THE FINANCE DEPARTMENT Organizing your Finances Presented to: Artemis Ventures Portfolio Group By: Bud Austin and Charlie Rodondi Kranz & Associates, LLC 650-854-4550 Baustin@kranzassoc.com Crodondi@kranzassoc.com www.kranzassoc.com

Key Issues for a Start-up Hire Your Interim CFO Determine Department Structure Set up a Chart of Accounts Purchase General Ledger Software Quick Books Peachtree Develop a Cash Management Program Establish Key Vendor Relationships Develop a Financial Plan Planning and Budgeting

Key Issues for a Start-up Establish Consistent Reporting Formats Establish Filing System Establish Policies and Procedures Establish Employee Benefits Program Establish Stock Management Program Establish Contract Management Program Establish Revenue Recognition Plan

Hire Your Interim CFO Why Hire a CFO Experience Contacts Obtain a Known Quantity Team Player Strategic Contributor Interview Several Options Individual Referrals Organizations Kranz & Associates The Brenner Group David Powell Group

Hire Your Interim CFO Check References Prior CEO’s Venture Partners Industry Experts

Determine Department Structure Development Marketing Business Development Sales G & A

Set-up Chart of Accounts Establish a Numerical Chart with Department and Standard Account Structure First Two Digits = Department Number Last Four Digits = Account Number

Purchase Accounting Software Key Features Low Cost Ease of Use Requires Disciplines for Cash Management, Revenue and Expense Management Reporting Structure Analytical Ability Ease of Conversion to Future Software Package

Cash Management System Invest Excess Cash to Generate Income Cash Reserves Account Three to Six Months of Liquidity Money Market Account Investment Brokers Smith Barney Morgan Stanley Dean Witter

Cash Management System Establish Authorization Matrix Two Signatures over $10,000 Establish Authorization Levels Managers = $ 1,000 Directors = $5,000 VP’s = $10,000 CEO = > $10,000

Cash Management System Paper Documentation for All Activities Vendor Quote Sheet Approved Internal Purchase Request Approved Purchase Order

Establish Key Vendor Relationships Banks Lease Lines Insurance Payroll Service CPA Firm Big Five Other Firms Investment Broker

Develop Financial Reporting Design Reports for Various Users Board Of Directors Executive Staff Department Management Others

Planning and Budgeting Define Goals and Objectives Corporate Department Bottoms-up Budget Start with Department Level Salaries and Build Up Roll Up: Balance Sheet Income Statement Cash Flow Statement Headcount Waterfall Capital Expenditures Obtain Board Approval

Establish Consistent Financial Reporting Package Monthly and Quarterly Reporting Balance Sheet Income Statement Cash Flow Statement Waterfall Report Actual vs. Budget Variance

Set-up Filing Requirements Personnel Folders Personnel Files Corporate Accounting

Establish Policies and Procedures Disbursements Travel & Entertainment Capitalization Hiring Practices Purchasing Option Management

Establish Employee Benefits Program Salary Structure Vacation and Sick Policy Medical, Dental, and Vision Plans 401K Plan Flexible Spending - Sec.125 Cafeteria Plan

Establish a Stock Management Plan Set a Budget Set-up a Policy for Issuance, Exercise, and Repurchase Set-up “Cap Table” and Reporting Formats Obtain Board Approval

Set-up Contract Management Process NDA’s Development Consulting – Draft Standard Agreement Customer Vendor

Establish a Revenue Plan Sales Acceptance Policy Sales Order Processing Credit Limits Revenue Recognition Statement of Position 97-2 Staff Accounting Bulletin No. 101

Executive Summary Organize Early Outsource Your Finance Department Manage Your Cash Be Successful