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When Do You Need a CFO to Improve Your Business?

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When Do You Need a CFO to Improve Your Business?

Have you ever felt that you weren’t getting the information you needed to run your business from your accountant or bookkeeper?

Are you expecting your accountant to let you know when you’ve got a problem with your cash flow and help you to fix it? Or perhaps you just want your accountant to work with you to improve your profit or build the value of your business.

Well, the answer is that you need more than an accountant and bookkeeper in your business. Some people may seek the services of a business coach, but I believe that what you really need is a CFO who truly understands numbers and has the strategies to help you improve them.

The first step in this process is to understand what work to expect of the different people.

Bookkeepers are the people who undertake the accounting data entry; they will reconcile your bank accounts, make sure that all your business transactions are entered into your accounting system. Some will also chase up outstanding invoices for you, and some will prepare short term cash flow forecasts. Many bookkeepers are also registered business activity statements (BAS) agents who can lodge BAS returns for you.

Accountants primarily attend to tax related matters, from BAS to income tax returns, financial statements and tax advice. A small percentage will provide additional services that touch on CFO work and be more proactive and engaged with their clients on a regular basis, not just quarterly at BAS time or once a year at tax time.

So, what is a CFO you ask? CFO stands for Chief Financial Officer and is a term taken from a role in big corporates. The CFO who helps small businesses will mostly be a contractor who works for a number of different businesses at any one time. This reduces the cost to you and gives you access to the higher level of knowledge and support without the price tag of a full-time employee.

There are also Virtual CFO’s (VCFO) who work sometimes remotely and sometimes on site at business premises. They use cloud based technology to see real time what is happening with their clients’ businesses.

A CFO can provide great value to a business.

One business who I have worked with has increased their gross margin by 29%, others have increased revenue by multiples. Generally, accountants and bookkeepers provide historical data, CFO’s look to the future. A CFO will spend considerable time working with the key stakeholders in the business to devise realistic budgets. From these budgets, the CFO will then prepare cash flow forecasts, both short-term and long-term. This work provides the basis for ongoing accountability and support.

There may be many different scenarios that need to be considered in looking to the future. I’ve recently been working with a consultant who has a number of potential contracts in Australia that he is working on and has the opportunity to expand globally. We’ve prepared half a dozen different budgets to understand the effects of the different options and to help the client make informed decisions.

The first forecast we prepared showed a massive cash flow shortfall for the next month. His response was:

“That’s the spreadsheet equivalent of an icy cold bath. What this has done is really provide laser focus for me in getting a decision either way on the … project; I need to act now to stop a future catastrophe. This type of reporting is exactly what I need.”

A CFO will analyse financial reports, looking for what the numbers say about what is happening in the business. This involves delving deeper into the numbers and interpreting them and then providing that information to the business owners. The numbers will tell a story, and the CFO will provide suggestions on ways to improve the numbers, discuss options and provide advice.

If you’ve got cash flow challenges, are wanting to make more profit or need to make decisions about a range of issues that have financial consequences, don’t look to your accountant to help you, rather search out a CFO or VCFO to provide you with expertise in these areas on a contract basis.

A CFO will help you focus on the areas you need to be focussing on in your business to achieve whatever your dreams are for your business.

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  • Clare Shirkey
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    This sounds like the work I want to do! More than a bookkeeper, planning budgets, targets, helping businesses to survive and grow! Thanks for helping me see the direction I want to move in 🙂

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