An experienced consulting CFO will be able to impact your business in the following ways, depending on what is needed and resources available. This is based on a “cash cycle” starting with sales, and progressing to financial statements and net equity.

  • Increasing sales – this may involve price adjustments if gross margins permit.
  • Optimizing gross margin – this involves examining cost of goods sold and cost of sales, and finding ways to eliminate or reduce cost, for example through bulk purchases.
  • Reducing overhead expense – a consulting CFO can draw on years of experience to suggest whether functions can be done with fewer people or information efficiencies.
  • Improving profit – in addition to the above items, there may non-operating expenses that can be reduced.
  • Enhancing cash flow – accounts receivable, inventory, accounts payable, prepayments and deposits, and loan and credit card interest are areas that can help maximize cash flow.
  • Maximizing working capital – by working on the above areas and improving cash flow, we should see – and should be able to forecast – increases in working capital that will reduce dependence on the bank.
  • Managing banking, CPA, and grant relationships – banks look much more favorably on lending to companies when financial statements and projections of cash flow and profit are accurate, timely, and accompanied by explanatory notes that make the bank feel like they understand the business and its future.
    • CPA firms like controls and procedures that reduce their risk in representing a company’s financial statements to the government; an experienced CFO makes sure that CPA firms get what they like.
    • Granting agencies need to be assured that their grant funds are being spent appropriately, especially compared to the budgets they originally approved. An experienced CFO ensures that granting agencies get what they legitimately need.
  • Strategic planning – an experienced CFO has seen the strategic plans of many companies go well – and not so well. She or he will be able to ask questions that will get to the heart of why a new strategic plan will work or not, including cost/benefit analyses, suggestions for market analysis, and tests to “fail fast and fail cheap.”
  • Budgeting and forecasting – based on either strategic plans or history, an experienced CFO can interview the right people in your organization and put together a budget with commitment from your senior managers.
  • Preparing timely, accurate, and meaningful financial statements – an experienced CFO ensures that within a reasonable number of days after month-end, financial statements with comparison to prior year, year-to-date, and other important benchmarks are available – in time to make operational adjustments as appropriate.
  • Preparing flash reports – when there are important weekly or more frequent milestones to watch, a CFO will find the data at a reasonable burden to staff to make sure that senior management is not surprised at month-end by events that were visible well before.
  • Preparing exit strategies – a CFO always the end-game in mind. The CFO wants to maximize the owner’s net equity in the business, to ensure the largest possible payout to the owner in a “liquidity event.”

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