As a small- or mid-sized business owner, your company will grow and evolve over time to where you will need broader financial and strategic guidance that is best provided by a CFO. A common obstacle is your business doesn’t have the need for a full-time CFO or faces other budgetary constraints.
Fortunately, you can obtain that expertise by contracting with a part-time CFO on an affordable basis. Let’s examine the role a CFO can play with three key constituents of your company.
Your banker is critical to the long-term success of your company. The bank is a primary source for a variety of financing programs as well as other financial services for managing your cash. An experienced CFO has spent their entire career managing banking relationships and is able to deal with the financial issues that arise. They will also provide financial projections to support your lending requests.
For example, your CFO will ensure any loan covenants are in compliance and perform regular reviews so you know well in advance if a covenant is at risk. They are also skilled in negotiating loan agreements to ensure fees and rates are reasonable. A CFO is familiar with treasury management services such as payables and receivables management, including fraud mitigation, merchant services and foreign exchange services.
Your CPA is a valued partner that provides a variety of financial services. Generally, they will produce audited, compiled or reviewed financial statements for your business on an annual basis, which are used by bankers and potential investors. Another important service is the preparation of your company’s annual tax returns.
Your CFO works hand-in-glove with your CPA by ensuring your company has appropriate internal policies and procedures so that timely and accurate financial statements are produced each month. These are important not only for internal management review, but significantly benefit your CPA in being able to produce year-end financial statements in compliance with the guidelines mandated by their industry. Further, your CFO will maintain regular contact with your CPA providing information about annual profit and future plans for the business so the CPA can provide value-added planning around taxes.
You – The Business Owner
As a business owner, you sometimes feel like you are on an island, having to make critical strategic and business decisions on top of managing your company without the benefit of a sounding board. The greatest benefit a CFO provides is being a trusted advisor, who can provide feedback and support in making these decisions based on their financial and operational experience. They are also an advocate to ensure your company maximizes its cash flow and profitability.
In addition, you will gain an important asset that is always in short supply – time. Your CFO will be a strategic advisor in addition to managing the financial and operational activities of your business. This will allow you more time to focus your core competencies in other areas of the business where you add the greatest value.
Once you benefit from the services provided by a part-time CFO, you will wonder how you ever managed without one!