Large, well-established companies can usually afford to have a full-time corporate financial officer (CFO) on staff. Though smaller companies require the financial expertise of a CFO, small to mid-sized businesses usually cannot afford the salary required to retain one in-house. A collaborative CFO, hired part-time through collaborative accounting services provides an affordable option. So, small businesses do not have to choose between profits and sound finances. The benefits a company will experience from utilizing a CFO’s knowledge are countless, but the following five should not be overlooked.
1. Time and Expertise
Although some business owners possess basic financial knowledge, it is unlikely they have the time or expertise required to perform the functions of a CFO. Most small business owners march forward, intending to handle company finances independently in order to save money. Taking on the responsibilities of a CFO, however, is a full time job, and when done without the proper experience and education can result in costly tax penalties, unnecessary expenses, and missed opportunities to increase revenue. Hiring a collaborative CFO will allow a business owner to handle business operations while the CFO takes care of the finances at a minimal cost.
2. Sound Accounting Systems and Processes
Like an in-house CFO, a collaborative CFO will assist your company in establishing the most sound accounting systems and processes for your business. An efficient system will help safeguard your company against fraud, ensure tax compliance, and reduce expenses by saving time and discovering unnecessary costs. A good process will also streamline your companies invoicing and accounts receivables, ensuring payment is received and collections are handled compliantly.
3. Strategic Finances
By uprooting flaws in a company’s existing accounting system and establishing smart financial practices, a collaborative CFO can implement a strategic financial plan to increase profit and reduce expenses. Considering all of a company’s accounts (cash, payroll, accounts payable, accounts receivable, inventory, etc.), a collaborative CFO will design and help to implement a comprehensive strategic financial plan to improve a company’s productivity.
4. Accurate Financial Statements
Financial statements are a company’s bill of health. By ensuring the accuracy of your company’s financial statements, a CFO can assist your company with tracking the financial health of the business. Without accurate financial statements, there is no way for a business owner to know how the company is performing, whether it is doing well or is facing imminent losses. Clean, accurate financial statements are necessary to properly file taxes and avoid costly IRS penalties. A consistent and accurate record of financial statements will also help your business secure financing with a bank.
5. Accurate Financial Analysis
Keeping accurate financial statements do not only ensure compliance and simpler financing, but also accurate financial analysis. Without access to accurate financial statements, a company cannot track its performance. An expert CFO can help a business owner learn how to read financial statements and understand what the numbers mean. With a collaborative CFO’s comprehensive knowledge of business finance, a small business owner can accurately track, measure, and predict the company’s performance over time. By consistently analyzing financial statements, a collaborative CFO can implement business strategies to improve efficiency, increase revenue, and reduce costs.
If you are interested in learning more about collaborative accounting and bookkeeping, take a look a this simple guide to independent small business accounting.