Waypoints: Ideas and Insights to Navigate Enterprise Complexity

Planned growth starts with forming a vision and identifying the steps necessary to achieve it. But the business environment will undoubtedly change as time passes and you implement your plan. Growth plans have to be balanced against the need to maintain profitability as well as the certainty of the unexpected emergency. Once you have a solid vision for your business, you need to get key decision makers on board with managing short-term budget effects in order to realize the long-term value of solid growth. It almost sounds easy when we say it in a blog like this, but it can be the hardest part of getting a business to break through to the next level.

When I talked with folks here at HORNE about the topic for this post, FAQs on the new revenue recognition standards, I asked them what questions they were getting about the implementation process for the new rules. After a few conversations, it became clear that we were much more likely to come across revenue recognition issues in the course of other discussions with clients. We really haven’t been asked much about the new standard from private companies. Currently, most questions relate to infrequent transactions or the impact of new sales contracts.

Companies with strong working capital have a competitive advantage in the marketplace and are poised to take advantage of growth opportunities—whether that means expanding a product line or acquiring a company. In addition, having significant working and strong liquidity gives CEOs and boards of directors a distinct advantage when it comes to weighing financing options. And, as we pointed out in last week’s blog, CFOs have a more strategic role than ever so optimizing working capital is a key priority.

The CFO role is changing and those that embrace that change will successfully grow their companies. Last week, we identified five challenges we see for CFOs in 2017.  As the first blog in this series, we will help you anticipate and navigate the risks and opportunities the year brings.

I can safely say that, so far, 2017 has been anything but dull. With a new administration in place, our clients and you as well, are likely watching the political and business drama unfold and wondering what effect it will have on your business and how to plan for growth in the future. 

Vendor risk is one of the key problem areas of enterprise risk management. Among other things, outsourcing critical processes and systems containing confidential information makes the challenge of managing vendor risk and compliance even more difficult. According to Director of Cyber IT Risk Services Bryan Allison, businesses should focus on four key areas in order to protect themselves, their employees, the customers that are the core to their existence, and even the vendor. Read more about efficiently and effectively managing risks in vendor relationships in Bryan’s HORNE Cyber blog below.  

During the past year, the HORNE PMM team has written about many of the challenges that companies in the public and middle market face. We've tried to provide straightforward, practical information that you can use immediately. Sometimes we examine the macro environment and sometimes we discuss the details. We always strive to make it relevant to your situation.

Family-owned businesses really are the heart of the U.S. economy. Forbes magazine estimates that 90 percent of all U.S. businesses are family-owned or controlled by a family. More than that, family-owned businesses account for 50 percent of the U.S. Gross National Product. Clearly, they are critical to the stability and growth of the U.S. economy, as well as to job creation.

Before becoming a parent I believed being married was the hardest thing ever.  Of course, after 13 years of proper training, my wife has almost whipped me into shape.  Forget the “seven-year itch,” she was probably ready to kick me to the curb after about two weeks.  Thank goodness she didn’t.

When the HORNE Public & Middle Market team started writing about the new lease standard and the new revenue recognition standard, the implementation deadlines seemed to be in the distant future. The guidance for the lease standard was just released in February of this year and doesn’t take effect for public companies until 2019 and for private companies until 2020. The revenue recognition standard deadlines are scheduled a year earlier—2018 and 2019 for public and private companies, respectively.

Forbes just reported that “the average cost of a data breach has reached $4 million, up 30% from 2013.” The article shows that time is of the essence when measuring the costs a breach may inflict. For example, if the breach is identified in less than 100 days, the cost is averages a mere $3.23 million while those that were undiscovered until after 100 days could cost an average of $4.38 million for repairs and reparations. What a difference a few days can make when it comes to controlling the costs associated with repairing the damage of a data breach.

New Orleans provided a great venue for this year’s AICPA CFO Conference. CFOs from around the country arrived to expand their knowledge on topics from risk management to being an effective leader.  As someone in the accounting profession and not in that CFO, here are a few of my takeaways from the conference. 

Hidden underneath the significant changes to revenue recognition and leases is the FASB’s update to accounting for share-based payments. And those changes – in an area often perceived to be as complicated as an NFL playbook – just made our jobs a little easier.