Effective Financial Operations Management for Small Businesses: A Look from the Inside
Corporate Payments And Payables
In this recurring SmartPayments feature, we sit down with business payment professionals from the corporate and banking space to talk to them about the issues they face on a daily basis. In this installment we interviewed Ryan Goodrich, CFO and co-owner at Ally Pediatric Therapy, and asked him what financial challenges a small business owner encounters. Ally Pediatric Therapy is a private organization that helps children with autism and other childhood disorders learn, speak and grow in order to improve quality of life and strengthen relationships with family and friends. [caption id="attachment_1054" align="alignnone" width="150"] Ryan Goodrich, CFO and co-owner, Ally Pediatric Therapy[/caption]
SP: As the CFO and co-owner of a small business, what does your day-to-day look like -- how do you make it all work?
Ryan: It’s busy! As the CFO I handle all of our day-to-day AP and AR financial processes, including accounting, billing and balance sheet management. As a co-owner, however, I’m also involved in daily operations like client onboarding, which involves securing authorization from insurance companies and confirming that the client is eligible for services. On the AP side, we currently use QuickBooks for invoice management and check printing when a vendor requests that form of payment. Electronic payments are handled by an automated clearing house that is separate from our bank but the funds are drawn our checking account. We also use our credit card for automated payments whenever we’re able. Our goal is to use a little paper as possible. On the AR side, we use CentralReach, a specialized management software for the autism therapy industry, because the billing side of healthcare is its own animal. CentralReach manages data collection, organizes schedules and feeds into billing. It can submit claims and track accounts receivables.
SP: What frustrates you on a recurring basis?
Ryan: QuickBooks can be clunky and it doesn’t have alerts to help us stay organized. It also doesn’t integrate with CentralReach so we can’t run reports on when we’ve been paid and what we’ve been paid. This is a big miss because AR is our biggest piece of working capital management by far and it’s really important to track the time between when a service is rendered and when payment is received. That visibility would go a long way to finding ways to close that cycle time, which is extremely important to a small business like ours. I know there are probably some better options out there but I just don’t have the time to do the research and explore what’s on the market. I’d love to find a more comprehensive financial system. I’d welcome help from my bank, but they don’t reach out to me to provide assistance with that kind of thing and I honestly don’t even know the name of someone I could contact to get guidance or advice. It can be frustrating and after all, small businesses have the potential to become big businesses with the right tools in place.
SP: So if you could wave a magic wand, what would your ideal financial process look like in 5 years?
Ryan: It would be great to have a fully integrated financial system that would work with CentralReach instead of having to cobble together disparate systems. I’m basically trying to make ends meet with inefficient solutions and it’s a huge distraction that takes time away from building my business. On the AP side, it would be great to have a dashboard where I could view a list of all of our vendors in one place along with when we’re paying them and what we’re paying them for (like rent, software subscriptions, supplies, etc.) and then display the amount due and when. I’d also like it to allow me to dig deeper into vendor history so I could have visibility into what drives costs, a capability that would give us an understanding into future cash flow and also how growth will affect expenses. Security would also have to be a main feature of the ideal solution. Data privacy and adherence to HIPAA regulations are a huge concern for us, so we require stringent internal/external security measures to protect our sensitive patient data, along with a proven back-up capability in case of interruption. Ultimately, we just need a banking partner that can help us understand what our options are. Sure, managing financial operations efficiently is critical to our success, but as a small business, I can’t do it all by myself. My focus is divided between keeping the business running on a day-to-day basis while also trying to actively attaining new clients, which we need to do to grow. I need a bank that understands that and can act as a partner with me to help make all the behind-the-scenes aspects of my business run more efficiently.