In this article, I wrote some explanations about financial management (CFO). Basically, giving an answer to the question, how do you manage your finances?
Finances are not a specter and they are certainly not something we leave to others!
As we all monitor our private finances ourselves, we make our own decisions and we have all the necessary information at all times, so in companies, every owner and manager knows how important it is to manage finances.
CFO Management can help establish quality business processes, obtain accurate and timely reports, and develop human resources in the finance and accounting segment.
CFO Management through the role of external financial director (CFO) on a part-time or part-time basis (several hours per week or monthly) together with the owners and management improves the business, processes, and results.
A good financial director manages finances, liquidity, and profitability, but also business processes and the entire business in order to make better business decisions, growth, and business development.
You have accounting, you don’t need a CFO?
Owners of small and medium-sized companies sometimes conclude that they do not need a CFO if they have accounting (often external). They also estimate that it is too much of a cost for them.
Such a way of thinking would be logical and correct if in practice there were no problems such as:
- incomplete and untimely financial statements (condition of customers and suppliers, monitoring of liquidity and profitability, condition of assets and liabilities to creditors-suppliers, banks, budget)
- lack of plan (income and expenditure plan, cash flow plan)
- lack of understanding of accounting and financial operations and reports
- poor communication with accounting, financial and government institutions
- outdated software (lack of ERP) and business processes, slow and outdated data processing
- unmotivated and unprofessional employees in accounting and finance
All or most of these and other problems occur in practice in most companies, especially small and medium-sized organizations that are growing and need professional support for the development and better business results.
For many companies that do not need the ongoing engagement of a CFO (full-time), engaging in a few hours per week or per month (for reporting purposes, process improvement, the introduction of new software, or a new accounting and/or finance employee) may be sufficient. it does not represent a cost, but quite the opposite, a profit in the long run in terms of business improvement and results.
What benefits can you get from hiring an external CFO?
Saving on the cost of a CFO’s salary – A full-time CFO’s salary can be too much of a burden for your business while at the same time you don’t even need that full-time job view ‘from another angle’ – the external finance director has the opportunity to approach a certain topic with unencumbered thinking and wider experience and, unlike his own employees, is sometimes not burdened with internal problems and the way of working that has ‘always been’, and this can contribute to a quality proposal and advice for resolving a particular situation.
Financial advice – when you do not have answers to questions about how to increase profitability or improve financial reporting, choose a quality accounting service, or an accountant in the department, an external CFO can help.
Optimization of business processes in accounting operations – semi-automatic data processing (a lot of manual input, reports in excel format, paper, etc.) in accounting and financial operations can cause inefficiency of these and other departments in the company and make financial reporting and making correct and timely decisions. CFO advice can significantly help optimize business processes, save costs, and influence more up-to-date data processing.
Up-to-date financial statements – financial statements are necessary for monitoring and planning business. If you are not an expert in the field and do not have up-to-date accounting financial statements in a format that you can understand, an external CFO can help.
Preparation of financial documents for banks or potential investors – for the purposes of any supervision or financing, project, or potential investors, the external CFO can prepare all necessary financial data and reports.
It is important to have professional employees for accounting and finance!
For the successful functioning of the company, it is generally important to have motivated and professional employees, as well as to adapt and develop the organizational structure to the needs of the business.
Employees in the accounting and finance segment need to have specific knowledge and skills. CFO Management advises owners and management in analyzing organization and processes in accounting and finance, defining organizational needs, key competencies, jobs, and job descriptions in accounting and finance.
He also advises on the selection of the internal financial director and/or head of accounting and finance. Provides mentoring of new and existing employees in order to professionally develop and make a full contribution to the organization in performing its work and advises in the field of assessing the development potential of employees in finance and identifying needs for their education in the professional part and “soft” skills.