The CFO as an ‘Operator’
- Ownership of Cash flow
- Maximisation of Profits and Profitability
- Reduce Costs
- Increase Productivity & Efficiency
If cash used to be King, in today’s new landscape it’s now Emperor. The Operator frees up the Business Owner from having to worry about the day to day financial operations. Your CFO will ensure that your business is built on rock solid foundations and able to withstand unforeseen market conditions. Cash has always been critical to every business, however now more so than ever. Your CFO will help (re)structure your business to maximise your cash position. This involves balancing supply and demand while cutting back unnecessary costs and improving productivity, efficiencies and ultimately profit.
Being thought of as the Operator may not be the first role that a small business owner would think of for their CFO. In his recent blog, my colleague from The CFO Centre – Dr. Andre Van Zyl set out The Strategist role that a CFO often fills. While that role is critical for any organisation’s long-term existence, CFOs also have vast tactical experience in an Operator role. We are obviously not referring to operating a factory floor machine. We mean that the CFO has the ability and experience to oversee and operate a number of critical functions. As COVID-19 is putting significant strain on many of these functions, a calm and reassuring Operator may be key to a company’s future.
Time, or the lack of it, is so often cited by small business owners as one of their biggest frustrations. Our CFO Centre clients often comment that they are spending so much time working in-the-business that they can’t spend enough time on-the-business. A Part-time CFO who works closely with a small business owner can free up time for the owner by sharing the load. This ensures the owner is as fully focused on those very client or customer facing roles that were the initial catalyst for creating the business. This can be a significant ‘value add’ aspect of the Operator role of a CFO.
By the very nature of the CFO role, all our CFOs have either worked their way up through, or had executive responsibility for, the Finance functions in various organisations. They deeply understand the importance of running a tightly controlled organisation during COVID-19 and with specific focus on cash flow management, profitability, and productivity. Andre wrote about developing three-way financial forecasting models which are critical for banks and financiers. It is just as important to deliver against those models.
COVID-19 is forcing many businesses to consider whether current business models can survive, will survive, or even should survive. Critical decisions may need to be made on products or business lines to either scale-up, maintain status quo levels, scale-down or even shut-down completely. A part-time CFO can help small business owners as they work through that exercise.
A new or refined operating rhythm may therefore need to be designed, which may require minor tweaking or more major restructuring. Consideration of this may be critical for survival. The Operator who has extensive business experience will greatly assist with a rapid transition to a new business model. Central to this will be the robust and disciplined forecasting exercise – with potentially a myopic focus on Cash Flow management.
While in a more benign operating environment, the maximisation of profit may be central to a company’s strategy, in the current environment keeping a tight control of cash and costs will increase organisational efficiency. Further, with the various Federal and State government support packages such as JobKeeper and Cash Flow Boost being available for SMEs, a detailed understanding of these is critical to maximise outcomes.
Part-time CFOs from The CFO Centre have the relevant experience required to assist small business owners navigate and operate during the current challenges. The objective must be to future proof your business, and The CFO Centre is here to support you.
Written by John Paterson, Principal (NSW) – The CFO Centre.