Standard Operating Procedure (SOP): Financial Management

For: YourData365
Domain: M365 Backup & Compliance
Tagline: Own your M365 outcomes
Effective Date: [DATE]

Purpose

This SOP establishes a structured and efficient financial management process for YourData365, ensuring accurate invoicing, timely payments, effective cash flow monitoring, and compliance with tax and reporting requirements. The procedures outlined are tailored to the M365 Backup & Compliance business model, where subscription-based revenue, recurring billing, and vendor relationships are critical.

Scope

This SOP applies to all financial management activities at YourData365, including:
1. Invoicing and payment terms for clients.
2. Accounts receivable (AR) follow-up cadence.
3. Expense approval workflows.
4. Monthly close procedures.
5. Cash flow monitoring.
6. Tax preparation.
7. Financial reporting and budget reviews.
8. Vendor payment processes.

Definitions

• M365: Microsoft 365, the suite of cloud-based productivity tools.
• Recurring Revenue: Subscription-based income from clients for backup and compliance services.
• AR: Accounts Receivable, outstanding invoices owed by clients.
• AP: Accounts Payable, amounts owed to vendors.
• ERP: Enterprise Resource Planning software used for financial management.

Responsibilities

• Finance Manager: Oversees all financial activities, ensures compliance, and prepares reports.
• Accounts Receivable Specialist: Manages client invoicing and AR follow-ups.
• Accounts Payable Specialist: Handles vendor payments and expense approvals.
• Tax Consultant: Prepares and files tax returns.
• CEO/COO: Reviews financial reports and approves budgets.

Procedures

1. Invoicing Procedures and Payment Terms

Purpose: Ensure timely and accurate billing for M365 Backup & Compliance services.

1. Invoice Generation:
   - Generate invoices via [ERP_TOOL] (e.g., QuickBooks, Xero) on the 1st of each month for recurring subscriptions.
   - Include detailed service descriptions (e.g., "M365 Backup for 50 users - $5/user/month").
   - Apply any applicable discounts or promotions.

2. Payment Terms:
   - Standard terms: Net 15 days.
   - Late payment penalty: 1.5% monthly interest on overdue balances.

3. Delivery:
   - Send invoices via email to [CLIENT_EMAIL] with a PDF attachment.
   - Include payment options: ACH, credit card, or PayPal.

4. Tracking:
   - Log all invoices in the AR module of [ERP_TOOL].

2. Accounts Receivable Follow-Up Cadence

Purpose: Minimize overdue payments and maintain healthy cash flow.

1. Day 1-15: Send invoice and payment reminder on Day 10.
2. Day 16-30: Send overdue notice with a copy of the invoice.
3. Day 31-45: Call the client’s accounts payable contact.
4. Day 46+: Escalate to Finance Manager for review and potential engagement of a collections agency.

KPI: Maintain AR aging under 30 days for 90% of invoices.

3. Expense Approval Workflow

Purpose: Control costs and ensure all expenses align with the budget.

1. Submission:
   - Employees submit expense requests via [EXPENSE_TOOL] (e.g., Expensify, Zoho Expense).
   - Include vendor quotes or receipts for all expenses over $100.

2. Approval:
   - Expenses under $500: Approved by Department Head.
   - Expenses $500-$2,500: Approved by Finance Manager.
   - Expenses over $2,500: Approved by CEO/COO.

3. Reimbursement:
   - Process reimbursements within 7 business days of approval.

4. Monthly Close Procedures

Purpose: Ensure accurate financial records and reporting.

1. Reconcile Accounts:
   - Reconcile bank accounts, credit cards, and AR/AP balances in [ERP_TOOL].

2. Review Revenue:
   - Verify subscription revenue against active client contracts in [CRM_TOOL] (e.g., HubSpot, Salesforce).

3. Adjustments:
   - Record any necessary journal entries (e.g., deferred revenue, prepaid expenses).

4. Close Books:
   - Lock the accounting period in [ERP_TOOL] by the 5th business day of the following month.

5. Cash Flow Monitoring

Purpose: Maintain liquidity to cover operational expenses and growth initiatives.

1. Weekly Review:
   - Finance Manager reviews cash flow projections every Monday.
   - Update projections based on AR aging and upcoming AP obligations.

2. Thresholds:
   - Maintain a minimum cash reserve of 3 months’ operating expenses.

3. Escalation:
   - If cash reserves fall below the threshold, notify CEO/COO immediately.

6. Tax Preparation Checklist

Purpose: Ensure compliance with federal, state, and local tax regulations.

1. Quarterly:
   - File estimated taxes for [STATE] and federal obligations.

2. Annually:
   - Collect 1099 forms from vendors by January 31.
   - Prepare and file corporate tax returns by April 15.

3. Documentation:
   - Maintain records of all tax filings and supporting documents for 7 years.

7. Financial Reporting Schedule

Purpose: Provide stakeholders with actionable financial insights.

1. Monthly Reports:
   - Revenue and expense summary.
   - AR aging report.
   - Budget vs. actual performance.

2. Quarterly Reports:
   - Cash flow statement.
   - Profit and loss (P&L) statement.
   - Balance sheet.

3. Annual Reports:
   - Comprehensive financial review for stakeholders.

KPI: Deliver monthly reports by the 10th business day of the following month.

8. Budget vs. Actual Review Process

Purpose: Identify variances and adjust financial strategies.

1. Monthly Review:
   - Compare actuals to budgeted figures in [ERP_TOOL].
   - Investigate variances over 10%.

2. Quarterly Adjustments:
   - Revise budget forecasts based on performance trends.

3. Approval:
   - CEO/COO approves any budget reallocations.

9. Vendor Payment Procedures

Purpose: Ensure timely and accurate payments to vendors.

1. Invoice Review:
   - Verify vendor invoices against purchase orders and contracts.

2. Payment Schedule:
   - Process payments on the 15th and 30th of each month.

3. Methods:
   - Preferred: ACH transfer.
   - Backup: Credit card or check.

4. Tracking:
   - Log all payments in the AP module of [ERP_TOOL].

Exception Handling

• Disputed Invoices: Escalate to Finance Manager for resolution.
• Cash Flow Shortfalls: CEO/COO to approve deferral of non-essential expenses.

Metrics/KPIs

• AR aging under 30 days for 90% of invoices.
• Monthly close completed by the 5th business day.
• Cash reserves maintained at 3 months’ operating expenses.
• Expense approval turnaround within 3 business days.

Review Schedule

• This SOP will be reviewed quarterly by the Finance Manager and updated as necessary to reflect changes in business operations or financial regulations.

By adhering to this SOP, YourData365 will maintain financial stability, ensure compliance, and support sustainable growth in the M365 Backup & Compliance market.