How would you know or measure if you are winning or losing? And how would you know if you should play harder?
As strange as it sounds, there are many companies out there that are treating their financial and accounting operations and statistics this way. They do not know where they stand, whether they are generating profit or spending too much on their overhead and other costs. They are not even sure if they are winning or losing their own business game. All they know is they are working really hard.
If you are in this situation – what does it mean for your company? You are working really hard, wasting time and resources and the result – you are either in the negative or in the unknown.
To add, imagine you have a potential client at the door who is interested in your company. They have a larger business that is missing your product to make them complete. You are super excited to sell because you are tired and exhausted and they want to make you an offer – but you have NO idea what your business is even worth…
Knowing where your business stands financially, understanding your profit and loss and balance sheet statements can give you a good indication of how your business is doing and show you the next steps to take. Who is responsible for preparing this information? Every business needs a CFO. Your Chief Financial Officer should be sitting down with you every month and going over your numbers, creating financial targets for each area of your operations. Knowing your numbers is similar to knowing your score and time, and how you are doing. Budgets, cash flow and forecasts should all be a part of what your CFO lays out in front of you. It is also a good idea to get the rest of your team involved, as each player has a position to play with an ultimate goal of hitting the target.
You know you have the right CFO when he or she:
- Has a CPA or has a strong accounting background
- Knows that you value honesty and truth and are willing to give you even the worst truth in the most honest matter.
- Knows all of the company’s objectives and keeps them in mind for projections and forecasting.
- Helps offer solutions on incentives and compensation plans for other players in your business.
- Provides you with weekly projections on cash flow and shows where you’re losing or gaining money and when transactions should take place.
- Maintains relationships with your creditors and investors and clue you into the suggestions or concerns they may have.
- Helps develop and forecast budgets and other projections for the future, also known as Key Performance Indicators (KPIs), which can give you information on everything from customer satisfaction to overall monetary performance.
Many companies struggle with understanding accounting and financial indicators because that information is not well translated to them by their accounting department and CFOs. At Profit Matters we make it our main goal to become your partner whether we provide you with a full accounting department or a fractional-CFO. When hiring your in-house CFO you can expect to pay somewhere between $100-260K. Hiring a Profit Matters team will save you between 30-65%.
Request a free 30-Minute Meeting with our Team to get a clear picture of what it looks like to have a full understanding of your company’s scoreboard
Written by Aliya Hulse