As your company grows, you may find yourself asking, “Is it time for my business to bring on a CFO?” This is a good question for an entrepreneur like you to be asking!  It means you are expanding and want to have a better handle on your business financials in order to make the best decisions for you, your team members and your customers. 

What could a Chief Financial Officer (CFO) role add to your business?

• A CFO helps monitor the timing of inflows and outflows to work to match those needs – you are probably doing that yourself right now but could you still do that if the business doubles?
• A CFO will help you make better financial decisions by keeping your big plans in focus and the daily activity humming.
• As the CFO quantifies the use of resources – money, time, staff – you have a better chance of improving the return on your investment of those resources.

So, all in all having that CFO around makes it easier to set budgets, make financial forecasts, track spending, and provide the financial advice to keep the business growing.

But what if you can’t afford a CFO yet? Or maybe you just haven’t found the right person? Or maybe a part-time person is all that you need and you’re not sure how to structure that position? 

Here are some helpful tips to help you move your business forward regardless of having a CFO in place or not:

Strong financials require accurate record-keeping and consistent reporting:

• The initial setup of the mechanical workings – keeping an eye on automated and well maintained procedures – is an important foundation.
• Then regular overview based on a checklist to catch large issues.
• Finally, accountability is properly assigned to align with budgeting, performance and goals.

A process allows you to manage your finances in real-time instead of cramming it all in at tax time. Although you might find you lack the time to review your performance, at least you can get a handle on where you are making or losing money. The trick is to put that habit in place so that you have a record to review, and come hell or high water, do it often. 

Keep in mind, you can adjust it as you see fit, so you’re constantly improving. Just begin to work that process.

As a successful business owner, you know that accountability is crucial to maintain efficient workflow and this is also true if you are operating without a CFO. Some of the ways you can make it work include:

• Determine who will be responsible for reviewing each section of the financial reporting – preferably the manager of the process creating that section 
• Set the timing and frequency of the reviews and how the feedback will be communicated and gathered
• Calendar your final review and approval of the financial information so that the books can be properly closed on a regular basis

Regularly comparing numbers to past periods allows you to look for patterns, improvements, and issues in your cash flow. To help determine frequencies for reviews you can use these basics: 

• Cash flow: Weekly
• Key Indicators (Growth, Liquidity, Leverage, Activity): Monthly  
• Profitability Ratios (Net profit margin, Operating profit margin, Return on assets): Quarterly
• Efficiency Ratios (Inventory and Average collection period): Bi-Yearly

Business coaching or an Accounting Advisor can show you how your evaluations and comparisons help you keep an eye on where you’ve been and where you’re going. You’ll gain insight that allows you to make well-informed decisions to gain more control over your money.

When reviewing the numbers, keep open to the ideas the numbers might generate for you. The key to effective financial management is to look for patterns and clues that can explain why things are getting better or worse. For example, what if you found your sales were lagging? 

Instead of spending more money on sales, you might be better off finding ways to reduce operating costs. This provides a richer, more rewarding result as you cut costs, instead of spending more money to resolve the issue. It all depends on the situation so a  well-rounded look at the factors is a must. CFOs help you learn to measure value and how to meet your company’s financial objectives.  

Don’t have a CFO? An Accounting Advisor with our Business Compass Program can help you create the processes and the know how to navigate your business financials in a whole new way. Call our Small Business Financial Coach for a free 30-minute introductory call to see if the Business Compass Program is right for you. 

Want to gain more clarity, confidence and control of your business financials, visit our Entrepreneur’s Guide to Accounting for more valuable articles like this one.