There’s a critical job that big business employ to drive profitability and efficiency. Recently it has become much more accessible to small and medium businesses.
The best description I can come up with for a CFO (Chief Financial Officer) is that they help you gain clarity, confidence and control of your business numbers. Also known as Management Accountants or Financial Controller, they communicate what your financials are saying into meaningful information about how you can improve your profitability and your cash-flow. That helps you to understand where your business is headed and what action you can take to improve it. It’s a role that focuses on keeping more of the money your business makes, analysing your spending and improving your profits. It helps businesses plan for the future and provides a navigation role for your business, much like your GPS does for your car.
Here’s a breakdown of some of the things you can expect to gain by engaging a Part-time/Virtual CFO.
Confidence
- You’ll have someone who can translate the financial jargon into practical, meaningful information that will help your business.
- They’ll ensure that your accounts are up to date, (with no “nasty surprises” of un-processed expenses) so that they accurately reflect your financial position at that point in time.
- You’ll understand every number in your financial statements and the impact they have on your business.
- You’ll know what your superannuation, tax and other payment obligations will be and have a plan to ensure you have the money to pay them.
- You’ll be able to have informed, meaningful discussions with your tax Accountant and your bank or financial institution, should the need arise, because you’ll know your financials inside out.
Clarity
- You’ll understand exactly what and who is driving financial results in your business.
- You’ll know what your bank balance is going to look like over the next few months.
- Through the use of a business budget, you’ll gain a financial GPS of your business so you know where it’s heading and keep you on track to your profit goals.
Control
- You’ll have an accurate business performance barometer that acts as an early warning system to prompt action.
- You’ll know where your costs are blowing out, so you can take immediate action and make financially informed decisions.
Armed with this information, you’ll be totally in control of your business numbers. You can make decisions to improve your business, manage your costs and make sure your profits are headed in the right direction.
While a good company CFO can cost upwards of $100k per annum, many mid-size businesses just don’t have the need for this role in a full-time capacity. Fewer transactions than a large business, means less analysis. A Virtual/part time CFO can be used for a fraction of the cost and still provide you with the same business insights big business use to help your business move to the next stage of growth.
While a Bookkeeper processes your business transactions and a traditional Tax Accountant ensures your compliance with the ATO and your tax obligations, a CFO is focused on the internal workings of your business, improving it’s efficiency to maximise your profits. A CFO will work with your bookkeeper and your Tax Accountant to make sure that you are able to plan for your tax and that the reports accurately reflect the profitability of different product/service groups.
What about the “virtual” part? Well, as many accounting systems such as MYOB, Xero and Quickbooks are based on-line, often this analysis work can be handled without the need to operate from your premises. This means no workstation or office space is required, as the Virtual CFO can access the information they need from anywhere, providing you allow access to your accounting information.
How do you know when it’s the right time to engage this sort of service? Many businesses have started up because the business owner is great at “doing the work” in their chosen field. As the business grows though and they start putting on staff, they can start to hit a bit of a profitability ceiling, because they lose direct control over costs. This is the very reason why “buying in” these financial skills can catapult their confidence and growth in the financial arena and the ideal time to consider taking action in this area.
