Welcome to the middle of the year! It’s about the time when you should be starting to communicate with your CFO about goals, progress, and where they believe the end of the year is heading for your business.
There’s plenty to cover when you sit down to recap and plan ahead and open communication with your CFO is essential during this time.
They have answers to the majority of your questions and can provide valuable insight to help you get where you want to be. However, even if you have productive conversations, you may not be asking all of the right questions.
5 Questions for Your CFO
To ensure a strong finish to the remainder of the year and to get the most out of your communication with your CFO, be sure you are asking these five questions:
1. What are the Surprises (Positive and Negative)?
Ask your CFO if there were any areas where the numbers were surprising. This will spark positive and negative feedback. Maybe you had a really good result in one area of your finances and a not-so-good result in another.
With the information you get by asking this question, you can see what is working and what is not. From there you can make adjustments to get all areas of your business working towards peak performance.
2. Which Sales Channels are Working?
Your CFO is likely tracking sales channels and keeping a detailed account of which ones are performing well and which aren’t.
Your sales channels give you valuable insight into the ways your customers prefer to receive their products/services. So when you know how they prefer to receive their services, you can adjust your sales channels to match accordingly. While there are plenty of examples, here are two ways knowing if your sales channels are working can help you:
- If a sales channel is highly successful, you can eliminate others or focus on using this as your primary channel.
- If a sales channel is not performing well, it may be time to get rid of that channel and place more effort into the ones that are working.
Using the preferred sales channel of your customers makes distributing more effective and efficient.
3. Do We Need Changes to the Budget Based on Our Actual Spending?
If you’ve read any of our other blogs, you’ve probably gotten the hint that budgets are important, in fact, they are an essential part of a successful business. You probably also know that the closer your actuals are to your budget, the more successful your business will be.
Comparing your actual spending to your budget is something every CFO does to help you stay on track with spending. When you get the chance, ask your CFO if your budget needs any adjustments based on actual spending.
Because they keep a close eye on your budget, they can point out areas where you are over or underspending. You can then begin to make changes. Start by analyzing your expenses and cutting any unnecessary spending. Then move to allocating additional funds to areas that are helping your business grow. Once you’ve done this, the hope is that your budget will provide a more accurate picture of your spending.
4. Is Our Cash Flow Forecast on Target?
Midway through the year, your financials should be in a good place to show if you are on pace to hit your goals. A good cash flow is an indicator that your business is functioning well, so keeping tabs on its progress will give you a good idea of whether or not you will reach the target you set at the beginning of the year.
Ask your CFO if your cash flow forecast matches your actual cash flow. If it doesn’t, dig a little deeper into your question by asking what can be done to get it on track. The good news is, it’s not too late to make adjustments and your CFO will likely have a good idea of what areas of your cash flow are underperforming and can point you in the right direction.
5. What Bumps in the Road Could Be on the Horizon?
One of the many tasks your CFO focuses on is creating forecasts. These are made to plan for the future with your goals in mind, but they also include possible economic downturns and take into account potential risks for your business.
At the mid-year point, hopefully, you have not had to turn to your forecasts in a negative sense, but you should still ask your CFO if they foresee any potentially rough roads ahead. This way you are at least somewhat prepared for the remainder of the year and know what to expect in the coming months.
Ready for an Outsourced CFO?
If you’ve not taken the time to ask your CFO these five questions, you should. They will give you a great idea of how your business has performed, if it’s on track to reaching your goals, and what to expect during the remainder of the year.
If you don’t have a CFO to turn to when you need answers to these questions, consider working with an outsourced CFO.
Adian offers outsourced CFO service so you can save money on staffing, free up your time, and enjoy the benefits of higher-level accounting services. Learn more here!