As a small business owner, handling your finances can be a daunting and incredibly time-consuming task. With so many other responsibilities, you just don’t have the capacity to do what needs to be done to reach the goals you’ve set for your business.
You’ve likely reached the point where you know something needs to give to get your finances heading in the right direction, but don’t know where to start. Do you continue to do it on your own, hire an in-house CFO to take on the tasks, or turn to an outsourced CFO?
Oftentimes, hiring an outsourced CFO is the right choice, but business owners like you are unsure of what to expect from a service like this and the uncertainty deters you away.
To help, we’ve put together a description of what you can expect from an outsourced CFO.
Cash Flow Management
Cash flow is a strong indicator of the health of your business. A positive and ever-growing cash flow is the goal for every small business owner. However, getting to that point requires a lot of maintenance work, tracking, and planning.
Some tips to keeping track of your cash flow included:
- Making it a habit to check your cash flow statement
- Automating your reporting
- Finding the root cause of your cash flow problems
Cash flow management also demands a good understanding of what affects cash flow and ways to improve it. You’ll need to understand how:
- Cash from operating activities
- Cash from investing activities
- Cash from financing activities
…all affect the way cash flows in and out of your business.
Working with an outsourced CFO will check all of the cash flow “boxes”. They will keep a close eye on your cash flow and the KPIs that go with it to make sure it is steady and trending towards growth. Not only will they keep up with maintaining it, but should your cash flow start falling in a negative direction, your CFO will provide you with sound, actionable advice to make needed adjustments.
Profit Improvement Strategies
Profit improvement strategies are very similar to the strategies you use to improve your cash flow. You’ll need to track all sales and expenses closely to see growth in profit. The best way to do this is to create detailed budgets and forecasts. Each of these tools is meant to keep you on track towards your business goals.
Budgets: Budgets show you how much money you should be spending and in which areas. Adjustments here are helpful for lowering expenses and getting the most out of your money, which prepares you for increased profits.
Forecasts: Forecasts are a detailed combination of realistic assumptions about what you can expect your business to bring in within a certain period of time. When you properly forecast, you can see what part of your finances needs more attention and make adjustments to improve your profit.
An outsourced CFO will work with you to create strong budgets and forecasts that provided a glimpse into where you’ll be spending money and how much money you’ll be making. From there they’ll create a profit improvement strategy that produces results and propels your business forward.
Strategic Planning
In a similar fashion to creating profit improvement strategies, a good outsourced CFO will help you create strategic plans with growth in mind. You will be able to turn to them with help in all areas of your planning and can expect valuable advice backed by experience and financial data.
In some cases, your outsourced CFO will create and implement new systems and processes to better your business. Because you will be experiencing new levels of growth, some of the systems and processes you already have in place may not be able to keep up. In this instance, they will work closely with you to strategize what you currently have in place and suggest new ways to improve them.
Once they’ve helped you work through the concepts of your new systems and processes, they will help you with implementation, making sure you and your team know why and how each step has been put into place.
In addition to creating and implementing, an outsourced CFO will ensure your systems coincide with your current financial state and will adapt well to the growth you are aiming to achieve.
Due Diligence
One of the most impactful aspects of an outsourced CFO is having newfound confidence in the accuracy of your financials. This comes from an intentional focus on:
- Cash flow management
- Using budgets and forecasts to improve profit
- Relying on the right metrics to create and improve strategic plans
Because the sole job of your outsourced CFO is to spend time learning and improving the financial health of your business — you can be sure they are providing you with the right information you need to make decisions.
Should you get to a point where you have questions, or don’t understand why your numbers look the way they do, they can walk you through your finances to explain the numbers and answer your questions.
If you are looking for an outsourced CFO to manage your cash flow, help you implement profit improvement strategies, create strategic plans, improve your confidence in your financials, and more, turn to Adian Professional Corporation. Adian Professional Corporation will partner with you to realize the heights your business can reach.