Standard Operating Procedure (SOP): Financial Management

For: Citadel Innovations
Tagline: Secure choices, made clear.
Domain: [WEBSITE_URL]
Effective Date: [DATE]

Purpose

This SOP establishes clear, efficient, and industry-specific financial management processes for Citadel Innovations, a Cybersecurity Reviews Hub. The goal is to ensure accurate financial tracking, timely payments, and compliance with tax and regulatory requirements while maintaining cash flow stability and supporting strategic decision-making.

Scope

This SOP applies to all financial management activities at Citadel Innovations, including invoicing, accounts receivable, expense approvals, monthly close, cash flow monitoring, tax preparation, financial reporting, budget reviews, and vendor payments. It is designed to address the unique needs of a cybersecurity reviews business, including managing subscription-based revenue, vendor partnerships, and operational expenses tied to digital tools and platforms.

Definitions

• Accounts Receivable (AR): Money owed to Citadel Innovations by clients or partners.
• Accounts Payable (AP): Money owed by Citadel Innovations to vendors or service providers.
• Net 30: Payment terms requiring payment within 30 days of invoice issuance.
• Budget vs. Actual (BvA): A financial analysis comparing budgeted figures to actual performance.
• ERP System: Enterprise Resource Planning software used for financial tracking (e.g., QuickBooks Online, Xero).
• Cash Flow: The net amount of cash being transferred in and out of the business.

Responsibilities

Procedures

1. Invoicing Procedures and Payment Terms

Purpose: Ensure timely and accurate billing to clients for services rendered.

Steps:

1. Invoice Creation:
   - Use [ERP_SYSTEM] to generate invoices for clients.
   - Include the following details:

   • Client name and address ([CLIENT_NAME], [CLIENT_ADDRESS])
   • Invoice number and date
   • Description of services (e.g., "Cybersecurity Review Subscription - Monthly")
   • Payment terms: Net 30
   • Payment methods: ACH, wire transfer, or credit card via [PAYMENT_GATEWAY].

2. Invoice Delivery:
   - Send invoices via email to the client’s accounts payable contact ([CLIENT_EMAIL]) within 2 business days of service delivery or subscription renewal.
   - Attach a PDF copy of the invoice and include payment instructions in the email body.

3. Payment Terms:
   - Standard terms are Net 30.
   - Late payments incur a 1.5% monthly penalty after 15 days past due.

4. Record Keeping:
   - Log all invoices in [ERP_SYSTEM] under the client’s account.
   - Update payment status upon receipt of funds.

2. Accounts Receivable Follow-Up Cadence

Purpose: Ensure timely collection of outstanding payments.

Steps:

1. Weekly Review:
   - Every Monday, the Accounts Specialist reviews overdue invoices in [ERP_SYSTEM].

2. Follow-Up Schedule:
   - Day 1 (Invoice Due Date): Send automated reminder via [ERP_SYSTEM].
   - Day 7 (Past Due): Send personalized email reminder to [CLIENT_EMAIL].
   - Day 15 (Past Due): Call client’s accounts payable contact to confirm receipt of the invoice and payment status.
   - Day 30 (Past Due): Escalate to Finance Manager for review and potential legal action.

3. Escalation Path:
   - If payment is not received within 45 days, engage external collections agency or legal counsel.

3. Expense Approval Workflow

Purpose: Control operational costs and ensure alignment with the budget.

Steps:

1. Submission:
   - Employees submit expense requests via [EXPENSE_TOOL] (e.g., Expensify).
   - Include supporting documentation (e.g., receipts, vendor quotes).

2. Approval:
   - Expenses under $500: Approved by Operations Manager within 2 business days.
   - Expenses over $500: Require Finance Manager approval within 3 business days.

3. Reimbursement:
   - Approved expenses are reimbursed via direct deposit within 5 business days.

4. Monthly Close Procedures

Purpose: Ensure accurate financial records and reporting.

Steps:

1. Reconcile Accounts:
   - Reconcile all bank accounts, credit cards, and payment gateways in [ERP_SYSTEM].

2. Review Transactions:
   - Verify all transactions are categorized correctly.
   - Investigate and resolve discrepancies.

3. Adjusting Entries:
   - Post necessary journal entries (e.g., depreciation, accruals).

4. Close Books:
   - Lock the accounting period in [ERP_SYSTEM] to prevent further changes.

5. Prepare Reports:
   - Generate Profit & Loss Statement, Balance Sheet, and Cash Flow Statement.

5. Cash Flow Monitoring

Purpose: Maintain liquidity and ensure financial stability.

Steps:

1. Daily Monitoring:
   - Finance Manager reviews cash balances in all accounts using [ERP_SYSTEM].

2. Weekly Projections:
   - Update 12-week rolling cash flow forecast every Friday.
   - Identify potential shortfalls and recommend corrective actions (e.g., delaying non-essential expenses).

6. Tax Preparation Checklist

Purpose: Ensure compliance with [STATE] and federal tax regulations.

Checklist:

• Quarterly:
• File estimated tax payments by IRS deadlines.

• Review payroll tax filings.

• Annually:

• Collect W-9 forms from all vendors.
• Issue 1099 forms to applicable vendors by January 31.
• Reconcile all accounts and provide financial statements to the External Accountant by February 15.
• File federal and state tax returns by April 15.

7. Financial Reporting Schedule

Purpose: Provide stakeholders with actionable financial insights.

Schedule:

• Weekly:

• Cash flow update to Finance Manager.

• Monthly:

• Profit & Loss Statement, Balance Sheet, and Cash Flow Statement to Operations Manager by the 10th of each month.

• Quarterly:

• Budget vs. Actual report to Executive Team by the 15th of the first month of the new quarter.

8. Budget vs. Actual Review Process

Purpose: Monitor financial performance and adjust strategies as needed.

Steps:

1. Report Preparation:
   - Finance Manager prepares BvA report using [ERP_SYSTEM].

2. Review Meeting:
   - Schedule quarterly review meeting with Executive Team.
   - Discuss variances exceeding 10% of budgeted amounts.

3. Action Plan:
   - Develop corrective actions for significant variances.

9. Vendor Payment Procedures

Purpose: Ensure timely and accurate payments to vendors.

Steps:

1. Invoice Receipt:
   - Vendors submit invoices to [EMAIL].

2. Approval:
   - Operations Manager approves invoices under $1,000.
   - Finance Manager approves invoices over $1,000.

3. Payment Processing:
   - Accounts Specialist schedules payments via ACH or wire transfer through [ERP_SYSTEM].
   - Payments are processed within Net 30 terms unless otherwise agreed.

4. Record Keeping:
   - Save all vendor invoices and payment confirmations in [DOCUMENT_MANAGEMENT_TOOL] (e.g., Google Drive).

Metrics and KPIs

• Days Sales Outstanding (DSO): Target ≤ 30 days.
• Expense Approval Turnaround: 95% of requests approved within 3 business days.
• Cash Flow Coverage Ratio: Maintain ≥ 1.5x monthly operating expenses.
• Budget Variance: ≤ 10% deviation from budgeted figures.

Review Schedule

• Quarterly: SOP review by Finance Manager to ensure alignment with business needs and regulatory changes.
• Annually: Comprehensive review and update by Executive Team.

This SOP is tailored to the financial management needs of Citadel Innovations, ensuring operational efficiency and compliance in the cybersecurity reviews niche.