The engagement of a Chief Financial Officer (CFO) in a business is currently a buzzword among accountants and bookkeepers across Perth. And the importance of a true CFO focusing on your business cannot be overstated to ensure your business is on track and progressing strategically.
Even if your small business is not yet of a size to employ a full-time CFO (and the team they need to support them) the use of a CFO service provider can still provide the following.
The following are the benefits a business gets when it introduces a CFO:
1. You become more strategic
A CFO is skilled at identifying strategies around your key markets, pricing of work and competition analysis. Far beyond just reconciling accounts a CFO can see into your business financials’ and identify future actions that are needed to get your business on track to where it needs to go.
2. You become more accurate
The governance of a business and financial reporting is where a good CFO will devote 30% of their time. However, the production of clean data is a critical element in good decision making.
If you engage a quality CFO in your small business you will enjoy meaningful financial information that you can rely on and use to understand your business.
3. You manage risk better
A CFO (or CFO consultants) will effectively manage the administrative operations of the business. So you will develop controls like key reporting dates, tax lodgement dates, insurance coverage, IT systems and technology and business systems to eliminate or reduce the risk of fraud.
4. Manage growth, cashflow and expenses
A great CFO understands that growth normally consumes cash as you invest in working capital. And a sound CFO (or a CFO service provider) will help prepare cashflow forecasts, treasury and banking needs and automate the processes within your business.
Many small businesses looking to engage CFO services for small businesses will look for a CFO service provider – simply because the cost of a full time CFO is prohibitive. And these CFO service providers, in particular, are good at cost control with software automation and technology options.
5. Negotiate with suppliers and customers
Many suppliers and customers will offer prompt payment, or discounted costs, where a business pays within a certain time period. A CFO will help identify these options and manage cashflow properly to take advantage of the cashflow benefit of these options.
If you are looking at CFO services for small businesses this can often be done with automating process including debtor follow up or forecasting.
6. Manage banking relationships
The relationship with your bank is important. A CFO in a small business, or a virtual CFO services group will also prepare and support the banking relationship. This can be done by producing management reports, banking packages and reporting on key banking covenants.
As an example in Westcourt we undertake a review of the term dates of a group of loan for a wealthy family group so that the client was able to plan ahead for loans that were coming up to review, expiration of the interest only financing period, security taken and interest costs.
If you engage CFO services you will be in front of your banking obligations so that you can enjoy a better quality service, terms and products offered by your bank.
The banking relationship is often now linked to ongoing tax compliance including management of tax debts or obtaining a Statement of Tax Record. So the CFO services for small businesses connected to a tax advisory role also assists with the overall tax governance piece.
7. Manage succession and sale
The use of a CFO (or CFO services) will ultimately result in a better run and better managed business. So the governance of the business, and general attractiveness of a business to another buyer, will be significantly increased – this can be through clear and reliable forecasts, processes and systems, key tax reporting dates and strategic positions.
If you make a business fundamentally more sound and easier to run – you increase its appeal to another purchaser – this could either be the next generation or an outside party.
At Westcourt we have seen that, without exception, that engaging our CFO consultants have significantly increased the profits and management of our small to medium sized family owned businesses. We have a diversity of experience from working only with small to medium family businesses, creating a business and engagement as virtual CFO for many clients.
And because our CFO services are experienced and independent – without the need to cross sell audit, legal, software or investment product – we are well placed to assist small and medium sized businesses in enjoying the benefits of a dedicated and experienced CFO can bring to them.