Deciding whether or not your business could benefit from the services of a CFO will certainly impact your company’s bottom line and growth horizon. We want you to have all the facts you need.
Here are some questions that we have answered for clients in the past to give you some background. If your question isn’t here, or you want more information, please call (586) 580-3285 or email [email protected] to get your answers.
A CFO helps your business with future focus; working with you as a strategic partner. In addition to addressing short-term needs and day-to-day analysis, a CFO provides long-range planning and focusing on keeping your company on solid footing.
At first, many CEOs have trouble visualizing how a part-time CFO can help their organization. During our initial meeting, we’ll show you specific examples of how Michigan CFO Associates can improve your company’s performance. There is no charge for this introductory meeting.
In a large business, the responsibilities are much clearer; in a small company, roles tend to be blurred,
and frequently the titles do not match the work that the individual is actually doing (e.g., calling a bookkeeper a Controller).
Regardless of the titles, someone qualified should be doing the following in every business:
- Financial reporting and analysis that is both accurate & useful for decision making (e.g., profitability by product/customer/location, market segment, etc.)
- Focusing the business on key metrics that have the greatest impact on profitability & cash flow
- Managing cash flow & cash planning
- Balancing health & growth in the organization Instilling basic financial disciplines and controls
- Creating projections to identify future problems and opportunities
- Providing leadership and training to the company’s accounting staff
- Questioning and challenging the status quo (e.g., not being satisfied with “that’s the way we’ve always done it”)
- Assisting the owner with difficult decisions
If some or all of the above items are not getting attention in your business, a part-time CFO can be a cost-effective solution. You may also be interested in our Whitepaper The #1 Financial Mistake Made by Small-Business Owners.
Depending on the engagement, your CPA may be required to be “independent”;
Their business is not set up as “hands on” as a CFO needs to be. Each of our CFO’s works with a small handful of clients. CPA’s typically work with hundreds;
They do not have our depth of private company CFO experience, which is a specialized skill; Most CPAs are largely unavailable during “the busy season”.
Being a CFO, whether on a full-time or part-time basis is much more than being able to crunch numbers or to fill out a tax form. A CFO is multi-faceted. A good one has lots of first-hand experience wearing many hats including administration, management accounting, production, purchasing, human resources, facilities, contracting, and negotiations in addition to having strong finance skills. Above all, a good small business CFO must be business savvy.
This will depend on the agreed upon action plan, timeline, and the abilities & capacity of your existing staff. Typical engagements are 2 days/month or 1 day/week, with exceptions both ways. In most cases, there is more front-end work followed by a reduced workload to maintain the improved processes and initiatives.
The need for good financial management is not a function of size; almost every business can benefit from the activities of a CFO. Generally though, we work with companies ranging from $1 million to $20 million in annual sales, although some are smaller and some are larger.
How you run your business, should be reflected in your financial statements. Financial statements and reports should be important management tools, not merely requirements for outside parties (your bank, IRS, etc). If your financial statements are a puzzle, they are being constructed incorrectly. Your accounting or bookkeeping staff needs to be trained in new methods and procedures that turn their work into valuable management assets, not confusing reports only your CPA can begin to understand.
We spend considerable up-front time designing financial reports that allow you to make good decisions based on your unique critical measures. We also spend time making sure you’re 100% clear on what the reports are telling you. The reporting package might include some or all of the following:
- Financial Statements using our unique TrendSpotter™ report design;
- Profitability by product/service line;
- Current year pro-forma financial statements, by month;
- Actuals vs. Budget/Forecast 5 to 8 Key Performance Indicators (KPI’s);
Thorough cash-flow planning and forecasting of cash needs, including borrowing scenarios.
Yes, we sign an engagement letter that explains the priorities and pricing options along with other relevant issues. The engagement letter is an explanation of what we’re agreeing to, not a binding contract. You may discontinue service at anytime.
We have a variety of fixed fee programs that allow you to choose the amount of involvement based on the priorities we’ve discussed and your budget. The fixed fee structure eliminates billing surprises and encourages open dialogue without the fear of being “nickel & dimed” for phone calls, emails and other time related charges.
In rare occasions where significant uncertainty exists in the scope of work, we will work under a very reasonable hourly rate structure.
That depends on the amount of involvement as well as physical space and other constraints in at your location. Generally, if we are working with you 1 day/week or more, we work on-site. If we’re working 2 days/month or less, we can do either on or off-site.
In either scenario, we hold financial review meetings at your location, or if necessary via web conference.
More than 98% of private companies fail within 10 years. Thousands of small businesses fail every year. Virtually all of these companies had an accountant. Often these businesses fail, not due to a fundamental weakness in the business itself or even the changing economics of their industry, but due to a lack of even the most basic financial management & planning.
What happened yesterday is not nearly as important as what’s going to happen tomorrow, next month and next quarter. Looking ahead and recognizing both risks and opportunities in the future will allow you to make better decisions today.
Yes. We’re also happy to sign an NDA (Non-Disclosure Agreement), if you prefer.
Most clients establish a username for the CFO to access the accounting information. Many clients allow the CFO to access the information through a web-based hosting company or through a Citrix connection. This allows the CFO access whether working on or off site. The CFO, as with any permanent staff, should have system limitations in order to adhere to internal control procedures.
The CFO will be following the agreed-upon priorities from the engagement letter. In addition, as the CFO gets involved in the details of the company, other potential issues will probably be uncovered which may change the list of priorities. Additional issues that are uncovered will be addressed to the President/CEO for prioritization.
We work closely with clients and as the needs of the company change, we change as well. We can assist in interviewing the permanent CFO and once hired have an orderly transition of duties until we are phased out. If the client still requires occasional advisory services or a sounding board for the CEO, we can assist in this area as well.