As businesses grow, accounting becomes more of a priority. Essentially, CFOs help organizations get the accounting structure in order, set long-range growth objectives, and navigate from here to there. They take ownership of the company’s accounting and financial reporting system and work with management to produce customized reports and track key metrics of the business along with profitability over time.
Since most small businesses are limited by cash and other constraints, most firms start with an interim CFO or part-time CFO which is someone who parachutes in perhaps once a week to make sure that accounting is under control, produce key reports, lead associated meetings, and hear the latest news. A part-time CFO can help even the smallest companies strategize on capital requirements to fund an acquisition or some other form of a growth initiative or to help a fast-growing company decide whether it might be advantageous to go public. This leadership and focus on the metrics can be insightful and make a big difference in a company’s success.
The key is that you don’t need to bring on a CFO full time to reap the benefits of their expertise. Why would your small business pay someone a six-figure salary when you only need them for a few hours each month? We have highlighted some of the key services a part-time CFO can perform for your business below.
Budgeting and Forecasting
Your business needs a direction to ensure survival. Forging ahead without clearly defined goals has the potential for serious negative consequences. Goals and direction are perhaps most important when it comes to the lifeblood of a business – its money. Financial forecasting is essential to helping your small business grow, yet many small business owners tend to skip this step.
According to BusinessDictionary.com, business forecasting is “a planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends.” Budgeting and forecasting are important to set targets for income and expenditure and then hold yourself accountable to those targets as the year progresses. The most financially stable businesses have a budget and a forecast.
A part-time CFO will help your small business create a budget, if you don’t already have one, and track it against your actual performance in real-time. Not only will budgeting and forecasting help you to manage your cash flow, capital investment strategy and burn rate, but they also become essential for any fundraising or strategic planning activities.
Cash Flow and Revenue Management
Cash flow refers to the movement of cash into and out of a business. Watching the cash inflows and outflows is one of the most pressing management tasks for any business. The outflow of cash includes those checks you write each month to pay salaries, suppliers, and creditors. The inflow includes the cash you receive from customers, lenders, and investors.
Poor cash management is probably the most frequent stumbling block for entrepreneurs. A part-time CFO can help your business Understand the basic concepts of cash flow that will help you plan for the unforeseen eventualities that nearly every business faces.
Key Performance Analysis Indicator
With so many variables across industries and business life stages to consider, a one-size-fits-all approach to KPIs will never succeed. With so many variables across industries and business life stages to consider, a one-size-fits-all approach to KPIs will never succeed. Not only are company key performance indicators critical for monitoring financial performance, but they can also help to improve employee morale, customer satisfaction and other, more personal objectives important to the growth and success of your business. KPIs can also compare a company’s finances and performance against other businesses
While not every business needs to track every KPI, there are a few that each company should pay attention to. Your virtual chief financial officer can help you better understand which KPIs are most important for your company, but here are a few every business should pay attention to:
• Revenue Growth Rate
• Debit to Equity Rate
• Lifetime Value of a Customer
• Employee Turnover Rate
Business Valuation
Business valuation is a process and a set of procedures used to estimate the economic value of an owner’s interest in a business. A business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership, taxation, and even divorce proceedings.
When a business owner is in need of a valuation, understanding exactly what type of expertise is necessary and ultimately who to hire can become a daunting task. A part-time CFO can help you undergo the processes in order to provide you with a credible valuation.
Specialized Financial Projects
Small businesses routinely have special projects they need to be addressed, but often times due to limited staff and/or expertise, they are unable to complete the project in a timely manner. Part-time CFO’s have the ability to step in and manage a wide array of special projects, including pricing analysis, ROI evaluation, M&A and entity restructuring.
Final Thoughts
A part-time CFO gives you someone who you can lean on for decision-making and planning. Whether you are planning for the next round of funding or looking for a game plan for doubling revenue in the next 18 months – a CFO is someone you can bounce ideas with and put those ideas into real numbers and plans.
Limitless Investment and Capital Part-Time CFO Services
Limitless Investment & Capital provides growing and established organizations with experienced CFO-level talent on an outsourced, part-time basis at a fraction of the cost of a full-time employee. Our CPAs and consultants provide specialized skill sets to navigate times of transition when you can’t afford to be without a CFO. We price our service offerings very sharply at rapid mandate turnaround times and place exceptional quality CFOs, Financial Controllers, and Analysts on the project, by leveraging on our varied and wide resource database pool.