As an owner or manager, you may also carry the hat of Chief Finance and Accounting Officer. In some businesses the accounting and finance role may be delegated to a spouse, another family member, an office manager, or another individual with a bookkeeping or accounting background.
How Efficient Is Your Accounting Team?
In my career as a public accountant and outsourced CFO I’ve seen many small businesses with excellent accounting departments. I have also met a fair number of business owners who were less than satisfied with the accounting and finance function of their business.
I would expect that your accounting staff is very efficient in invoicing your customers timely and accurately for the services you provide to your customers or the product that you delivered. I would expect that your receivables clerk stays on top of collections. Your bills are paid as timely as cash flow will allow. I would assume that you receive financial reports weekly or monthly and that you receive some financial reports on a timely basis that assist you in making current and long-term business decisions. If your accounting and finance team delivers on all or most of these expectations, then I expect your business is in relatively good shape. Now let’s take a look how your company is performing in the following finance and accounting areas.
How Can an Outsourced Chief Financial Officer Help Your Business?
1. A Part-Time CFO Helps Improve Your Business' Performance
You understand your business model for generating customer value and translate the operational metrics into measures for performance. You use a balanced scorecard, a dashboard, a financial health report, and financial statement ratio analysis to evaluate both the company’s expected and actual financial performance.
2. A Part-time CFO Can Help Keep a Closer Eye on Budgeting and Expense Control
Your chief accountant is responsible for overseeing the budget process, collecting the inputs, and comparing the company’s actual performance with the forecasted budget. This process is a tool for you to control cost in relation to revenues and to control the overall financial performance of the company. I highly recommend the use of a rolling forecast of 12 months, 6 quarters or 2 years. With a rolling forecast you will have a tool that creates an ongoing cycle of planning, conducting, evaluating, and updating your business wide operations.
3. A Part-time or Outsourced CFO Increases the Likelihood of Finance or Raising Capital
You or your CFO have established plans to assure capital required by the company, including the use of debt and equity capital and you maintain the required financial arrangements. You coordinate the long-range plans of the company, assess the financial requirements to execute these plans, and develop alternative ways in which financial requirements can be met.
4. A Part-time or Outsourced CFO Helps Increase Supervision & Increased Efficiency
In a small business, the CFO is the supervisor of Accounting, Finance, HR, and IT. The CFO supports the company’s accounting and financial functions using job descriptions, policies, and procedures, and methods for automating document control. Supervision and adequate accounting controls are critical in safeguarding company assets and to mitigate the risks of fraud.
5. A Part Time or Outsourced CFO Helps Manage Financial Obligations.
The CFO approves all agreements concerning financial obligations, such as contracts for materials, equipment, IT assets, and services, and other actions requiring a commitment of financial resources.
An outsourced CFO can be a cost effective way of hiring real finance and accounting experts during times when you need it most. We invite you to contact us for a free consultation about your accounting needs and to brainstorm potential solutions. Cook Martin Poulson provides its customers with a custom service level agreement without a long-term agreement.
Taking a close look at how your company is performing in key finance and accounting areas will help you decide if you're ready for a part-time CFO. Outsourcing could help you bridge the gap between filling the CFO role yourself and when you're ready for the next step - hiring a full-time CFO.