External CFOs help businesses in a number of key ways which can shift a business’ direction and make it more profitable.
In recent years, external CFOs, otherwise called virtual CFOs, have grown in popularity.
That is because external CFOs offer the services of a traditional CFO but at a fraction of the cost.
Under the traditional model, businesses would have to hire an in-house CFO. This did not work for many businesses because in-house CFOs can be extremely expensive to employ while many businesses simply do not have the budget.
An external CFO performs the same or a similar service as a traditional CFO, but instead this service is provided by an outside provider who comes into the business, either permanently or for an agreed upon period, and is often at a much lower price than a traditional CFO. External CFOs help businesses that traditionally would not have a CFO.
1) Setting strategic directionThe best thinking often happens when you are talking. When you are bouncing ideas off of someone, thinking freely about problems that need solving, you often have the best ideas for your business.
But in order to talk with someone in a way where you are able to really have the best ideas, you need to trust that person. Your external CFO should be someone who you trust to discuss the biggest problems in your business, so you can find solutions to those problems.
External CFOs have an extra edge over others you trust, because they are experts in improving businesses. They offer the perfect solution because you trust them, and they know what they are talking about.
That means you can bring to mind the biggest issues with your business, and discuss with an expert what the best strategic direction of your business should be with those issues in mind.
The reward for getting the strategic direction of your business right is that you will ultimately will lead to more profit.
When you get the direction right, profit follows – even if it takes some time.
2) Budgeting and Forecasting
Your external CFO will help you understand your business from a financial point of view.
When you understand your business from a financial perspective, you will be free to make the decisions you want in your business because you will be able to budget and forecast.
Having financial insight into your business will cut through the noise and let you know what is really going on in your business.
Your external CFO will take those insights and use them to forecast your business cash flow and give you options for how you can get the strategic direction of your business to become a reality.
3) Setting Business KPIs
Once you have your strategic direction and budgeting and forecasting sorted, your external CFO will help you identify and measure your key business performance indicators.
Your business KPIs are YOUR business KPIs. They will be based on the strategic direction you set for your business. They are customised to your business.
They are not arbitrary – they will be directly related to what you want to be doing in your business.
The right KPIs for your business will allow you to achieve your cash flow budget and forecasts, and they will mean that you are making progress towards the strategic direction of your business.
Your external CFO will provide expert advice on identifying what the key numbers in your business are which will help you achieve what you want to achieve in your business.
If you are interested in an external CFO for your business, please get in touch.I’m interested in CFO help