Advice

Move from understanding to execution

The most value added function of your financial department is its ability to provide you practical advice to help you grow your business. Led by a Chief Financial Officer, your financial operation should be helping you allocate scarce resources to maximize return on investment.

This video will show you the three areas of advice you should be getting and help you evaluate the kind of CFO you need.

The most value added function of your financial department is its ability to provide you practical advice to help you grow your business. Led by a Chief Financial Officer, your financial operation should be helping you allocate scarce resources to maximize return on investment.

This video will show you what kinds of advice should you be getting from your CFO. Its broken down into three areas:

  1. Operations
  2. Exit
  3. Risk management

Operational advice helps a founder grow sales, cash flow and profit. The CFO will help you develop strategies for your business and make them actionable through a financial plan and KPIs. They will hold the organization accountable as well has evaluate various business scenarios as you execute your plan.

Here’s a tip for you: good CFOs always use your data to supporttheir recommendations. They should offer more than one recommendation and work with you to evaluate various tradeoffs so you can feel confident you’re making the best decision possible. Look, you may find out later it wasn’t the right decision, but you’ll be less likely to second-guess yourself because you felt you made the best decision based on what you knew at that time.

Exit advice is helping you prepare for the day when you leave your business. Proper planning ensures you leave it on your terms.While your exit may not be happening anytime soon a day will come where you will exit your business. We all do.

A good CFO helps you figure out what that would look like for you and puts in place now what is needed to help you get there. This could be succession planning, pursuing an acquisition or raising capital, developing a retirement program or implementing a profit sharing plan for key employees. The point is that an exit plan usually results in much better company valuation and deal terms when you leave your business.

Risk management identifies threats to your company and helps mitigate them. It means putting controls and redundancy in place to make sure your financial data is accurate, timely and secure. Its identifying insurable risks, such as product liability, so you can get get the right coverage in place. Process and automation helps ensure your financial data is correct and transparent. An early warning system looks ahead to see what’s coming that could be disruptive to you. By moving away from being reactive to being proactive, you may be able to turn those threats into opportunities for you.

I find in the marketplace there are three kinds of CFOs. While we are adept at the three areas I mentioned above, there’s usually one area that we’re specialize in:

  1. The first are operators that are focused on growing sales, profit and cash flow. This is where I fit in.
  2. Dealmakers are transactional CFOs. They are great to have if you’re considering M&A or many big financing rounds..
  3. Accountants are typically CPAs who keep great books and controls. Their financial reporting is very solid.

Think about the type of CFO you think fits best for you before hiring them. Keep in mind that you can hire a fractional CFO to see what works before committing to the time and expense of a full-time hire.

Don’t forget to click a link below to learn more about what your financial department can do for you. Thanks for watching

The Four Pillars

The Four Pillars

Learn about the Four Pillars of Every Great Financial Department.

Accounting

Accounting

More than just transaction processing. Properly maintain your company's mission-critical financial data.

FinancialStmts

Reporting

Timely, accurate and insightful financial information to inform your decisions.

FinancialPlan

Planning & Analysis

Develop a roadmap to scale with measurable objectives that track progress.

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