The sign of a healthy company is healthy financial reporting. Financial reports are the first place any investor or potential partner is going to look for an indication of success and stability. Regardless of the situation in which you would be presenting your financials, you want them all to be in order and transparent in nature. Transparency is one quality of a company poised for rapid growth and something customers are more likely to pledge loyalty to.
Even if you know transparency is critical to your role as a CFO, thinking about transparency in the abstract can be overwhelming with a running list of other worries on your mind. But it doesn’t have to be so daunting. Transparency is easily accomplished when you implement these three factors. Doing so will ensure you have the most transparent and accurate financial records to show to anyone who wants to see numerical proof of your success.
- Dedicated Values & Team
To begin with transparency, it helps to have a team dedicated to the upkeep and adherence of your organization’s financial activity to certain values. When training anyone on this team, you should stress how important it is to know specific compliance regulations, to keep precise records and to always report activity — good and bad. At the end of the day, meticulous records will reflect accuracy and a complete picture of the business.
Complementary to this practice is putting financial controls and checks in action. This includes the segregation of responsibilities so a single person can’t manipulate the records. Different team members should initiate, approve, record, and reconcile any transaction. Authorized personnel should be limited to only the appropriate professionals. And all inventory review should involve routine management or third-party review.
Completing habitual audits will contribute to your company’s transparency. It shows you are willing to have an external firm come in to review your work for any discrepancies or mistakes. Owning up to any inconsistencies across audits shows you are managing a company’s finances with a level head. Auditing will also streamline any inefficient processes and identify any areas that require more attention and care. Similar to a progress report, an audit gives a broad overview of what you are doing right and what you should be doing to pick up your slack.
- Sharing Statements
Even in a private company, sharing your quarterly or annual financial statements provides a great deal of transparency. Whether to your shareholders, your board, your employees or the general public, it’s important to not be so tight-lipped about what gains or losses you have experienced. This information is important to stakeholders. Not holding back establishes some trust and creates a relationship of collaboration and honesty.
It’s smart to include these three practices in any corporate governing strategy for ultimate transparency. You can alter them based on the needs and parameters of your organization, but the basic foundation of these ideals should guide your financial reporting. If you provide transparent records, your company will be healthier in the long run and open to bigger opportunities.