Six times a (virtual) CFO can save your company’s arse

While I’m a big advocate for business people taking charge of their finances, I am the last to say that everyone needs the same kind of help. As I mentioned in my last post, it’s a case of horses for courses – and no two businesses are ever quite the same.

In my work as a Chartered Accountant and CFO I have, however, encountered a few situations where ‘bringing in the big guns’ makes an enormous difference. These situations seem to crop up time and time again across almost every business sector.

While in the past, only big businesses could justify a CFO, things have changed in recent times for the better. Thanks to the rise of cloud technology, ‘virtual CFOs’ can now provide top level financial and business expertise even to small start-ups – creating a more even playing field for all. After all, if you can pay a highly skilled Barrister by the hour as and when you need, why not a highly-skilled finance expert?

One of the questions I’m often asked is exactly how a CFO adds value to a business. What do we do that a regular accountant can’t? In an attempt to answer this question, I’ve pulled together those pivotal moments in business where a CFO can really change the outcome in a way your garden variety number cruncher is unlikely to do. If any of these resonate with you, maybe it’s time to look into the virtual CFO option yourself.

When you know some clients are wasting your time… you’re just not sure which ones.

In any business, it’s rare for every client to be equally valuable. Some will give you more work or pay higher rates, others are lower maintenance so eat up less time, and others are good for your image or reputation. With all this in mind, it can be hard to know which clients you should be focusing your energies on, and which you should consider giving the flick.

With the help of a CFO, you can actually figure it out, rather than go on guesswork or assumptions. This is usually done by tracking your efforts, assessing the (realistic) value of opportunities, and developing meaningful KPI’s – all of which gives you a robust framework for making decisions. According to the Pareto principle, 80% of outcomes are generated by 20% of causes – and if you apply this rule to your client list, you might be surprised to see where the gold really lies.

When you need capital, and aren’t sure where to get it from.

Needing money is normal, especially when you’re on a growth trajectory – but if you think running to the bank is your best (or only) option, you may be headed for an expensive mistake. Truth is, there are many ways to generate capital, from private equity raising to taking the company public. What a CFO will usually be able to do is explain all these various options, and tell you which one will be the most cost-effective to pursue.

When you’re making a profit, but are still occasionally strapped for cash.

Cashflow is the bane of many business owner’s life, and it can be a tricky thing to master. The most frustrating times can be when you know you’re ‘making money’ or even ‘making a good profit’ – but you occasionally go to pay a bill and find the cupboard is bare.

Where a CFO can help is by managing your revenue cycles so income and expenditure work in sync (taking into account future commitments as well as those you’re already aware of). This might mean adjusting your payment terms or billing cycles, or just keeping a bit more up your sleep so you don’t run into trouble. After all, there’s not much point knowing you’ve done well at the end of the financial year if you’re perpetually struggling in the day-to-day – and unfortunately, your bank cash balance isn’t always representative of your business performance.

When you’re having a growth spurt.

We all know that growth is GREAT… except when it isn’t. I think those who’ve been there will agree that, in spite of all the positives, growth can also mean BIG ANXIETY. Endless questions arise every day: who to hire? How much to pay? What if that big contract lands? What if it doesn’t? It’s exhausting for even an experienced leader with the world’s clearest business plan.

Where a CFO can come in handy is by assisting with contingency planning. Because, no matter how clear your plan or how good your prospects, a CFO will be able to anticipate the many things that ‘could’ happen, and create a Plan B, C, D, E (and so on) in response.

For instance, what would happen if your key client had a heart attack, or diversified, or moved their operations offshore? What if technology threw the entire sector you work in on its head? What if you experienced a cyberattack on your business? All these scenarios (and so many more) are things a CFO can prepare you for and protect you against. As you can see, it’s not just about your finances, but your business as a whole entity.

When you’d really rather avoid an audit.

In Australia’s highly regulated economy, codes of practice are an unavoidable fact of life – and (shock horror) I certainly believe it’s better to adhere to them! But what if you’re unaware of a particular rule or regulation? What if unknowingly, you’ve overlooked a tax requirement, or breached the privacy act?

With the regulatory landscape constantly changing, this can happen more easily that you might imagine. As well as walking away with a fine, you can end up subjected to an audit that’s time-consuming, expensive and disruptive. Not a situation I think anyone really wants. And of course, the person who can help you avoid it? A good old CFO, who (if they’re a Chartered Accountant) is required to stay up to date with all this minutiae as part of his or her mandatory continuing professional development (CPD).

When you’re dealing with complex contracts.

One of the other common times when a CFO can really keep you out of trouble is when you’re negotiating contracts. It may be with a client, or a supplier. Either way, a contract is a legally binding agreement, and if you don’t take care, you could sign up for a lot more (or less) than you bargained for. By having your CFO review your contracts and handle negotiations, you can feel confident that they’ll be examined from every financial angle, and won’t put you in a situation you haven’t (knowingly) agreed to.

While those are six of the most common moments a CFO can come in handy, there are plenty more. If you’d like to find out more about how CFOs work, or how it could benefit your business, why not give me a call? After all, there’s nothing I like more than saving companies’ arses!

Call David Thomas at Figure 8 Finance on 0405 422 437, email