When it comes to running a business every company is different, yet each faces similar challenges with the operational foundations of finance, human resources, and IT. Positioning these areas for success is essential to realizing your potential. In this blog, we’re talking about the area of finance and how one adjustment can positively impact your organization in numerous ways.
Why Do I Need a CFO?
All companies have someone who’s responsible for managing finances. It may be the owner, a bookkeeper, an accountant, or an employee who fell into it by default when another staff member left. Those day-to-day responsibilities, while critical, aren’t strategic in nature, nor are they driving your future success. That’s where a Chief Financial Officer comes into the picture. But many, especially smaller firms, either can’t afford to hire a full-time CFO or only need one on a part-time basis. The new trend of outsourcing strategic functions enables companies of any size to benefit from the high-level expertise and knowledge that a CFO offers.
A CFO can do a lot more than you think for your company. They fill multiple roles including analyst, futurist, and problem-solver. In short, they help build a financial future for the business. Now, let’s consider some key advantages of utilizing an outsourced CFO.
Success can be defined in many ways and just because a firm is making money today, doesn’t mean it’s going to experience sustainable growth in the future. An outsourced CFO works with your team to advise on the direction of the company and develop a comprehensive finance strategy.
Collaborating with you, they can help make important financial decisions such as lease vs buy or walk you through the pros and cons of mergers and acquisitions. They can assist you with setting short- and long-term goals to accelerate growth. A CFO will focus on truly understanding the strengths and weaknesses of your business. With this knowledge, they help you identify and leverage opportunities for success and minimize risks and threats.
Show Me the Money
Another key area where a CFO can bring significant contributions is in cash flow management. There are many disruptions to cash flow including seasonal trends, payment terms, staffing needs, new equipment investments, etc. Even if your company is profitable, not properly managing these types of disruptors can drain your cash flow and hamper your ability to run the business the way you want to and slow or prevent your growth.
A CFO can assess your cash position, quickly pinpoint any weak areas, and develop a solution that lets you realize more of your profits. How much more strategic could you be if you were confident in the amount of liquid cash you would have available in 3 months, 6 months, or even a year from now? Your ability to make better, more informed decisions skyrockets when you have a clearer picture.
If your accounting processes are still the same ones you were using five years ago, they are definitely not moving you forward. Using outdated processes and outdated data keeps your firm, yes you guessed it, outdated. I don’t know of any business owner who would see that as a competitive advantage and it’s certainly not a characteristic of a future-ready firm.
One of the benefits of enlisting a CFO is gaining their knowledge of process best practices, including how to utilize the latest technology to strengthen your financial position. An outsourced CFO can assist you in working with real-time data and performance indicators for stronger, more accurate forecasting. Don’t settle for the rear-view mirror when you could (and should) be looking ahead.
By working with an outside expert, you can identify areas for improvement and implement changes that will not only address existing issues but also create new efficiencies going forward. From billing and collection to streamlined reporting, often these changes have a very positive impact on profitability.
Even if you utilize an outside CPA firm or have an in-house accountant or finance team, they may not possess the skill sets necessary to help improve your firm’s performance and profitability, and growth. To accomplish these things, you need someone who can look beyond the numbers to provide strategic and sound advice.
If you are interested in learning more about how an outsourced CFO can help you grow your business, contact me today and let’s start the conversation.