Why CFO Services Are a Must-Have for Your Small Business?
It’s 2 PM and you decided to do some small business bookkeeping.
But instantly, you are scratching your head, “How the hell I am going to do cost management, planning, budgeting, forecasting, and gather the financial data of my small business.”
If you can relate to this situation, you aren’t alone. According to QuickBooks stats, around 42% of small business owners say they don’t have any financial literacy.
So, what to do in this situation?
Why not search of an accounting firm that offers CFO services?
No matter what your financial goals are, having a fractional CFO for your small business can change the way you think about finances.
Let’s break down what CFO services are and why you need them.
What are CFO services?
CFO aka Chief financial officer is responsible for looking at the overall financial performance of the business. These include focusing on financial analysis and planning, risk management, reporting, data gathering, and so much more.
Here’s what’s included in CFO services:
Financial planning and analysis
We know how everyone wants to put their budgeting hat sometimes, but CFOs put on their hat every time, come up with comprehensive financial plans and perform detailed analysis for financial forecasting. This comprehensive plan doesn’t appear out of thin air, rather it has budgeting and setting financial goals to achieve these plans.
Besides that, CFOs prepare financial statements and manage all financial reports. They also develop KPIs and dashboards to track financial performance.
CFO services also include identifying areas of improvement, so your small business can make informed financial decisions, instead of guesswork.
Cash flow management
Ah, the good ol’ cash; what we are all working for. As a small business owner managing cash flow is super important to fund day-to-day operations. The CFOs with their eagle eyes keep track of cash-in and cash-out. So, you have a better understanding of working capital and your financial obligations.
Not only this, by using CFO services, you can get a better idea of cash flow projections, account management, and strategies to improve cash conversion cycles.
Risk management
It’s good that your small business is making money, but if you aren’t managing risks properly, then the profits will start to disappear like Houdin’s tricks.
CFOs assess potential financial risks and develop risk management strategies. These include managing credit risks, market risks, operational, and compliance risks.
So, your business doesn’t have to face an uncertain future.
Compliance
Speaking of compliance risks, you must comply with financial requirements. The job of a CFO is to keep track of the updated financial laws and make sure that there are no legal issues in auditing or taxation. So, you can sleep peacefully at night knowing the IRS or CRA won’t knock on your door.
Advisory
CFOs services are not all about financial management. They also include advisory services on key decisions like mergers and acquisitions, capital raising, investments, and others.
Hey who knows someday your small business can turn into big business and require an IPO, then CFOs are there to help.
You must have noticed that the cool thing is it’s not all about keeping track of your dollars like in bookkeeping. CFO services are there to steer your business boat towards the stable and growth path. It’s like having a financial batman on your team that can protect and keep the bad financial practices away from your business.
If you have made up your mind about CFO services, you can check out our detailed guide here. Else, let’s move on to the cool types of CFOs (yes there are types of CFOs as well).
What are the types of CFO services?
Every business is unique and so are the types of CFO services. These types facilitate every business needs and budgeting.
Fractional CFO services
Fractional services include the CFOs on a part-time basis. The CFO firm will dedicate a fraction (hence the name) of their time to your business, managing your key financial tasks.
It’s perfect if you are short on budget or don’t need a full-time CFO and just need help managing daily operations.
Outsourced CFO services
If you aren’t an all-rounder, chances are you need to outsource some of the work. This is when outsourced CFO services come into play. Here, you hire a CFO service firm like Tangent Consulting and outsource the work.
The good thing about outsourced CFO services is, you can hire a specialized firm and apply standard practices without any hiccups.
Part-time CFO services
As the name suggests, part-time CFO services call for part-time work. It’s closely related to fractional CFO services. Having a part-time CFO can provide services on daily, weekly, or task-basis. It all depends on what your small business needs.
Virtual CFO services
Virtual means you are hiring a remote-based firm like Tangent Consulting to do all your CFO work. As a small business owner, you may have a remote setup too or don’t have a proper office. Here, hiring a virtual CFO services firm can be super beneficial.
For instance, we at Tangent use cloud-based tools and platforms to work and manage all your financial needs.
The good thing is all these CFO services are related in one way or the other. So, if you find it difficult to check which CFO type is good for your business, you can select anyone.
So far, we have talked about the CFO services, what they include and what their types are. But you would be asking, “Ok I think I don’t need CFO services.”
How about we give you six reasons why they are a must-have for your small business. Sounds good? Let’s jump right in.
6 reasons your business needs CFO services
Between managing operations, marketing, customer service, you probably don’t get enough time or don’t have time to do all the financial management. Let’s break down why your small business needs CFO services.
1. Managing overall finances
Do you know 82% of businesses fail due to cash flow problems? Having a small business requires you to keep an eye on your finances. You don’t want to develop a habit of mismanagement, ultimately resulting in a business failure.
CFO services can help you streamline the process and manage overall finance. They make sure you always have enough cash to cover your expenses, invest in growth opportunities, and efficiently run your business.
2. Planning
We all dream of having a business, so we can grow it like Warren Buffet. But you need solid plans to execute these dreams. That’s when CFO comes into play. As we mentioned earlier, the CFO not only helps in financial management, but they also advise you on planning and growth.
Fun fact: According to PwC, 75% of small businesses report a positive impact on their long-term growth when they hire CFOs.
3. Cost-cutting
When you are running a small business, extra costs can cause headaches. But CFOs are here to help. When you hire a CFO services firm, they’ll find ways to cut down on the unnecessary costs. And don’t worry, they won’t sacrifice the quality of your product or service to cut down the costs.
They’ll put on their detective glasses and find ways to cut the fruitless costs, which may not be visible to you.
4. Following the laws
The last thing you want as a small business owner is to be on the naughty list of IRS or CRA. For instance, if you are unable to pay your taxes according to deadlines set by the CRA, CRA charges compound daily interest on unpaid balance. There are plenty of penalties you need to look out for.
A CFO makes sure you comply with all the tax laws and financial regulations, and you don’t end up giving more than what is due.
5. Get funded
If your business is struggling or you want some external funding to grow your business, you need to go to the bank or investors. The part of a CFO job is to get your business funded.
They make sure your financial reporting is up to the mark, so banks or investors won’t decline your proposal.
Pretty cool, right?
Get automated
Manual financial management is so 20th century. If you are doing accounting on a piece of paper, good luck with that.
The good news is CFO firms like Tangent Consulting save you tons of time and resources to automate the entire process. We use advanced financial management tools to keep your business on track without any hassle.
Final thoughts
It’s important to know that although CFO services sound like a big corporation thing, every business requires them, no matter the size.
Also, you have read what CFO services can do and how much they can make your life easier, so you can focus on managing the other aspects of business.
Now that you know why CFO services are a must-have for your small business, isn’t it the right time to hire a firm that can streamline your small business’ financial needs?
If you are thinking about it, why not hire Tangent Consulting for all the CFO needs?
You can have access to expert CFO services with strategic support that can optimize all your financial operations.
To find out, check out our CFO services page, and how we can help you out.
FAQs
At what point do you need a CFO?
Usually, when a business reaches a certain revenue level or you think you can’t manage your business finances, it’s better to consider CFO services.
What size company needs a CFO?
Although there’s no hard-and-fast rule, a company making anywhere between $1 million to $10 million in annual revenue needs a CFO.
How to hire a good CFO?
To hire a good CFO, you can look for experienced firms, the types of CFO services they offer, strong communication, and automation.
