They say running your own company is a bit like training to be a US Navy SEAL… except, the SEALs get more sleep. Many of the questions and concerns that keep business owners awake at night can be answered by a capable Chief Financial Officer (CFO). An experienced CFO can provide invaluable financial analysis and insights that help entrepreneurs make ongoing financial and strategic decisions. 

However, many growing companies can’t yet justify the cost of hiring a full-time CFO. This is where a part-time, outsourced CFO can provide a valuable and cost-effective solution.

Why do you need a CFO?

A good CFO isn’t just an accountant that keeps your taxes and financials accurate and up to date. A good CFO is a financial expert that helps you find the right solutions for company challenges. Whether your company is constantly running out of money, not growing as fast as you expected it would, or not making enough profit, a CFO can help you to answer these questions, and many others. Are your products priced correctly? Are you paying too much tax? Should you lease or buy your operating premises? 

These and other ongoing financial decisions are part of operating a company that has an impact on your resources and ultimately, success. For example, setting the prices of your products and services correctly can maximise your margins and increase your profits. Proper tax planning ensures that you are compliant with the revenue authorities without paying more tax than you need to. The decision to lease or buy your operating premises can affect the value of your company and its assets, tax obligations, and bottom line. 

Scaling your company with guidance from an outsourced CFO

The path from your first million to beyond the 100 million mark is long and challenging. Small and medium-sized companies now have access to the same tools that were previously only available to large corporations. This allows them to gain a deeper insight into their company than ever before. New affordable automation processes allow any company to build systems that allow for rapid growth and expansion. While automation can help companies save valuable time and money as they scale, an outsourced CFO can also give access to the high-level financial and strategic insights that only a CFO can bring to the table. 

Outsourced CFO is a well-established consultancy firm that aims to provide part-time outsourced CFO services to companies. They offer various packages for companies depending on the needs of the company, and which stage of growth it finds itself in. This gives the company all the benefits of having a CFO on board, backed up by a team of experienced professionals without having to make a full-time hire that requires extra space in the office or incur any further overhead costs. 

The initial approach will be to evaluate where the company currently is, and where the owners and shareholders want to take the company. This allows the CFO to plot a map which can be implemented to reach the intended goal. 

The first step is to do a Financial Gap Analysis on the company to gain an in-depth understanding of the risks and opportunities the business faces, from a finance function perspective. The outcome of this deep dive is a detailed report which culminates in a strategic roadmap addressing both risks and opportunities to maximise company value. 

Assembling the right finance team at the right time can prove to be a balancing act and entrepreneurs often need high-level services before they can afford to hire a bigger finance team. Navigating month-end closes, audit preparation sprints and dealing with auditors can often push finance teams at fast growing companies into the red at key intervals during the year. Outsourced CFO’s services can provide additional capacity to your accounting efforts to make those deadlines every time without burning out your team.

Managing your cash flow and growth goals

Cash flow is the lifeblood of any company and business owners need to develop a deep understanding of their cash flow to help them forecast and plan. Three important pillars of maximising cash flow is to decrease debtors days, increase creditors days, and decrease inventory days. These three pillars keep more cash in the company at its current turnover and profit mark, while decreasing pressure on current operational capital.

Entrepreneurs can grow their companies more effectively if they know exactly how much cash they can spend. A carefully drafted and informed budget allows you to have a goal to work towards and gives an indication of how you can unlock growth opportunities. This process starts with ensuring that you implement effective management, set and track Key Performance Indicators, and improve the quality of reports to shareholders.

Making better company financial decisions for the future

A company’s management accounts and financial reports are a record of what has already happened in the business. When interpreted correctly, they can be a powerful tool to enable better financial decision-making to aid future planning. As a business owner, you need to make sense of financial data by generating financial forecasts and projections to test and adjust your current strategies. If you have a company strategy that lays out a roadmap for the future of your company, forecasting acts as a GPS to show your progress on the road you have chosen. The outsourced CFO is there to help the business owner interpret these reports and provide guidance where necessary.

Financial modelling and forecasting supports entrepreneurs in developing a compelling investment story to attract potential funders and investors. Doing so gives the investor an idea of what the company can achieve over time. An outsourced CFO can act as a post-investment financial manager to help keep investors up to date and show them how the company is progressing along its growth journey. 

You can make sure that your company is growing to its maximum potential by hiring an outsourced CFO who can support your company by implementing processes to ensure that you maximize profits and make the right decisions, at the right time. 

Contact Outsourced CFO to find out more.