Why Every Business Needs a CFO (And How Small Businesses Can Access This Expertise)

Larger businesses have a Chief Financial Officer (CFO) on staff. But what can small and medium sized businesses do in this regard?

Clearly, larger businesses can afford an in-house CFO. But it goes beyond an affordability issue: Large, successful businesses also understand how crucial the CFO role is to their business performance.

The CFO in a business:

• Keeps a close eye on the numbers and trends,
• Alerts management when preventative actions are required,
• Helps management create sound forecasts and plans,
• Ensures the cash inflows and outflows are managed well so the business never runs out of cash or needs to borrow in haste,
• Reports on revenues achieved compared with targets,
• Gives solid information on a range of Key Performance Indicators (KPIs) to the business decision makers, and also
• Helps management with decision making.
• This is management input that all businesses require regardless of their size. But how can small and medium sized business access CFO-level input and guidance?

The answer: You out-source it. You get a part-time, out-sourced CFO until you can afford one full-time.

That’s where we play a role for many of our business clients.

Our ‘CFO’ service has been developed with input from our clients to make sure it’s the ideal mix of support services and affordability.

As your CFO we roll our sleeves up and work with you in management meetings throughout the year on:

• Cash flow – Efficient management of cash flow to provide cash for saving or investing in growth
• Profitability – Identifying key drivers of profit and focusing on these
• Business value – Growing a valuable and saleable business asset
• Structure management – Staying on top of risk and taxation issues
• As business owners we all need to measure and monitor Key Performance Indicators (KPIs). That is, the handful of numbers that really matter in running our business.

It is also important that you have a ‘KPI dashboard’ to display your KPI targets compared with your current KPI performance. This helps tremendously in monitoring and managing your business’ performance and, ultimately, hitting your targets.

As your outsourced CFO, we will bring to each meeting that we conduct with you clear financial reports, easy-to-understand KPI information, as well as our commercial experience to interpret the information, make suggestions and help guide your decision making.

Items we’ll discuss each meeting include:

• Profit (historical and future)
• Cash flow (historical and future)
• KPIs: A mixture of focusing on Lead Indicators which drive performance and Lag Indicators that measure the outcomes
• Marketing activity and effectiveness
• Operational efficiencies such as work-in-progress or workflow
• Financial indicators such as debtors, inventory, stock turn (depending on your industry and type of business)
• Team efficiencies, knowledge management, morale and safety.
• By helping with your forward planning for achieving the next period’s targets, and by being a sounding board for you as you strive to meet your targets, our ‘CFO’ service and support gives you a crystal clear focus for what needs to be done to achieve the goals of your business.

Your next step meet with our team to discuss how we can work with you as your outsourced CFO.