Is Your Business Fit for 2025? A Financial Health Check Inspired by Macy’s

A Financial Fitness Plan for Small Businesses

Hard to believe that in just a couple of days we’ll be wrapping up the first month of the new year. Seems like an opportune time to check in with ourselves and reflect on the progress – or lack thereof – on those lofty New Year’s goals. (Think of me as your accountability buddy!)

Whether your resolutions were fitness-related or focused on other areas, now is a great time to assess how far you’ve come. On a personal level, that might mean asking how that new diet or exercise regime is helping you shed those pesky holiday pounds. (When did the holidays even start last year? I recall seeing Christmas ads in July…but I digress!)

For those of us running a business, the concept of fitness applies just as much to our enterprises. A business is only as healthy as its financials, whether you measure that by gross revenues, the bottom line or cash flows. Setting goals is essential for steering your business toward success, but as any business owner can attest, execution is where the real challenge lies. And sometimes, a lapse in focus or oversight can have serious consequences – an all-too-relevant lesson that we can learn from the recent Macy’s delivery expense scandal.

For those of you who are not familiar, late last year (around November 2024), Macy’s announced it had identified significant errors in its delivery and shipment expenses. Reportedly, the retail giant failed to manage its delivery costs effectively, leading to a significant financial fallout and regrettable reputational damage. This high-profile case, according to official reports, revealed how a single employee’s actions, combined with breakdowns in internal controls, led to a concealed $150 million in delivery costs. While Macy’s may weather the storm due to its size, many smaller businesses don’t have that luxury. Although there is probably a lot “more than meets the eye” in this case, at a minimum, this situation is a stark reminder that even well-established businesses can be vulnerable to financial mismanagement. Further, although this incident offers valuable lessons for businesses of all sizes, or small and mid-sized businesses specifically, this case is also an opportunity to reflect and take proactive steps to prevent similar issues despite the unique challenges these types of businesses may face.

As we wrap up the first month of the new year, I encourage you to cease the opportunity to strengthen the health and fitness of your business by considering the potential breakdowns that led to the Macy’s crisis and some of the actionable steps that businesses like Macy’s or perhaps your’s can take to safeguard your business from similar pitfalls. Below are some suggestions on how you can apply the lessons from Macy’s to ensure your business starts the year on solid financial footing.

1.      Strengthen Internal Controls: Implement safeguards like segregation of duties, regular internal audits, and automated tracking tools to prevent errors or fraud. For small businesses, adopting a robust internal control framework may seem challenging, but there are always steps you can take to minimize the risk of financial loss.

A proper internal control environment starts at the top. I recall working with a CFO who believed that trust alone was sufficient and resisted recommendations to implement segregation of duties within the team. Needless to say, I disagreed. Trust is foundational when building a world-class team – after all, you should never hire anyone you don’t trust. However, trust is not an internal control. Acting as if it is will only lead to regretful situations that could have been prevented. A strong control environment does not diminish trust; it enhances accountability and protects everyone involved.

 2.      Monitor Real-Time Expenses: Leverage technology to track costs as they occur, enabling you to quickly identify and address anomalies. While small businesses may be limited in their ability to adopt advanced systems, even simple measures like regular reviews or random audits of select vendors and transactions can improve oversight and reduce the risk of financial loss.

I recall a situation at a previous company where one of our freight carriers claimed a large discrepancy between their records and ours. Their accounting team had experienced high turnover and lacked institutional knowledge, and neither of our teams had the technology to reconcile accounts seamlessly. This forced us to collaborate, developing manual reconciliation processes that satisfied both parties.

As time-consuming and labor-intensive as these processes can be – especially for small teams without access to modern technologies – businesses as a whole, not just accountants or accounting teams, have a fundamental ethical responsibility to ensure the accuracy of financial data. This data serves as the foundation for critical decision-making, and failing to verify its accuracy can result in costly consequences.

While managing such short-term challenges, business leaders should also take a forward-looking approach by evaluating their organization’s needs. Whether it’s expanding teams or investing in technology, these steps are essential for enabling timely, reliable decision-making and building a stronger foundation for long-term success.

3.      Review Vendor Contracts: Regularly review vendor contracts to ensure favorable terms and compliance. Collaborating closely with vendors can prevent misunderstandings, reduce costs, and build stronger relationships. For example, during the freight carrier reconciliation issue mentioned earlier, both sides came to the table not only to resolve discrepancies but also to establish better processes and terms going forward. This proactive approach not only minimized risks but improved communication and strengthened our long-term partnership.

 4. Enhance Financial Oversight: Use predictive analytics to gain visibility into potential financial risks and opportunities. Many small businesses assume these tools are out of reach, but that’s not necessarily the case. Even basic forecasting tools, like the below examples, can make a significant impact.

•  Spreadsheet Models: Tools like Excel or Google Sheets, when combined with built-in functions (e.g., scenario analysis, what-if modeling), can help you project cash flow and revenue trends.

• Budgeting Software: Platforms like QuickBooks or FreshBooks provide built-in forecasting features tailored for small businesses, enabling you to project expenses, revenue, and profits based on historical data.

• Dedicated Forecasting Tools: More advanced yet affordable options like Fathom, Float, or LivePlan offer robust dashboards for scenario planning, cash flow management, and KPI tracking.

In several of my past roles, we relied on a combination of spreadsheet models and basic budgeting software to anticipate seasonal cash flow fluctuations. While not overly sophisticated, these tools provided enough insight to plan for leaner months and allocate resources strategically. Predictive analytics is not about perfection – it is about gaining enough foresight to make informed decisions.

5. Foster a Culture of Accountability: Encourage ethical behavior and transparency within your team. Establish clear policies for financial oversight and create channels for reporting concerns. Accountability is not about avoiding risks or punishing employees – it is about building trust and fostering growth across your organization. Mistakes are inevitable, but they also provide valuable opportunities for learning and improvement.

When someone commits an error, take the time to educate them. Explain the relevant policies, help them understand what went wrong, and mentor them to develop the skills needed to prevent similar mistakes in the future. Accountability coupled with education creates a supportive environment where employees feel empowered to take ownership of their roles and responsibilities.

True leadership lies in empowering your team through mentorship and education, turning mistakes into teachable moments. By investing in your employees' growth, you not only enhance their capabilities but also strengthen the overall resilience and integrity of your organization.

By implementing these measures, you will be on your way to building a strong, empowered team and establishing effective processes. These steps will ensure your business operates at peak financial fitness – ready to tackle the challenges and seize the opportunities the rest of 2025 will bring.

As the Macy’s case reminds us, financial and operational oversight is essential – not just for avoiding costly mistakes but for staying competitive. Now, as we close out January, it is still a great time to assess your systems, processes, and vendor relationships to build a strong foundation for the year ahead.

At Intellichoice Solutions, we specialize in helping businesses like yours identify vulnerabilities and implement tailored strategies to drive success. With over 20 years of expertise, we’re here to help you optimize your operations and achieve your goals.

Let’s work together to make this your most successful year yet! Whether it’s strengthening internal controls, improving cash flow, or setting strategic objectives, our boutique CPA advisory firm is ready to support you every step of the way.

Don’t wait for a breakdown to expose weaknesses – schedule a complimentary consultation and let’s create a roadmap for financial health and long-term success. Reach out today! Visit us at www.intellichoicesolutions.com or email us @ contact@intellichoicesolutions.com. Don’t forget to follow us on social: @intellichoice_solutions!