Take Better Control of Your Financials
I’ve worked with quite a few companies that have been in business for many years, have an excellent reputation with customers and within their industry, and are on a growth path. But to maintain that status and pace, attention to financials has sometimes taken a back seat which has created issues across the organization.
When I start working with a new client whose company is in this position, they often express that they don’t know where to start to regain focus and control of their financials.
There are often common tell-tale signs that financials need a reset.
- Bookkeeping is behind or of poor quality.
- Timely, accurate monthly financial statements cannot be produced with the data available.
- Owners are unable to adequately monitor profit.
- Cash flow is often a challenge.
- Employee job responsibilities are not clearly defined.
- Inventory is often out of stock.
- Accounts Receivable shows payments due beyond 90 days.
The existence of these issues indicates the need for improved Financial Intelligence – an understanding of the most important financial statements, the ability to interpret them, and the know-how to apply those interpretations to inform business operations and decision-making. To accomplish this requires a deep dive into the practices and procedures of the company – financial and otherwise, to uncover underlying issues.
There are a few problem areas that commonly exist which I typically address first when I start working with a client who is looking to reclaim control of their financials.
- Fundamentals for producing timely and accurate financial statements are not in place.
- Set up and properly organize the Chart of Accounts.
- Create classifications on the balance sheet and income statement.
- Properly define the monthly financial closing process.
- The owner has never been presented with the Statement of Cash Flows.
- Differentiate between Profit and Cash Flow – two critical drivers for valuation of the business.
- Implement regular Cash Flow Forecasting.
- There is no Profit Planning in place.
- Create an Operating Budget.
- Identify Strategic Initiatives.
- Expand to an annual profit plan, defining metrics to track progress and adjust as needed.
- Accounting department tasks and responsibilities are not clearly defined and assigned.
- Examine financial and operational documents.
- Assess company practices and procedures.
- Interview owners and employees.
- Identify any elements of the financial and accounting infrastructure that may be missing.
- Get the books caught up, which may require hiring a supplemental bookkeeper to expedite the process.
- Develop and document processes for all accounting functions or update existing procedures.
- Train or retrain employees involved with bookkeeping and accounting to implement new processes and procedures.
How did we get here?
A precarious financial infrastructure most often occurs in businesses which have gone without the regular guidance of a CFO, instead relying on their bookkeeper and tax CPA to keep their finances in order, when neither may have the experience or skills to do so.
To run your business with a forward-looking perspective, there is no substitute for the experience, insight, and expertise of a CFO. Yet not all companies need one full-time – and that’s where a fractional CFO makes sense.
As the word implies, fractional simply means that services are rendered on an as-needed basis and are keenly focused on specific issues and outcomes. It enables companies to bring in-depth financial knowledge, services, and technical expertise to their organization on an outsourced, part-time, retainer or contract basis, without the in-house salary, benefits, and other costs associated with a full-time CFO.
As a former CEO of my own $20 million company, I can also provide insight into the issues business owners face overall, beyond the financial challenges. Through the implementation of Financial Intelligence that may have been missing, I work in partnership with companies to strategically guide their business onto a new and well-defined path to profitability and growth.
What should you look for in a Fractional CFO?
- Someone who has substantial experience working with your size company.
- A clearly defined process for getting your financials on track.
- A high-level understanding of business systems and their implementation.
- A good fit with your company culture, which will provide a basis for a more holistic understanding and approach to your business needs.
As a CFO with a CEO perspective, I understand what business owners face every day and how all aspects of your business are connected. I would welcome the opportunity to help you do a financial reset and establish a financial structure that encompasses the knowledge, data, and tools that will meet the unique needs of your business and keep you moving forward with confidence. Contact me for a complimentary discussion of your specific situation.
