As a small business owner, you either manage most operations yourself or delegate essential roles to trusted team members. Inventory, bookkeeping, accounting, and technology are all core functions in any business, and hiring individuals with deep expertise in their areas is crucial. Yet, this alone is not sufficient. Each department may excel in itself. But if all these departments do not work in sync, following a common path and aiming for a common goal, it could spell disaster for your business. The question is, how can this be done? The answer is simple: by hiring a Chief Financial Officer or CFO to efficiently coordinate with these departments and align them with your business goals to achieve the desired outcome.
What Services Does A CFO Offer?
A Chief Financial Officer serves as a beacon for your business. Overseeing all financial operations —bookkeeping, cash flow, forecasting, strategy, and compliance — a CFO expertly guides your company toward growth and expansion.
Financial Forecasting and Budgeting
A CFO is adept at using financial models using different scenarios or variables to create data-based, informed forecasts that can help a business prepare for future opportunities and challenges in advance. They also use the same data to analyze, plan, and utilize your current resources to align with these forecasts and growth prospects, while aiming for maximum profits and minimal risks.
Ensuring Compliance
A CFO is well-versed with the intricacies of business law, CRA compliance rules, and the documentation required to avoid audits or legal issues. By streamlining your bookkeeping and accounting systems, setting up internal controls, and preparing a contingency management plan, the CFO can effectively reduce compliance and fraud risks.
Risk Assessment and Insurance
Every business is threatened by various risks, including volatile market movements, unusual fluctuations in demand or supply, and operational challenges. Moreover, a business can fall prey to natural calamities or other global events beyond its control. Insuring the business against such risks – be it through sharp alternative business planning or literal insurance of assets against fire, flood, or fraud – comes under the purview of a CFO.
Cash Flow Management
Cash flow is the heartbeat of any business, and any disruptions in the rhythm of this heartbeat can spell trouble for your business. By implementing effective strategies for tracking and managing accounts payable and accounts receivable, and cutting unnecessary expenses, a CFO can ensure a positive cash flow for the business.
Strategic Business Decision-Making
One of the most important things a CFO brings to a business is a fresh yet experienced perspective. By providing valuable insights using actual figures and data, studying market conditions and trends, and understanding your financial needs and resources, a CFO can help you align your business journey with your goals. From making tough decisions to strategizing and brainstorming new ideas, and innovating to gain traction over the competition, a CFO acts as a catalyst for the business’s growth.
Apart from these tasks, a CFO can also help design customized dashboards for data collection and key performance indicators (KPIs) to track the progress of implemented decisions and strategies. The CFO can use this data to communicate business performance with clients, stakeholders, and potential investors. Such transparent communication builds confidence in the company, making it easier for the business to raise funds or negotiate deal terms.
How CFO Services Can Transform Your Small Business
A CFO can perform all the above tasks for your business. But how does his contribution take your small business to the next level? How do all these factors transform your small business into a force to be reckoned with? Let us understand.
Sizeable Revenue Growth
The most common mistakes businesses make during the growth phase are expanding aggressively and being left cash-strapped during a downturn. A CFO analyses a company’s revenue by geography, product, price, profit, and design to determine the optimal product mix that can make the most of revenue growth. They may also analyze the cost of revenue growth to ensure the company is earning money on every new customer, and study market trends to confirm that revenue growth is sustainable enough to warrant additional capital. They bring a fresh perspective to growth and help determine whether to pursue aggressive expansion or gradual growth, while avoiding the risk of a cash crunch.
System Integration and Technology Transition
In this fast-paced, technology-driven world, innovation and early adoption of the latest technological tools are key to business growth. However, this is easier said than done. Giving your existing systems a complete overhaul or adopting Artificial Intelligence in ways that optimize human effort requires skill and in-depth knowledge of business, finance, and technology.
A CFO, with his 360-degree view and control of all departments in the business, is best-equipped to make this tech jump come true for your business. They can help you select a system that not only effectively connects key tasks, such as accounting, budgeting, investments, and KPIs, but also ensures real-time data updates and secure storage. Ensuring technology is financially feasible, easily adoptable, and compliant with all regulatory standards is what a CFO can bring to the table, giving you time to focus on growth-related planning.
The adoption of better technology can prove to be a game-changer for your growing business, as real-time data collection and analysis can lead to informed decision-making, ultimately culminating in higher profitability.
Industry Specific Challenges
Every industry is different, and so are its challenges. For instance, managing inventory is a major challenge in manufacturing and retail businesses. They need to hold a significant amount of inventory. Having too much inventory increases storage costs and risks goods becoming obsolete. At the same time, storing too little risks missing out on tapping the demand.
A CFO with industry knowledge knows the nitty-gritty of the industry, studies the market trends, and creates demand forecasts along with a contingency plan. If the forecast doesn’t come true, the CFO can help cut losses and withstand a slowdown by creating high working capital. For instance, a CFO of a grocery chain would sell inventory at deep discounts when the goods were nearing expiry, minimizing wastage.
The Kind of End Outcome a CFO Delivers
A new perspective professional CFOs bring to the table, and the strategies they implement have a visible impact on your business finances. You can see improvements in return on investment (ROI), greater success in securing capital, higher liquidity, lower debt, and a strong balance sheet.
CFOs work with accountants, lawyers, and bookkeepers to get the system rolling and ensure compliance. Their performance is visible and trackable, making every penny count. However, hiring a CFO is expensive. For many small companies, the business owner serves as the CFO, even though they may lack technical skills. This arrangement might work when the business is small, but you might miss out on scaling opportunities that need a system to manage volume.
Hiring a Fractional CFO For Small Business
Many Canadian firms are hiring fractional CFO services to address a project or business problem beyond their expertise. A fractional CFO is a cost-effective and scalable solution for small businesses. As the business grows, you can increase the scope of services of a fractional CFO and only pay for the hours worked. While hiring a fractional CFO, look for someone who has the technical skill and expertise in your problem area, has a track record of working with companies in your vertical, is a cultural fit, and understands your industry’s compliance, from labour laws to quality standards to tax laws.
A fractional CFO could be the bridge that transforms a small business to the height where it needs a full-time CFO.
Contact Edelkoort Smethurst CPAs LLP in Burlington to Help You Grow Your Business
Talk to a professional accountant and CFO to discuss business needs and identify areas where their services can make a difference. At Edelkoort Smethurst CPAs LLP, our accountants and CFOs can provide services such as forecasting, cash flow management, and technology integration. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best small business CFO expertise, contact us online or by telephone at 905-517-2297.