There are different levels of finance operation ranging from those that just barely get by or perhaps don’t even do that well, all the way to ones that are really strategic and add tremendous value to the organization. Take this test and let’s see what level is your particular finance department operating at.

Level 0. This is the finance department that is really struggling. Numbers take a long time to be generated. Results can change dramatically from month to month. Financials often have to be restated. Cash flow is tight. It can be a scramble to keep up with payroll or to keep vendors happy with payments.

Level 1. Just the basics are getting done, but not terribly well. The financials are getting created and perhaps somewhat accurate, but they take a long time to get together may be even up to 30 days. Cash flow is okay, but there’s not a log of cushion within the operation.

Level 2. Doing better, getting the basics done. Financials are done on a more timely fashion, perhaps within a week or ten days after the month end. Information appears to be generally accurate. There’s some cushion in there for the cash flow. Once in a while there may be a cash crisis, but fairly infrequently.

Level 3. Very good performance in the finance area. Financials are not only created shortly after month end, but they are also dashboards during the month. So, there are no surprises by the time month end results roll a long. There are also a financial flash done right after month end. Cash is in good order and the company has a handle on the upcoming cash flows. They know when any shortfalls might come up well ahead of time and can make adjustments to have financing lined up, such as through a line of credit to cover any of those temporary situations. There are budgets and forecasts and those are incororated into the financial and cash flow planning. Comparisons against forecasts are done and create a feedback loop that helps improve the performance of the overall corporation.

Level 4. Outstanding financial, here finance is at the top of the game. Numbers are tight, dashboards are readily apparent, communicated well throughout the organization. Company finances are in good order and they’re very proactive at finding more cost effective means of financing the business. Taxes are in good order. Cash is set aside well in advance for tax requirements. What really makes this type of finance area stand out is they’re well intertwined with the top management. The finance area helps fears that other departments within the company succeed. They’re also a close confidant to the CEO and president. Finance also thinks very strategically and comes up with ideas to help develop the company that wouldn’t necessarily be part of the regular financial activities.

What level are you at? What can be done to move you forward? What outside help do you need to get there?