
• Leverage existing knowledge. Your review should start with known issues and areas of concern but keep an open mind to following leads to identify previously undiscovered issues.
• Compare your organization to other best-in-class organizations.
• While any assessment is valuable, providing a roadmap to improvement and change, organizations need to be wary of spending too much time assessing the situation and not enough time addressing the core issues and how to resolve them.  When you have your assessment in hand, take action.