how to decide if you need a cfo - altusfinancial.com.au€¦ · can’t afford a cfo. you probably...

How to Decide if You Need a CFO

+ The Things You Need to

Know to Get One

www.altusfinancial.com.au | How to decide if you need a CFO

Introduction – The CFO conundrum

5 sure signs that your business needs a CFO

If you have asked these questions you should consider a CFO service

The 5 benefits of a top flight CFO service

So how can my business access CFO level advice?

The detail – An example CFO service package

Contents


Virtually all larger well established businesses employ the services of a Chief Financial Officer (CFO)

They understand why they need this resource and they can afford to have their own CFO.

So what about less established or smaller and medium size businesses?

Small and medium sized firms know that if the best businesses do something to succeed, then they should do it too. It’s a proven formula, it’s logical.

But in our experience, plenty of smaller businesses seem to find it hard to address the issue of accessing CFO level experience – on a small business budget. Sound like you?

Perhaps they don’t know how to access a CFO, don’t know if their advisers can help them, perhaps assume they can’t afford it, or simply just don’t address the issue and hope it works out.

So how does the smaller business get what the big business have?

The CFO Conundrum

The Conundrum

That’s why savvy small to medium sized businesses are looking to an outsourced CFO service. To provide their businesses with their share of the smarts that the big guys have.

5 Signs That Your Business Needs a CFO

The books are a bit of a mess

Information is late coming to you. And sometimes its quality is questionable. You need it quicker and you need it to be right. You don’t quite know where you are. Sound familiar? Often the books and accounts are in a state of disorder. Updating books and records can be a challenging and tedious task, especially keeping track of receipts and invoices. But it’s essential! Technology can help but staying on top of this can be very time consuming and can take up a lot of the business owner’s time and attention.

Your company has grown quickly

Your business has grown quickly and you’re feeling a bit out of control. You don’t seem to be able to concentrate on the areas you need to? Or maybe you are not sure what those areas are? There are so many things to address. When a company grows quickly, sometimes the flood of challenges can be overwhelming. It can cause a business to lose focus on the bigger picture as they try to keep up with managing the changes and getting everything done.

Administration is not your thing

If your knowledge of bookkeeping, accounting, compliance and budgeting are limited, then you really need to consider some level of CFO services. There are better uses of your time and effort. Outsource things you don’t do well.

Here are some tell-tale signs your business needs a CFO:

You want to grow your business

You want to grow. How will you manage everything? Is there a plan? Do you have the money to put the plan into action? Does the plan actually make sense? CFO’s help you plan for the future – this could include cash flow projections, finance structuring and assistance, budgeting, compliance obligations and profitability monitoring. Do you know how to do all that by yourself?

You want to exit your business

As a business owner, it’s inevitable that one day you will leave your business. This is often a real game changing moment. Whether you decide to sell up, retire or have to leave due to health reasons, it’s important that you plan for that day well in advance. For example, you need to plan who will take over your business, how will the finances work, how are the risks addressed and how all this syncs in with any legal agreements that may be required. And above all, how to ensure your business value is maximised. Getting assistance with the strategy while all the day to day stuff happens is crucial.


If you ask these questions you should consider CFO services

I think I need more financial talent in my business but I can’t afford a CFO.

You probably need to look at “renting” one – in a way that can grow with your business’s needs. CFO services allow you to leverage the services of your accounting firm. This means you can access the talent you require, but only to the extent you need it.

The numbers look good to me but I’m not really sure if I’m profitable? I don’t understand where all the money is going.

We are often asked “where’s my profit?”. This is usually because the business’s bank account hasn’t increased by the same amount as the profit.

As your CFO, we can help you understand the profitability of your business so you know what the key drivers of profit and growth are so you can focus on these. This can help keep you efficient in terms of cash flow so you can use it to invest in the growth of your business.

Should I take on extra staff?

Firstly, you need to understand how the role of the new staff member will contribute to the business. For instance, will they help to increase your bottom line? If yes, then by how much? Or will they just contribute to operational spending? If so, there may be a more efficient way to get the support you need.

A good CFO can help you make these game changing decisions.

My operating costs seem to be creeping up. What should I do?

There can be a couple of natural knee jerk reactions to operation costs increasing. Some businesses look to increase prices, others look to cost cut from areas like IT, HR and Marketing.

These are not often right approach because pricing goes hand in hand with your positioning as a business. Sometimes it’s not even the right question – maybe your expenses are growing but what you actually need to do is look at top line growth. Without a CFO in your team, it’s very hard to progress on these issues.

Is my business scalable and efficient?

Well the first question to ask is “compared to what?”. Context is everything – look at past data, industry data, perhaps it’s more relevant to look at the trends – are you making progress or not?

I don’t seem to receive my accounts on time from my staff and the numbers don’t always seem to stack up. Is my finance team underperforming?

Without that senior experienced financial hand on your team, it’s going to be virtually impossible to improve here – and good reliable information is “first base”. You just can’t grow without it.



So what could a CFO do for me?

This quick list of dot points sums it up. The CFO in a business:

• Is responsible to you for the financial measurement systems that

drive the business

• Measures what matters to your business

• Analyses the numbers and the trends

• Lets you know when preventative actions are required

• Helps management create thorough processes, forecasts and plans

• Ensures the cashflows are managed well so the business never

runs out of cash or needs to borrow in haste

• Reports on profitability compared with targets

• Ensures that the business complies with relevant law

• Liaises with you and the key decision makers on all of this important

stuff

• Can be on your board and become a key strategic adviser

The Big Question

A good CFO service should be able to work with you on a number of levels, so that you get the value YOU need for YOUR situation.

Consider the levels of value in the chart. Where are you? And what do you need? From a basic “peace of mind” level to genuine strategic input and innovation, a good CFO service should be able to adjust according to your needs.

A Good CFO

The 5 Core Benefits of a Great CFO


The first outcome is that you should be receiving “on time” information. Faster. Better quality. You need accounting systems that work and that are properly maintained, that are cloud based and up to date. You need to feel confident that your accounting information is current and automated.

Faster Better Data

Data FeedsReal Time InformationAutomatedCloud AccountingBetter Quality Accounting


Getting your accounting right means that you gain the peace of mind that your business is compliant with the myriad of accounting and tax laws and that the information from which all of that is based is reliable. It is very difficult to progress if this is lacking.

Peace of Mind

Tax ComplianceAnnual ReportingAccurate Accounts & Records


The value of a great CFO extends beyond that “peace of mind” feeling. “Clarity” is often so undervalued by business owners. The value of getting super clear about where your business is at can be huge. No guessing. No surprises. You know where you are, how profitable you are, how much cash you have. You have confidence in knowing this. Clearly. This enables you to focus on what you need to – the areas you are good at and that the business needs.

Clarity and Focus

Performance ReportingManagement AccountingDashboardsKPIsCashflowBudgetTax Plan


Now you have the ability to gain insights into your business and discuss and analyse your business. Consider the “what ifs”, model the outcomes. You and the other business leaders can now make informed decisions and keep the business on track toward its potential. But you also need to ensure that your actions match your intentions. You actually have to do what you said you were going to do. Who keeps you accountable? Many owners have no-one else in their business that keeps them accountable to their strategy and their goals. A good CFO does this.

Insight and Accountability

Monthly MeetingBoard of AdviceResults CommentaryPeformance AnalysisStructuringCorrective ActionsPerformance MonitoringCorporate Governance


The deepest level of a CFO service sees businesses benefit from involving the CFO in the strategy formulation of the business, ensuring that your plans and actions align to your goals. Often the CFO will form a board of advice or perhaps will be on your statutory board. They help keep your business on track, moving toward potential and dealing with those big game changers like business buy and sell transactions, succession issues, capital and debt strategies and corporate governance.

A Strategy Partner

Board of DirectorsBuy/Sell A BusinessSuccession PlanningTransaction ServicesProcess ReviewProduct & PricingStrategy Formulation & FacilitationCustomer Value PropositionDebt StrategyBusiness Valuation Organisational StructurePeople - Roles and Responsibilities


So you now have a clear understanding of the benefits a CFO can provide and how that could suit your business and your situation.

If you can afford a full time CFO of your own, then that would be your first option.

If not, then perhaps there are a few semi-retired ex CFO’s out there you may be lucky enough to source – so a part time resource could be an option.

The preferred option in many cases is to source the required services from your accounting firm. “Well that’s what you would say” we hear your shout! After all we are a private client advisory firm that does provide accounting services including an outsourced CFO solution.

But consider the benefits again:1. Faster more reliable info2. Peace of mind3. Clarity and focus4. Insight and accountability for your results5. Enhanced strategic capability

And think about the service list that underpins these benefits – check out the chart again. Honestly as we wrote this guide we were racking our brains to answer the question – “Where else can you find this?” - in a scaleable service that can grow with you. Buy as much as you need. Different levels of expertise according to your requirements. And probably the firm is already involved with your business on the compliance accounting front so they know some of your stuff already.

•

How can my business access CFO level advice?

So even though you don’t need and can’t afford a full time CFO, you have a way of accessing the benefits. Look for an all in fixed monthly price too, so you can plan and budget and so that there are no surprises.

The detail – Example service list of a typical CFO package

Monthly• Profit & Loss Statement• Balance Sheet• Cashflow • Budget vs Actual • Trend Analysis• KPI/Scorecard • Reconciliation• Compliance• Adjustments• Financial, tax and business telephone and email support

Quarterly• Review of management reports and analysis• Trend Analysis• KPI/Scorecard implications and actions• Face to face business review session• Agreement and monitoring on business improvement action items• GST & BAS discussions, assistance and lodgement

Yearly• Tax Planning• Yearly Budget• Outline of expected cashflows• Preparation of monthly budget and profit and loss for business

performance reporting• Review Meetings• Statutory Compliance• ASIC Compliance• Liaising with all ATO correspondence and inquiries (not audits)

Imagine having a top-flight CFO in your

business

Take the guesswork out of your financial future & discover how Altus Financial’s CFO Services can improve your

business.

http://www.altusfinancial.com.au/cfo-services-lp

how to decide if you need a cfo - altusfinancial.com.au€¦ · can’t afford a cfo. you probably...

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