As a fractional CFO helping $1M-$100M companies to maximize their cash flow and grow into financially well-run enterprises, my work can vary considerably between clients.

But any fractional or full-time CFO that you choose to bring aboard should be able to provide a myriad of services to you and your business, from forecasting and cash flow management to facilitating acquisitions and securing financing.

This week, I'll be talking about each in depth. My hope is that in doing so, you’ll be able to pick the right partner for your business, know what to expect when bringing on a CFO, and have the context you need to get the most out of them.

But before I get too into the weeds, I need to back up a little and answer a question I get from owners all the time.

When do I need a CFO?

The answer, it depends. 

I often see early-stage startups with part- or full-time bookkeepers and relatively simple internal systems look for a fractional CFO once they find their existing processes to be insufficient for scaling the business.

Other times, I work with more established businesses looking to maintain profitability while scaling to the next level of growth.

Starting with a fractional CFO lets you tap the expertise of another member of the C-suite while still only paying for what you need. Be advised, though, that you will still need a full-time CFO once you reach a certain size.

What a CFO Should Do for You

Most of the time, fractional CFOs are brought in with a specific goal in mind, whether it be resolving cash flow issues, improving margins, retooling systems for the next phase of growth, or navigating an acquisition.

But CFOs can do a lot more for your business.

Here’s what else.

• Strategic Finance

• Cash Flow Management

• Pricing

• Solving Financial Problems

• Pre-acquisition Prep

• Post-acquisition Support

Strategic Finance

Beyond closing the books and managing to budget each month, CFOs should be active problem solvers, leveraging data from across the business to address emerging issues and move the business forward.

This is where I spend the majority of my time.

I begin by setting the right KPIs with my clients.

Then I move on to forecasting with an eye toward long-term goals, identifying leverage points, evaluating investment opportunities, and ensuring optimal capital allocation.

My other core task is managing the P&L, balance sheet, and cash flow. More on that here.

Performing these in tandem allows your CFO to provide the whole company with the assurance that they’re moving in the right direction—on top of supplying teams with the insights they need to better manage the day-to-day.

Cash Flow Management

According to U.S. Bank, poor cash flow management is the #1 reason most businesses fail. Yet I often see owners rely on “bank balance accounting” to assess their cash position.

As a fractional CFO, I help clients move beyond the bank balance and toward an intimate understanding of their numbers through trend analyses, forecasting, and helping them zero in on a few short-term focus areas to clock in quick wins.

The best place to start here is by implementing a 13-week cash flow. This timeframe is perfect for managing cash in the immediate term, determining weekly averages, and extrapolating your longer-term cash position.

Reply to this email if you need a template.

Pricing

You might be shocked at how many businesses arbitrarily price their products.

But an optimized pricing strategy is low-hanging fruit to boost revenue and protect your margins. For that reason, this is one of the first things your CFO should be looking at in detail.

Making incremental adjustments over time and offering the right incentives to your sales staff are both crucial to executing this well.

The most straightforward way to evaluate each price adjustment is to calculate your average weekly sales both pre- and post-price change. Keep making adjustments until you notice a deviation from the average.

Only then will you have found the right price and can be confident that you’ve neither left money on the table nor priced out too many potential customers.

Solving Financial Problems

Most of the financial advice given to SMB owners is rather generic and oftentimes useless.

Working with a CFO offers tailored solutions to the unique problems facing your business. And their extensive expertise can help you arrive at creative solutions that are then applied in the most financially efficient manner.

Perhaps the most underrated advantage of working with a CFO as an owner is the long-term partnership. A good CFO will be passionate about collaboratively growing your business month by month.

Pre-acquisition Prep

Every owner needs to understand M&A, but navigating the deal-making process on your own is no easy task.

Engaging a CFO can help you prepare for the deal by getting your financial statements in order, translating term sheets and contracts into plain English, overseeing the due diligence process, managing strategic relationships, and offering expertise on how to best obtain financing.

Post-acquisition Support

Unfortunately, acquisitions tend to be messy. The good news though is that some of this is avoidable.

Too often, deals fall apart post-close due to improper or insufficient integration planning. To avoid this pitfall, I like to dig into the merged financial picture of my clients—even prior to closing—in order to identify overlooked synergies and bottlenecks that will affect the operations of the merged business.

Doing so allows me to develop the contingency plans my clients need to confidently bring the two businesses together.

Putting It All Together

Here are your top takeaways from this week’s post.

1. Working with a fractional CFO can help your business move into the next stage of growth, whether you’re an early-stage startup or a more established company looking to expand profitably.

2. Too often, CFOs are brought on by companies looking to achieve a narrow set of goals like improving margins or streamlining internal processes. But a good CFO can and should do much more than that.

3. Here’s what else.

   • Strategic Finance

   • Cash Flow Management

   • Pricing

   • Solving Financial Problems

   • Pre-acquisition Prep

   • Post-acquisition Support

Hungry for More?

1. Follow me on Twitter and LinkedIn for daily content to take your business to the next level.

2. Shoot me an email with your questions or requests for what you’d like me to write about next.