It is hard for small to medium size companies to justify a full-time chief financial officer (CFO). They simply do not have the need for a senior financial executive on a permanent basis. That is why more and more companies call on the services of a part-time CFO.
“Part-time CFOs offer outside perspective, invaluable strategic insight and their cost-effectiveness cannot be denied. The investment in the services of a part-time CFO very often generates a return on investment many times over.”
Hiring an interim or part-time CFO can immediately help you focus on key financial elements rather than get lost in the day-to-day operational details of the business.
Ready to take the plunge? Here's what to expect:
1. Get to know you and your business
An interim CFO will first want to identify the key financial issues facing your company. To do that, he will first get to know you, the owner and what is important to you. You could expect questions about your financial situation, what you feel is working for your company and what is not. Your financial statements will tell the story of what has happened but not why it has happened. The interim CFO will seek to unveil the underlying reasons for your financial weak spots through getting to know and understand your perspective. Expect also an assessment of your key employees and of your processes and business risks.
2. Understand your break even point
A crucial financial metric, the break-even point is very often overlooked by business owners. In a nutshell, it is the amount of units you have to sell to cover your fixed expenses where all further sales become profit. Depending on the business model, it can be difficult to determine for business owners.
Your company's breaking point will help the interim CFO answer further questions on the directions of your company and will clarify decision making. It will define the level of sales or services you will need to generate in order to cover certain of your initiatives.
3. Improve your margins
It is the part-time CFO's job to understand and improve your margins. The implications of your profit margins analysis is underestimated by most business owners. Changes to product or service mix for example that could improve your margins by as little as 1% could have significant impact on your bottom line.
Having a part-time CFO examine and track your financial indicators, your profitability and your results helps business owners focus on what they do best, serving clients and finding new and improved ways to do so.
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