Educate September 2015

“It Takes a Village”… of Professionals to Support a Business’s Financial Activities


Written By: Philip N. Kabler
“It Takes a Village.” The title of a book — attributed to an African proverb — that has worked its way into the common vocabulary.

There is a fundamental kernel of sense in this old (new?) adage. We have all heard this idea expressed in different ways such as, “Two heads are better than one” or “The sum is greater than the parts.” All describe the idea that collaboration is central to the success of a business in the marketplace.

Entrepreneurs and business managers are surely the best suited to understand the core aspects of their enterprises’ operations. Often, they started their companies. If not, they assumed control at some critical point in the ventures’ development. They grew them to where they are. They learned from their mistakes. They added to their learning curves. They moved forward.

Just one more aphorism for good measure: “No man (or woman) is an island.” Given the many moving parts of any production or service business (or hybrid), and the reality that it operates in a dynamic environment of local, regional, national, and international consumers, vendors, and regulators – even best-in-class executives need support and a division of labor among their enterprises’ innovation, design, procurement, production, delivery, human resources, financial, quality control, regulatory and compliance functions.

Here, we focus on the financial operations of a business. The key (but not the only) players are a company’s lawyer, accountant, insurance agent, investment adviser and banker. There certainly can be and are other consulting professionals appropriate to meet a specific need. All should, in reality, become and remain trusted advisers to entrepreneurs and managers due to their ongoing and proactive performance, transparency and accessibility.

Let us start in inverse order:

BANKER(S): these professionals are positioned to focus on a business’s cash position because they can view the inflow and outflow of a venture’s operating, payroll, tax and other accounts. They can advise when short term loans or lines of credit will be useful to meet a specific need or even help a company hold the line during a challenging period. And, they are certainly able to assist with loans for long-term projects or larger acquisitions such as new construction or the acquisition of existing structures or other capital assets. (There may be other nontraditional bank loan sources, as well.)

INVESTMENT ADVISER(S): Their function is to help businesses manage their accrued resources through equity, bonds, mutual funds, exchange-traded funds, hedge funds, and portfolio combinations of these and other investment vehicles. They do this with an eye toward meeting the predictable short-, medium- and long-term needs of a venture, balanced with readily available emergency reserves. (Please do note: Real estate brokers, investment bankers, and business brokers must also be included in this category because they help businesses acquire, manage and dispose of assets to support those enterprises’ ongoing needs.)

INSURANCE AGENT(S): These professionals must have a clear understanding of a business’s functions, operations and business environment, risk tolerance and ability to cover risk gone awry by available assets. They then organize a portfolio of insurance policies to protect a company’s assets, equipment, inventory and personnel. Each policy will attend to specific insurable interests and have coverage limits, deductibles and co-payment requirements. Several examples of available coverage include real and personal property, inland marine, commercial general liability, business interruption, finished products, workers’ compensation, health, disability and life, together with additional excess and umbrella coverages.

ACCOUNTANT(S): CPAs and enrolled agents can help a business file its applicable federal, state, and local periodic and annual payroll, sales and use, and income tax returns, as well as the other tax reports that must be timely addressed. But, accountants can do more. At one end of the spectrum, they can either perform a business’s bookkeeping activities or train the company’s internal employees to do it, leading to an efficient preparation of the required tax returns and other financial, investor and regulatory reports. At the other end, they can provide complex financial planning services to the business to aid in its growth, efficiency, tax planning and many other outcomes. And, being a spectrum, there is a wide range of other consulting services available such as information technology and human resources planning and implementation, which accounting firms can provide.

LAWYER(S): We (I am one, of course) provide a wide range of planning, implementation, and compliance services to businesses as well as to their owners, investors and other involved stakeholders. And, lawyers regularly do it in proactive collaboration with the other professionals mentioned above. For example, when a commercial client decides to buy or sell an asset, lawyers provide due diligence research. So, if the purchase of real estate is under consideration, lawyers can research the quality of its title, the boundaries (in collaboration with surveyors), the suitability and environmental history of the property (in collaboration with engineers), and whether there are liens or encumbrances affecting the transfer ability of the property. If an asset is being sold, lawyers can examine the ability of a buyer to pay (often in collaboration with the seller’s CPA). If an asset is being bought with borrowed funds, lawyers can provide a lender with information to help the loan process move efficiently. And, of course, lawyers write contracts, negotiate and close purchase, sale, and finance transactions, advise on business and tax strategies, engage in estate planning for entrepreneurs, and engage in informal or formal dispute resolution (through mediation, arbitration and litigation). One additional important function lawyers perform is helping a company coordinate the activities of its other professional advisers so that everyone is moving in the same direction to help achieve the enterprise’s intended outcomes.

So, to use a sports analogy, there are a lot of players on the field to help a business with its financial activities. All have a specific value to add, and when coordinated, they serve to benefit the enterprise, its owners, investors, lenders, managers, and employees — and benefit the community in which the company operates.

Philip N. Kabler, Esq. joined Bogin, Munns & Munns, P.A. in 2014 as senior counsel. He has almost 29 years of experience in the practice of law. Kabler adds a broad spectrum of practice areas in the fields of business entities (formations, operations, contract negotiating/drafting/review, transactions, finance, human resources, risk management, asset and equity dispositions), real estate (commercial and residential), banking and the equine industry. For more information, call Philip N. Kabler, Esq. of the Gainesville, FL office of Bogin, Munns & Munns, P.A. at (352) 332-7688, www.boginmunns.com/gainesvillelawoffice.

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